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Compliance Requirements for Financial Advisors in the Philippines

In a move to enhance connectivity among capital market professionals in the ASEAN region, the Securities and Exchange Commission (SEC) has issued Memorandum Circular No. 5 (s. 2019), outlining rules on the implementation of the ASEAN Capital Markets Forum (ACMF) Pass.

Overview of the ACMF Pass

The ACMF Pass allows licensed financial advisors from one signatory country to perform investment advice activities and issue research reports on ASEAN financial products in another signatory country. The SEC, along with regulators from Thailand, Malaysia, and Singapore, is a party to the Memorandum of Understanding on the ACMF Pass under the ASEAN Capital Market Professional Mobility Framework.

Eligibility Requirements

The guidelines specify that registered capital market professionals in the Philippines who intend to obtain an ACMF Pass in another signatory country or those from other signatory countries seeking to do so in the Philippines must meet specific eligibility requirements. These include:

  • Salesmen of broker dealers and/or investment houses
  • Certified investment solicitors
  • Key officers of fund managers
  • Others deemed eligible by the SEC

Additionally, professionals from other signatory countries are eligible for an ACMF Pass if they:

  • Are licensed or authorized by their home regulator
  • Have no pending disciplinary actions
  • Have not been convicted of any offense involving moral turpitude or violation of securities laws

Scope of Activities

Recognized representatives under the framework may only provide advice on ASEAN capital market products such as:

  • Shares
  • Bonds
  • Units of collective investments schemes

They are permitted to:

  • Issue research analysis or reports
  • Give general investment advice

However, they are prohibited from:

  • Soliciting sales
  • Providing personalized investment advice

Validity and Revocation

The validity of an ACMF Pass is two years, unless revoked by the SEC. Each recognized representative may perform activities under the framework in a host jurisdiction for the duration of its validity.

The process and requirements for application and renewal are detailed in the guidelines.

Revocation of ACMF Pass

The SEC reserves the right to revoke an ACMF Pass if:

  • The license and/or registration of the recognized representative is cancelled or becomes invalid
  • They commit any prohibited activities
  • Fail to comply with regulatory requirements
  • Violate securities laws

Conclusion

By implementing the ACMF Pass framework, the Philippines aims to promote investor protection and market integrity while enhancing connectivity among capital market professionals in the ASEAN region. For more information on compliance requirements for financial advisors in the Philippines, please contact Felix T Sy, Partner at Insights Abodago Philippines (a member of ZICO Law).