The Bangko Sentral ng Pilipinas (BSP) has amended trust entities’ access to its securities facility to include investment management accounts (IMA) not just unit investment trust funds (UITFs), to absorb more liquidity from the financial system.
Based on BSP Circular No. 1207, signed by BSP Governor Eli M. Remolona Jr. on Jan. 15 after a Monetary Board resolution on Dec. 23, 2024, the BSP approved the participation of trust entities through IMAs to access the BSP securities’ market.
The circular noted that UITFs and IMAs which are asset portfolios handled by fund managers, are the only investments that trust entities are allowed to use to engage in the BSP bills and bonds.
They may purchase securities in the secondary market since BSP bills are available for trading at the Philippine Dealing and Exchange Corp.
The BSP securities’ facility are open to all universal and commercial banks, thrift banks, digital banks, quasi-banks and trust entities.
“The issuance of Bangko Sentral securities is a part of the monetary operations (of the BSP) to manage short term liquidity in the financial system and guide market interest rates,” said the BSP.
The BSP first allowed trust entities’ access in the BSP securities in 2022 to mop up more excess liquidity or money supply in the financial system.
At the time, the BSP allowed UITFs of eligible trust departments of banks, regardless of whether the UITFs have funds from non-residents, to invest in BSP securities via the secondary market.
Prior to Circular No. 1157 of 2022, trust entities can only invest in the BSP securities through their UITFs if there are no non-resident participants in said UITFs.
The BSP said expanding the coverage of participants in the secondary market trading of BSP securities enhances the BSP’s capability to absorb liquidity and helps transform the BSP securities as a primary tool for liquidity management.
It also ensures the tradability and viability of BSP securities as a highly liquid instrument, thus allowing for better price discovery and monetary policy transmission.
The BSP is monitoring 30 trust entities with UITF and IMA operation.