THE BANGKO SENTRAL ng Pilipinas (BSP) plans to impose rules on the foreign exchange market that will improve transparency amid bigger trading volumes.
BSP Governor Nestor A. Espenilla, Jr. said policy makers have drafted a code of conduct for currency trading participants, at a time the central bank has been easing restrictions on foreign exchange transactions.
“We need a code of conduct so that everybody behaves properly,” Mr. Espenilla told reporters late Tuesday.
Among others, the new rules seek to prevent conflicts of interest among players by improving transparency in day-to-day trades.
Mr. Espenilla did not give details of the draft which, he said, has been undergoing industry consultations. The BSP chief said he hopes to finalize the guidelines within the year.
The new rules are in line with international standards, particularly those outlined under the FX Global Code that is designed to promote a “robust, fair, liquid, open and appropriately transparent market” for currency trades.
A working group composed of central banks under the Bank for International Settlements Markets Committee drew up the standards, which were first published in May 2017. The code is based on ethics, governance and information sharing principles.
The BSP’s own code will be patterned after global best practices adapted to the locally, Mr. Espenilla said. This will come alongside efforts to liberalize the foreign exchange market.
Mr. Espenilla had cited the need to pursue currency trading reforms, saying that stiff registration requirements dating back to the 1970s were needed when dollars had to be “rationed” due to limited supply back then.
Liquidity has improved since, with banks well-armed with cash to service both peso and dollar transactions.
Rules for formal financial institutions have been eased to do away with some approvals from the BSP to facilitate money conversion.
At the same time, tighter rules are being imposed on non-banks, as well as money changers and remittance agents.
The BSP has been liberalizing foreign exchange rules since 2007. Significant changes to trading rules include a higher limit for over-the-counter dollar purchases to $500,000 for individuals and $1 million for companies.
The peso has been trading weaker than P53 to the dollar since mid-June, hovering at 12-year lows. — Melissa Luz T. Lopez