PSE opens door to global stocks, bonds and crypto in ETF market reboot

Insider Spotlight

• The PSE is giving ETFs a fresh start nearly 13 years after the country’s first and only fund failed to spark a broader market.
• By allowing bond ETFs, the exchange is chasing a much larger pool of investment activity in hopes of boosting liquidity and narrowing the gap with regional peers.
• The broader ETF lineup would give local investors access to overseas stocks, bonds, commodities and cryptocurrencies through the PSE.

The Philippine Stock Exchange is opening the door for investors to buy overseas markets, bonds, commodities and even cryptocurrencies through locally listed exchange-traded funds, or ETFs.

The move comes nearly 13 years after the country’s first and still only ETF, the First Metro Philippine Equity Exchange Traded Fund Inc., debuted in 2013. This underscores how the market has struggled to grow.

By contrast, markets such as Taiwan have hundreds of ETFs that serve as a major source of stock trading volume.

An ETF is an investment fund that trades like a stock, allowing investors to buy a basket of assets through a single security instead of purchasing each investment individually.

The broader lineup is designed to attract more investors, fund managers and trading activity to the local bourse, where liquidity has long lagged larger regional exchanges.

The PSE has released its rules for public comment, with regulatory approval targeted by the fourth quarter of 2026.

Bonds, foreign stocks

One of biggest opportunities lies in bonds.

Under the proposed rules, ETFs listed on the PSE will be allowed to invest not only in Philippine stocks but also in fixed-income securities, foreign stock indices, commodities and cryptocurrencies.

That means investors who want exposure to bonds or other assets could increasingly do so through ETFs traded on the stock exchange instead of investing only through banks, mutual funds or unit investment trust funds.

Based on an estimate by a market insider, investors trade about P9.2 trillion in the Philippine bond market per year—multiples larger than the roughly P1.8 trillion on the PSE. 

Even capturing a small share of that activity could provide a meaningful boost to trading volumes on the local stock market.

Making it easier to launch ETFs

The PSE is also making it easier for fund managers to introduce new ETFs.

Instead of setting up a separate company for every fund, providers will be able to launch multiple ETFs under a single umbrella structure, reducing costs and simplifying new product launches.

The exchange is also lowering minimum capitalization requirements to match those for mutual funds while allowing actively managed ETFs for the first time.

What’s next?

The PSE will gather feedback on the proposed rules before refining the framework, with regulatory approval targeted by the end of the year.

Exchange officials are also focused on ensuring the overhaul gains traction. A market insider said the PSE is already in talks with one fund manager planning to convert an existing mid-cap fund into an ETF and another looking to launch an ETF tracking a foreign stock index once the new rules take effect.

—Edited by Miguel R. Camus