BSP allows new mode of securities delivery

MANILA, Philippines - The Bangko Sentral ng Pilipinas has allowed the use of central securities depository (CSD) for the delivery of securities.

“This provides greater flexibility to investors on where to place the securities they purchase for safekeeping and to avail of auxiliary services from the CSD, should the investor desire,” the BSP said in a statement.

CSDs are authorized entities under Securities and Exchange Commission regulations and are key infrastructures in handling securities settlement.

The BSP explained that securities are registered at the CSD in electronic form, speeding up the transfer of securities between buyers and sellers as compared to the physical exchange of paper securities.

“There are specific guidelines put in place to ensure the integrity of the securities holdings as well as the manner in which securities are delivered against the availability of payment,” the central bank said.

The BSP specifically required the “Name-on-Central Depository” facility to be compliant with its rules on the delivery of securities.

The central bank said the Name-on-Central Depository facility would record the securities at the CSD with the name of individual investors.

“This provides added transparency for investors. This is in contrast to being lodged in so-called ‘omnibus accounts’ which aggregate the holdings of all investors but without segregating the holdings of one investor from another,” the BSP said.

At the same time, the BSP said it has called for the independence of third party custodians, securities registries and CSDs under the new rules. This means they should not belong to the financial conglomerate or group which issued or sold the securities which the CSD now holds.

“This reform initiative is in line with the broader objective of the Bangko Sentral ng PIlipinas to further enhance the handling of securities for the protection of investors,” the central bank said.

“This is essential to capital market development and mitigates the potential build-up of systemic risks in the Philippine financial system,” the BSP said.