DragonFi Enters SEC Sandbox to Test OTC Depositary Receipts for US Stocks

DragonFi Securities has entered the SEC Sandbox to test its over-the-counter depositary receipt framework for US stocks and exchange-traded funds. The company is the first licensed Philippine broker-dealer to be cleared under the SEC's Strategic Sandbox program.

The proposed framework allows eligible local investors to access pre-approved US equities, with foreign equity exposure limits tied directly to their local market holdings. Investors maintaining certified domestic stock portfolios can access up to 50% of their local holdings in foreign offerings.

For Personal Equity and Retirement Account (PERA) holders, the limit increases to 100% of the equivalent value of their domestic PERA portfolio. The trading structure utilizes over-the-counter depositary receipts (OTC DRs), establishing a locally registered security counterpart for each foreign asset.

The test 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 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.

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.