SEC lifts minimum brokers’ commission for stock trades
The Securities and Exchange Commission (SEC) has removed the minimum commission fee paid by investors to stockbrokers, a move that it said should increase market activity.
Under the SEC’s April 16 memorandum circular, brokers are now allowed to set their own commission schedule for transactions with investors.Brokers previously charged a minimum 1.5-percent commission under a 1977 resolution of the SEC.
With the lifting of the minimum, brokers can now choose to charge a lower fee to entice clients.
The Philippine Stock Exchange, meanwhile, still imposes a minimum commission ranging from 0.25 percent to 0.05 percent of the value of a trade transaction.
“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 about more retail investors and spur trading activity,” SEC chair Emilio Aquino said in a statement.
An investor holding a stock certificate wishing to trade the shares needs to go to a broker that will check the authenticity of the ownership and documentation.
Brokers then endorse the shares to a transfer agent.
The SEC noted that it took cues from “neighboring jurisdictions” that do not prescribe minimum broker commissions.Juan Paolo Colet, managing director at investment bank China Bank Capital Corp., said the move could lead to more active trading and better liquidity in certain stocks.
“The liberalization of brokerage commissions is a significant reform that will create more competition among PSE trading participants and should help reduce the cost of investing in listed equities,” Colet said.
