SEC unveils market liquidity reforms

The Department of Finance welcomed the Securities and Exchange Commission’s new Rules on Market Making, establishing the Philippines’ first comprehensive regulatory framework for the practice.

The rules aim to improve market liquidity, enhance trading efficiency and encourage greater investor participation in the Philippine capital markets.

Finance Secretary Frederick D. Go said the reform is expected to deepen the domestic capital markets and bring the country’s regulatory framework closer to international standards.

“A deeper and more liquid capital market gives investors greater confidence to participate, enables businesses to raise more capital, and channels private investment into productive sectors that create jobs and support long-term economic growth,” Go said.

Market making involves facilitating securities transactions by ensuring the availability of buy and sell quotations. The practice supports price discovery, orderly trading and capital formation while making it easier for investors to transact.

The new rules cover equity and fixed-income securities and set common requirements for market makers, including capital and licensing standards, disclosure, recordkeeping and reporting obligations. They also introduce safeguards to protect investors and preserve market integrity.

Under the framework, only trading participants accredited or recognized by the relevant exchange and with at least 150 million in unimpaired paid-up capital, or a higher amount set by the SEC, may act as market makers.

Each accredited firm must also designate at least one specialist with three years of relevant securities trading or market-making experience, or equivalent qualifications based on certifications, training and demonstrated proficiency.

To encourage participation, exchanges are expected to offer incentives such as reduced transaction fees, liquidity rebates and enhanced access to trading facilities. They will also determine which securities qualify for market making based on the needs of different market segments.

Previously, self-regulatory organizations implemented their own market-making policies under SEC supervision. The new rules establish a common regulatory baseline across exchanges to promote consistent practices and alignment with international standards.

The initiative forms part of the government’s broader efforts to deepen the Philippine capital market, mobilize private investment and expand access to long-term financing.

The DoF said it would continue working with the SEC and other financial regulators on reforms to strengthen the financial system and support business expansion, job creation and sustained economic growth.