Despite global uncertainties and headwinds, capital markets in the US continue to set record highs. The S&P 500 has repeatedly beaten its pre-pandemic records and rallied from a low of 2,191.86 points in March 2020 to about 7,408.50 points in May 2026, translating to about three times growth in value.
Recently, to allow local investors to take advantage of this growth, some Philippine entities have launched feeder funds that pool money from investors onto a target fund such as the S&P 500. This has gained popularity because of its ease, while deemed safe for regulation by the Philippine government. However, the scheme is not without complaints. Instead of paying lower fees by directly investing money in a foreign exchange, a feeder fund involves higher fees because of administrative costs imposed by the trustee and the target fund.
Compared to the dismal performance of the Philippine Stock Exchange Index, which has fallen from an all-time high of 9,058.62 points in 2018 to its current level at about 5,900 points, one cannot be blamed for feeling disincentivised in betting on the local market. Even the Capital Markets Efficiency Promotion Act, which reduced stock transaction tax from 0.6% to 0.1%, did not boost capital market participation, as investors place their money abroad for lower fees.
SEC warns Filipinos on IBKR
Senior Associate
ACCRALAW
Davao Branch
One way to directly deal in global capital markets is investing through brokerage platforms with access to foreign securities. Interactive Brokers (IBKR) was considered a means for retail Filipino investors to participate in foreign capital markets, or to pick trending shares of stocks. IBKR is also known as one of the largest global brokerage platforms, with low fees and access to a range of global markets.
This was until the Securities and Exchange Commission (SEC) issued its advisory against IBKR on 19 January 2026. Citing the Securities and Regulation Code (SRC), the SEC stated that securities being offered must be duly registered, issued by a corporation or offered by a dealer duly registered in the Philippines, and the entity or person offering or selling securities must possess the appropriate secondary SEC licence.
According to the SEC, IBKR is not registered in the Philippines and does not have the necessary licence and/or authority to offer, sell or distribute securities including derivatives to the public. Neither is it authorised to engage in the business of buying or selling securities as a broker or dealer, nor to operate an exchange for the buying and selling of securities under the SRC.
SEC reiterates warning on unregistered entities
Reiterating its earlier Advisory Against Dealing with Non-Registered Foreign Entities, Organisations and Corporations, the SEC advised against transacting with such entities to avoid losing earnings or not getting money back once transmitted outside the Philippines.
The SEC said that money in unregistered platforms or entities had very limited or no protection at all by government from harm, damage, fraud or any form of misconduct. Fraud or misconduct committed by such entities falls under the jurisdiction of the foreign country where they operate and domestic participants would have to go to the country where these platforms are for remedies.
In contrast, dealing with registered corporations within the Philippines assures domestic parties that they are protected by Philippine laws. In case of future conflicts due to breach of contractual obligations, or in case of fraud or misconduct, parties may file their claims or complaints with local courts having jurisdiction over the same.
Philippine markets face globalisation test
It would seem that the SEC wants to keep our money safe and sound here in the Philippines and entrusted only with registered entities approved by the SEC. Nevertheless, the disappointing performance of the local exchange and the high charges in resorting to feeder funds to invest globally remain legitimate concerns.
Whether the Philippine government is serious in promoting capital markets within the context of globalisation, increased capital mobility and financial inclusion, and to incentivise investment in trading equity and debt securities, remains to be seen.
(This article first appeared in Business World, a newspaper of general circulation in the Philippines. The views and opinions expressed in this article are those of the author. This article is for general informational and educational purposes only and not offered as and does not constitute legal advice or legal opinion.)
Luke Morgan B Codilla is a senior associate at ACCRALAW, Davao branch
ACCRALAW11/F Pryce Tower, Pryce Business Park
JP Laurel Avenue, 8000 Davao City, Philippines
www.accralaw.com
Contact details:
T: +6382 224 0996
E: lbcodilla@accralaw.com
