MANILA, Philippines — Trading activity in the Philippine capital market gets a much-needed boost with the issuance by the Securities and Exchange Commission (SEC) of the rules establishing a regulatory framework for market-making.
The rules, issued through Memorandum Circular 28 Series of 2026, aligns local market practices with international standards to enhance liquidity, improve price discovery and support capital formation.
SEC chairperson Francis Lim said the framework is expected to help reduce frictions in secondary market trading and support more efficient price discovery.
It is also seen fostering a more competitive trading environment for both domestic and international investors.
“Establishing a robust market making framework is an important milestone in our efforts to boost trading activity in the Philippine capital market,” Lim said.
Finance Secretary Frederick Go, for his part, said the rules represent a long-awaited reform that will deepen the Philippine capital markets and align the country’s regulatory framework more closely with 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.
The SEC defines market making as a globally adopted mechanism wherein trading participants provide simultaneous posting of two-way quotes, or both the buying price and the selling price, for the purpose of ensuring liquidity and maintaining a fair and orderly trading market.
The commission said the rules outline the eligibility requirements for market makers, their disclosure, record keeping and reporting obligations, incentives, as well as investor protection and market integrity safeguards.
It applies to market making activities in equity and fixed income securities listed, traded or enrolled on an exchange under jurisdiction of the SEC.
Activities in government securities governed by the Bureau of Treasury (BTr)’s Primary Dealer framework are not covered by the rules, unless and until the SEC, in coordination with the BTr, expressly extends its application.
To qualify as a market maker, trading participants must be accredited or recognized by the relevant exchange and must have with a minimum unimpaired paid-up capital of at least P150 million, or such higher amount as the SEC may prescribe.
The rules indicate that applicants must also demonstrate operational capacity and a satisfactory track record, among other requirements.
At least one specialist with a minimum of three years of relevant securities trading or market-making experience, or an equivalent qualification based on certifications, training and demonstrated proficiency must be designated by each accredited firm.
Under the rules, market makers for equity securities must maintain firm two-sided quotations for a minimum period of the trading session, as set by the exchange, and ensure active presence and the required market participation during that period.
In fixed income market making, the relevant exchange shall establish quoting parameters based on market structure, type and characteristics of the security, trading mechanisms, prevailing market conditions and the relative liquidity of each designated security.
Exchanges will grant incentives to market makers, which may include reduced transaction fees, liquidity rebates and access to enhanced trading facilities, to encourage effective performance of market making functions.
The SEC said a six-month transition period from the effectivity of memorandum circular would be afforded to trading participants already engaged in market making to comply with the new rules.