BSP allows trust firms to join auctions

The Bangko Sentral ng Pilipinas (BSP) is now allowing trust entities to participate in the auctions of central bank securities, it said in a circular.

BSP securities in the primary and secondary markets are now available to all counterparties, namely universal and commercial banks, digital banks, thrift banks, quasi-banks and trust entities, according to a circular signed by BSP Governor Eli M. Remolona Jr. on Nov. 24.

The circular amends sections of the Manual of Regulations for Banks and the Manual of Regulations for Non-Bank Financial Institutions.

The amendments were made to allow “the participation of trust entities, which are trust departments of banks and stand-alone trust corporations, to access the primary market of the Bangko Sentral Issued Securities,” the central bank said.

“The issuance of Bangko Sentral Securities is a part of the monetary operations of the Bangko Sentral to manage short-term liquidity in the financial system and guide market interest rates,” it added.

Previously, trust firms were only allowed to participate in secondary market trading of BSP securities and could not join the auctions.

The BSP offers both bills and bonds, but only universal and commercial banks, thrift lenders, and nonbanks with quasi functions were initially allowed to participate in auctions of central bank securities.

A trust entity provides services involving a trustor-trustee relationship for the management of funds or properties to its clients.

BSP securities are considered high-quality liquid assets for the computation of liquidity coverage ratio, net stable funding ratio, and minimum liquidity ratio.

Based on BSP data, trust entities traded a total of PHP 1.8 trillion in BSP securities in the secondary market last year. Outstanding holdings of trust entities stood at PHp 135.5 billion in 2022. — K.B. Ta-asan