Outgoing Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. has a wish list that in the main includes a transparent yield curve and a fully functional repo market.
He bared this sentiment at the recent convening of members of the Chamber of Thrift Banks (CTB), where he said the central bank looks to pursue more reforms that not only streamlines financial transactions but casts a more transparent light on their execution, as well.
In that event, Tetangco vowed the BSP would continue to work actively on transaction processes in capital markets, as challenges remain no matter the gains or advancement achieved in recent years.
“Among others, we still need to define a more transparent yield curve and develop the repo market to improve market liquidity. I hope the reform agenda can be pursued more expeditiously,” Tetangco said.
There already exist, at present, a functional overnight market that allows reserve-deficient banks, for instance, to borrow from one another on very short-term basis.
But regulators like Tetangco have since complained the local financial system lacks a market, a strictly short-term one, where transactions do not exceed two years at the most.
In a repo market, transactions result in the actual, though temporary, ownership of securities and the government also benefits in the form of a tax on the transaction.
“Nevertheless, it can be said that we have moved toward international global standards,” Tetangco said.
Among the reforms the central bank already put in place include the further liberalization of the foreign-exchange regime and developments in market conduct requiring BSP-supervised financial institutions to act ethically and with utmost integrity, as well as avoiding conflict of interests.
Also just last week, the Philippine Stock Exchange Inc. (PSE) signed a term sheet with the Bankers Association of the Philippines (BAP) allowing the PSE to acquire the BAP’s 28.9 percent stake in the Philippine Dealings System Holdings Corp. (PDS).
“This occasion underscores our commitment to see a unified equities and fixed income exchange. We remain cognizant of the advantages of this consolidation to capital market stakeholders and the Philippine economy, and we hope to realize these benefits the soonest possible time,” PSE President and CEO Hans B. Sicat said
BAP President Nestor V. Tan also said the share sale will help shape a better capital market for the Philippines.
“We welcome this opportunity to bring this deal into completion with the PSE. BAP remains supportive of the goal to have a more efficient financial market through this transaction,” Tan said.