Starting this month, former Transportation Secretary Jaime “JJB” Bautista is wearing an altogether different hat—that of overseeing financial statements, ensuring compliance with reporting standards, and making sure the Philippine Stock Exchange (PSE) operates in accordance with best practices.

Seasoned banker Vicente “Vicot” Panlilio has turned over the baton to JJB as the PSE’s audit committee chair. This role is right down the alley of the former president of the flag carrier, Philippine Airlines, whose financial sharpness was incubated when he was an auditor at SGV, the country’s largest auditing and multidisciplinary professional services firm.

JJB, along with Cecile Ang, are welcome additions who—based on a cursory survey I’ve conducted—will bring diverse perspectives and pump new blood into the 15-man board of the PSE. As an SRO, the board’s composition is currently dominated by non-brokers.

Yes, Virginia, JJB and Ms. Ang could be the adrenaline that sparks investors’ interest in an otherwise sluggish equities market.  

Oh, by the way, did you know that when you search for “SRO,” Google provides several definitions? There is Single Room Occupancy, a type of low-cost housing aimed at residents with minimal incomes; and Standing Room Only, which refers to a well-attended gathering.   The third refers to Stock Rights Offering, a financial option that allows existing shareholders to buy additional shares at a discounted price. Then there’s Senior Responsible Owner, the person responsible for ensuring a project meets its objectives and delivers projected benefits.   And finally, there is Self-Regulatory Organization. This has been the status of the PSE since 1998, giving it the power to set industry standards and regulations through its own efforts.  

In my exchanges with a good number of market players, I’ve observed divergent views—though most are on the opposing side—regarding the present structure of the PSE, where brokers comprise only one-third of the board members.

One opposing view cites that the current PSE setup, dominated by non-brokers, weakens the idea of market self-governance. In principle, as an SRO, stronger broker representation should be a core part of its governance.

I fully agree that stronger broker presence is essential, as they are the very fabric of the exchange. They are the ones directly executing trades, managing client risk, and implementing rules on the ground. Their decisions are anchored in market reality.

While policies may be sound from a governance standpoint, the risk of becoming detached from actual market realities still exists. Simply put, an effective SRO needs both strong independent directors and a meaningful balance of broker participation.  

“With the board dominated by non-brokers, the concern is that the model slowly shifts from true ‘self-regulation’ toward something closer to external regulation, but without the same operational accountability,” laments one market player.

Aligning the board structure with its SRO mandate will strengthen both credibility and efficiency. To be clear, I am not advocating for a broker-led exchange, but rather a healthy mix of those involved in equities, business, and industry expertise so that decisions remain free from conflict of interest.

From where I sit, closer collaboration with brokers is crucial at a time when markets are facing liquidity challenges, fewer initial public offerings, and increasing capital outflow.

This is the challenge JJB faces as the overseer of exchange best practices: how to improve operations and systems to ease protocols and make investing in the stock market more attractive.

Before I end, I’ve heard along the market corridors that the PSE has substantially increased its monthly terminal fee to ₱23,000. It is a decision that puzzles most brokers and traders, as it seems to run counter to the PSE’s objective of expanding business.