The Securities and Exchange Commission (SEC) is open to amending its proposal to increase its fees and charges, after a meeting with two business groups that have raised objections.
SEC officials, led by chairperson Emilio B. Aquino, on Thursday met with representatives of the Philippine Chamber of Commerce and Industry (PCCI) and the Federation of Filipino Chinese Chambers of Commerce and Industry, Inc. (FFCCCII) to discuss the controversial plan to raise its fees and charges.
“Yes (we are open to changes)… That’s the reason why we are exposing these drafts because we’re open to suggestions. But of course, on our side, we’ll have to make a case on why we came up with the proposal,” he said during a media roundtable in Makati City.
Mr. Aquino said the SEC is not pushing the plan to increase its fees since the Commission is currently focused on its amnesty program for corporations which ends on Nov. 6. The SEC’s amnesty program offers a reprieve from the fines and penalties imposed on the late or nonfiling of companies’ general information sheet, annual financial statements, and noncompliance.
“This is just a proposal. That is why we are eliciting all sorts of comments from all sides. Part of our vision is to be customer-centric… We’re not doing this on our own. I think we have met all the requirements there are for these increases,” he said.
SEC Commissioner McJill Bryant T. Fernandez told reporters that another meeting with the leaders of the business groups will be scheduled in two weeks to further discuss their concerns.
“The proposal from their end was to convene another meeting with the principals of all these business groups and we welcome that. We are devoting time to sit down with them. The entire Commission is open to meet them and discuss point by point,” he said.
In a letter to the SEC dated Oct. 2, several business groups and associations criticized the regulator’s proposal to increase its fees and charges, calling it “anti-business” and “unnecessary.”
Mr. Fernandez said that during Thursday’s meeting, the representatives from PCCI and FFCCCII apologized for the language and contents of the letter.
“They have conveyed apologies in terms of the manner that the letter was constructed,” he added.
Mr. Fernandez said the SEC and business groups are looking at issuing a joint statement once the matter is resolved.
At the same time, SEC Commissioner Kelvin Lester K. Lee said the commission could justify its proposal to hike its fees and charges, since it is backed by data from market studies.
The SEC earlier said the current rates have not been adjusted since 2017 and were based on a 2014 proposal.
“Bottom line, I think we can make a very good case for justifying the direction we’re going because it’s done very well. We have to laud our technical team who has worked on this for an excessively long time,” Mr. Lee said.
However, PCCI President George T. Barcelon said businesses should have been consulted on the proposed hike in SEC fees and charges.
“We can see the point of the SEC that they have not increased the charges ever since I believe it was 2014. But having said that, one of the concerns of the business sector is that the jump is quite high, the increase is quite high,” Mr. Barcelon said at a media briefing on Thursday.
He said that the SEC and the private sector are willing to discuss the matter and come up with a compromise.
“It is not yet a closed book, so this is something that we’d like to have a say on because we also compare the rates charged by other countries since we are trying to be competitive in foreign investments,” Mr. Barcelon said.
The business groups had objected to “unreasonable, if not ‘obscene’ fees and charges,” such as the proposal to charge corporate issuers one-fourth of 1% of total indebtedness when creating bonded indebtedness.
“Using 2022 numbers, SEC’s fees would amount to PHP 1.27 billion on the total bond issuances of PHP 508 billion for that year,” the groups said.
The business groups 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. at 0.1 basis point (bp) and 0.05 bp, respectively.
Based on the transactions in 2022, the groups said this would mean PHP 14.51 million and PHP 7.25 million in additional friction cost for stock market investors.
According to the business groups, the current fee collections of the SEC far exceed the cost of its operations.
The business groups also noted the SEC’s proposal to impose “unconscionable” increases on fees may discourage new investments in the country.
“The increased cost of doing business will also hurt small and medium enterprises covered by SEC due to the ripple effects of the fee increases,” they added.
Aside from the PCCI and FFCCCII, the letter to the SEC was also signed by the Management Association of the Philippines, Philippine Retailers Association, Philippine Franchise Association, Chamber of Thrift Banks, Philippine Exporters Confederation, Inc., Employers Confederation of the Philippines, Philippine Association of Legitimate Service Contractors, Stratbase ADR Institute for Strategic and International Studies, and Philippine Food Processors and Exporters Organization, Inc. — Revin Mikhael D. Ochave and Justine Irish D. Tabile