Minimum documentary requirements for foreign exchange (FX) forward and swap transactions

Annex “A” GUIDELINES AND MINIMUM DOCUMENTARY REQUIREMENTS FOR FOREIGN EXCHANGE (FX) FORWARD AND SWAP TRANSACTIONS The following is a list of minimum documentary requirements for FX forward and swap transactions to cover FX obligations and exposures. Unless otherwise indicated, original documents* shall be presented on or before deal date to banks, non-banks with quasi-banking functions (NBQBs) and their subsidiaries/affiliates authorized to engage in financial derivatives activities. A. FORWARD SALE OF FX TO COVER OBLIGATIONS – DELIVERABLE AND NON-DELIVERABLE 1. FORWARD SALE OF FX – TRADE (includes trades with banks other than the issuing/booking bank) 1.1 Trade Transactions 1.1.1 Under Letters of Credit a. Copy of LC opened; and b. Accepted draft, or Commercial invoice / Bill of Lading 1.1.2 Under Documents against Acceptances (DA) / Open Account (OA) Arrangements a. BSP registration letter or copy of Records of Goods Imported (RGI) received and acknowledged by the BSP; b. Copy of commercial invoice; and c. Copy of Bill of Lading, or Shipping guarantee In addition to the above requirements, the bank/NBQB and their subsidiaries/affiliates shall require the purchaser to submit a notarized Letter of Undertaking that: i. At maturity date of the forward contract, it shall comply with the documentation requirements on sale of FX for trade transactions under Circular-Letter dated January 24, 2002, as amended; and ii. No double hedging has been obtained by the client for the covered transactions. * If copy is indicated, it shall mean photocopy, electronic copy or facsimile of original

Annex “A” 1.1.3 Direct Remittance Original shipping documents indicated in item II.a of Circular Letter dated January 24, 2002. 2. NON-TRADE TRANSACTIONS Only non-trade transactions with specific due dates shall be eligible for forward contracts, subject to the same documentation requirements under Circular No. 388 dated May 26, 2003 on the sale of FX for non-trade purposes. 2.1 Foreign Currency Loans owed to non-residents or AABs 2.1.1 Deliverable Forwards The maturing portion of the outstanding eligible obligation, i.e., those that are registered by the BSP, including interest and fees thereon as indicated in the BSP registration letter, may be covered by a deliverable forward subject to the documentary requirements under Circular No. 388 dated May 26, 2003, except that the creditor’s billing statement shall be submitted only on or before the maturity date of the contract. 2.1.2 NDFs The outstanding eligible obligation, i.e., those that are registered by the BSP, including interests and fees thereon as indicated in the BSP registration letter may be covered by a non-deliverable forward subject to the documentary requirements under Circular No. 388 dated May 26, 2003 except the creditor’s billing statement which need not be submitted. The amount of the forward contract shall not exceed the outstanding amount of the underlying obligation during the term of the contract. 2.2 Inward Foreign Investments The outstanding amount of sales/maturity proceeds due for repatriation to non-resident investors pertaining to BSP- registered investments in: a. PSE-listed shares of stock; b. government securities;

Annex “A” c. money market instruments; and d. peso time deposits with a minimum tenor of 90 days may be covered by forward FX contracts subject to the presentation of the original BSRD on or before deal date, except that for Item 2.2.a above, the broker’s sales invoice shall also be presented. Sales proceeds of BSP-registered investments in shares of stock that are not listed in the PSE may be covered by a deliverable forward contract only if determined to be outstanding and payable on a specific future date as indicated in the Contract To Sell/Deed of Absolute Sale and subject to the same documentary requirements under Circular No. 388 dated May 26, 2003. B. FORWARD SALE OF FX TO COVER EXPOSURES – DELIVERABLE AND NON-DELIVERABLE 1. TRADE (includes trades with banks other than the issuing/booking bank) 1.1 Under LC a. Copy of LC opened; and b. Proforma Invoice, or Sales Contract / Purchase Order 1.2 Under DA/OA Any of the following where delivery or shipment shall be made not later than one (1) year from deal date: a. Sales Contract b. Confirmed Purchase Order c. Accepted Proforma Invoice d. Shipment/Import Advice of the Supplier In addition to the above requirements, the bank/NBQB and their subsidiaries/affiliates shall require the purchaser to submit a notarized Letter of Undertaking that: i. At maturity of the forward contract, it shall comply with the documentation requirements on the sale of FX for trade transactions under Circular-Letter dated January 24, 2002, as amended; and

Annex “A” ii. No double hedging has been obtained by the client for the covered transactions. 2. NON-TRADE (NON-DELIVERABLE) BSP-registered foreign investments without specific due dates are considered FX exposures. As such, the outstanding balance of this investment, appearing in the covering BSRD may only be covered by an NDF contract, based on its market/book value on deal date, subject to prior BSP approval under Circular No. 135 dated July 22, 1997 and presentation of the covering BSRD and the proof that the investment still exists (e.g. stock certificate, or broker’s buy invoice, or confirmation of sale, or certificate of investment in money market instruments, or certificate of peso time deposits). Hedging for permanently assigned capital required for Philippine branches of foreign banks/firms is not allowed. C. FORWARD PURCHASE OF FX FX forward contracts shall be subject to the institution’s “Know Your Customer” policy of the institution and the AMLA guidelines of the BSP. In addition, counterparties must be limited to those which are manifestly eligible to engage in FX forwards as part of the normal course of their operations and which satisfy the institution’s suitability and eligibility rules for such transactions. D. FX SWAP TRANSACTIONS 1. FX SALE (first leg)/FORWARD FX PURCHASE (second leg) (with non- bank counterparties) – The same minimum documentary requirements for sale of FX under BSP Circular No. 388 dated May 26, 2003 for non-trade transactions, and Circular-Letter dated January 24, 2002 for trade transactions, as amended, shall be presented on or before deal date. 2. FX PURCHASE (first leg)/FORWARD FX SALE (second leg) (with non- bank counterparties) - The first leg of the swap will be subject to the institution’s “Know Your Customer” policy and the AMLA guidelines of the BSP and will require the conversion of foreign currency to pesos. The second leg of the swap transaction will be subject to the swap contract between the counterparties.

Annex “A” Banks/NBQBs and their subsidiaries/affiliates shall: (a) retain copies of supporting documents pertaining to the underlying transaction (e.g., BSP approval or registration [for BSP-approved/ registered foreign currency loans and investments], promissory note, loan agreement, stock certificate, certificate of time deposit, proof of FCDU deposit, shipping documents) which shall be made available to the BSP for verification; and (b) submit copies of the covering swap contracts to the BSP-Treasury Department within three (3) days from the execution of the swap contract. Swap contracts of this type with non-residents shall, however, require prior BSP approval.

Annex B Deadline: Weekly within two (2) banking days after end of reference week Submission: IOD at e-mail address: [email protected] ___________________________________ Universal/Commercial Bank For the Week Ending ____________________ Report on Foreign Exchange Swaps With Non-banks */ Where the First Leg is a Purchase of Foreign Exchange Against Pesos Non-bank Swap Counterparty Source of FX First Leg Second Leg Deal Date Deal Slip Residency BSP Orig. Availment Final Maturity Residency Value FX FX Purchases PHP Sales Maturity Forward FX Sales PHP Purchases No. Name 1/ Indicator Purpose Type Approval Date 2/ Date 2/ Counterparty Name 1/ 3/ Indicator Date Rate Ccy Amount Amount Date FX Rate Ccy Amount Amount ccyymmdd 1 - resident ccyymmdd ccyymmdd 1 - resident ccyymmdd 99.99999 AAA 999,999,999.99 ############ ccyymmdd 99.99999 AAA 999,999,999.99 999,999,999.99 2 - non-resident 2 - non-resident 1 - hedging-banking books 2 - hedging-trading books 3 - trading (non-hedging) 1 - Proceeds of FCDU loan 2 - Proceeds of OBU loan 3 - Proceeds of offshore loan 4 - Proceeds of intercompany advances 5 - Proceeds of foreign investment 6 - Proceeds of exports 9 - Others (specify nature) 1 - With BSP approval 2 - Without BSP approval 1/ Use capital letters; indicate complete business name; for individuals use the format "SURNAME, FIRST NAME, MIDDLE NAME" 2/ For foreign currency loans and intercompany advances 3/ If foreign loan, indicate name of creditor; if foreign investment, indicate name of investor; if export proceeds, indicate foreign buyer, etc. */ Excluding cross currency swaps

Annex C Deadline: Weekly within two (2) banking days after end of reference week Submission: IOD at e-mail address: [email protected] ___________________________________ Bank For the Week Ending ____________________ Report on Cancellations, Roll-overs and Non-delivery of Foreign Exchange Forward Purchase and Sale Contracts */ Transaction Non-bank Counterparty Underlying Transaction Purchases Sales Deal Slip Roll-over/Cancellation Justification Value Date Residency Residency Trans. BSP Forward Deal Date No. Type Ccy Amount Original New Name 1/ Indicator Purpose Counterparty Name 2/ Indicator Code Approval FX Rate Ccy Amount FX Rate Ccy Amount ccyymmdd AAA 999,999,999.99 ccyymmdd ccyymmdd 1 - resident 1 - resident 99.99999 AAA 999,999,999.99 99.99999 AAA 999,999,999.99 2 - non-resident 2 - non-resident FC - Full Cancellation FR - Full roll-over/renewal 1 - hedging-banking books 1 - FCDU loan PC - Partial cancellation 2 - hedging-trading books 2 - OBU loan PR - Partial roll-over/renewal 3 - trading (non-hedging) 3 - Offshore loan 4 - Intercompany advances 5 - Foreign investment 6 - Export proceeds 7 - Importations (except USD Trust Receipts) 8 - USD Trust Receipts (for NDFs only) 9 - Others 1 - With BSP approval 2 - Without BSP approval 1/ Use capital letters; indicate complete business name; for individuals use the format "SURNAME, FIRST NAME, MIDDLE NAME" 2/ If foreign loan, indicate name of creditor; if foreign investment, indicate name of investor; if export proceeds, indicate foreign buyer, etc. */ Excluding cross currency swaps