Short-term deliverable forward contracts with non-residents

CIRCULAR NO. 344 Series of 2002

To: All Commercial Banks and Universal Banks

As an exception to Circular No. 135 dated July 22, 1997, the Monetary Board under its Resolution No. 1041 dated July 18, 2002, authorized banks to roll over, without prior Bangko Sentral approval, short-term deliverable forward contracts with non-residents at every maturity during the tenor of the underlying long-term Philippine government securities, subject to the following conditions:

1.  The underlying transaction for each short-term deliverable foreign exchange (FX) forward contract should be a BSP-registered foreign investment in government securities for which a Bangko Sentral Registration Document (BSRD) has been issued;

2.  The actual delivery/settlement of the forward contract shall coincide with the date of the repatriation of the BSP-registered investments;

3.  The value of the forward contract shall not exceed the foreign currency equivalent of the maturity value/net proceeds of the BSP-registered investments computed based on the agreed forward exchange rate;

4.  The repatriation and remittance out of the country of the BSP-registered investments must comply with the documentary requirements under existing BSP rules; and

5.  The Bank concerned shall submit to the Department of Commercial Banks (DCB) I or II, a weekly report of daily executed forward contracts to sell FX to non-residents with no full delivery of principal, including cancellations, rollovers/renewals thereof, within two (2) banking days after end of reference week, using the attached prescribed form duly signed by the Head of Settlements/Treasury Operations or by an officer of equivalent rank and countersigned by the Compliance Officer.

Delayed, incomplete or erroneous reports shall be subject to a fine of PHP1,200 a day for each day of violation until the correct report is submitted to the appropriate supervising and examining Department.

This Circular shall take effect immediately.

FOR THE MONETARY BOARD:

RAFAEL B. BUENAVENTURA Governor