Question & AnswerQ&A (BSP Circular No. 885)
The primary purpose is to set guidelines for the segregation, handling, and reporting of customer funds and securities received by banks in the performance of their securities brokering functions to promote investor protection and transparency.
Securities brokering refers to the act of buying and selling evidences of indebtedness, shares, and all types of securities by order of and for the account of customers.
A securities broker is an entity duly registered by the Securities and Exchange Commission (SEC) to engage in securities brokering transactions.
Customer funds are funds received from a customer by a broker under a securities brokering arrangement.
Banks must maintain two separate accounts: (1) Broker Customer Account for Settlement of Customer Trades for funds; and (2) Broker Customer Securities Account for securities.
Banks must keep customer funds and securities separate from their own assets and liabilities to protect customers' interests.
No. Customer funds are held in a fiduciary capacity, free from liens on the bank's assets, and are not answerable for bank liabilities.
Funds are held fiduciary, lien-free from bank assets, do not earn interest, are not insured deposits, and excluded from BSP reserve requirements.
Securities are held in a fiduciary capacity, free from liens on bank assets, are off-balance sheet items, and excluded from BSP reserve requirements.
The receiver must promptly close the securities business, arrange for transfer of outstanding contracts to another exchange member or notify customers to transfer accounts if no exchange membership exists.
Banks must submit monthly reports on end-of-week balances of cash and securities held under securities brokering arrangements, starting from the reporting period ending 30 September 2015.
They are free from any and all liens on the bank’s assets and shall not be held liable for any obligations of the bank.
The Circular does not exempt banks from complying with other SRC requirements; it provides additional guidelines specifically for segregation and reporting of customer funds and securities.
Banks must begin reporting their securities brokering transactions using the prescribed Financial Reporting Package format starting the reporting period ending 30 September 2015, with additional reports submitted every 15th banking day after the reference month.
It took effect fifteen (15) calendar days after its publication in either the Official Gazette or a newspaper of general circulation.