Question & AnswerQ&A (BSP CIRCULAR NO. 636, S. OF 2008)
It regulates the sale, discounting, assignment, or negotiation by banks and quasi-banks of their credit rights in Special Deposit Account (SDA) placements and Reverse Repurchase Agreements with the BSP to clients.
No, banks are prohibited from selling, discounting, assigning, or negotiating their credit rights arising from claims against the BSP in Special Deposit Account placements and Reverse Repurchase Agreements.
The policy is to promote investor protection and transparency in securities transactions as important components of capital markets development.
Any violation is considered a less serious offense and shall subject the bank and the directors and/or officers concerned to the sanctions provided under Section X299.
Yes, the same prohibitions on sale, discounting, assignment or negotiation of credit rights apply to quasi-banks under Subsection 4101Q.6 of the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI).
Violations are treated as less serious offenses and subject the quasi-bank and the concerned directors and/or officers to sanctions under Section 4199Q.
Such sale agreements not compliant with the Circular are allowed to remain in force and subsisting until pre-termination or maturity of the underlying SDA placement or RR/P, whichever comes earlier.
It took effect fifteen (15) calendar days following its publication either in the Official Gazette or in a newspaper of general circulation.
Item A of Circular Letter dated 14 November 2001 on the sale of RR/P to clients and Annex G of the same Circular Letter on the pro-forma accounting entries for sale of RR/P were deleted.
The sub-account 'Reverse Repurchase Agreements with BSP-Sold to Clients' under 'Other Deposit Substitutes' in the Financial Reporting Package for Banks was deleted, and Appendix Q-26 of the MORNBFI on pro-forma accounting entries for quasi-banks' sale of RR/P to clients was deleted.