SEC to broaden definition of ‘qualified buyers’
The Securities and Exchange Commission (SEC) plans to amend its rules to expand how investors are classified as “qualified buyers,” a move aimed at aligning investment thresholds and reflecting evolving market practices.
In a notice dated March 19, the SEC exposed for comment a draft memorandum circular amending Rule 10.1.11.1 of the 2015 Implementing Rules and Regulations of the Securities Regulation Code.
Stakeholders have until March 31 to submit feedback.
At the core of the proposal is a refinement of the criteria for qualified individual buyers—investors deemed financially capable and sufficiently sophisticated to participate in securities offerings that are exempt from registration.
Under the draft, natural persons may now count financial instruments issued by the government—such as Treasury bills and Treasury bonds—when meeting the P10-million minimum portfolio investment threshold.
This marks a shift from the current rule, which does not include such instruments in the computation for individuals.
The SEC said the change recognizes the growing role of government securities in the domestic fixed income market, where they account for a significant share of trading activity.
It also seeks to harmonize the treatment of individual and institutional investors, as juridical persons are already allowed to include government-issued instruments in meeting their higher P60-million portfolio requirement.
The SEC will retain other qualification pathways for individuals. These include earning at least P10 million annually for the past two years or having a net worth of at least P30 million.
Applicants must also demonstrate relevant experience, such as at least one year of securities trading or professional exposure in roles requiring expertise in financial markets.
The draft further requires individuals to register to act as registrars of qualified buyers.
