Banks ditch PDS, shift forex trades to Bloomberg platform

Philippine banks have officially shifted their foreign exchange operations to a new trading platform, abandoning its long-running ties with the Philippine Dealing System which is being targeted for acquisition by state-owned Land Bank of the Philippines.

The Bankers Association of the Philippines (BAP) said on Monday that it appointed Bloomberg – a global provider of financial market data and business news – as the new “calculation agent” for the US dollar-Philippine peso spot reference rate.

The new initiatives are meant “to further the growth of the foreign exchange market in the Philippines,” the group said in a statement.

An important benchmark, the dollar-peso spot reference rate is extensively used by onshore and offshore banks, corporations and asset managers for trade execution, valuation and benchmarking of portfolios.

The move came a day after the expiration of a deal between the Philippine Stock Exchange and the BAP for what would have been a P2-billion acquisition of PDS Holdings Corp. – the firm that manages the country’s bond bourse, the FX trading platform and the securities depository – by the former from the latter.

The proposed acquisition, though initially encouraged by the government, has been plagued by opposition from regulators who have cited the PSE for allegedly being noncompliant with legal prerequisites, a charge the owners of the stock market contest.

In the statement, BAP managing director Benjamin Castillo said the umbrella organization representing the country’s largest financial institutions was “pleased to partner with Bloomberg to provide enhanced solutions to the foreign exchange community in the Philippines.”

“These new initiatives will support the Bangko Sentral ng Pilipinas’ financial market development reforms to better organize and deepen the country’s foreign exchange market,” he said. “We look forward to execution efficiency, increased market liquidity and transparency leveraging Bloomberg’s technology platform and industry best practices.”

Under the new scheme, Bloomberg will calculate the dollar-peso spot reference rate based on trades carried out by BAP member banks.

An accurate representation of the market and each fix will be available as trades are captured across a deep and broad pool of foreign exchange market participants. Results will be published on BAP’s website (https://bap.org.ph) as well as on Bloomberg terminals.

As part of the partnership, dollar-peso spot trading will be conducted by BAP member banks on Bloomberg’s foreign exchange electronic trading and communication platform where regulators will have real-time visibility of market activity and greater oversight of the market.

Liquidity of the foreign exchange spot and forwards markets in the Philippines is also pooled onto a single platform since forwards have been traded and reported on Bloomberg’s electronic platform since 2015.

Currency traders can also tap on news, data and analytics to monitor markets, analyze trends and generate trading ideas on the Bloomberg terminal.

“Bloomberg is excited to extend our ongoing partnership with the Bankers Association of the Philippines by improving transparency and efficiency in the Philippines FX market,” Bloomberg’s Asean head of sales Andrea Mosconi said. “As the Philippines undergoes economic transformation, we will continue to bring best-in-class technology to advance one of the world’s fastest-growing countries.”

Bloomberg is also the official calculating agent for the Philippine interbank reference rate used by financial institutions as a basis for pricing their loans. /atm