The Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE) are moving to revitalize the domestic capital market by introducing rules for Global Philippine Depository Receipts, which would allow local investors to trade foreign stocks in the local currency.

SEC Chairman Francis E. Lim said in an interview that the regulator also plans to revive the registration and trading of standard Philippine Depository Receipts. These instruments allow foreign capital to flow into listed companies that face strict nationality restrictions under Philippine law.

GPDRs are negotiable financial certificates issued by a custodian bank, representing ownership of a specific number of foreign company shares traded on a local stock exchange.

They allow investors to buy foreign stocks without dealing with foreign currency or international brokers, trading instead in their local currency and market.

On the other hand, PDRs are financial instruments traded on the PSE that grant holders the economic rights—such as dividends—of the underlying company's shares, but do not confer ownership or voting rights. Often used by companies to allow foreign investment in restricted industries (such as media).

“I want depository receipts backed by foreign equities. Let’s say, Google shares of stock which is listed in the US. It’s just like the ABS-CBN (Philippine) depository receipts, but the underlying stock is Google shares. What will be tradable here (PSE) is the depository receipts,” he noted.

PDRs of ABS-CBN Corporation and GMA Holdings are currently being traded at the PSE, while online media firm Rappler also had PDRs, but these were controversial as it was alleged that Rappler’s PDRs gave foreign investors control over the company.

The Court of Appeals has already overturned the SEC’s shutdown order (issued under the previous administration) and affirmed that the company has not violated the Anti-Dummy Law and is 100 percent Filipino-owned.

Lim, the lead counsel of Rappler in the case, noted that the SEC’s move at that time had scared off anyone who may have been interested in registering PDRs and noted that, now that the case has been resolved, this financial instrument can be revived to help inject more life into the local stock market.

“Reviving PDRs is actually a smart move. The structure itself isn’t the villain — the politics around it were. Globally, PDR‑type instruments are common because they let firms raise capital without breaching foreign‑ownership rules. So yes, if the SEC brings them back with clearer rules and stronger investor protections, that’s a plus for the market,” said Reyes Tacandong & Co. Senior Adviser Jonathan Ravelas.

He added, “Will investors bite? If the underlying company is solid and the terms are transparent, absolutely. Investors care about clarity and stability. Remove the political baggage, tighten the framework, and PDRs can be a useful bridge for firms that want more capital without giving up control.

Chinabank Capital Corporation Managing Director Juan Paolo Colet said “Well-structured PDRs are instruments that can provide foreigners with equity-like investment exposure to listed companies with nationality restrictions. As long as safeguards are in place, these are perfectly legitimate securities that can help deepen our capital markets and facilitate fundraising, especially in sectors with foreign ownership limits.”

“But given how the issue of PDRs was used against media companies like ABS-CBN and Rappler, foreign investors might approach any revival of PDRs with caution. I think we need a very clear Supreme Court ruling upholding the legality of PDRs to remove any doubt about their viability,” said Colet who is also a professor at the University of the Philippines College of Law.

COL Financial Chief Equity Strategist April Lynn Tan also observes that, “Right now, it’s not as critical because the foreign ownership (in the local market) is low. But, over the long term, having that option is good.”

Meanwhile, Lim said GPDRs can also be of use to Jollibee Foods Corporation, which is planning to spin off its overseas operations into a separate company, Jollibee International, which it intends to list on a US bourse.

It plans to issue shares of Jollibee International to JFC stockholders as a property dividend, but this has raised questions on how the Filipino shareholders can trade the stock in the US, as this will mean having to open accounts with US stock brokers or digital platforms and will also subject them to US taxes.

Lim said that Jollibee International shares can be used as the underlying stock for GPDRs, which can then be listed at the PSE, and allow the trading of the shares in the PSE.

“Yes, it’s possible to use GPDRs so that Jollibee International shares can be indirectly traded on the PSE,” said Colet.

The PSE hopes to launch GPDRs as a derivative product with the SEC this year. PSE President and CEO Ramon S. Monzon said their efforts to develop a regulatory framework governing the trading of GPDRs received a boost with the passage of the Capital Markets Efficiency Promotion Act (CMEPA).

“We're glad that CMEPA has introduced a very specific provision expanding the definition of securities to include other securities in addition to stocks. So, I guess Depository Receipts and derivatives should be covered by that,” he said.

He noted that, “So that ambiguity has been addressed…so now we just need to really come up with the regulatory framework for the trading, the settlement, and the investment protection component of the (GPDRs).”

The PSE said holders of GPDRs will have the option to convert them into equivalent shares or units of the underlying security. This innovation will allow local investors to diversify their portfolios by trading foreign securities within the domestic market.

Philippine listed companies will also be traded in other exchanges, which in turn should generate additional liquidity for the local market, Monzon said.