SEC adds new tool for stock bets

Filipino investors will soon have another way to bet on stock price movements without directly buying or selling the underlying shares, as the Securities and Exchange Commission (SEC) opens the local market to structured warrants.

The SEC issued Memorandum Circular No. 27, Series of 2026 on 23 September, setting the rules for the registration and trading of structured warrants and widening the range of investment products available in the local capital market.

A structured warrant allows an investor to gain exposure to the movement of an underlying asset.

It gives the holder the right, but not the obligation, to buy or sell the underlying financial instrument at a predetermined price on or before a specified expiry date, or receive a cash settlement based on its price or level.

“The issuance of these rules marks a major milestone in our ongoing efforts to deepen and modernize the Philippine capital market. By introducing structured warrants, we are providing investors with a sophisticated tool for risk management, hedging, and portfolio diversification, bringing our market architecture at par with our ASEAN peers,” SEC Chairperson Francis Lim said on Tuesday.

Under the rules, structured warrants may be linked to individual equities listed on Philippine or foreign stock exchanges, securities indices and exchange-traded funds.

The SEC may also allow listed debt securities, baskets of listed equities or debt securities, as well as other assets or reference values.

Only licensed broker-dealers and investment houses incorporated in the Philippines, as well as foreign corporations licensed to do business in the country, may issue structured warrants.

An issuer or its guarantor must maintain at least P400 million in unimpaired paid-up capital for as long as any of its structured warrants remain outstanding.

The SEC also set a minimum issue size of P20 million.

For physically settled warrants linked to locally listed securities, the total issue size, including outstanding physically settled structured warrants, cannot exceed 50 percent of the underlying company’s issued shares, excluding treasury shares.

Structured warrants must first be registered with the SEC before they can be offered or distributed to investors.

Issuers must file a registration statement and prospectus disclosing material information, including the terms and conditions of the warrants.

Their listing and trading will likewise be subject to the rules of the relevant exchange, which cannot approve structured warrants for listing unless they have been registered with the SEC.

Structured warrants will generally carry a maximum tenor of three years from issuance, unless the SEC allows a longer period.

The SEC said warrants that have been fully exercised before maturity may be delisted after the issuer notifies the Commission and the exchange.

An issuer may also seek early delisting if all outstanding warrants are held by the issuer or its appointed market maker and none are held by the public.