Question & AnswerQ&A (BSP CIRCULAR NO. 470, S. 2005)
The CRPP Facility is a non-deliverable USD/PHP forward contract (NDF) between the Bangko Sentral ng Pilipinas (BSP) and a universal/commercial bank to hedge eligible foreign currency obligations of bank clients, where only the net difference between the forward rate and the spot rate is settled in pesos at maturity.
Eligible obligations are unhedged foreign currency obligations of at least US$50,000 that are current and outstanding as of application date, including BSP-registered medium/long-term FCDU loans and bonds with remaining tenor up to 5 years, BSP-registered short-term trade-related FCDU loans, short-term trade-related borrowings of oil companies from OBUs and offshore banks, US dollar trust receipts, foreign currency import bills, and DA/OA import obligations duly reported to BSP.
No, past due foreign currency obligations are not eligible for coverage under the CRPP Facility.
No, a derivatives license is not required to avail of the CRPP Facility.
The minimum amount is US$50,000 for foreign currency obligations to be eligible under the CRPP Facility.
Monetary penalties shall be imposed, including a penalty of PhP30,000.00 per calendar day for contracts found to be ineligible, reckoned from ineligibility date up to maturity or pretermination date.
Banks must submit daily reports on executed, preterminated, or cancelled CRPP transactions to BSP-Supervision and Examination Department by 4:30 PM the following banking day, signed jointly under oath by an authorized Senior Vice-President or equivalent and the Compliance Officer.
Certified true copies of BSP registration letter and Schedule of Principal and Interest Payments (Schedule RA-2), or BSP letter-notation for partial utilization with loan terms and bond prospectus if applicable, certified by a Senior VP or equivalent and Compliance Officer.
Pricing is based on the formula: NDF Rate = Spot Rate x [1 + (Peso Interest Rate x Tenor/360)] / [1 + (US Dollar Interest Rate x Tenor/360)], where peso interest rate is BSP-Treasury determined and the dollar interest rate is based on the relevant SIBOR.
Contract tenors range from 10 days to 12 months, not exceeding the final maturity date of the foreign currency obligation. Longer obligations may be hedged by a series of CRPP contracts.