By Melissa Luz T. Lopez, Senior Reporter
THE CENTRAL BANK has tightened rules on the pricing of peso debt securities, taking into account new valuations for these papers.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said it has tweaked rules on marking-to-market of financial instruments, to keep up with the change in pricing peso-denominated government securities.
This comes after the Bankers Association of the Philippines shifted away from the Philippine Dealing System Treasury Reference Rates to the PHP Bloomberg Valuation Service (BVAL) Reference Rates in as benchmark for Treasury yields.
Starting this month, market rates for debt papers are based on BVAL.
“The new policy aims to ensure consistency of fair value measurements and comparability of financial reports in the financial system,” the BSP said in a statement sent late Wednesday.
“The Bangko Sentral also expects BSP-supervised financial institutions to have adequate governance structures and control processes to ensure that valuations are prudent and reliable for risk management and financial reporting purposes.”
The change in valuations seek to ensure consistency in pricing instruments by acknowledging the BVAL, which has been recognized as the valuation methodology by the Securities and Exchange Commission.
The central bank said the change in the rules would also allow the regulator to align with international accounting standards and will adopt the provisions of Philippine Financial Reporting Standards (PFRS) 13 on fair value measurement.
“The issuance of enhanced rules on valuation is part of the capital markets road map aimed at promoting price transparency and confidence in the market, encouraging active market trading, and providing basis for the establishment of reliable and market-based benchmarks,” the BSP added.
The central bank also pointed out that the change in valuation rules is part of reforms aimed at deepening the local capital markets, particularly to promote price transparency and market confidence as well as to encourage market trading.
The reform also provides basis for the creating “reliable and market-based” benchmarks, the central bank noted.