QuestionsQuestions (BSP MEMORANDUM)
The BSP memorandum is issued pursuant to Monetary Board Resolution No. 1131 dated 3 September 1997, which reduced the ratio of liquidity reserves for all financial intermediaries.
Section 1 amends the first paragraph of Subsection _405.5, Item 1.1 (Reserves Against Peso-Denominated Common Trust Funds).
The required reserve is ten percent (10%) against peso-denominated common trust funds and other managed peso funds that partake the nature of collective investment of such common trust funds.
On top of the regular 10% reserve, an additional eight (8) percentage point liquidity reserve takes effect 5 September 1997.
The additional liquidity reserve is reduced to seven (7) percentage points effective 12 September 1997.
It may be held in the form of short-term market-yielding government securities purchased directly from the BSP-Treasury Department.
All financial intermediaries authorized to engage in trust and other fiduciary business must maintain ten percent (10%) reserve against Trust and Other Fiduciary Accounts (TOFA) and others, in addition to the basic security deposit required under Subsection _405.1.
Examples include: (a) accounts held under administration; (b) bond issues under deed of trust or mortgage; (c) custodianship and safekeeping; (d) depository/reorganization; (e) employees’ benefit plans under trust; (f) escrow; (g) personal trust (testamentary or living trust); (h) executorship; (i) guardianship; (j) life insurance trust; and (k) pre-need plans (institutional/individual).
An eight (8) percentage point liquidity reserve is imposed effective 5 September 1997, and subsequently seven (7) percentage point reserve is imposed effective 12 September 1997.
It may be held in short-term market-yielding government securities purchased directly from the BSP-Treasury Department.
The memorandum provides that the reserves on TOFA shall be provided out of such funds.
Peso-denominated common trust funds require a 10% reserve plus an additional liquidity reserve (8 percentage points then 7 percentage points). TOFA accounts similarly require a 10% reserve (with enumerated exemptions), plus the same liquidity reserve schedule (8 then 7 percentage points), subject to the specific exclusions.
Exempt accounts are not included in the computation/coverage of the 10% TOFA reserve requirement, meaning the intermediary’s reserve calculation and liquidity reserve placement need to exclude those specified account types.
Yes. The text states that the 10% reserve applies not only to peso-denominated common trust funds but also to other managed peso funds which partake the nature of collective investment of such common trust funds.
It was adopted on 4 September 1997 and signed by (SGD.) GABRIEL C. SINGSON, Governor.