THE Securities and Exchange Commission (SEC) said the proposed 10-year cumulative term limits for broker directors align the governance of exchanges with international best practices, specifically those established by the International Organization of Securities Commissions (IOSCO).
In accordance with a draft memorandum circular released on March 3, the Commission said it intends to limit broker directors, or individuals representing trading participants on an exchange board, to a maximum cumulative service period of ten years.
The SEC said that the move is crucial to make sure “fair and effective representation,” allowing more qualified brokers the chance to supply “latest perspectives” inside the leadership of an exchange.
Under the proposed guidelines, a broker director could also be elected for a one-year term. Nonetheless, after serving a cumulative period of 5 years (whether consecutive or intermittent), the director must observe a compulsory two-year cooling-off period before becoming eligible for re-election.
Once this cooling-off period is accomplished, a director may serve a fresh term of as much as five additional years, provided they don’t exceed the general 10-year maximum limit.
For the needs of calculation, any service exceeding six months in a given yr might be counted as one full yr of service.
The SEC sets forth stringent financial and administrative sanctions to implement compliance with term limits for broker directors.
The essential penalty imposes a nice of P1 million per broker director for annually the violation occurs. As well as, a unbroken monthly nice of P30,000 applies for each month a director stays in office beyond the permitted term.
For repeated violations, the implications escalate. A 3rd or subsequent offense could lead on to the suspension or revocation of the exchange’s primary or secondary operating license, reflecting the SEC’s commitment to maintaining strict governance standards and accountability inside the industry.
The Commission further said that any schemes designed to bypass these term limits might be penalized accordingly.
The SEC noted that term limits are already in place for independent directors and people representing other market participants. Aligning broker directors with these standards follows IOSCO principles, which suggest that the length of board terms is a critical think about the power of shareholders to actively take part in the nomination and election process.
The proposal is currently in a public exposure phase. The Commission is inviting stakeholders to submit comments, suggestions, and inputs on the draft through March 19, 2026.
Once finalized, the principles will take effect 15 days after complete publication within the Official Gazette or newspapers of national circulation.
A transitory provision will allow incumbent broker directors to finish their current terms before the brand new limits and cooling-off requirements are applied. — A.G.C. Magno