DragonFi Securities Inc. has received approval from the Securities and Exchange Commission to begin testing an over-the-counter depositary receipt framework under the agency’s regulatory sandbox, allowing eligible local investors access to pre-approved U.S. equities and exchange-traded funds.
The authorization makes DragonFi the first licensed Philippine broker-dealer cleared under the SEC Strategic Sandbox (StratBox) program to test global equity offerings. Under the proposed framework, an investor’s foreign equity exposure limit is directly tied to their local market holdings.
Investors maintaining certified domestic stock portfolios can access foreign offerings worth up to 50% of their local holdings. Investors holding Personal Equity and Retirement Account (PERA) assets may access foreign equities up to 100% of the equivalent value of their domestic PERA portfolio. (Read More: BSP Approves PERA Time Deposits: Rules, Tax Perks, and Eligibility Explained)
The proposed trading structure utilizes over-the-counter depositary receipts (OTC DRs), establishing a locally registered security counterpart for each foreign asset. Foreign equities and cash reserves will be stored in segregated institutional custody accounts with international financial partners, while local customer funds will remain with licensed domestic institutions.
“Filipinos should be able to participate in the world’s largest capital markets through a structure that is locally regulated, transparent and built with investor protection at its core,” DragonFi Chief Executive Officer Jon Carlo Lim said in a statement. “The model creates a direct incentive for investors to build their Philippine portfolios as they diversify internationally.”
Testing will take place within a controlled environment established under SEC Memorandum Circular No. 9, Series of 2024, overseen by the regulator’s PhiliFintech Innovation Office. The commission will evaluate operational stability, investor protection measures and regulatory requirements before considering wider market deployment. (Read More: Now Official: Binance to Enter PH via Blockshoals Partnership, SEC Sandbox Framework)
SEC Commissioner McJill Bryant T. Fernandez said the sandbox framework allows the commission to evaluate new approaches to global asset access while protecting market integrity.
The initial trial phase will be restricted to a select group of users once the SEC validates DragonFi’s amended testing plan and client suitability protocols. Broader public access remains subject to further commission review.
This article is published on BitPinas: DragonFi Securities Enters SEC Sandbox to Test Over-the-Counter U.S. Stock Depositary Receipts
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