SEC explains proposed hike in fees

MANILA -- The Securities and Exchange Commission (SEC) has spoken up about concerns raised by 11 business groups who objected to its plans to raise fees.

In a statement, the SEC noted that their current schedule of fees and charges was last updated in 2017, based on a proposal from 2014.

"This means that the current rates are based on operational and administrative costs prevailing almost 10 years ago," the commission said.

Eleven business groups, including the Philippine Chamber of Commerce and Industry, Federation of Filipino Chinese Chambers of Commerce and Industry, Employers Confederation of the Philippines, and Management Association of the Philippines, wrote the SEC last week to oppose proposed increases in their fees.

Newspaper reports said business groups are against the proposal to charge corporate issuers one-fourth of 1 percent of total indebtedness when creating bonded indebtedness.

Among others, the businessmen also opposed the proposed fee on the total transactions cleared and settled in the previous year by Securities Clearing Corp. of the Philippines and Philippine Depository Trust Corp.

The commission however justified its decision to hike fees on some IT-related services, such as accessing documents from their SEC Application Program Interface (SEC API) and the Electronic SEC Education, Analysis, Research Computing Hub (eSEARCH).

SEC said they held a public consultation prior to imposing the fees, and said these are sufficient to recover the cost of services rendered.

SEC also said these amounts were benchmarked with those imposed on similar services in the Philippines and in other jurisdictions.

"For instance, Singapore’s Accounting and Corporate Regulatory Authority charges P3,029.70 for the download of financial statements, and Corporate Compliance and Financial Profile. This is equivalent to the company snapshot package, consisting of the General Information Sheet, Annual Financial Statements, and company snapshot, worth P1,000 that may be downloaded from eSEARCH," the commission explained.

The commission also noted that the fees help them perform their functions well.

SEC cited a report by think-tank Daiwa Institute of Research, which flagged the body's lack of personnel for market regulation, which "has made it difficult for the Commission to fulfill its duties and responsibilities as a capital market regulator."

"In comparison to its peers the SEC Philippines, in 2019, only had a total of 107 personnel performing capital market-related functions; while SEC Thailand and Securities Commission Malaysia had 571 and 628 personnel, respectively," the commission said in its statement.

SEC noted that their Australian counterpart, which wears a similar dual hat of corporate and markets regulator, had a 1,011-strong workforce--almost 10 times that of the number of Philippine staff. The Daiwa Institute of Research said this means each employee in the SEC Philippines has to exhibit more than 5 times efficiency and/or work longer than the employees in the benchmark countries.

The think-tank also noted that SEC's budget is nearly 25 percent lower than that of its ASEAN counterparts.

"In order to ensure the efficient delivery of public service and effective enforcement of laws concerning the capital market, financing and lending companies, and the overall corporate sector, the SEC needs to expand and enhance its institutional capacity while embarking on the digital transformation of its services," the SEC said.

SEC said they have set a meeting with the business groups for Thursday, October 12, to discuss their concerns.

They also stressed that they remain committed to the Marcos administration's goal of promoting business and capital formation in the country.

"The SEC is fully committed to championing business and investors," they said. "The Commission shares the goal of developing a vibrant corporate sector and well developed capital market with the business groups."

"Fulfilling the Commission’s mandate, however, requires ensuring the sustainability of its operations and the continuous improvement of its services," they added.

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