Philippines Sets Market-Making Rules to Boost Liquidity
The Philippines has introduced its first comprehensive regulatory framework for market making, setting common standards for firms that provide buy and sell quotations in equity and fixed-income securities. The Department of Finance said on 17 October that the Securities and Exchange Commission rules are intended to improve liquidity, support trading efficiency and encourage wider participation in Philippine capital markets.
For investors and companies, the reform addresses a practical feature of market depth: whether securities can be bought or sold more readily without large price movements. The rules create a common baseline across exchanges, replacing a system in which self-regulatory organisations applied their own market-making policies under SEC supervision.
What the new Philippine market-making rules cover
Market makers facilitate buying and selling by maintaining quoted prices. According to the finance ministry, the new framework applies to both equity and fixed-income securities and sets requirements for market makers on capital, licensing, disclosure, recordkeeping and reporting.
The rules also include investor-protection and market-integrity safeguards. Only trading participants accredited or recognised by the relevant exchange, with at least ₱150 million in unimpaired paid-up capital or a higher amount the SEC may prescribe, may act as market makers.
Each accredited firm must also designate at least one specialist with at least three years of relevant securities-trading or market-making experience, or an equivalent qualification based on certifications, training and demonstrated proficiency, the DOF said.
Why liquidity matters for business financing
Liquidity is not the same as market performance, and the rules do not guarantee trading volumes or higher security prices. But more consistently available buy and sell quotations can help price discovery and make it easier for investors to enter or exit positions.
That matters beyond secondary-market activity. A deeper market can support the ability of businesses to raise capital over time, while investors may be more willing to participate when trading conditions are more orderly. The DOF said the framework is intended to help channel private savings into productive investment and expand access to long-term financing.
Exchanges will set incentives and eligible securities
Under the framework, exchanges will determine which securities are eligible for market making based on the needs of different market segments. They will also offer incentives such as lower transaction fees, liquidity rebates and improved access to trading facilities to encourage participation.
The design leaves important implementation choices with the exchanges, including which instruments are prioritised and how incentives are calibrated. The effectiveness of the reform will therefore depend on accreditation, exchange rules and whether eligible firms find the economics of providing continuous quotes sustainable.
A step toward a more consistent framework
The new rules establish a single regulatory foundation for a practice that had previously been governed through separate self-regulatory approaches. The finance ministry said this should promote consistency and closer alignment with international standards.
The immediate outcome is a regulatory framework, not evidence of additional capital raised or liquidity already delivered. Businesses and investors should watch which securities are designated, how many firms become accredited and whether quoted spreads, trading activity and investor participation change after implementation.
