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Manila Bulletin devider Business devider The Stock Market devider SEC unveils proposed market-making framework to boost liquidity

SEC unveils proposed market-making framework to boost liquidity

Published Jun 22, 2026 03:14 pm
SEC Chairperson Francis Lim
SEC Chairperson Francis Lim

The Securities and Exchange Commission (SEC) is drafting a regulatory framework for market making in listed securities as part of its ongoing efforts to revitalize the capital market and align local market practices with international standards.

In a statement on Monday, June 22, the SEC said the framework is being drafted in coordination with the Philippine Stock Exchange (PSE) and Philippine Dealing & Exchange Corp. (PDEx).

Market making is a globally adopted mechanism that enhances liquidity, facilitates efficient price discovery, and promotes orderly trading, thereby contributing to capital formation and overall capital market development.

Last June 17, the SEC issued for public comment the draft rules on market making, which set out the eligibility requirements for market makers, their disclosure, recordkeeping, and reporting obligations, as well as investor protection and market integrity safeguards.

Under the proposed rules, only trading participants of an exchange that are duly licensed by the SEC may serve as market makers.

Eligible firms must maintain a minimum unimpaired paid-up capital of ₱100 million, demonstrate adequate trading experience with a sound regulatory and legal track record, and have a valid and subsisting market-making agreement with the issuer, the exchange, or another authorized party.

Market makers will be required to maintain continuous two-sided quotations during trading hours in accordance with relevant exchange-prescribed parameters, as well as sufficient inventory to support liquidity provision.

Quotations must be firm and executable, except in cases of system failures, market-wide disruptions, force majeure events, or other exceptional circumstances.

The draft rules also establish reporting and oversight mechanisms through the timely and accurate submission of reports to the exchange, including trading and quotation reports, compliance certifications, and immediate notification of any material breaches.

Exchanges, in turn, must regularly report market-maker performance and compliance to the SEC.

To encourage market-making activities, exchanges may grant incentives such as reduced transaction fees, liquidity rebates, and access to enhanced trading facilities.

Exchanges will be required to adopt implementing rules and guidelines necessary to operationalize the framework, subject to the SEC’s approval. - James A. Loyola

Related Tags

Securities and Exchange Commission Philippine Stock Exchange Philippine Dealing & Exchange Corporation
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