The Securities and Exchange Commission (SEC) has introduced new term limits for broker directors of exchanges to overhaul board composition and governance structures in the country’s capital markets.

Under Memorandum Circular No. 17, Series of 2026 released on Thursday, broker directors may serve for a maximum cumulative period of 10 years, whether consecutive or intermittent, in the same exchange. 

Broker directors who have completed five cumulative years of service must also observe a one-year cooling-off period before becoming eligible for re-election.

The new rules will apply to exchange boards, including the equities exchange, where broker directors hold seats alongside other categories of directors.

The SEC said the measure is intended to strengthen governance standards, promote fair representation, and align exchange regulation with international standards for self-regulatory organizations.

The circular is consistent with principles of the International Organization of Securities Commissions, which emphasize fair representation in the governance of exchanges and other self-regulatory organizations.

“Strong institutions require regular renewal, independent oversight, and broader representation,” SEC Chairperson Francis Lim said in a statement.

“By setting reasonable term limits for broker directors, the SEC seeks to strengthen market governance, mitigate potential conflicts of interest, level the playing field among the different categories of directors in exchanges, and align our regulatory framework with internationally recognized standards, while ensuring a fair and orderly transition,” he added.

The SEC granted incumbent broker directors a two-year transition period. Existing directors may complete their current terms and remain eligible to run in the next two annual elections.

During the transition period, the equities exchange is expected to undertake a phased reconstitution of its board to enhance representation, diversify expertise, and strengthen minority shareholder protection.