Coverage and Eligible Obligations
- Applicable to unhedged foreign currency obligations of at least US$50,000.
- Only current and outstanding obligations qualify; past due obligations are excluded.
- Unhedged means no existing hedge through forward contracts, options, or matched assets.
- Partially hedged obligations evaluated case-by-case.
- Eligible obligations include various BSP-registered FCDU loans, short-term trade-related borrowings, US dollar trust receipts, foreign currency import bills, and properly reported documents against acceptance or open account.
- Some obligations incurred after December 31, 2003, are eligible upon case-by-case approval.
Terms and Conditions
- Detailed terms are specified in the implementing guidelines (Annex 1).
CRPP Application Process
- Applications must be fully completed; incomplete forms are rejected.
Reporting Requirements
- Banks must submit daily reports on CRPP transactions to BSP-Supervision & Examination Department by 4:30 P.M. of the next banking day.
- Reports require joint sworn certification by a senior executive and compliance officer.
- Reports classified Category A-1 for penalties on delays/errors.
Pretermination of CRPP Contracts
- Pretermination allowed under prescribed rules including settlement of net difference in pesos.
Sanctions
- Illegal pretermination incurs monetary penalties.
- Ineligibility found post-maturity results in daily monetary penalties of Php30,000 until contract maturity.
Repealing Clause
- This Circular supersedes BSP Circulars Nos. 292 and 300 and inconsistent parts of other circulars.
Effectivity
- Effective 15 calendar days post-publication in official publication.
Application Mechanics
- Clients apply through banks certifying unhedged FX obligations under oath.
- Banks coordinate with BSP-Treasury to quote CRPP rates during fixed time windows.
- Deals must be reported to BSP-SED departments with evidence.
- BSP confirms deals after verifying documentary requirements.
Documentary Requirements
- Various certified true copies needed depending on obligation type, including loan registrations, promissory notes, certifications, import/export documents, and letters of undertaking especially for oil companies.
- Specific documentation obligations tied to imports, credits, and financing structures.
Tenors
- Contract periods range from 10 days up to 12 months, not exceeding maturity of the FX obligation.
- Obligations exceeding 12 months may be hedged through successive contracts.
Pricing Methodology
- Pricing formula based on spot rate adjusted by peso and USD interest rates for the tenor.
- Spot rate reference varies depending on deal timing (morning/afternoon sessions).
Fixing Date and Settlement
- Fixing rate agreed one business day before maturity using PDS weighted average spot rate.
- Peso net settlement amount is calculated by applying the rate difference to the notional USD amount.
- Settlement is executed through the bank's BSP demand deposit account on maturity.
Pretermination Procedures
- Client pretermination requires proof of full or adequate FX obligation payment, excluding loan renewal as payment.
- BSP-Treasury provides NDF reversal rate to determine net settlement on pretermination.
- Penalties apply for false claims or misuse.
- BSP may preterminate contracts upon finding ineligible obligations or early FX obligation payment without pretermination request, imposing penalties.
Matured Contracts and Refund Obligations
- BSP payment on matured contracts later found ineligible must be refunded with interest calculated at BSP overnight lending rate until refund date.