1 
NINETEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
) 
H O U S E   O F   R E P R E S E N T A T I V E S 
House Bill No. ________ 
Introduced by REP. CAMILLE A. VILLAR 
1 
AN ACT  
ESTABLISHING THE SMALL AND MEDIUM ENTERPRISES STOCK 
EXCHANGE 
EXPLANATORY NOTE 
MSMEs are the backbone of the Philippine economy. To substantiate, 99.51% 
of businesses are composed of MSMEs wherein, 10.25% of which are classified as 
Small while 0.49% are Medium. Additionally, they generate 62.66% of the country’s 
employment where small enterprises cover 25.78% and medium enterprises are at 
7.50%. Overall, they are responsible for 40% of our country’s Gross Domestic 
Product (GDP). Because of their major contribution, they are also considered key 
actors for inclusive economic recovery from the COVID-19 pandemic.1
However, with the several necessary community quarantines that the state 
had to implement due to COVID-19, a number of MSMEs faced difficulties resulting 
in decreased capacity and for some, even closure. The first MSME online forum in 
2020 revealed that 80% experienced lower average monthly income during the first 
three months of the pandemic and 25% laid off employees. Amid the coping 
measures they implemented, lack of access to credit facilities, tax breaks, and 
deferred loan payments persist and are among their major struggles.2 
Nevertheless, MSMEs’ role remains vital in economic performance. The need 
for government assistance in order to enhance MSME performance and alleviate 
problems they are currently facing is not only strong but urgent. 
Stock exchanges possess potential solutions for current problems faced by 
MSMEs and promote sustainable development in the enterprises. A study by the 
World Federation of Exchanges and the United Nations Conference on Trade and 
1 https://www.dti.gov.ph/resources/msme-statistics/ 
2 https://philippines.un.org/en/93680-msme-sector-key-covid-19-inclusive-recovery-ph 
August 3, 2022
1:33 pm
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Development (UNCTAD) identified that stock exchanges advance economic 
development more particularly through mobilizing resources for sustainable 
economic growth and development and promoting good governance in business 
practices. Both of which concretizes opportunities for MSMEs to grow and expand.3
In fact, prior to the pandemic, the Development Bank of the Philippines and 
the Philippine Stock Exchange Inc. were reported to have agreed on the listing of 
small and medium enterprises (SMEs) in the local market. This signifies that this 
mechanism is applicable and needed in the Philippines to facilitate growth for 
SMEs.4
This bill forwards the establishment of Small and Medium Enterprises Stock 
Exchange (SMEX), which once enacted, will provide the avenue for both economic 
recovery and economic development. Creation of SMEX will reduce the sufferings 
experienced by SMEs during the pandemic leading to accelerated economic recovery 
and will pave the way for sustainable economic growth and development through 
financing and increased motivation and confidence for long-term investors. 
Moreover, SMEX will increase the assurance and stability for stakeholders who gain 
their livelihood from either running or being employed in SMEs, which is an 
important component for national development.  
Hence, I recommend the immediate approval of this bill. 
CAMILLE A. VILLAR 
3 HTTPS://WWW.PHILSTAR.COM/BUSINESS/2014/05/18/1324331/DBP-PSE-SIGN-DEAL-SPUR-SME-LISTING 
4 HTTPS://UNCTAD.ORG/SYSTEM/FILES/OFFICIAL-DOCUMENT/WFE_UNCTAD_2017_EN.PDF 


3 
NINETEENTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
) 
H O U S E   O F   R E P R E S E N T A T I V E S 
House Bill No. ________ 
Introduced by REP. CAMILLE A. VILLAR 
AN ACT  
ESTABLISHING THE SMALL AND MEDIUM ENTERPRISES STOCK 
EXCHANGE 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
Section 1. Title. – This Act shall be known as the "Small and Medium 
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Enterprises Stock Exchange (SMEX) Act of 2022".  
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Sec. 2. Declaration of Policy.  – It is the declared policy of the State to recognize 
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the indispensable role of the private sector, encourage private enterprise, and 
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provide incentives to needed investments. 
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In compliance with this policy, the State shall: 
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a)
Encourage the establishment of small and medium enterprises;
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b)
Develop an effective and efficient stock exchange for small and
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medium enterprises;
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c)
Provide for increased access to financing for small and medium
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enterprises in order to facilitate funds necessary for their expansion;
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and
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d)
Stimulate investors and private firms, both local and foreign, to invest
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in small and medium enterprises.
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Sec. 3. Establishment of the Small and Medium Enterprises Stock Exchange (SMEX). 
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– There is hereby established a Small and Medium Enterprises Stock Exchange,
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(hereinafter referred to as the "SMEX"), which shall be a stock market catering to 
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small and medium enterprises. The SMEX shall be primarily self–regulatory but 
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shall be under the supervision of the Office of the President for purposes of policy 
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coordination. 
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For purposes of this Act, the small and medium enterprises shall be those 
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defined as such under Republic Act 9501 or the Magna Carta for MSMEs.   
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Sec. 4. Board of Governors.  –  To carry out the purposes of this Act, there is 
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hereby created a Board of Governors, which shall be organized within sixty days 
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after the approval of this Act.  It shall operate as an independent entity but shall be 
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attached to the Office of the President for budgetary purposes. The operations and 
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activities of the SMEX shall be managed and controlled by the Board of Governors 
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(hereinafter referred to as the "Board" composed of the Governor of the Bangko 
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Sentral ng Pilipinas, the Securities and Exchange Commission (SEC) representative, 
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the Philippine Stock Exchange representative, and five members from the SMEX.  
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The five members from the SMEX shall be selected from the officers of the 
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Board, which shall include one stockbroker or securities dealer coming from the 
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registered brokers or securities dealers of the SMEX.  
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Sec. 5. Transaction of Business. – Only registered members shall transact 
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business on the floors of the SMEX and such members shall deal or otherwise 
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transact business only with registered brokers or securities dealers of the exchange.  
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Sec. 6. Issuance of Implementing Rules and Regulations. – The Board, in 
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consultation with the Philippine Stock Exchange (PSE), SEC, Board of Investments 
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(BOI) and representatives from the small and medium-sized business sector, shall 
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promulgate and adopt a Code of By-Laws which shall contain, among others:  the 
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organizational structure; the rules and regulations on the listing and issuance of 
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securities; and  the code of ethics for all members of the exchange, including grounds 
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for disciplinary sanctions or suspension and expulsion of any member, and 
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standards to ensure strict adherence thereto.  
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Sec. 7.  Accountability.  – To ensure accountability of the Board and the SMEX, 
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all funds of and held in trust by the SMEX from the National Government, pursuant 
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to the provisions of this Act, shall be audited by the Commission on Audit (COA) 
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and all disbursements shall be made in accordance with existing auditing rules and 
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regulations.  
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Sec. 8. Transition.  –  After a period of five (5) years from the effectivity of this 
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Act, the SMEX may be privatized in order to ensure the efficient and effective 
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functioning of the stock exchange.  
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Sec. 9.  Appropriation.  –  The amount necessary to carry out the provisions of 
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this Act is hereby authorized to be appropriated in the General Appropriations Act 
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of the fiscal year following its enactment into law and thereafter.  
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Sec. 10. Separability Clause. – If any portion or provision of this Act is declared 
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unconstitutional or invalid, the remainder of this Act or any provisions hereof not 
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affected thereby shall continue to be in force and effect. 
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Sec. 11. Repealing Clause. – Any law, presidential decree or issuance, executive 
1 
order, letter of instruction, rule or regulation inconsistent or contrary to the 
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provisions of this Act is hereby repealed or modified accordingly. 
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Sec. 12. Effectivity. – This Act shall take effect after fifteen (15) days following 
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its complete publication in the Official Gazette or a newspaper of general circulation. 
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Approved,