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THE
market for derivative instruments is expanding and with
nurturing from regulators and market players alike,
should help those with sizeable excess resources put
their money to good use.
Derivatives are financial instruments whose value is
based on an underlying asset or index such as interest
rates or exchange risks. They are useful hedging tools
to protect those facing exchange or interest rate risks
moderate or even eliminate them.
At a
recent public forum, Bangko Sentral ng Pilipinas
Governor Amando Tetangco Jr. paid tribute to
institutions that made the expansion possible, saying
their innovation and patience benefited even overseas
Filipino workers.
“There
is growing sophistication among Philippine banks as
shown by the expansion of the number of financial
instruments now available,” said Tetangco.
His
remark was drawn out by public comments that the BSP and
relevant other government entities offer only token
response to the need for investment outlets by a growing
number of Filipinos with extra cash in their wallets.
According to Tetangco, lenders, such as the Development
Bank of the Philippines and privately owned Security
Bank, now offer hedging tools for exporters hurt by the
newfound strength of the peso.
He said
there had been regulatory issuances in the past that
helped build the requisite framework and growth of
investor sophistication. “We have provided the necessary
framework for these transactions to happen.”
He
acknowledged those who have the money, especially the
community of overseas Filipino workers, are largely
unaware and unsophisticated to take much notice of what
is now actually available in the market. “Many OFWs are
not yet conversant with the derivative instruments now
available but we have to start somewhere.”
Security
Bank also helped the BSP deliver the message that it
pays to be financially shrewd to be able to take
advantage of new investment opportunities, but that they
need to be well aware of the risks involved.
Security
Bank previously announced its own economic road show,
intended to make more people outside of Metro Manila
aware of other attractive investment instruments
available other than plain savings and time deposits.
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