Guidelines on the Use of Scripless Securities as Security for the Faithful Performance of PERA Administrator (Appendix 34a/Q-21-a to Subsec. X405.1/4405Q.1 of the MORB/MORNBFI)

May 22, 2015 BSP CIRCULAR NO. 879-15 SUBJECT : Guidelines on the Use of Scripless Securities as Security for the Faithful Performance of PERA Administrator (Appendix 34a/Q-21-a to Subsec. X405.1/4405Q.1 of the MORB/MORNBFI) The Monetary Board in its Resolution No. 509 dated 27 March 2015 approved the introduction of Appendix 34a to Subsec. X405.1 of the Manual of Regulations for Banks (MORB) and Appendix Q-21-a to Subsec. 4405Q.1 of the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI), relative to the implementation of PERA Act of 2008 and PERA Rules. Definition of Terms and Acronyms BSP Bangko Sentral ng Pilipinas BSP-FAD Financial Accounting Department of the BSP BSP-SES Supervision and Examination Sector of the BSP DDA refers to the regular demand deposit account of a bank/quasi-bank with BSP-FAD DSSA Daily Statement of Securities Account Financial Institution (FI) refers to a bank, non-bank financial institution, or trust entity supervised by the BSP that is accredited to be a PERA Administrator MORB/MORNBFI Manual of Regulations for Banks/Manual of Regulations for Non-Bank Financial Institutions Off-site Supervising Department refers to the department of the BSP-SES responsible for off-site supervision of FIs Scripless securities refers to uncertificated securities issued by the Bureau of Treasury (BTr) that are under the BTr's Registry of Scripless Securities (RoSS) Trust Specialist Group (TSG) refers to the technical unit of the BSP-SES responsible for supervision of trust entities A. Basic Requirements 1. The BSP-SES shall file with the BTr an application to open a BSP-PERA RoSS principal securities account where the securities for the faithful performance of PERA Administrator shall be held. The BSP-SES shall use Annex 1 for this purpose. 2. The BSP-SES through its TSG shall request with the BTr the creation of a PERA Administrator securities account under the BSP-PERA RoSS principal securities account using Annex 1-A. The BTr shall maintain each PERA Administrator securities account for P1,000.00 or any amount per month as may be determined by the BTr. 3. An FI must have a DDA with BSP-FAD. In case when an FI does not have a DDA with BSP-FAD, it shall designate a settlement bank and shall inform the appropriate BSP-SES off-site supervising department of its designated settlement bank. 4. Each FI shall accomplish an autodebit/autocredit authorization for its PERA Administrator securities account under the BSP-PERA RoSS principal securities account. The document shall authorize the BTr and the BSP to credit the DDA of the FI or the designated settlement bank with BSP-FAD for coupons/interest payments and maturity proceeds of securities and to debit the same DDA for the monthly fees payable to the BTr for maintenance of the PERA Administrator securities account. An FI with a DDA with BSP-FAD shall use Annex 2-A while an FI with a settlement arrangement shall use Annex 2-B. 5. The BSP-SES off-site supervising department shall be responsible for monitoring deposit and withdrawal of securities in the PERA Administrator securities account. 6. Every FI shall ensure that it has adequate security for the faithful performance of PERA Administrator pursuant to the provisions of the Personal Equity and Retirement Account (PERA) Act of 2008 and its implementing rules and regulations. 7. The BTr shall provide TSG a monthly statement of securities account as well as a DSSA whenever a transaction in any PERA Administrator securities account is made. 8. The responsible BSP-SES off-site supervising department shall determine on a quarterly basis the compliance with the security for the faithful performance of PERA Administrator based on the reportorial submission of the FI. In case of deficiency, the responsible BSP-SES off-site supervising department shall recommend, as warranted, the imposition of sanctions and/or any other appropriate action to higher BSP authorities. B. Procedures for Assigning Initial/Additional RoSS Securities as Security for the Faithful Performance of PERA Administrator 1. The FI shall notify the appropriate BSP-SES off-site supervising department that it will transfer RoSS securities to its PERA Administrator securities account at least two (2) banking days before the date of transfer using the prescribed form (Annex 3) and checking Box "A" or "B", as appropriate, and indicating details therein. The notice, which may initially be sent through electronic mail or fax, shall be forwarded as an official letter duly signed by authorized officer/s and shall be accompanied by the following: A. Computation of compliance with the security for the faithful performance of PERA Administrator. The FI shall provide detailed calculation on specific and relevant dates whenever there is a transfer of RoSS securities to and from its PERA Administrator securities account using Annexes 4 and 4-a to affirm the continuing compliance with the security requirement; and B. Notarized certification signed by the chief executive officer of the FI using Annex 5 attesting: i. The accuracy and completeness of submitted reports and corresponding schedules; and ii. The effective interest rate method is being used in the amortization of relevant premium/discount of securities in compliance with the Philippine accounting standards. This notarized certification shall likewise be submitted to the appropriate BSP-SES off-site supervising department every quarter to attest the continuing compliance of the FI to the security requirement. 2. The FI shall instruct the BTr to transfer RoSS securities to its PERA Administrator securities account on specified date. 3. The BTr shall effect the transfer upon verification of RoSS balances. At the end of the day, the BTr shall transmit a DSSA to TSG containing the transfer. 4. The TSG shall provide the appropriate BSP-SES off-site supervising department a copy of the DSSA. 5. The responsible BSP-SES off-site supervising department shall verify from the DSSA the transfer of securities indicated in the advice (Annex 3) sent earlier by the FI. 6. The above procedures shall also be observed in transferring additional securities to replace maturing/matured RoSS securities. C. Procedures for Withdrawing RoSS Securities 1. The FI shall notify the appropriate BSP-SES off-site supervising department that it will withdraw existing RoSS securities assigned as security for faithful performance of PERA Administrator at least two (2) banking days before the date of withdrawal using the prescribed form (Annex 6) and indicating the details of the securities to be withdrawn. The notice shall be accompanied by a computation of compliance with security requirement and certification required under B.1. 2. The responsible BSP-SES off-site supervising department shall verify if the securities to be withdrawn are in the PERA Administrator securities account and the value of outstanding securities remains compliant with the security requirement after the withdrawal. The department concerned shall immediately inform the FI for any discrepancy/deficiency. If in order, the department concerned shall authorize TSG to instruct the BTr to transfer the securities to be withdrawn to the RoSS account of the FI. The BSP-SES off-site supervising department shall use Annex 7 and check boxes "B" and "C". The authority to allow the withdrawal should be transmitted to TSG one (1) banking day before the date of withdrawal indicated in the advice (Annex 6) sent earlier by the FI. The BSP-SES off-site supervising department shall also advise the FI that it has approved the withdrawal of security using Annex 8 and checking boxes "B" and "C". 3. The TSG shall instruct the BTr within the same day to transfer the securities specified to be withdrawn from the PERA Administrator securities account to the RoSS account of the FI using annex 9. The BTr shall acknowledge receipt of the confirmation of transfer of government securities (sans consideration). 4. The BTr shall effect the transfer/withdrawal and shall send a DSSA to TSG containing the transfer/withdrawal. 5. The TSG shall provide the appropriate BSP-SES off-site supervising department a copy of the DSSA. 6. The responsible BSP-SES off-site supervising department shall verify from the DSSA the transfer of securities indicated in the advice (Annex 6) sent earlier by the FI. 7. The above procedures shall also be observed in withdrawing and replacing existing and/or maturing/matured RoSS securities. D. Procedures for Replacing RoSS Securities 1. The FI shall notify the appropriate BSP-SES off-site supervising department that it will replace existing and/or maturing/matured RoSS securities assigned as security for the faithful performance of PERA Administrator at least two (2) banking days before the date of replacement using the prescribed form (Annex 3). The FI shall check box "C" of the form and indicate the details of the securities to be replaced. The notice shall be accompanied by a computation of compliance with security requirement and certification required under B.1. 2. The responsible BSP-SES off-site supervising department shall verify if the securities to be replaced are in the PERA Administrator securities and the value of the outstanding securities remains compliant with the security requirement after the replacement. The department concerned shall immediately inform the FI for any discrepancy/deficiency. 3. The procedures for assigning additional RoSS securities specified in sections B.2 to B.5 of this Appendix shall herein apply. 4. The BSP-SES off-site supervising department shall use Annex 7 and check boxes "A" and "C". Should there be any discrepancy/deficiency, the BSP-SES off-site supervising department shall immediately inform the FI. The authority to allow the replacement shall be transmitted to TSG not later than the day when the replacement securities were transferred to the PERA Administrator securities account. The BSP-SES off-site supervising department shall also advise the FI that it has approved the replacement of security by using Annex 8 and checking boxes "A" and "B". 5. The procedures for withdrawing RoSS securities specified in sections C.3 to C.6 of this Appendix shall herein apply. E. Procedures for Crediting Interest and Maturity Proceeds of Securities 1. On coupon or interest payment date, the BTr shall instruct BSP-FAD to credit the DDA of the FI or its designated settlement bank for coupon/interest payment of securities held in the PERA Administrator securities account. 2. On maturity date, the BTr shall instruct BSP-FAD to credit the DDA of the FI or its designated settlement bank for maturity proceeds of securities held in PERA Administrator securities account. 3. The appropriate BSP-SES off-site supervising department shall determine if the value of the outstanding securities remains compliant with the security requirement after the maturity of securities. The department concerned shall immediately inform the FI for any discrepancy/deficiency. 4. When the value of security falls below the required level, the FI shall instruct the BTr to transfer securities from the FI's own RoSS account to its PERA Administrator securities account under the BSP-PERA RoSS principal securities account. The procedures specified in sections B.1 to B.5 of this Appendix shall herein apply. This Circular shall take effect fifteen (15) days following its publication in the Official Gazette or in any newspaper of general circulation. FOR THE MONETARY BOARD: (SGD.) AMANDO M. TETANGCO, JR. Governor APPENDIX 34a/Q-21a ANNEX 1 SUPERVISION AND EXAMINATION SECTOR ________________ (Date) _______________________ Treasurer of the Philippines The Bureau of the Treasury Cabildo Street corner A. Soriano Avenue and Sto. Tomas Street, Intramuros, Manila Attention: Registry of Scripless Securities (RoSS) Dear ____________: The Supervision and Examination Sector of the Bangko Sentral ng Pilipinas hereby makes an application to open a Principal Securities Account in the Registry of Scripless Securities (RoSS) to hold government securities earmarked in favor of the BSP as security for the faithful performance by PERA Administrators of their duties set forth in the Personal Equity and Retirement Account (PERA) Act of 2008 (BSP-PERA). We understand that the Bureau of Treasury shall maintain the Principal Securities Account of BSP-PERA for free. Very truly yours, ______________________ Deputy Governor ANNEX 1-A SUPERVISION AND EXAMINATION SECTOR ________________ (Date) _______________________ Treasurer of the Philippines The Bureau of the Treasury Cabildo Street corner A. Soriano Avenue and Sto. Tomas Street Intramuros, Manila Attention: Registry of Scripless Securities (RoSS) Dear Ms. __________: In connection with the BSP-PERA Principal Securities Account of the Bangko Sentral ng Pilipinas-Supervision and Examination Sector in the Registry of Scripless Securities (RoSS), please open PERA Administrator Securities Account for the following trust entities/banks so we can MONITOR the security for the faithful performance of their duties set forth in the Personal Equity and Retirement Account (PERA) Act of 2008. Please note that the settlement bank of the ENTITY, if it is required, is also indicated. Name of Trust Entity/Bank Name of Settlement Bank, where required 1 _______________________ ____________________________________ 2 _______________________ ____________________________________ 3 _______________________ ____________________________________ We understand that the Bureau of Treasury will maintain the PERA Administrator Securities Account for (AMOUNT) per month per account. Very truly yours, ______________________ Authorized Signatory ANNEX 2-A To be used by an FI with own demand deposit account with BSP-FAD Letterhead of Financial Institution AUTODEBIT/AUTOCREDIT AUTHORIZATION The _______________________ (Name of Financial Institution) hereby authorizes the Bureau of Treasury (BTr) and the Bangko Sentral ng Pilipinas (BSP) to debit/credit our demand deposit account (DDA) with BSP-Financial Accounting Department for coupons/interest payment of our securities held in our RoSS account; and to settle the payment of monthly maintenance fees to the BTr in our PERA Administrator Securities Account. We also authorize the BTr and the BSP to credit our DDA with BSP-Financial Accounting Department for the redemption proceeds of our securities in the event such securities mature while in our RoSS account. This authorization will take effect on ___________________ (indicate date) . ________________________ (Authorized Signatory) ANNEX 2-B To be used by an FI with settlement arrangement with a bank Letterhead of Financial Institution AUTODEBIT/AUTOCREDIT AUTHORIZATION The ___________________________ (Name of Settlement Bank) for the account of ________________________ (Name of Financial Institution) hereby authorizes the Bureau of Treasury (BTr) and the Bangko Sentral ng Pilipinas (BSP) to debit/credit our demand deposit account (DDA) with BSP-Financial Accounting Department for coupons/interest payment of securities of _________________________ (Name of Financial Institution) in its designated RoSS account; for maturing securities of the ______________________ (Name of Financial Institution) held in its designated RoSS account with the BTr; and to settle the payment of monthly maintenance fees to the BTr of our PERA Administrator Securities Account. The ______________________ (Name of Financial Institution) also authorizes the BTr and the BSP to credit the account of the settlement bank with BSP-Financial Accounting Department for the redemption proceeds of our securities in the event such securities mature while in our RoSS account. This authorization will take effect on _________________ (indicate date) . _________________________ (Authorized Signatory of Settlement Bank) ________________________ (Authorized Signatory of Financial Institution) ANNEX 3 Letterhead of Financial Institution Date: The Director Name of Off-site Supervising Department Bangko Sentral ng Pilipinas A. Mabini St., Manila Dear Sir: We are transferring on ___________________ (indicate date of transfer) the following securities to our PERA Administrator Securities Account as our security for the faithful performance of PERA Administrator pursuant to Republic Act No. 9505 also known as the Personal Equity and Retirement Account (PERA) Act of 2008 and its implementing rules and regulations. Type ISIN Purchase Issue Date Due Date Remaining Face Purchase Date Tenor a/ Amount Price We are transferring the above securities: a. [ ] As our initial security b. [ ] As an additional security c. [ ] To replace the following security/ies which we earmarked on _______________ (date) . Type ISIN Purchase Issue Date Due Date Remaining Face Purchase Date Tenor a/ Amount Price d. [ ] To replace matured securities the redemption value in the amount of P_____ is credited to our deposit account or that of our settlement bank with BSP-Financial Accounting Department. Very truly yours, Name and Designation of Authorized Signatory ______________________ a/ Reckoned from actual date of transfer/withdrawal ANNEX 4 Name of Financial Institution Computation of Security for the Faithful Performance of PERA Administrator As of (date) FOR THE QUARTER ENDED (Date) 1st Month 2nd Month 3rd Month Average A. COMPUTATION OF AVERAGE BALANCES 1 Securities Held by the PERA Administrator P - P - P - P - B. SECURITY REQUIREMENT Book Value 1 Security Requirement (1% of A. 1(Ave.) above - As of _________________ (Transaction date) 1/ 2 Inventory of Outstanding Securities held by the PERA Administrator (Beginning Balance) (Face Value P__ million) P - 3 Add (Subtract) Securities earmarked (matured/replaced) (Face Value P__ million) P - 4 Outstanding Securities held by the PERA Administrator (Ending Balance) (Face Value P__ million) P - 5 EXCESS (DEFICIENCY) P - 1/ For multiple transaction dates, the FI shall provide separate calculation of Annex 4-A for each specific and relevant dates. ANNEX 4-A Securities for the Faithful Performance of PERA Administrator under Registry of Scripless Securities (RoSS) ANNEX 5 (NAME OF FINANCIAL INSTITUTION) CERTIFICATION (Date) Pursuant to the requirements of Appendix 34a/Q-21a of the Manual of Regulations for Banks/Manual of Regulations for Non-Bank Financial Institutions, I hereby certify the following: 1. The computation of security for the faithful performance of PERA Administrator and relevant schedule of inventory of outstanding securities under ROSS are true and accurate; and 2. The effective interest rate method is being used in the amortization of relevant premium/discount of securities in compliance with the Philippine accounting standards. _____________________________ Authorized Officer/Signatory ANNEX 6 Letterhead of Financial Institution Date: The Director Name of Off-site Supervising Department Bangko Sentral ng Pilipinas A. Mabini St., Manila Dear Sir: We hereby advise you of our decision to withdraw on ____________________ (indicate date of transfer) the following securities used as security for the faithful performance of PERA Administrator from our PERA Administrator Securities Account. Type ISIN Purchase Issue Date Due Date Remaining Face Purchase Date Tenor a/ Amount Price Very truly yours, Name and Designation of Authorized Signatory ______________________ a/ Reckoned from actual date of transfer/withdrawal ANNEX 7 MEMORANDUM Name of Off-site Supervising Department For : The Head Trust Specialist Group From : The Authorized Officer Subject : Scripless Securities for the Faithful Performance of PERA Administrator Date : In connection with the request of ______________________ (indicate name of Financial Institution) dated ____________ to: a. [ ] Replace outstanding ROSS securities b. [ ] Withdraw ROSS securities You are hereby authorized to: c. [ ] Instruct the Bureau of Treasury to transfer the following securities to the ROSS Account of ______________________ (Name of Financial Institution) . Type ISIN Purchase Issue Date Due Date Remaining Face Purchase Date Tenor a/ Amount Price _________________ Authorized Signatory ______________________ a/ Reckoned from actual date of transfer/withdrawal ANNEX 8 NAME OF OFF-SITE SUPERVISING DEPARTMENT (Date) (Name of Financial Institution) (Address) Subject : Scripless Securities for the Faithful Performance of PERA Administrator Dear ______________: We are pleased to inform you that we have approved your request dated _______________ to: a. [ ] Replace outstanding ROSS securities b. [ ] Withdraw ROSS securities Accordingly, we have authorized the Trust Specialist Group to: c. [ ] Instruct the Bureau of Treasury to transfer the following securities to your ROSS accounts Very truly yours, __________________ Authorized Signatory TRUST SPECIALIST GROUP Transaction No. _________ Value Date _________201X The Director Liability Management Service The Bureau of the Treasury Cabildo Street corner A. Soriano Avenue and Sto. Tomas Street, Intramuros, Manila Attention: Registry of Scripless Securities (ROSS) Subject: ROSS Securities of PERA Administrator CONFIRMATION OF TRANSFER OF GOVERNMENT SECURITIES (GS) SANS CONSIDERATION The Bangko Sentral ng Pilipinas-Supervision and Examination Sector , BSP-PERA, does hereby CONFIRM that it has TRANSFERRED SANS CONSIDERATION unto _______________________________ (Name of Financial Institution) the following described government security held by the Bureau of Treasury under the Registry of Scripless Securities (ROSS) system. Type/ISIN Issue Date Due Date Face Amount Purchase Price (NAME OF AUTHORIZED SIGNATORY) Designation REGISTRY OF SCRIPLESS SECURITIES This is to acknowledge receipt of the Confirmation of Transfer of Government Securities (Sans Consideration) of Bangko Sentral ng Pilipinas-Supervision and Examination Sector, BSP-PERA . _________________ ROSS Bureau of the Treasury