BSP pushes for more capital sources to help PH investors, borrowers

MANILA, Philippines—The Philippine central bank continues to push for reforms to strengthen local capital markets and allow more Filipino firms to raise funds more cheaply from domestic sources and investors to get better returns on their assets.

Speaking at an online briefing, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the agency is “playing an active role” in the development of capital markets in support of its mandate to promote the stability of the domestic financial system.

“Deep capital markets facilitate the efficient allocation of funds in the economy,” he said. “By diversifying funding sources, they also support financial system resilience as stresses on a single creditor will not be propagated in the system.”

Toward this end, the BSP is working closely with the Securities and Exchange Commission, the Department of Finance and the Bureau of the Treasury on a roadmap that will support deepening of the capital markets.

“The capital market roadmap is a calibrated, deliberate, and sequenced program consisting of immediate to medium-term action plans,” Diokno said. “This approach ensures synergy in policy direction at the national level as well as the smooth execution of the necessary reforms by concerned regulatory authorities.”

To support the implementation of the capital market roadmap, the BSP has released five policy issuances since 2020.

To promote investor access and protection, the BSP issued amendments to the rules on securities custodianship and securities registry operations, aiming to expand the client base and the number of financial institutions offering said services.

The BSP also issued amendments to rules on Personal Equity and Retirement Accounts, which were expected to shorten the turnaround time for account opening and reduce transaction costs.

Lastly, the BSP amended the rules on investment management activities, which reduces the minimum account opening amount for these bank services from P1 million to any lower amount, subject to a floor of P100,000.

To promote price discovery and reliable benchmarks, the BSP issued circulars on the exclusion of debt securities held by market makers from the single borrowers limit.

This is aimed at improving market liquidity, promoting price transparency and helping maintain a fair and orderly trading market.

The BSP also issued circulars on the market’s transition from the London Inter-Bank Offered Rate, which seeks to ensure that Philippine banks are well-positioned to adapt to changes in global financial markets, including the planned phaseout of this benchmark used in a wide range of financial transactions.

“Aside from addressing funding gaps that cannot be fully met by bank credit, a developed capital market also promotes the availability of a broader range of financial products, and this can support financial inclusion,” Diokno said.

TSB