The Bangko Sentral ng Pilipinas (BSP) will start its pilot testing of the International Transactions Reporting System (ITRS) next week for a more transparent disclosure of banks’ foreign exchange (FX) transactions.
In a memo on Wednesday, Oct. 25, BSP Deputy Governor Francisco G. Dakila Jr. reminded all banks that the dissemination of the extensible markup language (XML) schema definition for the ITRS has started on Oct. 24.
Dakila said that with ITRS pilot testing in November to December this year, there will be a weekly and monthly ITRS reports and banks are advised to comply or submit the necessary document immediately.
For the whole month of October, the BSP conducted technical briefings for the banks. After the ITRS pilot-testing next month until December, the BSP will soft-launch the system in January 2024.
The ITRS is a data collection system specifically to gather data on all peso and FX transactions that pass through the local banking system. It is a summary report that captures data on the banks’ net on-balance sheet FX assets and net foreign asset (NFA) position daily.
Meanwhile, the full ITRS implementation is slated for April next year.
Dakila signed BSP Memorandum No. M-2023-023 last Aug. 18 for the implementation of the ITRS.
The BSP wants ITRS reports to be submitted using the application programming interface (APl) in XML format.
The purpose of the ITRS is to monitor cross-border transactions and to collect data for the compilation of the country’s balance of payments (BOP) statistics based on international standards. It will also serve as a platform for prudential supervision and monitoring of FX transactions by the BSP.
The BSP will require all banks to submit information using the ITRS report on all peso and FX transactions between residents and non-residents, as well as all FX transactions between residents.
As part of transitory provisions, some FX reports will continue to be submitted on a weekly and monthly basis as per their existing deadlines and reporting rules until otherwise advised by the BSP, to facilitate the gradual transition to the ITRS report.
The BSP said it will not sanction or penalize violations to the ITRS reporting rules immediately, and instead will only impose sanctions and penalties one year after the effectivity of the circular.
Based on the BSP’s ITRS Manual of Instructions, the data to be collected are on banks’ correspondent accounts such as: nostro accounts, which are correspondent accounts of the resident banks with banks abroad or with other resident banks (i.e. in the case of banks that are not licensed to have correspondent accounts with banks abroad); and vostro accounts, which are non-resident banks’ accounts with resident banks.
The ITRS also collects data on resident-to-resident FX transactions.
The BSP said banks’ ITRS report should be “complete, accurate, consistent, reliable, and timely” to comply with the BSP Reporting Standards. The report will also be submitted on a solo basis, meaning the combined financial statements of the head office and local branches in the Philippines.
The BSP said the main report will cover the daily consolidated outstanding balances of the reporting bank’s peso claims/liabilities with non-residents and FX claims/liabilities with non-residents and other residents. This report will compute the NFA position and net on-balance sheet FX assets or liabilities position of the reporting bank.
The BSP also said that the end-month balances of the accounts included in this report should be reconciled by the BSP with the end-month balances in the Financial Reporting Package or FRP for banks thirty working days after the end of the reference month.
The Manual of Instructions for the ITRS covered interbank transactions, export and import of goods, services, personal remittances, primary and capital accounts, foreign direct investments and portfolio investments, spot and financial derivatives, FX market turnover, loans, and other consolidated reports on FX transactions.
The BSP said the ITRS data collection methodology is aligned with the BOP data compilation standards developed by the International Monetary Fund and other internationally accepted standards, recommendations, and best practices. BOP is a summary of the economic transactions of a country with the rest of the world for a specific period.