Amendment to Trust Rules on Liquidity Reserves

The amended reserve requirements apply to all financial intermediaries authorized to engage in trust and other fiduciary business.
The rules cover peso-denominated common trust funds and managed peso funds that partake the nature of collective investment of peso-denominated common trust funds.
The rules also cover Trust and Other Fiduciary Accounts (TOFA) (as identified in the amended text).
The additional liquidity reserves apply “on top of the regular reserve requirement” for the covered funds/accounts.
The imposed liquidity reserves may be held in a specific form of government securities purchased from the BSP.

Section 1 amends Subsection _405.5, Item 1.1 to set the required reserves against peso-denominated common trust funds at ten percent (10%).
Section 1 also requires ten percent (10%) reserves against such other managed peso funds that partake the nature of collective investment of peso-denominated common trust funds.
Section 1 imposes, on top of the regular reserve requirement, an eight (8) percentage point liquidity reserve effective 5 September 1997.
Section 1 further imposes, on top of the regular reserve requirement, a seven (7) percentage point liquidity reserve effective 12 September 1997.
The liquidity reserve may be held in the form of short-term market-yielding government securities purchased directly from the BSP-Treasury Department.

Section 2 amends Item 1.2 of Subsection _405.5 to require ten percent (10%) reserve against Trust and Other Fiduciary Accounts (TOFA) a Others.
The ten percent (10%) TOFA reserve requirement applies “in addition to the basic security deposit required under Subsection _405.1”.
The TOFA ten percent (10%) reserve requirement applies except to accounts held under the following categories:
- accounts held under administration
- bond issues under deed of trust or mortgage
- custodianship and safekeeping
- depository/reorganization
- employees' benefit plans under trust
- escrow
- personal trust (testamentary or living trust)
- executorship
- guardianship
- life insurance trust
- pre-need plans (institutional/individual)
Section 2 imposes an eight (8) percentage point liquidity reserve effective 5 September 1997, on top of the regular reserve requirement.
Section 2 imposes a seven (7) percentage point liquidity reserve effective 12 September 1997, on top of the regular reserve requirement.

The liquidity reserves imposed under both Section 1 and Section 2 may be held as short-term market-yielding government securities purchased directly from the BSP-Treasury Department.
Section 2 provides that the reserves on trust and other fiduciary accounts (TOFA) a Others shall be provided out of such funds.
The liquidity reserve is expressly added on top of the regular reserve requirement for the covered trusts and TOFA accounts.