SEC explores revival of futures market


The Securities and Exchange Commission (SEC) is exploring the revival of a futures market in the Philippines decades after a commodity and currency futures bourse was shut down due to irregularities.

In a statement, the SEC said it is looking to develop a futures market to expand options for investors and further deepen the capital market.

In preparation for the possible establishment of a domestic derivatives market, the SEC conducted a Derivative Market Oversight and Regulatory Scheme Training with the United States Commodity Futures Trading Commission (CFTC), in collaboration with the Asian Development Bank (ADB), last August 12 to 16.

The CFTC, represented by Deputy Director Kevin C. Piccoli during the workshop, is an American independent federal agency that regulates the derivatives markets, with a robust international technical assistance program that aims to guide countries in the development of a commodities market within their jurisdictions.

“The Derivative Market Oversight and Regulatory Scheme […] complements our ongoing efforts to develop regulatory frameworks for commodity futures and an electricity derivatives market, in pursuit of our mandate to deepen capital markets,” SEC Commissioner McJill Bryant T. Fernandez said.

The program tackled fundamental aspects of derivatives such as legal frameworks and regulatory elements, investor protection and regulation, and contract design and transaction clearing mechanisms. 

It aimed to initiate discussions and address concerns among focal SEC personnel and key industry and government stakeholders on the formulation of a derivatives market in the Philippines. 

The week-long training included participants from the SEC, as well as representatives from government agencies and the private sector, namely The Philippine Stock Exchange, Inc., Bangko Sentral ng Pilipinas, Department of Agriculture, Department of Energy, Independent Electricity Market Operator of the Philippines, Inc., Philippine Dealing & Exchange Corp., University of the Philippines Law Center - Institute of Government and Law Reform, and Power Sector Assets and Liabilities Management Corporation.

“Developments in the derivatives market as a whole have contributed to more complete financial markets, improved market liquidity, and increased the capacity of the financial system to price and bear risk effectively– ultimately, ushering in stronger economic growth over time,” Commissioner Fernandez said. 

In the same week, the SEC held extensive strategic discussions with key representatives of the ADB on possible areas of collaboration and support in pursuit of capital market development and reforms for the coming years.

“We thank our partners from the ADB and CFTC for joining our efforts to boost the Philippine capital market,” SEC Chairperson Emilio B. Aquino said. 

He added that, “The SEC remains committed to finding new and innovative solutions to further develop the capital market in order to provide businesses more accessible funding for their growth, as well as more investment options that cater to the different risk profiles of the investing public.”

The SEC also continues its active participation in the ASEAN Capital Market Forum (ACMF) and collaborative regional activities and projects on sustainable finance and capital market development.