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Friday, May 31, 2024

SEC removes minimum stockbroker’s commission

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The Securities and Exchange Commission (SEC) said Wednesday it removed the minimum amount of commission that stockbrokers may charge their customers to boost trading activity in the stock market.

The new rule allows brokers to set their own commission schedule for transactions with their customers, without the limitations of a prescribed regulatory minimum commission, SEC said in a statement. It previously set the broker’s commission at 1.5 percent.

“Lower transaction costs are vital in encouraging the public to invest their money in the stock market. The removal of the minimum stockbroker’s commission seeks to address this, and hopefully bring out more retail investors and spur trading activity,” SEC chairperson Emilio Aquino said.

“The SEC will continue to review existing rules and regulations to see areas where we can make improvements to achieve our goal of boosting the capital market,” he said.

The SEC said the removal of the minimum commission takes into account the rise of online trading platforms, which paved the way to more cost-efficient transactions. It also takes cues from other neighboring jurisdictions, which do not prescribe a minimum stockbroker’s commission.

The SEC is hoping that the removal of the minimum commission would help spur trading in the stock market, which is on a downtrend due to market conditions.  The average daily value is at P6 billion, down from P9 billion in 2021.

The new rule also seeks to empower the investing public to engage the services of a broker of their choice based on cost preference.

The guidelines issued by the Philippine Stock Exchange prescribed a minimum commission ranging from 0.25 percent to 0.05 percent of the value of a trade transaction to lower transaction costs.


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