BTr defers non-restricted trading of gov’t securities

MANILA, Philippines - The Bureau of the Treasury has deferred anew the implementation of non-restricted trading and settlement for government securities to ensure a smooth rollout of this landmark initiative.

In a notice issued yesterday, National Treasurer Roberto B. Tan said the postponement of the transition to a non-restricted trading across all peso-denominated, coupon bearing government securities, set on Feb. 2, will allow all market participants to fully prepare for it.

This initiative which will allow government securities to be traded between various entities, regardless of their tax category or classification, in any accredited government securities trading market, was originally scheduled to be implemented last Nov. 24 but the BTR moved it to Jan. 5.

Tan said the extension should allow all market participants to conclude preparedness for activities in relation to account setup, access to relevant systems,market-wide and end-to-end testing and required documentation.

“The Bureau would like to ensure a smooth rollout of this landmark program in the government securities market,” Tan said.

Finance Secretary Cesar Purisima said the lifting of trading restrictions will allow the BTr to designate or employ facilities or systems that would enhance the existing capabilities of the Registry of Scripless Securities (RoSS).

Transfer of the bonds across tax categories shall be monitored by a tax-tracking facility that shall provide an environment where holders of the bonds belonging to any tax classification will be allowed to transfer the bonds and settle the same between and among themselves.

The tax-tracking facility shall compute the appropriate final withholding tax on accrued interest due from a seller for each transaction on the basis of the seller’s holding period.

Securities held by government-owned and controlled corporations (GOCCs) and local government units (LGUs) may be transferred prior to maturity only with GOCCs and LGUs which maintain securities account in the book entry of the BTr.

Tax-exempt institutions currently account for 21 percent of government securities, mostly held-to-maturity.