Despite global uncertainties and headwinds, capital markets in the United States continue to set record highs. For one, 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. This would translate to about three-times growth in value of invested money.
Recently, to allow local investors to take advantage of this growth, some Philippine entities have launched feeder funds which pool money from investors to be funneled onto a target fund such as the S&P 500. This has recently gained popularity because of its relative ease, while deemed safe for being regulated by the Philippine government. However, the scheme is not without complaints. As opposed to paying lower fees by directly investing money in a foreign exchange, a feeder fund involves relatively higher fees because of multi-layered administrative costs both imposed by the trustee and the target fund.
Compared to the dismal performance of our local Philippine Stock Exchange Index, which has fallen from its 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 disincentivized in placing bets on the local market. Even the passage of the Capital Markets Efficiency Promotion Act, which reduced the stock transaction tax from 0.6% to 0.1%, did not boost capital market participation in the local exchange as hoped.
Understandably, the performance of the local stock exchange has been off-putting for retail and institutional investors alike, who have a natural inclination to rather place their money in more historically profitable placements abroad. And, of course, for lower fees.
Seen as one of the ways for a market participant to directly deal in global capital markets is investing through brokerage platforms with access to foreign securities.
For a time, Interactive Brokers (IBKR) was among those considered as a means for retail Filipino investors to participate in foreign capital markets or indexes, or to pick trending shares of stocks – such as companies engaged in development of artificial intelligence or industries involved in defense. IBKR is also known for being one of the largest global brokerage platforms, recognized for its low fees and access to a wide range of global markets.
This was the case until the Securities and Exchange Commission 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 license from the SEC.
According to the SEC, IBKR is not registered in the Philippines and does not have the necessary license and/or authority to offer, sell, or distribute securities, including derivatives, to the public. Neither is it authorized 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.
Reiterating its earlier Advisory Against Dealing with Non-Registered Foreign Entities, Organizations, and Corporations, the SEC advised the public to avoid transacting with such entities to avoid losing their earnings or run the risk of not getting one’s money back once transmitted outside of the Philippines.
The SEC pointed out that money in unregistered platforms or entities only have very limited protection or afforded no protection at all by government from harm, damage, fraud or any form of misconduct. Jurisdiction over fraud or any form of misconduct committed by such entities falls under the jurisdiction of the foreign country where they operate. 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 duly protected by Philippine Laws. In case of any future conflict with the corporation or entity arising out of breach of contractual obligations or in case of fraud or misconduct, parties may avail of remedies under Philippine Laws by filing their claims or complaints with our local courts having jurisdiction over the same.
It would thus seem that the SEC simply wants to keep our money safe and sound here in the Philippines and entrusted only with registered entities approved by the SEC to broker securities. Nevertheless, the disappointing performance of the local exchange and the high charges in resorting to feeder funds to invest globally remain legitimate concerns, and market participants are now asking for better and cheaper options.
Given this, whether the Philippine government is serious in its declared policy of promoting the development of capital markets within the context of globalization, increased capital mobility, and financial inclusion, and to incentivize investment in the trading of equity and debt securities, remains to be seen.
This article was first published by BusinessWorld at bworldonline.com. It is only for general informational and educational purposes and is not offered as and does not constitute legal advice or opinion.
Atty. Luke Morgan B. Codilla is a Senior Associate of the Angara Abello Concepcion Regala Cruz Law Offices (ACCRALAW), Davao Branch.
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