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

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Reverce Pepurcha* Agtements with tle &ngko &ntral.

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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).

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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

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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:

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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.

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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:

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The Bangko Sentral Term Deposit F*iliU FDF). The TDF is a

key liquidity absorption facility of the Bangko Sentral used to

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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:

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e. Placements in the TDF shall be governed by guidelines

issued by the FM-DMOD of the Bangko Sentral.

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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:

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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

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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.

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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

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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.
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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

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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.