SEC Reforms: From Regulatory Intent to Market Impact

By Atty. Pedro H. Maniego Jr., FICD

Fellow

Institute of Corporate Directors

Despite recent economic progress, the Philippine capital and stock markets still fall behind its ASEAN neighbors. Compared to Singapore, Thailand, Malaysia, and Indonesia, the Philippines has a lower market capitalization-to-GDP ratio, less trading activity, fewer listed companies, and narrower investor participation—factors that directly influence companies’ ability to secure long-term funding and attract investment. The PSE’s market cap is only 52-76% of GDP, much lower than Singapore’s ~200%, Thailand's ~130%, and Malaysia's ~90%. Persistent low numbers of IPOs and limited market activity continue to hamper growth for the country.

Against this backdrop, the recent reforms rolled out by the Securities and Exchange Commission merit close attention and well-deserved commendation. By lowering the cost of doing business while strengthening investor protection, the SEC has taken concrete steps to address structural constraints that have long limited market depth, participation, and competitiveness.

These reforms respond to concerns repeatedly raised by companies, investors, and directors alike: that excessive friction, uneven processes, and regulatory uncertainty can discourage market participation even when firms are willing and able to comply. The SEC’s initiatives reflect a clear shift toward efficiency, predictability, and credibility—qualities that are indispensable if the Philippines is to narrow the gap with its regional peers and strengthen its capital formation ecosystem.

Listening to the Market’s Longstanding Concerns

For decades, business groups and investors have delivered a consistent message: regulatory quality is judged not just by the substance of the rules on paper, but by their clear, consistent, and efficient implementation. Recent SEC measures—particularly those streamlining processes, expanding digital platforms like ZERO, and rationalizing fees and timelines—directly address these longstanding concerns

Equally important, improvements in efficiency have not come at the expense of governance standards. Enhanced disclosure requirements, clearer accountability frameworks, and strengthened investor safeguards reaffirm the SEC’s core mandate: to promote fair, orderly, and transparent markets. This balance deserves recognition, as it reflects a mature regulatory approach aligned with international best practice.

A Boardroom Perspective: Why These Reforms Matter

These reforms strongly resolve challenges that have often come up in boardroom conversations. While serving as a director for several companies, ICD Trustee from 2015 to 2024, and ICD Chair in 2024, I repeatedly encountered serious concerns from colleagues about regulatory delays, ambiguous requirements, and the mounting costs of compliance—especially for expanding businesses considering their initial entry into the capital market.

In many cases, hesitation was not about governance readiness or strategic intent, but about uncertainty: How long would approvals take? Would requirements change midstream? Would the costs justify the effort? These questions have discouraged otherwise well-managed companies from pursuing listings, bond issuances, or other market-based financing options. The SEC’s recent reforms directly address these challenges-- reducing uncertainty and making participation more feasible while maintaining standards.

Now, as Chair of ICD’s Thought Leadership Committee, I view these reforms not simply as incremental improvements, but as a meaningful opportunity—one that boards should actively engage with rather than passively observe.

Lowering Barriers While Raising Confidence

The strength of the SEC’s current reform agenda lies in its balance. Streamlined procedures, expanded use of digital platforms, and lower transaction costs make compliance more manageable, especially for small and mid-sized enterprises. Furthermore, the transparency fostered by clearer rules on disclosure, beneficial ownership, and accountability strengthens investor confidence—an indispensable ingredient for deeper and more liquid markets.

Capital markets function best not when regulation is relaxed, but when it is clear, efficient, and trusted. By advancing both efficiency and investor protection, the SEC is laying the groundwork for broader participation and increased market activity.

A Call to Action for ICD and the Business Community

Regulatory reform creates opportunity; leadership determines whether that opportunity is realized.

For ICD, this is an opportune moment to:

• Further strengthen board education on capital market readiness and investor-centric governance;

• Encourage directors to view sound disclosure and compliance not merely as obligations, but as strategic enablers of credibility and growth; and

• Serve as a constructive partner to regulators by providing grounded, experience-based feedback as reforms are implemented.

For the business sector, the challenge is equally clear:

• Reassess growth and financing strategies in light of lower costs and clearer regulatory pathways;

• Invest in governance systems that meet heightened investor expectations; and

• Act early and decisively recognizing that first movers often set benchmarks for the rest of the market.

Boards should not wait for the next reform cycle. The regulatory environment has already improved, and companies that respond proactively will be better positioned to access capital, manage risk, and compete more effectively—both domestically and within the ASEAN region.

From Reform to Results

The SEC’s reforms mark an important inflection point. They reflect an understanding that economic growth, investor protection, and good governance are mutually reinforcing—not competing—objectives, with the potential to elevate our markets to ASEAN prominence.

For ICD members and the broader business community, the task now is to convert reform into results. If boards engage proactively and companies step forward, these reforms can help close the gap with regional peers and position the Philippine capital market as a more credible and dynamic contributor to long-term economic activity.