The Philippines’ influential business organizations threw their weight behind the Securities and Exchange Commission (SEC) proposal to impose term limits on broker directors of securities exchanges, arguing the move is vital to bolstering market credibility and governance.

In a joint statement released Thursday, March 19, the Institute of Corporate Directors, Financial Executives Institute of the Philippines, Management Association of the Philippines, Capital Markets Development Foundation Inc., and the Investment House Association of the Philippines said the draft memorandum circular represents a constructive step toward reinforcing board independence.

The groups noted that the SEC’s plan to curb long-tenured directors would help mitigate potential conflicts of interest within the country’s financial infrastructure.

The organizations said that the securities exchange functions as more than a standard private corporation. Under the Securities Regulation Code, these entities operate as self-regulatory organizations tasked with monitoring trading activities and supervising the very brokers who sit on their boards.

The dual role creates a unique governance environment where the SEC maintains broad authority to ensure that board structures prioritize fairness and the public interest over narrow corporate goals.

According to the business leaders, the introduction of tenure limits does not infringe upon shareholder rights but rather activates them. By requiring stockholders to periodically choose from a wider pool of qualified brokers, the exchange boards stand to benefit from fresh perspectives and heightened accountability.

The groups further argued that while the Revised Corporation Code provides a general framework for Philippine companies, regulators are well within their rights to impose more stringent standards on institutions with systemic public responsibilities, citing similar rigorous requirements already in place for the banking sector.

The joint statement identified four primary objectives served by the SEC proposal: preventing the concentration of influence among a small circle of long-serving directors, reducing the risk of regulatory capture through mandatory board renewal, boosting investor confidence, and ensuring that a more diverse range of brokers has the opportunity to serve in leadership roles. The groups pointed out that such limits are already a staple of global financial markets, where entrenched interests are viewed as a barrier to modernization and transparency.

The organizations concluded that the SEC’s supervisory authority under the Securities Regulation Code necessitates a balance between fair representation for brokers and the broader mandate of protecting market integrity.

They characterized the proposed circular as a valuable instrument for reinforcing the resilience of Philippine capital markets and expressed support for the commission’s ongoing efforts to align local governance with international best practices.