The corporate regulator has issued a circular increasing independent directors to a third of the board of exchanges and other organized markets.

The Securities and Exchange Commission (SEC) said there should be at least four directors representing the interests of issuers, investors and other market participants, with each sector having at least one representative on the board.

SEC Chairman Emilio A. Aquino signed the memorandum circular detailing the rules.

An independent director and sectoral representative must have at least three years of experience or working knowledge of capital markets.

They may be elected for up to 10 years, with a mandatory cooling off period of at least a year after the first five years.

The regulator said the rules were based on “best practices of major and comparable markets in many economies,” where independent directors account for a majority of the board of exchanges.

Present rules require exchanges to have at least three independent directors.

The Philippine Stock Exchange, Inc. has three independent directors on its 15-member board. — Arjay L. Balinbin