The Bangko Sentral ng Pilipinas (BSP) has made fresh amendments to its foreign exchange (FX) regulations that will give Filipinos more access to hedging instruments and help deepen the domestic capital market.
In a press release, the BSP said its policy-making Monetary Board (MB) increased the number of hedging options that the public can avail of, which now include non-deliverable swaps, non-deliverable cross-currency swaps, and foreign exchange options.
The BSP defines FX swaps as an agreement that involves exchanging two currencies using the prevailing spot rate and swapping these at a specified time using a different exchange rate.
Before the latest MB decision, Filipinos could only hedge through deliverable and non-deliverable foreign exchange forwards, defined as the agreement for the delayed delivery of a specific amount of foreign currency at a specified exchange rate.
The BSP said hedging, which uses financial instruments to address risks from the exchange rate and interest rate movements, benefits individuals and businesses, such as overseas Filipino households, exporters, and importers.
Aside from broadening hedging options for Filipinos, the MB also lifted the requirement for deliverable FX forwards "to have maturity dates matching the underlying FX exposure.”
The central bank said “maturity dates can now be equal to or shorter than the underlying FX exposure, allowing flexibility when no matching FX derivatives are available.”
The board also amended the "rules applicable to banks when transacting in FX derivatives for their own account and in transacting with customers” and allowed the online submission of applications for registration of foreign investments.
"Banks are given a six-month transition period from the effectivity of Circular No. 1212 to make the necessary adjustments to their systems and processes and ensure compliance with the revisions in the reports and new reporting guidelines,” the BSP added.
BSP PHOTO
The Bangko Sentral ng Pilipinas (BSP) has made fresh amendments to its foreign exchange (FX) regulations that will give Filipinos more access to hedging instruments and help deepen the domestic capital market.
In a press release, the BSP said its policy-making Monetary Board (MB) increased the number of hedging options that the public can avail of, which now include non-deliverable swaps, non-deliverable cross-currency swaps, and foreign exchange options.
The BSP defines FX swaps as an agreement that involves exchanging two currencies using the prevailing spot rate and swapping these at a specified time using a different exchange rate.
Before the latest MB decision, Filipinos could only hedge through deliverable and non-deliverable foreign exchange forwards, defined as the agreement for the delayed delivery of a specific amount of foreign currency at a specified exchange rate.
The BSP said hedging, which uses financial instruments to address risks from the exchange rate and interest rate movements, benefits individuals and businesses, such as overseas Filipino households, exporters, and importers.
Aside from broadening hedging options for Filipinos, the MB also lifted the requirement for deliverable FX forwards "to have maturity dates matching the underlying FX exposure.”
The central bank said “maturity dates can now be equal to or shorter than the underlying FX exposure, allowing flexibility when no matching FX derivatives are available.”
The board also amended the "rules applicable to banks when transacting in FX derivatives for their own account and in transacting with customers” and allowed the online submission of applications for registration of foreign investments.
"Banks are given a six-month transition period from the effectivity of Circular No. 1212 to make the necessary adjustments to their systems and processes and ensure compliance with the revisions in the reports and new reporting guidelines,” the BSP added.
BSP PHOTO
