Key Definitions
- Securities Brokering: Buying/selling securities for customers
- Securities Broker: Entity registered by SEC to engage in brokering
- Customer: Person whose funds or securities are handled
- Customer Securities: Securities held or transacted for customers
- Customer Funds: Funds received under brokering arrangement
- Broker Customer Account for Settlement: Separate cash/margin account for settlement of trades
- Broker Customer Securities Account: Account for holding customer securities such as margin securities or those prior to settlement
Segregation Requirements
- Customer funds and securities must be segregated from the bank's own assets/liabilities
- Separate accounts required:
- Broker Customer Account for Settlement of Customer Trades (funds account)
- Broker Customer Securities Account (securities account)
- Banks must implement risk management systems to protect customer assets and prevent conflicts of interest
Accounting and Record Keeping
- Banks must keep current books and records located at the bank’s principal office
- Customer funds recorded as liabilities under "Broker Customer Account for Settlement of Customer Trades"
- Funds held in a fiduciary capacity
- Free from liens and not liable for bank’s debts
- Non-interest bearing and not insured deposits
- Excluded from BSP reserve coverage
- Customer securities recorded off-balance sheet under "Broker Customer Securities Account"
- Also held in fiduciary capacity and free from liens
- Excluded from reserve requirements
Receivership Provisions
- Upon appointment of a receiver, the securities business must be closed promptly
- Outstanding contracts may be transferred to another Exchange Member if applicable
- Customers to be informed in writing about account transfers or receivership status
Reporting Requirements
- Banks with securities brokering licenses must submit monthly reports with weekly end balances of cash and securities
- This report is a Category A-1 report
- Detailed amendments to the Financial Reporting Package (FRP) include recognition of:
- Broker Customer Accounts for settlement
- Broker Customer Securities Accounts
- Income from securities brokering activities
- Special reserve accounts for securities brokers
Amendments to Financial Reporting Package
- Revised balance sheet, income statements, and schedules per BSP Circular No. 512 and Circular No. 644
- Specific line item instructions added for broker customer accounts and securities
- Treatment of cash segregated for brokering and securities held for customers clarified
Transition Period and Effectivity
- Reporting in amended FRP formats and submission of new reports begin with period ending September 30, 2015
- Additional reports submitted within 15 banking days after month-end
- Reports considered provisional and subject to BSP revision after six months
- Circular takes effect 15 days after publication in Official Gazette or newspaper of general circulation