BSP Circular on Repo Deposit Substitutes

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BSP CIRCULAR NO. 444: BSP Circular on Repo Deposit Substitutes

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Title Source: Supreme Court: BSP Circular on Repo Deposit Substitutes

Law: Bsp Circular No. 444

Decision Date: Aug 18, 2004

BSP Circular No. 444 mandates that deposit substitutes through repurchase agreements (repos) of government securities, up to the adjusted Tier 1 capital of banks and quasi-banks, are subject to a 2% statutory reserve requirement, contingent upon compliance with documentation and custody regulations.

Law Summary

Amendments to Existing Regulations

The provisions amend Subsection X 253.1 of the Manual of Regulations for Banks.
They also amend Section 4246Q of the Manual of Regulations for Non-Bank Financial Institutions.

Statutory Reserve Requirement

Repos covered under this regulation are subject to a statutory reserve requirement.
The reserve rate is set at 2% of the amount covered by the repos.

Conditions for Applicability

The 2% statutory reserve rate applies only if the repo agreements meet specific conditions:
- The documentation of the repos must conform to existing BSP regulations.
- The repos must be delivered to a third-party custodian accredited by the Bangko Sentral ng Pilipinas (BSP).

Effective Date and Authority

The Circular takes effect immediately upon issuance.
It was issued pursuant to Monetary Board Resolutions Nos. 914 and 1713 dated June 26, 2003, and November 20, 2003, respectively.
The issuance is authorized and signed by the Officer-in-Charge of BSP, Amando M. Tetangco, Jr., on August 18, 2004.

END