GLOBAL BROKERAGE infrastructure provider Alpaca said it’s engaging with regulators and market participants to explore ways to expand Filipino retail investors’ access to foreign securities, citing strong demand.
“The demand for access to foreign securities within the Philippines exists, and it is critical,” Alpaca Singapore Chief Executive Officer Rohit Mulani told BusinessWorld in a virtual interview.
Citing data from the US Treasury, the corporate said Filipino investors currently hold greater than $3 billion in US securities. Nevertheless, within the absence of an area framework for accessing these investments, many investors have turned to offshore platforms, a few of which have recently faced restrictions from the Securities and Exchange Commission (SEC).
“So, we’re engaging with the SEC and the Philippine Stock Exchange (PSE) and brokers on the bottom to see how you can open up the market in order that retail investors within the Philippines can get access to the US market,” Mr. Mulani said.
He said the US market is amongst the most important and most liquid globally and has generated significant wealth over time.
Mr. Mulani added that interest in international markets amongst Filipino retail investors is partly driven by access to globally recognized corporations corresponding to Apple, Netflix, and Starbucks. These markets also host corporations developing emerging technologies that might influence industries worldwide, including within the Philippines.
“We would really like to be sure that retail investors within the Philippines which have interest within the product will have the opportunity to access those markets,” he said.
“We imagine that everyone on the earth must have access to those technologies and will have the opportunity to speculate in these corporations. So, we’re working with brokers, we’re engaging with regulators, and attempting to pioneer access for the US markets into the Philippines,” Mr. Mulani added.
He said fractional share trading in the US allows investors to purchase portions of stocks for as little as $1, lowering the associated fee of entry and enabling diversification with smaller amounts. In contrast, the Philippine market continues to make use of board lot sizes with set minimum investments per stock.
Mr. Mulani said reducing such entry barriers could help broaden investor participation.
“The barrier for any individual to becoming an investor is critical, where they would want larger amounts of capital to have the opportunity to speculate in 10 corporations, they would want to purchase 10 lots, versus within the US, to accumulate a portfolio of 10 corporations, you would like as little as $10,” he said.
“So, bringing that barrier of entry down may be very, very significant. And it’s something that we’re quite enthusiastic about.”
Alpaca said broader retail investor participation is linked to overall economic growth, noting that expanding access to financial services could increase participation in each Philippine and global capital markets.
“And so, we fundamentally imagine, based on our experience and data that we’ve seen, when any individual becomes an investor within the US markets, in addition they change into an investor within the local markets. And so, we predict that this is nice for the economy, this is nice for the local capital markets, and it’s good for the retail investor as well,” Mr. Mulani said.
“We would really like to have more people participating within the capital markets within the Philippines, and this isn’t limited to the US markets. We would really like people to be accessing and participating within the local markets as well,” he added.
Last 12 months, GoTyme Bank, a three way partnership between the Gokongwei Group and Tyme Group, launched a cryptocurrency investment feature in partnership with Alpaca, expanding access to digital assets as crypto adoption within the Philippines continued to grow. — Alexandria Grace C. Magno