Amendment to the Manual of Regulations for Banks and Manual of Regulations for Non-Bank Financial Institutions pertaining to Bangko Sentral Issued Securities Eligible Counterparties

BANGKO SENTRAL NG PILIPINAS OFFICE OF THE GOVERNOR CIRCULAR NO. II57 Series of 2022 Subject: AmendmenttotheManualofRegulationsforBanksand Manual of Regulations fior Non-Bank Financial Institutions pertaining to Bangko Sentral lssued Securities Eligible Counterparties The Monetary Board, in its Resolution No.'1466 dated 6 October 2022, approved the following amendments to the Manualof Regulations for Banks (MORB) and the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI) pertaining to the participation of trust entities that manage unit investment trust funds with non-resident participants in the secondary market of the Bangko Sentral lssued Securities. Section l. Section 6O1/6O'|-Q of the MORB/MORNBFI on Monetary Operations is hereby amended to read as follows: 60l/60l -Q Monetary Operations xxx The Bangko Sentral lssued Securities (Bills and Bonds). xxx Prohibition against funds from non-residents being accepted in the TDF, ODF, and BSP-SF (primary and secondary markets). The TDF, ODF, and BSP-SF are monetary 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. Further, placements in the TDF, the ODF and the BSP-SF are contractual in nature and thus shall be governed by the intent of the contracting parties. In keeping with the nature of these facilities, counterparties of the Bangko Sentral shall comply with the Guidelines on the Prohibition Against the Use of Funds from Non- Resident Sources for Placements in the Bangko Sentral's TDF, the ODF and the BSP-SF, as shown in AppendixS2/Q-48. Provided, however, that in the secondary market for Bangko Sentral Securities, participation of trust entities through unit investment trust funds (UlTFs) with non-resident participants in the selling or buying of Bangko Sentral Securities shall be allowed, provided that theshareofnetassetsofnon-residentsinthenetassetsofeach ;.Pqrtigpatjng UITF {oes not exqeed 'lo pergell qpo/ol. For this - .'.._":,:

purpose, trust entities shall submit periodic reports to the Bangko Sentral. Section 2. Annexes A-l and A-2 of this Circular shall replace the corresponding Appendices of the MORB and MORNBFI as follows: a. Annexes A-l of this Circular shall replace Appendix 82 of the MORB.T b. Annexes A-2 of this Circular shall replace Appendix Q-48 of the MORNBFI. Section 3. This Circular shall take effect immediately upon its publication either in the Official Gazette or in a newspaper of general circulation. FOR THE MONETARY BOARD: 'Yral.**e ' HI G. FONACIER fficer-ln-Charge | 4 octoaer 2cr22 1 Appendices on the Guidelines on the Prohibition against the Use of Funds from Non-Resident Sources for Placements in the Bangko Sentral's Term Deposit Auction Facility (TDF), the Overnight Deposit Facility (ODF)and the Bangko Sentral Securities Facility (BSP-SF).

ANNEX A-1 GUIDELINES ON THE trROHISITION AGAINSTTHE USE OF FUNDS FROM NON.RESIDENT SOURCES FOR PLACEMENTS IN THE BANGKO SENTRAL'S TERM DEPOSIT FACILITY TTDF} AND OVERNICHT DEPOSIT FACILIW (ODF), AND BANGKO SENTRAL SECURITIES FACILITY {BSP-SF} fAppendix to Sec. 6Ol (Prohibition against funds fram non-residents heing accepted in the TDn ODE and BSP- SFil 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 banksfiD 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. However, the UITFs of eligible trust departments (TDs), regardless of whether the UITFs have funds from non-residents, can be invested in Bangko Sentral Securitiesvia the participation oftheTDs in thesecondary market, subject to the limits imposed under Sec. 60l and periodic reporting on non-resident funds to the Bangko Sentral. An eligible bankfiD is required to submitto the Bangko Sentral's Financial Markets a notarized Letter of Undertaking (LOU) (Annex "A" for a bank, Annex 'B" for a TD) committing it is qualified as a counterparty ofthe Bangko Sentral TDF, ODF and/or BSP-SF. It is the responsibility of an eligible bankfiD 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 bank/fD is unable or unwilling to comply with the terms and conditions for the access to the TDF, the ODF, and the BSP-SF, the Bangko Sentral may limit, suspend, or deny access by the subject bankflD to the TDF, the ODF and/or the BSP-SF. The eligible banMID shall report to the appropriate supervising department of the Bangko Sentral all existing TDF, ODF, and BSP- SF placements not consistentwith these guidelines. Such placements shall not be renewed and shall be terminated upon maturity. Manual of Regulations for Banks - Appendix 82 Page 1

ANNEX A-1 AnnexA (lnstitution's Letterhead ) Date: The Financial Markets Bangko Sentral ng Pilipinas A. Mabini St., Malate. Manila Letter of Undertakinq Pursuant to Sec. 60l, which prohibits the use of funds sourced from non-residents from being placed in the Term Deposit Facility (TDF), the Overnight Deposit Facility (ODF), and the Bangko Sentral Securities Facility (BSP-SF) of the Bangko Sentral, the (Name of Instituti hereby undertakes not to place in the TDF, the ODF and the BSP-SF, as applicable, funds obtained from non- residents. The {Name of lnstitution) shall put in place appropriate internal oolicies and monitoring and assurance mechanisms consistent with the above conditions. Furthermore, it shall make available pertinent information and documents requested by the Bangko Sentral to verify compliance with the terms and conditions on its access to the Bangko Sentral's TDF, ODF and BSP-SF. (Treasurer) (President or Equivalent Position ) Signature Over Printed Signature Over Printed Name Name SUBSCRIBED AND SWORN TO before me this day of_at affianVs exhibiting thei r to wit NOTARY PUBLIC Doc. No.-; Page No._; Book No.-; Series of 2O-. Manual of Regulations for Banks - Appendix 82 Page 2

ANNEX A-1 Annex B (l nstitution's Letterhead ) Date: The Financial Markets Bangko Sentral ng Pilipinas A. Mabini St.. Malate. Manila Letter of Undertakino Pursuant to Sec. 60'1, which prohibits the use of funds sourced from non-residents from being placed in the Bangko Sentral Securities Facility (BSP-SF) of the Bangko Sentral, the {Name of Trust Department/Trust Entity) hereby undertakes not to place in the BSP-SF, as applicable, funds from any UITF in which non-residents account for more than lO percent (lO%)of net assets. The (Name of Trust Departmentftrust Entity) shall put in place appropriate internal policies and monitoring and assurance mechanisms in accordance with the provisions of Sec. 6OI, and submit timely, accurate and comprehensive periodic reports on non-resident funds to the Bangko Sentral. Furthermore, it shall make available pertinent information and documents requested by the Bangko Sentral to verify compliance with the terms and conditions on its access to the Bangko Sentral's BSP- sF. (Chief Compliance (Trust Officer) Officer) Signature Over Printed Signature Over Printed SUBSCRIBED AND SWORN TO before me this day of_at affianVs exhibiting their to wit: NOTARY PUBLIC Doc. No. :: Page No. -: Book No._; Series of 20

ANNEX A-2 CUIDELINES ON THE PROHIBITION ACAINST THE USE OF FUNDS FROM NON-RESIDENT SOURCES FOR PLACEMENTS IN THE BANGKO SENTRAL,S TDF, ODF, and BSP-SF [Appendix to Sec. 6Ol-Q (Prohibition against fttnds from non-residents being accepted in the TDE oDE and BSP-SF)I The TDF, ODF, and BSP-SF are monetary 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,placementsintheTDF,theODF, and the BSP-SFarecontractualinnatureandthus. shall be governed by the intent ofthe contracting parties. In keeping with the nature ofthis facility, all eligible quasi-banks/trust entities (QB/rE ) shall not place in the TDF, the ODF, and the BSP-SF (primary market and secondary markets) funds obtained, directly or indirectly. from non-residents. However, the UITFs of eligible trust entities. regardless of whether these have funds from non-residents. can be invested in Bangko Sentral Securities via the participation of the TEs in the secondary market, subject to the limits imposed under Sec. 60l-Q and periodic reporting on non-resident funds to the Bangko Sentral. An eligible QB/|E is required to submit to the Bangko Sentral's Financial Markets a notarized Letter of Undertaking (LOU) (Annex "A" for a QB, Annex'8" for a TE) committing it is qualified as a counterpafi of the Bangko Sentral TDF, the ODF, and/or the BSP-SF. It is the responsibility of an eligible QB/IE to have in place the appropriate internal policies and monitoring and assurance mechanisms consistent with its LOU. The Bangko Sentral reseryes the right to verify compliance with the above conditions. Whenever the Bangko Sentral has reason to believe that an eligible QB/rE is unable or unwilling to comply with the terms and conditions for the access to the TDF, the ODF, or the BSP-SF, the Bangko Sentral may limit, suspend, or deny access by the subject QB/rE to the TDF, the ODF. and/or BSP-SF. The eligible QB/rE 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.

ANNEX A-2 Annex A (l nstitution's Letterhead ) Date: The Financial Markets Bangko Sentral ng Pilipinas A. Mabini St.. Malate. Manila Letter of Undertaking Pursuant to Sec. 6O1-Q, which prohibits the use of funds sourced from non-residents from being placed in the Term Deposit Facility (TDF), the Overnight Deposit Facility (ODF), and the Bangko Sentral Securities Facility (BSP-SF)of the Bangko Sentral, the (Name of lnstitution) hereby undertakes not to place in the TDF, the ODF and the BSP-SF, as applicable, funds obtained from non-residents. The (Name of Institution) shall put in place appropriate internal policies and monitoring and assurance mechanisms consistent with the above conditions. Furthermore, it shall make available pertinent information and documents requested by the Bangko Sentral to verify compliance with the terms and conditions on its access to the Bangko Sentral's TDF, ODF and BSP-SF. (Treasurer) (President or Equivalent Position ) Signature Over Printed Signature Over Printed Name Name SUBSCRIBED AND SWORN TO before me this day of affiant/s exhibiting their to wit: NOTARY PUBLIC Doc. No._; Page No._: Book No._; Series of 2O-.

ANNEX A.2 Annex B (l nstitution's Letterhead ) The Financial Markets Bangko Sentral n9 Pilipinas A. Mabini St.. Malate. Manila Letter of Undertakino Pursuant to Sec. 60l-Q, which prohibits the use of funds sourced from non-residents from being placed in the Bangko Sentral Securities Facility (BSP-SF)of the Bangko Sentral, the (Name of Trust Departmentfirust Entity) hereby undertakes not to place in the BSP-SF, as applicable, funds from any UITF in which non-residents account for more than lO percent (lO%o)of net assets. The (Name of Trust Department/Trust Entity) shall put in place appropriate internal policies and monitoring and assurance mechanisms in accordance with the provisions of Sec. 6Ol-Q, and submit timely, accurate and comprehensive periodic reports on non-resident funds to the Bangko Sentral. Furthermore, it shall make available pertinent information and documents requested by the Bangko Sentral to verify compliance with the terms and conditions on its access to the Bangko Sentral's BSP-SF. (Chief Compliance (Trust Officer/ Officer or Eouivalent President or Equ ivalent Position) Position ) Signature Over Printed Signature Over Printed Name Name SUBSCRIBED AND sWoRN To before me this day of-at- affiant/s exhibiting their to wit: NOTARY PUBLIC Doc. No. :: Page No. -: Book No. =: Series of 20