BSP eyes transfer pricing, pool rate reports to track policy transmission

THE BANGKO SENTRAL ng Pilipinas (BSP) is planning to establish a mandatory reporting framework on fund transfer pricing and transfer pool rates (FTP/TPR) for large banks.

In a draft circular, the central bank said the reporting requirement will allow them to track how universal and commercial banks react to interest rate adjustments and manage their liquidity.

“The BSP seeks to institutionalize the submission by U/KBs (universal and commercial banks) of the FTP/TPR Report,” the BSP said in a note. “This report will support the BSP’s fulfillment of its price and financial stability mandates through the closer monitoring of how banks respond to changes in the interest rate environment and implement good governance in the management of their interest rate and liquidity exposures.”

Under the proposal, universal and commercial banks will be required to disclose their pricing methodologies, benchmark rates, and any strategic adjustments made to their fund transfer pricing or transfer pool rate mechanism.

The BSP said the reporting requirement will be launched for a pilot implementation phase a month after the circular takes effect.

All big banks must submit the reports monthly five days after the end of every reference month via the BSP’s Prime Reporting Innovation and Monitoring Engine or PRIME system.

BSP Governor Eli M. Remolona, Jr. has said that interest rate adjustments usually take about one-and-a-half to two years before they are fully transmitted in the financial market.

According to the central bank’s latest Monetary Policy Report, interest rates for the overnight reverse repurchase and the term deposit facilities have fully reflected a total of 200 basis points (bps) in rate cuts.

The BSP has delivered a cumulative 225 bps in reductions since it began easing in August 2024, bringing the policy rate to 4.25%. — Katherine K. Chan