Faster repo settlement system in place
Banks selling some of their holdings of government securities to the Bangko Sentral ng Pilipinas (BSP) under repurchase agreements or repos can now receive the funds owed to them at a much faster pace, thanks to the fully automated intraday settlement facility (ISF).
Launched last June 27, the BSP said on Monday that the automated ISF is a product of linking the central bank’s own peso real-time payment system called PhilPass Plus and the enhanced National Registry for Scripless Securities (NRoSS) of the Bureau of the Treasury.
PhilPass Plus is the country’s only system that enables efficient and low-risk settlement of large-value peso funds transfers between financial institutions like banks. Meanwhile, NRoSS is an electronic registry system that facilitates the settlement and recording of transfers of government securities like Treasury bonds and Treasury bills.
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By linking the two systems, “timing mismatches” encountered by banks when receiving payments under their repos with the central bank can be prevented.
Under a repo, the BSP buys some government securities held by banks. The payment from the BSP, in turn, provides additional liquidity to these lenders until the time comes for the BSP to sell the securities back to the banks at a specified future date at a predetermined rate.
Article continues after this advertisementRepos are one of the BSP’s tools for managing the supply of money circulating in the Philippine economy.
Article continues after this advertisementApart from preventing gridlocks in the settlement of repo payments to banks, the BSP said the automated ISF was also designed to “support a quick and efficient paperless process.”
“This allows PhilPaSS Plus participants (banks) to obtain funds within a few minutes after initiating a repurchase agreement or repo transaction with the BSP,” the central bank said.
“The ISF’s full automation is aligned with the BSP’s mandate of promoting a safe, efficient and reliable mode of funds transfer in support of financial stability,” it added.
PhilPaSS Plus not only facilitates the settlement of repo payments to banks. This system also settles the clearing results of retail payments made by individuals, businesses and the government using bank checks, ATMs and electronic fund transfer services InstaPay and PESONet. INQ
