By Lee C. Chipongian
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi G. Fonacier said they are in talks with banks to set up a peso-US dollar trading platform for a more smoothly-functioning foreign exchange (FX) market.
MB file photo.
The proposed set up, which will be completed with a memorandum of agreement (MOA) between participating banks, is similar to the peso-renminbi (RMB) trading facility that was signed between Bank of China Manila and 13 local banks last October 31.
This was one of the Philippine-China initiatives that was presented in Malacañang during Chinese President Xi Jinping’s state visit last week.
Fonacier said on Friday that the discussion with the banking industry is ongoing to formalize the peso-US dollar trading platform.
“(This will) be covered with a MOA, including formalizing the rules, market conventions and code of conduct,” she said. “Market participants/financial institutions are the ones to formulate (these rules, code of conduct).”
Fonacier said earlier they want a non-discriminatory and well-functioning FX trading community as this will widen currency options and will strengthen their FX market monitoring and governance.
“It builds trust and investor protection mechanisms, supports product innovation and market development,” she has said. Under such environment, non-discriminatory prudential rules will cover market- determined exchange rates, pre- and post-trade transparency and efficient settlement of the peso leg central bank money, Fonacier explained.
Last month, the peso-RMB trading facility was established by 14 banks initially. Bank of China country head, Deng Jun, said that increased trade and investments with China, he estimates that peso-RMB transactions will exceed 10 billion RMB or roughly $1.43 billion this year.
BSP Governor Nestor A. Espenilla Jr. said they are very much open to other FX trading facility that will be launched, and in the future, could include the Japanese yen, and the Korean won.
“It has to be market driven. If there’s an initiative, we have the framework to rapidly respond,” he said.