Alpaca engages regulators to explore wider access to foreign securities

GLOBAL BROKERAGE infrastructure provider Alpaca said it is engaging with regulators and market participants to explore ways to expand Filipino retail investors’ access to foreign securities, citing strong demand.

“The demand for access to foreign securities in the Philippines exists, and it is significant,” Alpaca Singapore Chief Executive Officer Rohit Mulani told BusinessWorld in a virtual interview.

Citing data from the US Treasury, the company said Filipino investors currently hold more than $3 billion in US securities. However, in the absence of a local framework for accessing these investments, many investors have turned to offshore platforms, some of which have recently faced restrictions from the Securities and Exchange Commission (SEC).

“So, we are engaging with the SEC and the Philippine Stock Exchange (PSE) and brokers on the ground to see how to open up the market so that retail investors in the Philippines can get access to the US market,” Mr. Mulani said.

He said the US market is among the largest and most liquid globally and has generated significant wealth over time.

Mr. Mulani added that interest in international markets among Filipino retail investors is partly driven by access to globally recognized companies such as Apple, Netflix, and Starbucks. These markets also host companies developing emerging technologies that could influence industries worldwide, including in the Philippines.

“We would like to ensure that retail investors in the Philippines that have interest in the product will be able to access those markets,” he said.

“We believe that everybody in the world should have access to these technologies and should be able to invest in these companies. So, we’re working with brokers, we’re engaging with regulators, and trying to pioneer access for the US markets into the Philippines,” Mr. Mulani added.

He said fractional share trading in the United States allows investors to buy portions of stocks for as little as $1, lowering the cost of entry and enabling diversification with smaller amounts. In contrast, the Philippine market continues to use board lot sizes with set minimum investments per stock.

Mr. Mulani said reducing such entry barriers could help broaden investor participation.

“The barrier for somebody to becoming an investor is significant, where they would need larger amounts of capital to be able to invest in 10 companies, they would need to buy 10 lots, as opposed to in the US, to build up a portfolio of 10 companies, you need as little as $10,” he said.

“So, bringing that barrier of entry down is very, very significant. And it’s something that we’re quite excited about.”

Alpaca said broader retail investor participation is linked to overall economic growth, noting that expanding access to financial services could increase participation in both Philippine and global capital markets. 

“And so, we fundamentally believe, based on our experience and data that we’ve seen, when somebody becomes an investor in the US markets, they also become an investor in the local markets. And so, we think that this is good for the economy, this is good for the local capital markets, and it’s good for the retail investor as well,” Mr. Mulani said.

“We would like to have more people participating in the capital markets in the Philippines, and this isn’t limited to the US markets. We would like people to be accessing and participating in the local markets as well,” he added.

Last year, GoTyme Bank, a joint venture between the Gokongwei Group and Tyme Group, launched a cryptocurrency investment feature in partnership with Alpaca, expanding access to digital assets as crypto adoption in the Philippines continued to grow. — Alexandria Grace C. Magno