BSP relaxes rules on 2 investment instruments
MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has relaxed rules governing sellers of two investment instruments.
The relaxation of the rules is targeted at broadening investment opportunities to deepen the capital market, a BSP statement said yesterday.
Long-term negotiable certificates of time deposit (LNCTD) and unsecured subordinated debts may soon be issued by financial institutions licensed by the Securities and Exchange Commission (SEC) but not supervised by BSP.
LNCTDs are like time deposits except that they have longer terms and cannot be pre-terminated. Unsecured subordinated debts, meanwhile, pertain to bonds or other types of instruments extended without collateral.
Under present rules, only BSP-supervised financial institutions such as commercial and investment banks, which have SEC license, can issue these investment notes.
The new rule expands the coverage to include firms such as investment houses which are not overlooked by BSP.
The new regulation, which will take effect 15 days after publication of a pertinent circular, “will broaden investors’ access to the domestic capital market” providing “greater options” to both investors and issuers.
With more investment options and participants, BSP hopes to deepen the capital market with an end in view of boosting competition and in effect, lower interest rates paid for fund raising activities such as floatation of bonds.
However, BSP reminded issuers of their “responsibility to undertake a careful and diligent evaluation of the parties whom it shall engage in.”
“The requirement is consistent with the BSP’s thrust of promoting self-governance in BSP’s supervised financial institutions,” the statement said.