DOF eases rules on trade of PH debt paper

MANILA, Philippines–The government this month will allow tax-exempt institutions to trade treasury bills and bonds in the debt market, the Department of Finance (DOF) announced on Wednesday.

Under Department Order No. 68-2014, which amends Department Order 141-95, government securities may be traded by various entities, regardless of their tax category or classification, in any securities trading market accredited by the Bureau of the Treasury (BTr), the DOF said.

Also, transfers between market participants will be allowed regardless of tax status.

“By allowing tax-exempt institutions to join the taxable segment of the market, we expect to have gradual increase in buy-sell transactions within and across categories. More transactions in the secondary market mean better price discovery and improved attractiveness of government paper, leading to reduced borrowing cost for the government,” Finance Secretary Cesar V. Purisima said in a statement.

Purisima said unifying the taxable and tax-exempt segment of the market by lifting the current restrictions would generate activity in the secondary government securities market.

Tax-exempt institutions currently hold over a fifth of mostly held-to-maturity government securities.

National Treasurer Rosalia V. de Leon said the government would roll out “the non-restricted trading environment” this month, depending on the market’s appetite.