The Philippine Securities and Exchange Commission has sought public comment on proposed rules that would set a regulatory framework for sukuk, as Manila tries to broaden funding options and deepen its capital markets through Islamic finance.
In a draft memorandum circular issued on Nov. 26, the SEC asked stakeholders to submit feedback by Dec. 12 via email, as it moves to formalise disclosure standards, Shari’ah governance, and investor safeguards for sukuk offerings.
Sukuk are certificates that represent an undivided interest or right in underlying assets, services or projects structured to comply with Shari’ah principles, the draft said.
Unlike conventional bonds, sukuk structures typically link returns to asset-based cashflows rather than interest payments.
Under the proposed rules, sukuk intended for public offering would need to be registered with the SEC and could be listed and traded on an SEC-registered fixed-income exchange or other organised market.
The draft also allows the use of special-purpose entities created specifically to issue sukuk and hold assets for sukukholders.
The SEC listed permissible structures, including ijarah (lease-based), murabahah (cost-plus), istisna (manufacturing or construction), wakalah (agency), mudarabah (profit-sharing), and musharakah (joint venture), with other structures subject to SEC approval.
Issuers would be required to form a Shari’ah committee or appoint a Shari’ah adviser to certify compliance.
The initiative builds on earlier policy steps. The Philippine government sold its first sovereign U.S. dollar sukuk in late 2023, aiming to tap Islamic-focused investors, and the tax authority later issued guidance on sukuk tax treatment.
More explicit issuance rules could lower legal and structuring friction for corporates, banks, and infrastructure sponsors considering sukuk.
But scaling a local market will likely depend on building Shari’ah governance capacity, developing a pipeline of asset-backed deals, and ensuring secondary-market liquidity so sukuk do not remain a one-off “novelty” product.
