Last update: 28 August 2020
6 min read

BSP Forex Brokers Regulation

Are you on the lookout for the best BSP regulated brokers? If you’re interested in trading in the Philippines, you’ve probably come across the Bangko Sentral ng Pilipinas – or BSP – already. Our experts will help you get a deeper understanding of how the best BSP regulated brokers operate, as well as some tips on how to contact them and more.

Anyone considering trading in the Philippines is in for a confusing ride. The country’s financial system is still very much in its infancy and there is stiff competition from neighboring countries such as Hong Kong, Japan, Singapore, and Malaysia. The official authority with monitoring responsibility for the Philippines economy and ensuring it is a safe and stable environment is the Bangko Sentral ng Pilipinas (BSP). The BSP plays a vital role in the regulation of various financial institutions, but brokers are regulated by the SEC.

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How safe is the SEC?

The SEC is concerned with improving the transparency and integrity of the Philippine financial markets and is able to issue regulatory guidelines and recommendations to reach this aim. It also acts as an advisor to the government, congress, and other federal authorities in respect of the regulation of the securities and exchange market.

Something which makes it a little different from other regulatory agencies is its absolute power over companies and individuals. And the fact it is able to request help from civil, military, or independent enforcement organizations to assist it in carrying out its regulatory duties.

Here are some of the things the SEC can do:

  • Issue ‘cease and desist’ notices against a company or individual if it believes the general public is at risk of harm by way of fraud or malpractices
  • Approach the courts to resolve problems
  • Create search and seizure notices to obtain evidence

Many experts believe the commission has been given far too much power and that it has had a dramatic effect on regulating national financial companies – and not necessarily in a positive way. But the fact that the SEC has such strong powers, usually reserved for higher authorities, makes it a very influential figure in the financial world of the Philippines.

What is the SEC?

Securities and Exchange CommissionSEC stands for Securities and Exchange Commission and is the agency of the Government of the Philippines with responsibility for regulating the securities industry. Alongside its regulatory functions, it also holds the country’s register of companies. Its headquarters are in Mandaluyong City, Metro Manila. The major functions of the SEC include:

  • Supervising all registered business entities, including the suspension and revocation of registrations
  • Writing policies in relation to market securities
  • Controlling and approving security registration statements
  • Investigating security law violations and imposing the necessary sanctions
  • Issuing subpoenas, punishing contempt and issuing cease and desist orders

What the SEC is permitted to do

The SEC has a long list of responsibilities, aside from regulating Malaysian forex brokers. The main interest of the commission is to safeguard the integrity and stability of the financial markets of the country. It has ultimate control over all types of financial organization, including BSP regulated brokers.

All regulated financial companies are obliged to follow the guidelines and instruction set out by the SEC, with no exceptions. The SEC is permitted to issue licenses and also has the power to revoke, renew, cancel, suspend, and terminate them. It is the final decision maker when it comes to deciding whether a company is qualified to be issued with a license allowing it to operate in the Philippines.

Does the BSP have a role to play in regulation?

The role of the BSP is to help maintain the overall financial stability of the Philippines, but it also has a heavy influence in the forex industry.

Here are some of the BSP’s responsibilities:

  • Streamline the money exchange process and other financial dealings which take place in the retail trading industry
  • Determine the exchange rate policy for the Philippine peso (PHP) against other currencies
  • Oversee the management of the country’s currency reserves

Having a sound exchange rate policy and sufficient currency reserves is vital for the peso, and allows the country to gain an international financial visibility. The BSP plays an important stabilizing role in the country’s economy. As well as regulating all banking and non-banking financial institutions, it also serves as a lender, financial advisor and a body which is able to maintain market liquidity. It does this by aiding other banks and government agencies.

Should it become necessary for the economy of the country, it is possible for the BSP to extend loans, issue advances, raise capital, offer discounts, and act as a depository for other financial institutions. The BSP has a huge number of important roles to play – not just in the financial sector, but in the stabilization of the country’s economy. No wonder it has turned over regulatory responsibility to the SEC.

Is it a sensible choice to choose a BSP regulated broker?

It is not compulsory for traders to choose BSP regulated brokers as there are no such restrictions imposed on Philippine traders. They are, in fact, able to open an account with any broker of their choosing.

While the best brokers regulated by BSP – or should we say, SEC regulated brokers – are unable to offer the same level of protection as those regulated by more established agencies, it could be considered a better choice.

BSP brokers provide a high amount of regulation which is only going to protect your investment in a positive way. If you are really unsure about the direction to take, it is possible to get some expert financial advice.

Whatever you decide, the fact you have been proactive in exploring your options is going to serve you well in the future and ensure your investment is as safe as possible.

Can I complain to BSP?

A telephone number, email address and physical address are all provided on the official BSP website, keeping things transparent and making it easy to get in touch if you have an issue.

How can I find out if a broker is BSP regulated?

The simplest way to check if a broker is regulated by the BSP is to check their website. There, you’ll find a full list of all the companies associated with them and can quickly check if they’re fully regulated by them. Alternatively, you may find the license information on the broker’s website directly.

Frequently Asked Questions (FAQs)

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