Expansion of Eligible Participants for Monetary Operations and for BSP Securities in the Secondary Market

BANGKO SENTRAL NG PILIPINAS CIRCULAR NO. II3O Series of 2O2l- OFFICE OF THE GOVERNOR SubJect Expansion of Eligible Participants br Monetary Operations and for BliP Securities in the Secondary Market The Monetary Board, in its Resolution No. 1524 dated tl November 2o21, approved the following amendments to the Manual of Regulations for Banks (MORB) and the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI) to operationalize the inclusion of digital banks as eligible participants for BSP's monetary operations and of trust entities as eligible participants of BSP Securities in the secondary market. Section l. Section 361-Q of the MORNBFI shall be amended to include provision on investment of QBs in BSP-issued securities, as follows: 351 -Q Pu rchase of Receivables and Other Obligations xxx Reverce Pepurcha* Agtements with tle &ngko &ntral. xxx Investment of QBs on evidences of indebtedness by the Bangko Sentral. Purchase of Bangko Sentral-issued securities shall be governed by Sec. 6Ol-Q Fhe Bangko Sentral Securities: Bills and Bonds). xxx Pagel of4 C2 aa .aaaatt'

-./ Section 2. Sections 60l of the MORB on Monetary Operations as amended by Circular lO95 dated 8 September 2O2O are further amended, as follows: "60l MonetaryOperations xxx Revets rcpurchase agneements with tlrc Bangko Sentral. Reverse Repurchase Agreement (RRP) refers to the Bangko Sentral's monetary instrument where the Bangko Sentral sells government securities with a commitment to buy them back at a later date. RRPs shall be open to banks (UBs/KBs, digital banks and TBs) and QBs. These counterparties may enter into RRP transactions with the Bangko Sentral by participating in the RRP auction operation and said transactions with the Bangko Sentral shall be subject to the following terms and conditions: xxx bnowings from the Overnight Lending Facility (OLF)of the hngko*ntraLThe OLF is a Bangko Sentral standing facility which allows counterparties to obtain overnight liquidity from the Bangko Sentral on an open-volume basis against eligible collateral in order to cover short-term liquidity requirements. The OLF shall be open to banks (UBs/KBs, digital banks and TBs) and QBs. xxx Overnight depsits with Bangko *ntral. The Ovemight Deposit Facility (ODF) is a Bangko Sentral standing facility which allows banks (UBs/KBs, digital banks and TBs) and QBs to place overnight deposits with the Bangko Sentral, subject to the following terms and conditions: xxx The Bangko Sentral Term Deposit F*iliU FDF). The TDF is a key liquidity absorption facility of the Bangko Sentral used to Page 2 of4

c withdraw liquidity from the system in bulk.t Term deposit transactions shall be open to banks (UBs/KBs, digital banks and TBs) and QBs and may be effected with the Bangko Sentralsubject to the following terms and conditions: xxx e. Placements in the TDF shall be governed by guidelines issued by the FM-DMOD of the Bangko Sentral. xxx The hngko *ntral S*urities: (Bills and bnds). The issuance of Bangko Sentral Securities is a part of the monetary operations of the Bangko Sentral to manage short-term liquidity in the ftnancial system and guide market interest rates. Bangko Sentral Securities are available to all Bangko Sentral counterparties, namely banks (UBs/KBs, digital banks and TBs) and QBs. The Bangko Sentral Bills and Bonds shall be subject to the following terms and conditions: xxx h. Secondary market trading. lssued Bangko Sentral Securities shall be available for trading in the secondary market and shall be done on the trading platform operated by the Philippine Dealing and Exchange Corporation (PDEx). Banks (UBs/KBs, digital banks and TBs), QBs, and trust entities are eligible participants of Bangko Sentral Securities in the secondary market, subject to the rules and guidelines issued by the Bangko Sentral. Provided, That, in the case of trust entities, only unit investment trust funds may be invested in Bangko Sentral Securities. The trading and Settlement WindoMlimeline xxx xxx Section 3. The provisions of Section 60l of the MORB (except for Item "e" on the purchase and sale of government securities by the National Treasury and government-owned or controlled corporations) l The TDF also reFrs to the Term Deposit Auctlon Faclllty in Partlcipation Agreements and Rules and Regulation pertalnlng to the Bangko Sentral facllltles under the Monetary Operatlons S!6tem.

\ including the amendments under Section 2 of this Circular, shall also be adopted under Section 6Ol-Q of the MORNBFI. Section 4. Annexes A-l and A-2of this Circular, as amended by Circular No. IO95, shall replace the corresponding Appendices of the MORB/MORNBFI to include Trust Entities on the Guidelines on the Prohibition Against the Use of Funds from Non-Resident Sources for Placements in the Bangko Sentral's Term Deposit Facility [fDF), the Overnight Deposit Facility (ODF) and the Bangko Sentral Securities Facility (BSP-SF), as follows: a. Annex A-l of this Circular shall replace Appendix 82 of the MORB; and b. Annex A-2 of this Circular shall replace Appendix Q-48 of the MORNBFI. Annex A and Annex B of Appendix 82 of the MORB shall be added/adopted under Appendix Q-48 of the MORNBFI. Section 5. This Circular shall take effiect fifteen 05) calendar days after its publication either in the Official Gazette or in a newspaper of general circu lation. FOR THE MONETARY BOARD ara. S (' \ BENJAMIN E. DIOKNO Governor A,t November 2O2l Page 4 of4

I rl ANNEX A.I CUIDELINES ON THE PROHIB]TION AGAINST THE USE OF FUNDS FROM NON-RESIDENT SOURCIS FOR PTACEMENTS IN THE BANGKO SENTRAI'S TERM DEPOSIT FACIUTY (TDF), AND OVERNIGHT DEPOSIT FACILIW (oDF), AND BANGKO SENTRAL SECURTTTES FACTUW (BSp-SF) [Appendix to ecfion 60l (Ptohibition agalnst funds from non-residents being accepted ln the |DE ODE and BSP-SF)I The TDF, ODF, and BSP-SF are monetary policy instruments deployed by the Bangko Sentral for the purpose of managing domestic liquidity in the financial system. These facilities should not be made available for opportunistic investment activities funded from non-resident sources. Furthermore, placements in the TDF, the ODF, and BSP-SF are contractual in nature and thus, shall be governed by the intent of the contracting parties. In keeping with the nature of this facility, all eligible banks (UBs/KBs, digital banks and TBs) and trust entities shall not place in the TDF, ODF, and BSP-SF (primary and secondary markets) funds obtained, directly or indirectly, from non-residents: Provided, That funds inwardly remitted by a foreign bank intended as capital of its branch or subsidiary in the Philippines shall be eligible for placement in the TDF, the ODF, and the BSP-SF (primary and secondary markets) of the Bangko Sentral. An eligible bank or trust entity is required to submit to the Bangko Sentral's Financial Markets (FM) a notarized Letter of Undertaking(LOU)(Annex"A. or Annex "B', as applicable)committingitis qualifi ed asa cou nterpartyof the BangkoSentralTDF, ODF, a nd BSP-SF. It is the responsibility of an eligible bank and trust entity to have in place the appropriate internal policies and monitoring and assurance mechanisms consistentwith its LOU. The Bangko Sentralreservesthe rightto veriff compliancewith the above conditions. Whenever the Bangko Sentral hasreasontobelievethataneligible bank or trust entityisunableorunwillingto complywiththetermsandconditionsforthe accesstotheTDF,theODF, and the BSP-SF,theBangko Sentral maylimit,suspend,ordenyaccessbythesubject bank or trust entitytotheTDF, theODF and/or the BSP-SF. The eligible bank or trust entigt shall report to the appropriate supervising department of the Bangko Sentral all existing TDF, ODF and BSP-SF placements not consistent with these guidelines. Such placements shall not be renewed and shall be terminated upon maturity.

I I ANNEX A.I AnnexA (l nstitution's Letterhead ) Date: The Flnancial Markets (FM) Bangko Sentral ng Pilipinas A. Mabini St., Malate, Manila Letter of Undertaking xxx

I,- t ANNEX A.I Annex B (l nstitution's Letterhead ) The Financial Markets (FM) Bangko Sentral ng Pilipinas A MabiniSt.. Malate, Manila Letter of Undertaking

ANNEX A.2 GUIDEUNES OI{ THE PROHIBMON AGAINST THE USE OF FUNDS FROM ilOII-RESIDEI{T SOURCES FOR PIACEMEilTS IN THE BANGKO SENTRAT'S TDF, ODF, and BSP-SF [Appcndlxto*c.6Ol-Q (Prohlbftlmagainstfundsftom non-rcsklents blngaccqtd In tltn fDEODEandBSPSFil The TDF, ODF, and BSP-SF are monetary instruments deployed by the Bangko Sentral for the purpose of managing domestic liquidity in the financial qystem. These facilities should not be made available for opportunistic investment activities funded from non-resident sources. Furthermore,placementsintheTDF,theODF, and the BSP-SFarecontractualinnatureandthus, shall be governed by the intent of the contracting parties. In keeping with the nature of this facility, all eligible QBs and trust entities shall not place in the TDF, the ODF, and the BSP-SF (primary and secondary markets) funds obtained, directly or indirectly, from non-residents. An eligible QB or trust entity is required to submit to the Bangko Sentral's Financial Mark€ts (FM) a notarized Letter of Undertaklng (LOU) (Annex "A' or Annex 'B', as appllcable) committing it is qualified as a counterpafi of the Bangko Sentral TDF, the ODF, and the BSP- sF. It is the responsibility of an eligible QB or trust entity to have in place the appropriate internal policies and monitoring and assurance mechanisms consistent with its LOU. The Bangko Sentral reserves the right to verifo compliance with the above conditions. Whenever the Bangko Sentral has reason to believe that an eligible QB or trust entity is unable or unwilling to comply with the terms and conditions fior the access to the TDF, the ODF, or the BSP-SF, the Bangko Sentral may limlt, suspend, or deny access by the subject QB or trust entity to the TDF, the ODF, and/or BSP-SF. The eligible QB or trust entity shall report to the appropriate supervising department of the Bangko Sentral all existing TDF, ODF, and BSP-SF placem€nts not consistent with these guidelines. Such placements shall not be renewed and shall be terminated upon maturity.