The Philippine Stock Exchange (PSE) is planning a drastic reduction in capitalization requirements for exchange-traded fund (ETF) issuers, cutting the threshold to as low as ₱1 million from ₱250 million, in a regulatory overhaul aimed at reviving the dormant asset class.

The local bourse is preparing to release a series of proposed amendments to its ETF framework for public consultation. Under the draft rules, the baseline capitalization requirement for issuers will drop to ₱50 million.

The exchange will allow an even lower floor of ₱1 million for investment firms that boast at least a five-year track record.

Under the revised rules, Collective Investment Schemes—including umbrella funds and Unit Investment Trust Funds (UITFs)—may now list multiple sub-funds under a single ETF issuer. The Exchange will also accept the listing of different types of securities, such as fund units, in addition to traditional shares of an ETF company. Actively managed ETFs will likewise be allowed to list.

Furthermore, the market maker for an ETF will no longer need to be an Authorized Participant (AP) under the proposed amendments. The revised rules will also allow ETF issuers to appoint just one AP to handle the creation and redemption of ETF shares or units. Additionally, the amendments introduce clearer guidelines for ETFs with underlying indices that track foreign exchange-listed securities.

“We are working on reviving our ETF market and we hope these rule changes will provide the impetus for asset managers to structure and list ETFs,” said PSE President and CEO Ramon S. Monzon.

The PSE is also developing new rules for a Negotiated Trade Reporting Facility, which will allow brokers to execute trades similarly to negotiable trading facilities on other global exchanges. This facility aims to boost market liquidity by ensuring a more efficient flow of funds. Both the ETF and Negotiated Trade Reporting Facility rules will be released to the public for consultation.

An ETF is a pooled investment vehicle that holds a basket of securities and trades on a stock exchange just like an individual company's stock. By buying shares of an ETF, investors gain fractional ownership of all the underlying assets held by the fund.

Unlike mutual funds, which are priced only once at the end of the trading day, ETFs can be bought and sold throughout the day at fluctuating market prices. Most ETFs are passively managed, designed to mirror the performance of a specific financial benchmark (such as the PSEi or a sub-index) rather than trying to beat the market.

Meanwhile, the PSE and its wholly owned subsidiary, the Philippine Depository and Trust Corp. (PDTC), are collaborating with multiple stakeholders to amend the PSE's Securities Borrowing and Lending (SBL) rules. The changes will allow the execution of directed pooled lending (i.e., bilateral SBL where the lender and borrower are identified) through the PDTC’s SBL facility.

This new SBL model is expected to make it easier for foreign institutions to participate in the domestic SBL market. The PSE submitted the amended SBL rules incorporating directed pooled lending to the Securities and Exchange Commission on April 16, 2026.

The PSE and PDTC are likewise engaging with pension funds, index funds, and insurance companies to encourage them to participate in the PDTC’s Lending Agency Service and populate the lending pool.