‘Forex market reforms to continue’
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Thu, 02 May 2019 16:22:11 +0000
THE Bangko Sentral ng Pilipinas (BSP) will keep pursuing reforms that will improve the country’s foreign exchange (FX) market, according to its chief.
“The BSP will…continue to pursue initiatives aimed at promoting the development of robust, fair, liquid and transparent FX market in the Philippines,” Bangko Sentral
Governor Benjamin Diokno said in a speech at the recent joint general membership meeting of the Financial Executives Institute of the Philippines and the Management Association of the Philippines in Makati City.
This was after he made the asurance that the central bank would continue to adhere to a market-determined FX policy amid the peso’s sustained strength against the US dollar this year.
The BSP chief said one such initiative was the establishment of a governance framework for the FX market.
“The framework shall require that spot transactions between dealer BSFIs (BSP-supervised financial institutions) be transacted only in an organized interdealer market that is governed by trading rules and regulations, codes of conduct and conventions set forth by an FX Market Oversight Body,” he added.
Providing an update on the initiative, Diokno said the exposure draft for the Bangko Sentral regulatory issuance has been circulated in the industry for comments.
Besides the oversight body, the BSP governor said another initiative was the development by the industry of a comprehensive FX Code of Conduct.
According to him, this code will present a common set of guidelines for participants in the wholesale FX market.
“The objective is to adopt global principles of good practice in areas such as ethics, governance, execution, information sharing, risk management and compliance, and the confirmation and settlement processes that shall promote the integrity and effective functioning of the market,” he said.
At present, an industry working group has been convened for the purpose and is developing a proposed approach that will be submitted to the central bank for review, Diokno added.
The BSP has been embarking on FX reforms for the past few years.
In January, monetary authorities eased the rules on foreign exchange transactions to give investors greater flexibility in managing their investments and cash flows.
They also relaxed rules on outward investments and associated derivatives transactions by expanding the coverage of outward investment transactions and lifting the prior central bank approval requirement for purchase of foreign exchange beyond the threshold amount, subject only to prior notification to the BSP.
The reforms also allowed the submission of supporting documents through electronic means for: registration of private sector foreign loans/borrowings without public sector guarantee; registration of inward investments; and sale of foreign exchange by banks covering various FX transactions.
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