The Securities and Exchange Commission (SEC) finalized rules imposing a maximum 10-year cumulative term limit for broker-directors of the Philippine Stock Exchange (PSE), standing firm against pushback from local stockbrokers while offering a two-year transition window.

Under SEC Memorandum Circular No. 17, Series of 2026, the regulator established strict compliance guidelines and heavy financial penalties for any exchange that breaches the new tenure limits. Violators face a basic penalty of ₱1 million per broker-director per year, alongside a continuing monthly fine of ₱30,000 for as long as the non-compliant director holds the seat.

A third or subsequent offense could lead to the suspension or revocation of the exchange’s primary or secondary operating licenses.

The regulation dictates that a broker may serve on an exchange’s board for a maximum cumulative period of 10 years. Directors must observe a one-year cooling-off period—shortened from an originally proposed two years—after an initial five years of cumulative service before becoming eligible for re-election to serve their remaining five years.

To ease the impact, the corporate regulator granted a two-year transition period, allowing incumbent broker-directors who would otherwise be immediately disqualified or forced into a cooling-off period to complete their current terms. Affected individuals remain eligible for nomination and election in the two succeeding annual board races. However, the SEC reserved the right to shorten this transition period through subsequent issuances for good cause or under specific conditions.

During this interim phase, the SEC ordered the PSE to undertake a phased reconstitution of its board to foster broader representation and diversity. The bourse must actively recruit two foreign independent directors with international market expertise, choose broker-directors representing foreign firms, and appoint individuals with investment banking or capital markets experience to enhance minority shareholder protection.

SEC Chairman Francis Lim said in a statement that strong institutions require regular renewal, independent oversight, and broader representation. He noted that by setting reasonable term limits, the commission seeks to strengthen market governance, mitigate potential conflicts of interest, and level the playing field while aligning local frameworks with international standards. The SEC added that the rules match governance principles set by the International Organization of Securities Commissions.

The policy will eventually reshape the leadership of the local bourse, directly impacting four veteran market figures. While they can serve for two more years under the transition guidelines, long-standing directors will face mandatory retirement from the board. Ma. Vivian Yuchengco, the former PSE chairwoman representing First Resources Management and Securities Corporation, will be barred from re-election after 28 years on the board.

Eddie Gobing of Lucky Securities, who has served 25 years, and Wilson Sy of Wealth Securities, with 12 years of service, will also face disqualification. Diosdado Arroyo, who has served six years, must step down for a one-year cooling-off period before he can seek election for his remaining four years.

The regulatory overhaul extends beyond broker-directors. The SEC recently implemented separate rules limiting the tenure of independent directors of public corporations to nine years. This policy affects current PSE Chairman Jose T. Pardo, who has served as an independent director of the local bourse for more than 15 years.

The Philippine Association of Securities Brokers and Dealers Inc., an industry group chaired by Yuchengco, lodged formal opposition to the rules during the drafting stage. The association argued that the measure fails to reflect the structural role of broker-directors and risks worsening governance gaps.

The group also warned that the circular makes the PSE the only exchange in the Association of Southeast Asian Nations to mandate tenure limits on elected broker-directors, claiming the restriction violates shareholder rights guaranteed under the Revised Corporation Code.