BTr to try different trade tack for gov’t debt paper

THE BUREAU of the Treasury (BTr) will begin testing the market on how the trade in government securities will fare in a non-restricted trading environment—an initiative that has been already delayed thrice.

In a Feb. 4 memorandum issued by National Treasurer Roberto B. Tan, the BTr will will conduct a month-long market-wide testing throughout February. Actual testing will take place from Feb. 9 to 13, while the finalization of test results is scheduled on Feb. 16-20.

Testing activities will include end-to-end system familiarization exercises, where dealers, brokers, custodians, BTr personnel and a number of institutional investors are expected to participate, Tan said.

The Philippine Dealing System or PDS Group will also provide test scenarios to simulate trading and settlement.

Following a series of assessment meetings with participants on Feb. 13 and 20, a concluding meeting will be held from Feb. 23 to 27, during which the BTr will inform the market of the final date of implementation.

At the same time, the BTr will set up SATT accounts among dealers and brokers, as well as individual clients and investors.

Also, trading participants, as well as custodians and institutional investors, will be given systems access this month.

Last Monday, Tan told reporters that the BTr had to postpone the rollout of non-restricted trading of government securities anew, as the agency needed more time to address the participants’ concerns.

“On the settlement side, there were concerns on possible failed trade,” he revealed.

The BTr will gather feedback from participants this week based on another set of end-to-end market testing of the process from the order stage to the settlement stage, Tan said.

“We just want to ensure that the launch will have, as much as possible, no serious hitches,” he explained. “Despite the delays in implementation, participants remained very enthusiastic.”

Under the Department of Finance’s latest amendment to Department Order (DO) No. 141-95 via DO 068-2014 issued in August last year, government securities were to be trade between various entities, regardless of their tax category or classification, in any BTr-accredited government securities trading market.

The BTr had noted that Department Order 141-95 issued almost two decades ago had “restricted the transfers of securities between taxable and tax-exempt institutions, effectively segmenting the government securities market along these tax categories.”