BSP eases rules on sale of bank investment products


The Bangko Sentral ng Pilipinas has allowed banks to tap more financial institutions outside the regulatory ambit of the BSP to sell their investment products.

The objective is to increase accessibility of financial instruments to a greater number of Filipinos and help make the country’s capital markets more active, BSP officials said.

Covered by this rule are long-term certificates of time deposits (LTCTDs) and unsecured subordinated debts (UnSDs).

LTNCTDs are time-bound deposits that earn interest. UnSDs are debt papers that provide interest to holders.

UnSDs are described as “unsecured” because the issuer does not provide collateral as guarantee. These are likewise described as “subordinated” because holders of the instruments are not the top priority for payment in case the issuer goes bankrupt.

In a statement, the BSP said the financial institutions that could be tapped to serve as selling agents for bank products must be licensed by the Securities and Exchange Commission. They may be SEC-registered securities dealers or brokers.

Under the old rule, only financial institutions with quasi-banking or trust license from the BSP are allowed to sell the said investment products.

“Allowing qualified financial institutions not supervised by the BSP to participate in structures involving bank issues will broaden investors’ access to the domestic capital market by expanding the universe of securities trading participants and providing both investors and issuers with greater options,” the BSP said in the statement.

The bank regulator, however, stressed that banks that would tap other financial institutions as selling agents were accountable for the behavior of their latter.

“The new guidelines likewise explicitly set forth the BSP’s expectations on the part of the issuing bank with regard to its responsibility to undertake a careful and diligent evaluation of the parties whom it will engage in its LTNCTD or UnSD issuances,” the BSP said.

The new ruling by the BSP is consistent with the push for a liberalized regulatory environment, which industry players said would help in the development of the capital markets.

Industry players said the Philippine capital market remained shallow compared with those of other countries in the region.

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