Banks ditch PDS

Philippine banks have officially shifted their foreign exchange operations to a new trading platform, abandoning its long-running ties with the Philippine Dealing System (PDS), 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 which manages the country’s bond bourse, the FX trading platform and the securities depository—by the former from the latter.

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.”

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.