The Philippine Stock Exchange could more than triple the minimum capitalization of all brokers to 100 million pesos ($2 million) as it seeks to prevent a repeat of a theft that brought down a 50-year-old securities company.
The proposal will be presented to the bourse’s board at the start of 2020 and is meant to ensure that brokerage firms can afford enough employees across different functions, PSE President and CEO Ramon Monzon said.
The move comes after R&L Investments Inc., one of the oldest brokerages in the country, reported last month that a clerk managed to siphon off more than 700 million pesos in clients’ shares since he handled trading, settlements and record-keeping years earlier.
While the Securities and Exchange Commission in the country required new brokers to put up at least P100 million in capital in 2003, those who started before that were subject to the old requirement of a minimum capital of just 30 million pesos.
Brokers will likely be required by the PSE to raise their capitalization over several phases, Monzon said. Those that fail to reach the threshold could be restricted from clearing operations, he said.
“There will be some consolidation” among the Philippines’ 132 brokers as a result of the rule change, Monzon said, adding that the Philippines has “too many” brokers for the size of its market.