CB Circular No. 1256

February 28, 1991 CBP CIRCULAR LETTER TO : All Banks and Non-Bank Financial Institutions Engaged in the Buying and Selling of Government Securities (GS) SUBJECT : CB Circular No. 1256 The Monetary Board, in its Resolution No. 125 dated February 1, 1991, approved: 1. The following clarifications of the pertinent provisions of CB Circular No. 1256 dated October 17, 1990: a. The serial number of the GS sold need not be indicated in the Confirmation of Sale( COS) and in the Custodianship Agreement; b. The financial sales data (yield, terms, final tax and selling price) of the GS sold which are left with the bank/non-bank financial institution need not be indicated in the Custodianship Agreement; c. The number and the date of the Securities Credit Memo (SCM) may be indicated in the file copy of the COS and the Custodianship Agreement when the bank/non-bank financial institution obtains/secures its copy of the SCM from the Government Securities Department, but not later than three (3) banking days from the date of sale; d. Banks/non-bank financial institutions may have the option to use either a separate instrument for Custodianship Agreement, a combined COS-Custodianship Agreement, or a Master Custodianship Agreement per client. In the case of combined COS-Custodianship Agreement, the Agreement need not be numbered separately nor the GS subject of the Agreement be described completely, except in the case where some clients require partial delivery. Hence, the Custodianship Agreement shall reflect the undelivered portion of the GS sold. If the GS sold are fully delivered to the buyer, the COS-Custodianship Agreement shall be filed in the bank's/non-bank financial institution's treasury/money market department; but if the GS sold are left with the bank/non-bank financial institution, copy of the COS-Custodianship Agreement shall be filed in the office of the Custodian. Banks and non-bank financial institutions may also opt to adopt a Master Custodianship Agreement (MCA) per client where all GS sold which are left with the bank/non-bank financial institution shall be recorded by COS. The MCA shall also be serially pre-numbered but need not fully describe the GS subject of custody provided that a copy of the COS (which shall be the basis for recording as contingent account) pertaining to undelivered GS is attached to the MCA; and e. Circular No. 1256 is applicable to banks and non-bank financial institutions, hence the term "bank" as used therein shall read "bank/non-bank financial institution"; and 2. The corrected page 3 of said Circular, copy attached, in accordance with the corrected Resolution No. 1027 dated September 28, 1990. (SGD.) JOSE L. CUISIA, JR. Governor Attachment: b. In case the GS sold are not covered by specific treasury bill/note certificate, in addition to the information under item 'a' above, the number and the date of the Securities Credit Memo (mentioned under item 1.d of the Central Bank Circular to All Accredited Government Securities Dealers dated December 21, 1988) given by the Central Bank to cover the original purchases and subsequent acquisitions and deposits of GS which the GS subject of the sale agreement are part of; c. The number of the COS covering the securities held under custody; d. The Custodianship Agreement shall be serially pre-numbered and all unused forms shall be considered accountable forms; 6. All GS held under custodianship shall be kept physically separate and distinct from those owned by the bank; 7. Any violation of the above rules and regulations as well as those contained in the Central Bank Circular to All Accredited Government Securities Dealers dated December 21, 1988 shall be subject to any or all of the following sanctions as may be decided by the Monetary Board;0 a. Suspension or 0ccancellation of accreditation as GS dealers; b. Disqualification from the rediscounting window and other credit facilities of the Central Bank; c. Suspension of branching privileges; and d. Administrative sanctions under Secs. 34-A and 34-B of R.A. No. 265, as amended. This Circular shall take effect immediately. For The Monetary Board: (SGD.) JOSE L. CUISIA, JR. Governor