The Philippine Association of Securities Brokers and Dealers Inc. (PASBDI) has opposed the plan by the Securities and Exchange Commission (SEC) to impose a mandatory 10-year term limit on broker directors of exchanges, arguing the move would strip the local bourse of critical expertise.

In a position paper filed with the regulator, the industry group—which represents trading participants of the Philippine Stock Exchange (PSE)—warned that the proposal fails to recognize the structural role of broker directors.

The association is currently chaired by Vivian Yuchengco, who has served as a board director of the PSE for 28 years. While PASBDI stated it supports the SEC’s governance reform mandate, it argued that the specific measure risks exacerbating governance deficiencies that currently impede the development of the local capital market.

The group’s opposition is based on an assessment against regional benchmarks and recent reviews by the Organization for Economic Cooperation and Development (OECD).

According to the PASBDI, the OECD’s 2024 Capital Market Review of the Philippines highlighted the need for evidence-based reforms to strengthen oversight, yet found no recommendation for mandatory tenure caps on elected broker directors.

Instead, the OECD’s primary governance suggestions focused on improving the enforcement of existing rules, enhancing audit committee independence, and addressing related-party transactions.

PASBDI contended that the proposed circular would make the PSE the only exchange among its ASEAN peers to enforce such limits on elected broker directors. The group noted that term limits are typically designed to protect board independence, whereas broker directors are elected specifically for their sustained market expertise.

It further argued that existing safeguards are sufficient, as broker directors are already prohibited from forming a majority of the PSE board, ensuring that independent directors maintain control in line with regional standards.

Beyond governance concerns, the association claimed the term limit would violate shareholder rights under the Revised Corporation Code.

By automatically disqualifying a director based solely on years of service—regardless of shareholder confidence—the SEC would be substituting regulatory judgment for shareholder accountability, the group said.

According to PASBDI, the Philippine stock market continues to underperform its Southeast Asian neighbors in several metrics, including the number of listed firms, secondary market liquidity, and transaction costs.

PASBDI argued that the “systematic displacement” of experienced professionals would hinder efforts to make the exchange more attractive for new listings.

Rather than a tenure cap, the association recommended the SEC prioritize annual board performance evaluations and the strengthening of “fit-and-proper” nomination standards.

While opposing limits for broker directors, the group indicated support for tenure limits on independent directors, suggesting a cap of up to 12 years to align with benchmarks set by the Singapore Exchange and Bursa Malaysia.