The Bangko Sentral ng Pilipinas (BSP) has approved new regulations, hoping to deliver on its promise of more transparency for investors.
In a statement, the BSP said its policymaking body, the Monetary Board (MB), amended the rule on the delivery of securities by adding the use of a central securities depository (CSD) as another option available to investors.
The MB specifically allowed the “Name-on-Central Depository” facility to be compliant with previously issued Circular No. 392.
“This provides greater flexibility to investors on where to place the securities they purchase for safekeeping and to avail of auxiliary services from the CSD, should the investor desire,” the BSP statement read.
The Name-on-Central Depository facility allows securities to be recorded at the CSD in the name of individual investors. This provides added transparency for investors. This is in contrast to securities lodged in so-called “omnibus accounts,” which would aggregate the holdings of all investors but without segregating the holdings of one investor from another.
A CSD is an entity authorized under the rules of the Securities and Exchange Commission and is considered a key element in handling securities settlement.
There are guidelines in place to ensure the integrity of the securities holdings, as well as the manner in which securities are delivered against the availability of payment.
This reform initiative is in line with the broader objective of the BSP to further enhance the handling of securities for the protection of investors. This is essential to capital market development, mitigating the potential buildup of risks in the financial system.