SEC urged to defer commission order          

MANILA, Philippines — Stockbrokers have appealed to the Securities and Exchange Commission (SEC) to defer the removal of minimum commission fees on stock trades—at least until the stock transaction tax has been reduced—to ensure the welfare of both brokers and investors amid “challenging market conditions.”

The Philippine Association of Securities Brokers and Dealers Inc. (PASBDI) said the reduction of commission fees and a bill proposing lower stock transaction tax from the current 0.6 percent to 0.1 percent must be simultaneously implemented to spur trading activity.

“We think that the reduction of the broker commission charge is not sufficient to materially improve the volume of transactions in the market, but when done together with the reduction of sales tax, could be a more meaningful reform that will be appreciated by a wider investor base,” the group said in an April 18 letter to SEC Chair Emilio Aquino, Philippine Stock Exchange (PSE) president Ramon Monzon, Finance Secretary Ralph Recto and Investment and Economic Affairs czar Frederick Go.

PASBDI, a 50-year-old organization that aims to develop the local securities market, has 122 PSE trading participants as its members.

READ: SEC lifts minimum brokers’ commission for stock trades

Lawmakers are pushing for a reduction in stock transaction tax to 0.1 percent through House Bill No. 9277. The House of Representatives approved the bill, which was authored by Ways and Means Committee chair Joey Salceda, on third and final reading last month.

Improving transactions

PASBDI’s letter came after the SEC had issued a memorandum circular allowing brokers to set their own commission schedule for transactions with investors, removing decades-old minimum fees that the corporate watchdog earlier required.

Under a 1977 resolution of the SEC, brokers previously charged a minimum commission of 1.5 percent of the value of a trade transaction. Meanwhile, guidelines issued by the PSE prescribed a minimum commission ranging from 0.25 percent to 0.05 percent of the value of a trade transaction.

An investor holding a stock certificate wishing to trade the shares needs to go to a broker who will check the authenticity of the ownership and documentation. Brokers then endorse the shares to a transfer agent.

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“The association is committed to supporting the membership through market landscape changes and through continuing investments in technology, education, and collaboration with other industry stakeholders to promote the long-term sustainability of the stock market ecosystem,” PASBDI said.

The group likewise lamented its declining number of broker-members “due to challenging market conditions.”

For its part, the SEC said the order to remove the minimum commission has taken into account the rise of online trading platforms, which have paved the way to more cost-efficient transactions. It also took its cue from other neighboring jurisdictions that do not prescribe such a minimum stock broker’s commission.