Amendments to the Guidelines on the Issuance of Long-Term Negotiable Certificates of Time Deposits

BANeKo SeNrnaL Ne ptr-rprNag OFFICE OF THE GOVERNOR ctRcuLAR NO. s77 Series of 2015 Subiect: Amendments to the Guidelines on the lssuance of long-Term Negotiable Certificates of Time Deposits Pursuant to Monetary Board Resolution No. 745 dated May 07, 2015, the provisions of the Manual of Regulations for Banks (MORB) on long-term negotiable certificates of time deposit (LTNcrD) are hereby amended as follows: Section 1. ttem "b" of Subsection X233.9 of the MORB on Application for authority of the issuing bank is hereby amended to read as follows: "b. Application for outhority of the issuing bonk. An application for authority on each issue/issue program of LTNCTD shall be filed with the appropriate department of the sES. Th.t p.rti"n .n rppr"""d tTN€TD th"t i- n"t "ny "f d€€tn€d+€'rfeited: The application shall be signed by the president/country manager (branch of a foreign bank) of the bank. ltshall be accompanied by: (i) a certified true copy cf the resolution of the bank's board of directors authorizing the issuance of LrNcrD, indicating, among others, the issue size, offering period, purpose or intended use of proceeds thereof, registry bank, underwriter/arranger, and selling agent(s) @ and (ii) a Lerrer of Undertaking\.(LOU) signed by the president/country manager that the issuing bank wirl ensure its continuous compliance with the prequalification requirements under rtem .. (c) 1,, of this subsection up to the time of the last offering of its approved and Iisted LTNCTDs.,, xxx xxx" Section 2. ltem t'c" of Subsection X233.9 on the pre-quolification Requirements of the MORB is hereby amended to read as follows: " c. Preqttalificotion requirements xxx xxx As such, the issuing bank shall make a careful and diligent evaluation of the parties whom it shall engage to act as underwriter/arranger, registry bank, and selling agent The following qualification requirements shall be strictly complied with prior to and on a continuing basis by the issuing bank and Fls engaged to act as underwriter/arranger, registry bank and selling agent an4 marketrrnaker while the LTNCTD of the issuing bank remains outstanding.

(Ll lssuing bonk XXX XXX lS]+qe{M nee; (e) lt must be an Fli with dealer.hip er brekering lieense; and plianee with ltems xxx XXX,, section 3. ltem "d" of subsection X233.9 of the MORB on Additional requirements for the issuonce of LTN|TD is hereby relabeled as ltem ,,e,, and amended as follows: "e. Additional requirements for the issuonce of LTNCTD. Aft€+-+bankb hefo|lowingadditiona|requirementssha11be submitted to the appropriate department of the SES within ten (10) calendar days after issuance of the initial offering/tranche: (1) xxx xxx xxx (4) Specimen of the proposed registry confirmation and purchase advice from each selling agent/ma+ket+ker which will evidence sale of the LTNCTD. The bank shall, likewise, submit within ten (10) calendar days after issuance of the initial and subsequent tranches, a written notice to the appropriate department of the SES of the actual date of initial/tranche offering aeeemBa+ied bY a €ertifieatien by the pre'ident/eeuntry rnanager that the pre qualifjeatien ith uF te the ti+ne ef s,ffissisg." section 4. ltem "e" of subsection X233.9 of the MORB on Listing of LTNCTD with an accredited exchonge is hereby relabeled as ltem "d" and amended as follows: "d. Listing of LTNCTD with on occredited exchange. LTNCTDs shalt+dist€d en a€€redited ex€h du1y approved by the Monetary Board shall be issued and

immediately list.ed on an accredited exchange: provided, That banks which opt to issue portions of irre approved amount in tranches shall immediately list such Liancne issuance: provided, further, That if within one (1) year from approval of the Monetary Board, the entire amount of the approved LTNCTDs shall not have been issued, the bank's authority to issue the unissued portion of the approved amount shal1 be deemed revoked, and said unissued portion sha1l no longer be issued. Banks which fail to list their issu€d LTNCTDs on an accredi_ted exchange within the prescribed period shal_l net+e+{+esr€c te further issue trNCTDs, be subject to the sanctions under item (o) (r) of this Subsectior:." section 5. ltem of' of subsection x233.9 of the MORB on Functions/responsibilities of the parties involved is hereby amended as follows: "(Ll Registry bank xxx l2l U nderwrite r/Arra n ger (d) Disseminates informati"rlilprospective depositors/investors of LTNCTDs on the terms and conditions of the issue (including information of non-pretermination by the depositor prior to original maturity and the liquidity mechanism in secondary trades) and the rights and obligations of the holder, issuer, ma*e#selling agent, underwriterfarranger and registry bank; and xxx XXX (4+A4€rletqel<er XXX xxx" Section 6. ltem "g" of Subsection X233.9 on Change of rwrite r/a rra n ger, reg istry bank selling ogent(s)/market maker(s) is hereby u nde amended to read as follows:

"9. change of underwriter/arranger, registry bonk, and selling agent(s)@) The issuing bank shall notify the appropriate department of the SES in writing of any change in the identity of its registry bank, underwriter/arranger and selling agent within ten (10) calendar days from date of such change. xxx xxx" section 7. ltem "h" of subsection X233.9 on waiver of the secrecy of Deposits for Morket Makers is hereby deleted and items "i to p" are hereby relabeled as "h to o", respectivelyl. "h, weive+ ef the 'eeree'' ef depesits fer market mekers, \ markel mau.er €€|t+fid€{*i€{, section 8. ltem "i" of subsection X233.9 is hereby amended to read as follows: ua. Agreements between issuing bonk ond registry bank/seiling ogent(s)/+n4+ket4@). The agreements between the issuing bank and the registry banklma#{e+-rm€{<€+s/selling agents shall comply with provisions of Sec. X162 on bank service contracts. The issuing bank shall be liable for any damages to investors/depositors caused by actions of said registry bank and selling a ge nt(s )lma+ket-ma*e+{+fco ntra ry to th e a greements ente red i nto. xxx xxx" section 9. ltem "j"(4) of subsection x233.9 on primory Offering/Secondory Troding is hereby amended to read as follows: "ljl Minimum features x x x xxx xxx (4) Primory offering/secondory Troding - The initial offering shalt be executed through an underwriter or an arranger. Subsequent negotiations in secondarytradingmustbeexecutedthrough3p@ accredited exchangie. XXX xxx" ' Relabeling of items "i to p" of Subsection X233.9 of the MoRB is effected for the succeeding amended sections under this circular Page 4 of G

section 10. ltem "k" of subsection X233.9 is hereby amended to read as follows: "k. Purchose Advice and Registry Confirmation (1) The Purchase Advice and Registry Confirmation shall conspicuously contain the following caveat: (a) xxx (bl 'All negotiotions/transfers of this LTNCTDs prior to moturity must be co u rse d t h ro u g h e44ad<c+4Aal<er an a c c re d i t e d exc hange,,. (2) The selling agent/ma+&et-ma*er shatl issue a Purchase advice to evidence initial purchase ana-seeengar++reding of LTNCTD with the original copy given to the holder. xxx xxx" Section 11. ltbm "o"(3) of Subsection X233.9 on Sanctions is hereby amended to read as follows: "o.Sonctions xxx xxx xxx "(31 On the selling oQentsfuslat mqlass - Disqualification to be appointed as selling agentlmar*et+a*er for one (L) year and a monetary penalty of P30,000 for each violation. XXx XxX (51 On the responsible officer - x x x XXX Fls not supervised by the Bangko sentral acting as seiling agent an4/o+ of LTNCTDs and/or x x x XXX XXX,, section 12. A new provision is hereby added as item "p" of subsection X233.9 of the MORB: "p. Supervisory Enforcement Actions. The BSp reserves the right to deploy its range of supervisory toors provided in circular No. B7s dated 15 April 2015 Page S of 6

t.o ensure compliance with the provisions of this Subsection." Section 13. Effectivity. This Circular shall take effect fifteen (15) days after its publication either in the Official Gazette or in a newspaper of general circulation. & May 2o1s