‘Kinks’ delay proposed bond trading scheme

The planned nonrestricted trading of government securities would start very soon, as the Bureau of the Treasury (BTr) is just ironing out a “small” kinks hampering its eventual rollout.

In a speech during the 10th PDS Annual Awards Night last week, National Treasurer Roberto B. Tan said the forthcoming implementation of the nonrestricted trading and settlement environment for peso-denominated, coupon-bearing government bonds is one major initiative that the BTr is strongly pushing on in order to “move our markets forward.”

“We understand that the tax-exempt institutions community is also eagerly awaiting its launch so that they can access the greater liquidity presented by a unified market environment,” Tan said, hence the BTr is “keenly looking to finish the final stages of this process.”

Tan later told reporters that he met with the Philippine Dealing and Exchange Corp., which shall provide the platform, as well as market participants last Thursday, during which the feedback was that they were “getting better” and there was “a lot of improvement” in terms of trading and settlement processes.

“There are still small issues, but I think we’re in very advanced stages [to implement the initiative soon],” Tan said.

Only when the BTr concludes the assessment of participants’ feedback on the end-to-end exercises they underwent last month would the live date be announced, he said.

Last February, the BTr conducted monthlong market-wide testing activities that simulated the nonrestricted trading environment for government securities, an initiative that had been already delayed thrice.

The initiative’s initial implementation date of Nov. 24 last year was canceled just four days before the schedule, and was then moved to Jan. 5 this year.

The live date was later pushed back to Feb. 2, before it was again postponed.

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 allowed to trade between various entities, regardless of their tax category or classification, in any BTr-accredited government securities trading market.

Transfers between market participants shall be allowed regardless of tax status, hence would allow tax-exempt institutions to trade in the debt market.

The BTr had noted that DO 141-95 issued 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.” Ben O. de Vera