Omnibus Revised Rules and Regulations Implementing R.A. No. 245

June 15, 2010

DOF DEPARTMENT ORDER NO. 020-10

OMNIBUS REVISED RULES AND REGULATIONS IMPLEMENTING R.A. NO. 245, AS AMENDED, AND R.A. NO. 1000, AS AMENDED, IN RELATION TO R.A. NO. 7653

1. Legal Basis:

1.1 This Order is issued pursuant to Republic Act No. 245, as amended, and Republic Act No. 1000, as amended, in relation to Republic Act No. 7653 to prescribe the omnibus revised rules and regulations on the issuance, placement, recording, selling, servicing, redemption and payment of Government Securities issued by the Republic of the Philippines.

1.2 The Secretary of Finance is mandated under Republic Act No. 245 to prepare and issue such rules, regulations, and instructions as he considers necessary for the successful achievement of the purposes of meeting public expenditures authorized by law or providing for the purchase, redemption, or refunding of any obligations, either direct or guaranteed, of the Philippine Government, taking such measures as he may deem necessary to protect the Republic of the Philippines and the investing public from fraud or loss.

1.3 The Secretary of Finance is authorized to prescribe the form or forms, the interest and discount rates, the denominations, maturities, negotiability, convertibility, call and redemption features, and all other terms and conditions of issuance, placement, recording, sale, servicing, redemption, and payment of all evidences of indebtedness issued under the authority of Republic Act Nos. 245 and 1000.

2. Purposes:

2.1 To provide a liquid and organized environment for Government Securities issued by the Republic and make the same more attractive to investors thereby enhancing the capability of the Republic to raise needed funds from public borrowings to achieve the purposes set forth in Republic Act Nos. 245 and 1000.

2.2 To allow various participants in the Government Securities market to trade, transfer, or encumber in and among themselves despite differences in their tax status in due consideration of the innovations of technology which now enable the tracking of beneficial ownership and the development of a legal framework that recognizes electronic evidence of recording beneficial ownership.

2.3 To establish an orderly environment and appropriate oversight over the secondary market for Government Securities consistent with relevant laws, rules and regulations which now require the existence of organized secondary markets under the regulatory oversight of the Securities and Exchange Commission, even for securities which are exempt under the Securities Regulation Code, such as Government Securities, to protect the Republic of the Philippines and the investing public from fraud or loss. CDAHIT

2.4 To establish the minimum standards for secondary markets of Government Securities to ensure that all investors of Government Securities enjoy equal benefits regardless of market venue.

In accordance with Republic Act No. 245, as amended, and Republic Act No. 1000, as amended, in relation to Sections 117, 118, 119, 120, 121, 122, and 129 of Republic Act No. 7653, the following Omnibus Revised Rules and Regulations governing the Issuance, Placement, Sale, Servicing and Redemption of Government Securities issued by the Republic of the Philippines are hereby adopted:

ARTICLE I

General Provisions

PART 1

Definition of Terms

SECTION 1. Definition of Terms. — When used in this Order, the terms below shall have the following meaning:

1. "Auction Method" is a method of sale or origination of Government Securities whereby prospective buyers accredited by BTr submit tenders or bids through the Auction System.

2. "Auction System" means an auction system used by BTr for the primary or origination sale of Government Securities through an Auction Method. Unless the context otherwise requires, the term Auction System shall include ADAPS or such other BTr-accredited auction system.

3. "Automated Debt Auction Processing System" or "ADAPS" means the electronic auction system that accepts and processes bids for auction of Government Securities.

4. "Brokers" are institutions licensed as such by the SEC in respect of Government Securities.

5. "BSP" shall refer to the Bangko Sentral ng Pilipinas, or its successor agency.

6. "BTr" means BTr or National Treasury, or its successor agency.

7. "BTr-Managed Funds" shall refer to funds managed by BTr pursuant to law or contract.

8. "Competitive Bid or Tender" means a bid or tender to purchase a stated par amount of securities at a specified yield or rate. CAcIES

9. "Dealers" are financial institutions licensed as such by the SEC in respect of Government Securities.

10. "Dutch or Single Price Auction" means an auction in which all successful bidders pay the same price regardless of the bid yields or rates that each of them submits.

11. "English or Multi-Price Auction" means an auction in which each successful competitive bidder pays the price equivalent to the bid yield or rate that each of them submits.

12. "Financial Institution" shall mean corporations organized as such primarily to deal in financial assets through borrowing funds from savers or investors and lending funds to users, producers and other financial institutions. This may refer to banks, non-bank financial intermediaries, insurance companies, securities dealers or brokers, investment houses, finance companies and mutual funds under the appropriate regulatory requirements of Bangko Sentral ng Pilipinas, the Securities and Exchange Commission, or the Insurance Commission.

13. "Government-Owned or Controlled Corporation" shall refer to a corporation which is created by special law or organized under the Corporation Code in which the Government, directly or indirectly, has ownership of the majority of the capital or has voting control.

14. "Government Securities" for purposes of this Department Order shall mean securities issued by the Republic of the Philippines and includes Treasury bills, certificate of indebtedness, Treasury bonds, notes, securities, and other evidence of indebtedness.

15. "Government Securities Eligible Dealer" or "GSED" means a SEC-licensed dealer in Government Securities accredited by BTr to participate in the primary or origination sale of Government Securities.

16. "Government Securities Trading Market" or "GSTM" shall refer to an SEC-authorized trading market accredited by BTr under this Order as a secondary market for Government Securities.

17. "Local Government Unit" shall refer to a political subdivision of the Republic of the Philippines consisting of provinces, cities, municipalities, or autonomous regional political subdivision authorized by law to issue bonds or incur indebtedness.

18. "Market Maker" means a GSED accredited by BTr who commits to provide firm two-way quotes in Government Securities in accordance with the relevant BTr rules and regulations. AaSHED

19. "Non-Competitive Bid or Tender" means a bid or tender to purchase a stated par amount of securities at the weighted average interest rate resulting from the accepted Competitive Bid or Tender.

20. "Over-the-Counter Method" is a manner of primary origination or sale of Government Securities through offer or negotiation to entities as may be allowed by BTr such as but not limited to Government-Owned or Controlled Corporations (GOCCs), Local Government Units (LGUs), or Tax-Exempt Institutions (TEIs).

21. "Primary Securities Account" shall refer to the securities account in RoSS maintained by a participant.

22. "Registry of Scripless Securities" or "RoSS" means the electronic registry, which serves as the official and final record of ownership or interest in Government Securities. Unless the context otherwise requires, the term RoSS shall include any BTr-accredited electronic sub-registry.

23. "SEC" shall refer to the Securities and Exchange Commission of the Philippines, or its successor agency.

24. "Settlement Bank" shall refer to BSP or to a bank or non-bank financial institution designated by a bondholder for any settlement of primary market purchases, receipt of coupon and/or redemption payments of Government Securities. The Settlement Bank must be a member of the applicable payment system such as BSP Philippine Payment and Settlement System (PhilPaSS) or Philippine Domestic Dollar Transfer System (PDDTS).

25. "Tax-Exempt Institution" shall refer to an entity declared and certified by the Bureau of Internal Revenue as exempt from the applicable tax under the National Internal Revenue Code.

26. "Tap Method" means a manner of sale or offering of Government Securities open exclusively to GSEDs qualifying as Market Makers, BTr-Managed Funds, and other entities or instrumentalities as may be allowed by the Secretary of Finance or through BTr.

PART 2

Powers of the Secretary of Finance

SECTION 2. Authority to Borrow. — Under Section 1 of R.A. No. 245, as amended, the Secretary of Finance, with the approval of the President of the Philippines, and after consultation with the Monetary Board, is authorized to borrow from time to time on the credit of the Republic of the Philippines such sum(s) as in his judgment may be necessary to meet public expenditures authorized by law or to provide for the purchase, redemption or refunding of any obligation, either direct or guaranteed, of the Philippine Government, and to issue thereof evidence of indebtedness which may be made payable in Philippine currency, or in any readily convertible foreign currency. DCHaTc

Under Section 1 of R.A. No. 1000, as amended, upon the recommendation of the Secretary of Finance, the Monetary Board, and the National Economic and Development Authority, the President of the Philippines is authorized to issue, preferably in the Philippines, or abroad if necessary, in the name and in behalf of the Republic of the Philippines bonds, including lottery bonds, to finance public work and projects for economic and social development which have high economic or social rates of returns and which are authorized by law, including expropriation of lands for subdivision and resale to individuals, or to repay or service bonded obligations of the Government incurred for such projects. The bonds issued under the authority of this section may be made payable both as to principal and interest, in Philippine currency or any readily convertible foreign currency.

SECTION 3. Issuance of Government Securities. — The exercise of authority to borrow by the President of the Philippines or the Secretary of Finance shall be through the issue of Government Securities, and shall be undertaken by an Auction Committee hereinafter constituted whenever auction is prescribed and by BTr whenever any other method is authorized.

SECTION 4. Authority of the Secretary of Finance to Prescribe the Features of Government Securities. — The Secretary of Finance, in consultation with the Monetary Board, shall prescribe the terms, yields, denominations, maturities, negotiability, convertibility, call, eligibility, redemption and other features of the Government Securities, including documentary stamps tax on the original issue and final withholding tax on the income derived from Government Securities. Other terms and conditions of Government Securities issued pursuant to this Order shall be subject to the provisions of R.A. Nos. 245 and 1000, as applicable.

SECTION 5. Authority of the Secretary of Finance to Prescribe Standards on Secondary Market of Government Securities. — The Secretary of Finance, through BTr, shall determine the appropriate secondary market structure for Government Securities, in accordance with relevant laws and regulations, as well as require the implementation, through BTr, of an accreditation framework for GSTMs and its participants and provide the necessary environment to ensure the liquidity of the issues and the development of the investor base.

PART 3

Classification, Features, Pricing, and Redemption of Government Securities

SECTION 6. Classification of Government Securities. — (1) Government Securities issued pursuant to R.A. No. 245, as amended are classified as follows:

a. Treasury bills issued on a discount basis or at par and payable at maturity without interest. Treasury bills may be offered for sale either on a competitive basis or at a fixed rate of discount or at par and may be made payable at any date not later than one year from the date of issue;

b. Certificate of indebtedness having maturities not exceeding eighteen months from the date of issue; and TAIcaD

c. Treasury bonds, notes, securities or other evidences of indebtedness having maturities of one year or more but not exceeding twenty-five years from the date of issue.

(2) Government Securities issued pursuant to R.A. No. 1000, as amended.

(3) Cash management bills and other evidences of indebtedness not falling under Paragraphs (1) and (2) above, issued by the Republic of the Philippines.

SECTION 7. Pricing of Government Securities; Frequency of Payment.— Government Securities may be issued at a discount basis, at a premium, or at par and payable with or without coupon in accordance with the terms and conditions of issuance under a Notice of Offering or public notice issued by the Secretary of Finance through BTr. Coupons due on coupon-bearing Government Securities shall be payable semi-annually in arrears calculated on 30/360-days unless otherwise prescribed in the terms and conditions of issuance under a Notice of Offering or public notice issued by BTr.

SECTION 8. Denomination and Exchange. — (1) Government Securities issued in scripless form may be transacted in any face amount, subject to such requirements as the BTr may prescribe.

(2) Government Securities issued in certificated form shall be in denominations of P10,000.00, P50,000.00, P100,000.00, P500,000.00, P1,000,000.00, P5,000,000.00 and P10,000,000.00 unless otherwise prescribed in the terms and conditions of issuance under a Notice of Offering or public notice issued by BTr. Exchanges of Government Securities from higher to lower and/or lower to higher denominations of identical issue and series may be effected at BTr.

SECTION 9. Servicing and Redemption. — Government Securities issued by the Republic of the Philippines pursuant to R.A. Nos. 245 and 1000 as implemented by this Order may be exchanged at any time before maturity, or redeemed at or after maturity. Coupon and redemption payments due on Government Securities shall be made by the Republic of the Philippines, through BTr, to the person whose name appears in RoSS as registered owner of the Government Securities.

SECTION 10. Taxation. — (1) The income derived from Government Securities issued pursuant to R.A. No. 245, as amended, shall be subject to the applicable final tax rate under the National Internal Revenue Code in force at the time of issue and the rules and regulations issued by the Bureau of Internal Revenue (BIR), to be withheld on discounts valued at the time of issue on every original sale which shall be deducted by the buyer from the discounts of the Government Securities and included in the remittance of the purchase price. Periodic coupon payments on Government Securities shall be subject to the applicable final tax to be withheld at the time the coupon payments are made. DCTSEA

(2) Government Securities issued pursuant to R.A. No. 1000, as amended, shall not be subject to taxation.

(3) The documentary stamp tax on the original issue of Government Securities under R.A. No. 245 shall be for the account of the issuer.

(4) No other taxes shall be collected on subsequent trading of the securities which have been subjected to tax under the first paragraph herein.

(5) Taxation of Government Securities transactions conducted under SEC-approved borrowing and lending programs of accredited GSTMs shall be governed by rules, regulations and issuances of the Bureau of Internal Revenue.

(6) Taxation of repurchase agreements covering Government Securities conducted under relevant SEC-approved programs of accredited GSTMs and which provide for transfer of title over Government Securities subject of the repurchase agreement, shall be deemed to be covered by the exemption from documentary stamp tax under the relevant provisions of the Documentary Stamp Tax Law.

PART 4

Form and Registry of Government Securities

SECTION 11. Form of Government Securities. — Government Securities issued pursuant to R.A. Nos. 245 and 1000 shall be issued in scripless form unless a physical certificate is otherwise prescribed by the Secretary of Finance through BTr.

SECTION 12. Registry of Government Securities. — Government Securities issued by the Republic of the Philippines pursuant to R.A. Nos. 245 and 1000, as well as all subsequent transfers of such Government Securities, shall be recorded in the RoSS.

BTr shall issue such rules, regulations, and procedures for the operation of the RoSS as it deems necessary, desirable and appropriate for the proper performance of its registry function.

SECTION 13. Sub-Registrar and Sub-Registry Records. — The BTr may engage a Sub-Registrar which shall maintain the books and records of specific set of accountholders and their transactions.

(a) Qualifications of a Sub-Registrar:

i. The Sub-Registrar must be a duly licensed entity under the jurisdiction of the BSP and/or the SEC and authorized to perform registry functions;

ii. The Sub-Registrar must have the capability to service a tax unification program for trading and settlement of Government Securities in a manner acceptable to BTr, pursuant to this Order;

(b) Duties of a Sub-Registrar. The Sub-Registrar shall perform the following duties: aSTHDc

i. It shall maintain an electronic sub-registry book, which shall contain all records of transfers of ownership;

ii. It shall electronically interface with a BTr-accredited GSTM that provides services relative to clearing and/or settlement processes;

iii. It shall perform such other duties as may be prescribed or required by BTr for the efficient and effective recording of transactions on Government Securities.

(c) The Sub-Registry records shall form part of the official records of RoSS.

SECTION 14. Recording of Transfers. — Government Securities may be validly transferred by making appropriate entries in RoSS. Such transfers shall have the effect of legal delivery of such Government Securities.

SECTION 15. Finality of Transfer Through RoSS. — Records of transfers of Government Securities through entries in RoSS shall be binding on the parties to the transfer, and shall be final, conclusive and irrevocable. The procedure by which, and the exact time at which such entries are created shall be governed by the rules of RoSS as prescribed by BTr.

SECTION 16. Pledge of Government Securities. — A pledge of Government Securities which have been transferred through entries in RoSS shall be constituted, and shall accordingly be considered delivered, in accordance with Articles 2093 and 2095 of the Civil Code (RA No. 386) when RoSS certifies by an appropriate entry that the Government Securities have been segregated and/or earmarked in favor of the pledgee.

SECTION 17. Involuntary Liens and Encumbrances on Government Securities Recorded in RoSS. — Involuntary liens, garnishment, attachment, execution, or other legal processes against Government Securities recorded in RoSS shall comply with the provisions of the Rules of Court promulgated by the Supreme Court of the Philippines subject to R.A. Nos. 245 and 1000 prescribing limitation on garnishment or execution on Government Securities.

ARTICLE II

Primary Market of Government Securities

SECTION 18. Methods of Origination. — The following are the recognized methods of issuing Government Securities: (a) Auction Method (b) Over-the-Counter Method, and (c) Tap Method. The Secretary of Finance through BTr may prescribe such other methods of origination in issuing Government Securities.

PART 1

Auction Method

SECTION 19. Auction Process. — Auctions of Government Securities may be conducted under a Dutch or Single Price Auction, English or Multi-Price Auction, or such other auction process as announced by BTr. DAEIHT

SECTION 20. Participants in Auction of Government Securities. — (1) Any financial institution may be accredited to participate as an accredited GSED in the primary origination or auction of Government Securities in accordance with the requirements of BTr. Except as may otherwise be prescribed by BTr, an accredited GSED or financial institution shall meet the following criteria:

(a) Unimpaired capital and surplus account at any one time as prescribed by BSP, the SEC, or the Insurance Commission. For purposes of this Order, the term "unimpaired capital and surplus" shall mean the combined capital accounts of a financial institution and refer to its unimpaired paid-in capital and earned surplus. The term "surplus" shall refer to the excess of the assets over the liabilities and paid-in capital of the financial institution, but excluding the reserves set aside for valuation purposes, and reserves for liabilities and deferred income tax, and other capital adjustments;

(b) Certification by BSP, SEC, or Insurance Commission as to compliance with Paragraph (a) above including a certification that the financial institution is in good standing; and

(c) For purposes of participating in the primary origination or sale of Government Securities, such Financial Institution shall have a deposit account with a Settlement Bank, where the settlement of the award may be debited.

(d) Necessary interface, electronic or otherwise, to effect participation in the methods of origination and settlement of Government Securities as prescribed by BTr.

Accredited GSEDs may participate in competitive and non-competitive auction.

(2) Persons other than accredited GSEDs may be allowed to participate in the Auction on a non-competitive basis in accordance with the rules and regulations that will be issued by BTr.

SECTION 21. Public Notice of Offering. — The Secretary of Finance through BTr may, from time to time, by public notice offer Government Securities for sale and invite tenders therefor. All tenders or bids for Government Securities of accredited buyers shall be transmitted through the Auction System. The Government Securities so offered, and tenders received shall be subject to the terms and conditions imposed under this Order, except as they may be modified by the Secretary of Finance, in consultation with the Monetary Board, which shall be made part of the public notice of offering. The public notice of offering shall be transmitted electronically to accredited buyers through an Auction System and/or by any other method as may be prescribed by BTr and shall indicate such information as may be deemed appropriate by the Secretary of Finance through BTr. IAEcCT

In cases where the announced auction cannot be conducted due to a declared holiday or suspension of work or banking day, or fortuitous event, the auction for Government Securities shall automatically adjust to the next succeeding business day or as may be announced by the BTr.

SECTION 22. Submission of Bids or Tenders. — Unless otherwise prescribed by the Secretary of Finance through BTr, bids or tenders in response to a public notice of offering of Government Securities shall be transmitted to BTr through the Auction System.

In case of system failure, power outages or as may be prescribed by the Secretary of Finance through BTr, tenders for purchase of Government Securities shall be submitted in official tender forms required by BTr before the prescribed cut-off time for receiving tenders for manual entry to the Auction System.

Each tender shall be unconditional and shall be for a minimum nominal amount of P10.0 million and in multiples of P1.0 million thereafter, unless otherwise prescribed by the Secretary of Finance through BTr.

Unless otherwise provided in the public notice of offering, yields of submitted tenders for Government Securities shall be stated in three (3) decimal places.

SECTION 23. Receipt and Processing of Tenders. — Tenders for Government Securities electronically transmitted by accredited buyers through the Auction System prior to the cut-off time fixed for the receipt of tenders shall automatically be acknowledged by BTr through the Auction System. In case of any downtime of the Auction System, tenders for Government Securities shall be submitted in the prescribed tender form within the prescribed cut-off time and manually stamped in the time-dated receiving system by the Securities Origination Division of BTr. The BTr shall not be liable for any errors in tenders received or for delays in the transmission of tenders beyond the prescribed cut-off period for submission and receipt of tenders.

SECTION 24. Auction Committee. — All tenders received on time shall be deliberated upon immediately after the cut-off time set by the Auction Committee composed of the Secretary of Finance, as Chairperson; the Treasurer of the Philippines as Vice Chairperson; the Assistant Secretary for the Domestic Finance Group of the Department of Finance or duly authorized representative as Member; the Deputy Treasurer of the Philippines for Operations or duly authorized representative as Member; the Deputy Governor for the Banking Services Sector, Research and Treasury of the BSP or duly authorized representative, as Member; the Head of the Treasury Department of the BSP or duly authorized representative, as Member; and the Director of the Market Regulation Department of the SEC or duly authorized representative, as Member. TAIEcS

At least four (4) members of the Auction Committee shall constitute a quorum to do business.

The Deputy Treasurer of the Philippines for Operations shall also act as the Executive Officer of the Auction Committee.

The Secretary of Finance may designate an additional member(s) in the Auction Committee as he may deem appropriate.

The Auction Committee staff support shall be provided by the appropriate division of BTr.

SECTION 25. Award for Tenders. — The Auction Committee shall make a decision as to the amount and rate of the awards. Such decision shall be transmitted immediately to the winning accredited buyers through the Auction System, except on any downtime of the Auction System in which case the decision of the Auction Committee shall be transmitted manually in the prescribed notice of award form of BTr. The Executive Officer of the Auction Committee or duly authorized representative shall confirm the transmitted decision. The Vice Chairman shall authorize the posting of the confirmed and awarded Government Securities to the winning accredited buyer's Primary Securities Account in RoSS, subject to receipt of auction proceeds. A print-out of the auction results summary shall be signed by the members of the Auction Committee.

SECTION 26. Apportionment of Awards and Reservation of Right. — Unless otherwise provided in the public notice of offering by the Secretary of Finance through BTr, the lowest rate offered by bidders for Competitive Bids will be accepted in full down to the amount required after deducting the amount of Non-Competitive Bids from the total amount of issue(s). At cut-off level, if the same rate appears in two (2) or more Competitive Bids or Tenders, and it is necessary to accept only part of the amount offered at such rate, the amount accepted at such rate shall be prorated in accordance with the respective amounts applied for. If the amount is the same, the proration of odd amount shall be applied in accordance with the terms and conditions as stated in the public notice of offering. Non-Competitive Bids or Tenders shall be accepted at the weighted average yield of the accepted Competitive Bids or Tenders.

The Auction Committee reserves the right to accept or reject any or all tenders or parts of the tenders and to award less than the amount applied for and any action it may take shall be final.

SECTION 27. Payment of Awards. — Payment on awarded issues shall be made or completed in accordance with the prescribed settlement cut-off time of BTr. In the event of a national or local holiday or fortuitous event when no settlement of the Government Securities and/or cash can be effected, the settlement date shall be adjusted to the next business day. Due notice shall be issued by BTr through the Auction System, or in the prescribed notice form of BTr in case of any downtime of the Auction System. cADTSH

On settlement date, BTr shall instruct the debiting of the winning accredited buyer's Settlement Bank account and the crediting of the deposit account of the Treasurer of the Philippines under Section 47 of this Order.

PART 2

Over-the-Counter Method

SECTION 28. Terms of Over-the-Counter Sale of Government Securities. — The BTr shall issue a public notice of offering prescribing the terms and conditions for the over-the-counter origination or sale of Government Securities.

SECTION 29. Allowable Funds; Scope of Investment. — GOCCs and LGUs shall be allowed to purchase Government Securities using investible funds or idle funds in excess of normal operating requirements in the case of LGUs. The phrase "idle funds in excess of normal operating requirements" shall generally mean the level of funds which an entity can freely invest in Government Securities after considering provisions for coverage of such (1) regular and recurring operating expenses such as salaries and wages, repairs and maintenance, inventories and supplies, debt servicing, etc. within the context of the entity's cash operating cycle; and (2) local counterpart commitments for capital expenditures within the current fiscal year. In case of LGUs, unremitted national collections and funds set aside for payments of obligations to government corporations/cooperatives shall not form part of their idle funds.

New and internally-generated excess funds of GOCCs, i.e., funds which have not been previously invested in Government Securities nor sourced from equity or subsidy from the National Government may also be invested in Government Securities.

Temporary idle funds of LGUs qualifying as local counterpart commitments for capital expenditures within the current fiscal year may also be invested in Government Securities as may be allowed by their cash requirements, and provided that such investments will not delay the implementation of covered projects.

SECTION 30. Form and Cut-off Time. — Placements of GOCCs, LGUs, and TEIs shall be transmitted to BTr (Attention: Securities Origination Division, Liability Management Service) in the prescribed placement forms and in accordance with such time as may be prescribed by BTr.

Placements may be submitted in hard copy or via facsimile or any other mode of transmission acceptable to the BTr. The BTr may lawfully rely and execute such placement instruction within the settlement cut-off time for settlement payment with the Settlement Bank. The BTr shall not be liable for damages or losses on the GOCC, LGU or TEI for effecting settlement payment instructions. aHSTID

On or before 4:00 P.M. on the day of placement, the GOCCs/LGUs/TEIs shall submit the duly executed placement form, in duplicate, to BTr (Attention: Securities Origination Division, Liability Management Service). Submitted placements of GOCCs, LGUs and TEIs shall be acknowledged by BTr (Securities Origination Division, Liability Management Service).

SECTION 31. Pricing of Placements. — Pricing of Government Securities offered or issued to GOCCs, LGUs and TEIs shall be as prescribed by BTr.

SECTION 32. Specific Requirements for TEI Accounts. — A TEI or its managing bank/financial institution shall:

(a) To open a tax-exempt RoSS securities account, submit to the Securities Origination Division, Liability Management Service a (i) Certified copy of current ruling (not more than a year) from the Bureau of Internal Revenue regarding its status as a tax-exempt institution; (ii) Copy of the Board Resolution or as embodied in the Secretary's Certificate duly certified by the Corporate Secretary authorizing the placement (directly for managed funds or indirectly through designated trustee bank/financial institution in the case of managed trust funds) in Government Securities; and (iii) Copy of the covering trust agreement; and

(b) Perform all acts and undertaking connected therewith including the designation of person(s) authorized to exercise such functions.

SECTION 33. Amount of Placements. — The minimum amount of placement shall be P500,000 for GOCCs and LGUs, and P1.0 Million for TEIs, and in even multiples of P100,000.00 in any case.

SECTION 34. Settlement of GOCC, LGU and TEI Placement. — Settlement of GOCC, LGU and TEI over-the-counter placement shall be on the same day as placement date.

Upon placement/maturity of Government Securities, BTr RoSS shall credit/debit the concerned GOCC/LGU/TEI RoSS Primary Securities Account.

Simultaneously, the Settlement Bank shall correspondingly debit/credit the GOCCs/LGUs/TEIs Cash Account and credit/debit TOP's Account with the Settlement Bank.

SECTION 35. Proof of Over-the-Counter Placement. — Government Securities placement of GOCCs, LGUs or TEIs shall be evidenced by the acknowledgment of the placement in the executed placement document.

SECTION 36. Transfers. — Government Securities held by GOCCs, LGUs and TEIs may be transferred prior to maturity to any person, regardless of tax classification, in any BTr-accredited GSTM. AHDaET

PART 3

Tap Method

SECTION 37. Participants. — The tap facility shall be available to Market Makers, BTr-Managed Funds and other entities or instrumentalities as may be allowed by the Secretary of Finance or through BTr.

SECTION 38. Methods of Issuance and Features of GS Issued Under Tap. — Primary origination or sale of Government Securities through tap shall be announced through a public notice of offering. The issue ceiling, yield and amount for Government Securities available on tap shall be as announced or as negotiated by BTr.

ARTICLE III

Secondary Market for Government Securities

PART 1

General Provisions

SECTION 39. Secondary Market Transfers. — Transfers of Government Securities in a BTr-accredited GSTM shall be governed by this Order and the applicable rules and regulations issued by the Secretary of Finance through BTr, the rules and regulations of the SEC and the rules and conventions of such BTr-accredited GSTM.

SECTION 40. Transfers Across Tax Categories. — Transfers of Government Securities between market participants shall be allowed regardless of tax status, subject to the rules and regulations to be issued by BTr to ensure the proper assessment and collection of taxes.

SECTION 41. Accreditation of Secondary Market Participants. — The BTr shall promulgate the appropriate rules and regulations to classify and accredit participants in the secondary market of Government Securities based on their activities therein and their participation in a Government Securities Trading Market. The participants that may be allowed are Market Makers, Dealers and Brokers.

Notwithstanding the foregoing, the Secretary of Finance through BTr shall have the power, in accordance with this Order, to further and additionally classify and accredit participants in the secondary market, prescribe standards and qualifications defined by it for such classifications, establish a hierarchy of market participants based on their commitment to the Government Securities market, including incentives to ensure accredited participants' ability to support its commitments to the Government Securities market and enhance liquidity in the secondary market.

The BTr shall prescribe mechanisms to monitor compliance with commitments and take such actions as are necessary to enforce the classification system, including suspension/revocation of incentives, suspension/revocation of the accreditations granted and such other actions necessary and incidental hereto to protect the Republic of the Philippines and the investing public from fraud or loss. ECaScD

SECTION 42. Special Covenants of All Accredited Secondary Market Participants. — All accredited participants, by application for any such accreditation of whatever classification, are deemed to have given consent to the disclosure to BTr of their activity in the Government Securities market by a GSTM. No other written consent shall be deemed necessary to give effect hereto, other than the accreditation granted by BTr under this Order and implementing issuances issued by BTr in relation hereto.

PART 2

GS Trading Market Accreditation Standards

SECTION 43. Market Structure. — The Secretary of Finance through BTr may accredit any trading market as a GSTM; provided, the GSTM is duly recognized by the SEC under applicable law, rules and regulations.

SECTION 44. Documentation. — A GSTM shall be accredited as such by BTr through a Listing Agreement or other appropriate document showing BTr's consent to have Government Securities traded and settled on such GSTM.

SECTION 45. GSTM Rules. — The GSTM shall adopt such rules and conventions as are necessary to give effect to its obligations under its accreditation.

SECTION 46. Minimum Requirements for GSTM. — A GSTM shall comply with the following minimum requirements to be qualified for accreditation:

I. GS Trading Market Facilities.

a. Transaction Modes. The GSTM shall allow negotiated transactions and/or automatic matching processes, or any other transaction modes as may be notified to the BTr.

b. Retail Market Structure. The GSTM shall allow retail investors to participate therein in accordance with relevant regulation and at the trading lots prescribed by BTr.

c. Accessibility. The GSTM shall be accessible as much as possible on a nationwide basis. The GSTM shall be deemed to be in compliance herewith where regional or key cities in provincial areas are capable of accessing the trading system directly.

d. Regulatory environment. The GSTM shall be under the oversight of a Self-Regulatory Organization (SRO) duly recognized as such by the Securities and Exchange Commission, with rulemaking and enforcement powers, and independent compliance and surveillance functions as required under the Securities Regulation Code or its successor law. EcICDT

II. GSTM Participants. The GSTM shall include the participation of brokering entities, dealing entities and qualified investors.

III. Monitoring Facilities on Market Participants. The GSTM shall have facilities required to monitor and report on the secondary market performance of GS Market Participants accredited by BTr, based on performance criteria prescribed by BTr.

IV. Price Transparency. The GSTM shall have price transparency mechanisms consisting of public dissemination facilities that capture transaction data and disseminate the same in accordance with timeliness standards under applicable regulation.

V. Liquidity Facilities for Failed Trades Management and to Support Trading Activities

a. Cash Liquidity Programs. The GSTM shall operate programs that seek to address cash liquidity concerns of its participants, which shall serve as part of the GSTM's failed trades management activities. Such cash liquidity programs shall have the following essential features:

(1) SRO. Cash Liquidity Programs shall be under the oversight of a duly registered Self-Regulatory Organization (SRO); provided, however, that the SRO may exempt certain entities or activities from its SRO oversight with concurrence of the SEC.

(2) Risk Mitigation Mechanisms. Cash Liquidity Programs shall have in place mechanisms that mitigate risks, such as, but not limited to, collateralization of transactions.

(3) Collateral Administration and Management. Cash Liquidity Programs shall include the participation of an entity that shall take delivery of collateral with the task of monitoring and acting to maintain collateral levels at agreed upon levels and conduct resolutions processes.

(4) Regulatory Approval. Such Cash Liquidity Programs must be approved by the relevant regulatory authorities having jurisdiction over the GSTM and the participants contemplated.

b. Securities Liquidity Programs. The GSTM shall operate programs that seek to address securities liquidity concerns of its participants, which shall serve as part of the GSTM's support for the trading activities of its participants. Such securities liquidity programs shall have the following essential features: ScTIAH

(1) SRO. The Securities Liquidity Program shall be under the oversight of a duly registered Self-Regulatory Organization (SRO); provided, however, That the SRO may exempt certain entities or activities from its SRO oversight with concurrence of the SEC.

(2) Risk Mitigation Mechanisms. Securities Liquidity Programs shall have in place mechanisms that mitigate risks, such as, but not limited to, collateralization of transactions.

(3) Collateral Administration and Management. Securities Liquidity Programs shall include the participation of an entity that shall take delivery of collateral with the task of monitoring and acting to maintain collateral levels at agreed upon levels and conduct resolutions processes.

(4) Regulatory Concurrence. Such Securities Liquidity Program shall have been approved by the relevant regulatory authorities having jurisdiction over the GSTM and the participants contemplated.

VI. Trading Programs that Promote Equality of Access. The BTr shall establish trading programs that enhance market access and allow equality of access by its participants, which Programs shall be implemented through the GSTMs accredited by it. The GSTM shall provide facilities to ensure that counterparty risks are sufficiently mitigated through the use of bilateral counterparty limits, margin-based trading limits, pre-delivery and such other mechanisms to mitigate counterparty risk.

VII. Settlement Standards. The GSTM shall observe the following settlement standards:

a. Straight-Through Process. The GSTM shall provide for settlement on a straight-through process mode, to ensure minimization of operational inefficiencies.

b. Delivery-versus-Payment. The GSTM shall settle trades conducted on its systems on a delivery-versus-payment (DvP) mode. Such settlement may allow investors to settle directly into their cash and/or securities accounts.

c. Clearing Authority. The GSTM shall ensure that its clearing and settlement processes use intermediaries that are authorized by the Securities and Exchange Commission to perform the clearing and settlement process of the GSTM. CSDAIa

VIII. Other Capabilities. The GSTM shall likewise have the following capabilities.

a. Business Continuity Plan (BCP) and Disaster Recovery Program (DRP) Requirements. The GSTM shall provide BTr a copy of its DRP and BCP.

b. Ability and Undertaking to Link with Existing Markets and Payment Systems. All GSTMs shall have the capability to link with existing GSTMs and payment systems.

c. Electronic Interface. All GSTMs shall have automated interface with the RoSS.

ARTICLE IV

Miscellaneous

SECTION 47. Deposit Account. — The Treasurer of the Philippines shall maintain a deposit account with the Bangko Sentral ng Pilipinas or authorized government depository bank to which all proceeds from the sale of Government Securities under R.A. No. 245, as amended, and R.A. No. 1000, as amended, shall be credited and all payments for interest and redemption of Government Securities shall be charged.

SECTION 48. Reservation as to Terms of these Rules and Regulations.— The Secretary of Finance reserves the right to amend, supplement, revise, prescribe or withdraw all or any of the provisions of these rules and regulations at any time, or from time to time.

SECTION 49. Inconsistent Circulars, Memoranda, and Orders. — This Order expressly supersedes and repeals Department Order No. 141-95, as amended. All circulars, memoranda or orders inconsistent herewith are hereby revoked or modified accordingly.

SECTION 50. Transitory Provision. — The BTr is hereby authorized to implement the requirements of this Order in such manner deemed appropriate under the circumstances, and shall further prescribe the transitory provisions necessary to ensure a smooth transition from the present state of the Government Securities market to the environment contemplated under this Order.

SECTION 51. Effectivity. — These Omnibus Revised Rules and Regulations shall take effect immediately.

(SGD.) MARGARITO B. TEVESSecretary of Finance

ATTACHMENT

Current	Proposed	Remarks
DEPARTMENT ORDER NO. 141-95	DEPARTMENT ORDER NO. ____
(As Amended)
REVISED RULES AND REGULATIONS	OMNIBUS REVISED RULES
FOR THE ISSUANCE, PLACEMENT,	AND REGULATIONS	The Title of the Department
SALE, SERVICE AND REDEMPTION	IMPLEMENTING R.A. NO. 245,	Order sets forth its coverage
OF TREASURY BILLS AND BONDS	AS AMENDED, AND R.A. NO.	and intention.
UNDER R.A. NO. 245, AS	1000, AS AMENDED, IN RELATION
AMENDED	TO R.A. NO. 7653
	1. Legal Basis:		New. This part of the
Pursuant to R.A. No. 7653, otherwise	1.1 This Order is issued pursuant	preamble sets for the legal
known as the "New Central Bank Act", the	to Republic Act No. 245, as amended,	basis.
Department of Finance, through the	and Republic Act No. 1000, as
Bureau of the Treasury, shall be assuming	amended, in relation to Republic Act
the fiscal function of issuing Treasury Bills	No. 7653 to prescribe the omnibus
and Bonds effective November 16, 1995,	revised rules and regulations on the
however, the placing, servicing, selling and	issuance, placement, recording,
redeeming shall remain with the Bangko	selling, servicing, redemption and
Sentral ng Pilipinas until assumption of the	payment of Government Securities	New. This provision in the
same by the Bureau of the Treasury.	issued by the Republic of the	preamble sets forth the
	Philippines.		applicable laws underlying the
In accordance with Section 4 of R.A. No.					proposed Order, and the
245, as amended, the following rules					intention of the same.
and regulations governing the issuance,
placement, sale, service and redemption
of Treasury Bills and Bonds authorized
under the said Act are hereby prescribed:
	1.2 The Secretary of Finance is
	mandated under Republic Act No.
	245 to prepare and issue such rules,
	regulations, and instructions as he
	considers necessary for the
	successful achievement of the	New. This provision aligns the
	purposes of meeting public	proposed Order with the
No provision.	expenditures authorized by law	mandate of the Secretary of
	or providing for the purchase,	Finance under applicable law.
	redemption, or refunding of any
	obligations, either direct or
	guaranteed, of the Philippine
	Government, taking such measures
	as he may deem necessary to
	protect the Republic of the Philippines
	and the investing public from fraud
	or loss.
	1.3 The Secretary of Finance is
No provision.	authorized to prescribe the form or
	forms, the interest and discount rates,
	the denominations, maturities,
	negotiability, convertibility, call and	New. This provision aligns the
	redemption features, and all other	proposed Order with the
	terms and conditions of issuance,	mandate of the Secretary of
	placement, recording, sale,	Finance under applicable law.
	servicing, redemption, and payment
	of all evidences of indebtedness
	issued under the authority of
	Republic Act Nos. 245 and 1000.
	2. Purposes			New. This part of the
					preamble sets forth the
					purpose of the proposed
					Order.
	2.1 To provide a liquid and organized
	environment for Government
	Securities issued by the Republic
	and make the same more attractive	New. This provision aligns the
	to investors thereby enhancing the	proposed Order with the
	capability of the Republic to raise	mandate of the Secretary of
	needed funds from public borrowings	Finance under applicable law.
	to achieve the purposes set forth
	in Republic Act Nos. 245 and 1000.
	2.2 To allow various participants in	New. This provision states the
	the Government Securities market	policy of the Secretary of
	to trade, transfer, or encumber in	Finance to lift current
	and among themselves despite	transactional barriers that
	differences in their tax status in due	should not impede liquidity,
	consideration of the innovations of	since advances in technology
	technology which now enable the	and law have already been
	tracking of beneficial ownership and	made. In particular,
	the development of a legal framework	technological advances allow
	that recognizes electronic evidence	recording of ownership down
	of recording beneficial ownership.	to the level of beneficial
					ownership and tracking of
					taxes despite transactions
					that cross tax classes. These
					have already been used to
					support trading and
					settlement for US dollar
					tranches of the recently
					issued Multicurrency Retail
					Treasury Bonds.
					Furthermore, legal and
					regulatory framework now
					recognizes the electronic
					recording of beneficial
					ownership and requires
					delivery of securities bought
					to beneficial owners or their
					agents. As such, the tracking
					can be put in place to ease
					transfer restrictions that are
					present in the current DO
					141-95.
	2.3 To establish an orderly	New. This provision aligns the
	environment and appropriate	proposed Order with the
	oversight over the secondary	mandate of the Secretary of
	market for Government	Finance under applicable law.
	Securities consistent with relevant
	laws, rules and regulations which now
	require the existence of organized
	secondary markets under the
	regulatory oversight of the Securities
	and Exchange Commission, even for
	securities which are exempt under the
	Securities Regulation Code, such as
	Government Securities, to protect the
	Republic of the Philippines and the
	investing public from fraud or loss.
	2.4 To establish the minimum	New. Investor protection
	standards for secondary markets of	dictates that all investors in
	Government Securities to ensure that	GS should be able to enjoy
	all investors of Government Securities	parity of liquidity and
	enjoy equal benefits regardless of	secondary market facilities
	market venue.		in any secondary market
					structure where such investor
					is serviced.
	In accordance with Republic Act No.
	245, as amended, and Republic Act	New. This provision sets forth
	No. 1000, as amended, in relation to	the legal bases for the
	Sections 117, 118, 119, 120, 121,	adoption of the proposed
	122, and 129 of Republic Act No.	order.
	7653, the following Omnibus Revised
	Rules and Regulations governing
	the Issuance, Placement, Sale,
	Servicing and Redemption of
	Government Securities issued by
	the Republic of the Philippines are
	hereby adopted:
I. GENERAL PROVISIONS		Article I
	GENERAL PROVISIONS
		Part 1			New. Section on definition of
	DEFINITION OF TERMS	terms is intended to
No provision.					facilitate understanding and
					interpretation of the
					regulations.
		Section 1. Definition of Terms. —	New. Standard opening
		When used in this Order, the terms	language for a section on
		below shall have the following	definition of terms.
		meaning:
Section 8. Definition. — Auction is a	1.	Auction Method is a method	Emphasizes that buyers in the
method of sale of government securities		of sale or origination of	auction method are first
whereby prospective buyers compete		Government Securities whereby	accredited by the BTr before
against each other by trying to better		prospective buyers accredited	they can participate in the
each others bids.		by BTr submit tenders or bids	primary market. Emphasis is
		through the Auction System.	also laid on the process of
					auction which is transmission
					through the auction system.
	2.	Auction System means an
No provision.		auction system used by BTr for	New provision. Definition is
		the primary or origination sale	intended to facilitate
		of Government Securities	understanding and
		through an Auction Method.	interpretation.
		Unless the context otherwise
		requires, the term Auction
		System shall include ADAPS or
		such other BTr-accredited
		auction system.
	3.	Automated Debt Auction
		means the electronic auction
		system that accepts and
		processes bids for auction of
		Government Securities.
	4.	Brokers are institutions licensed
		as such by the SEC in respect of
		Government Securities.
	5.	BSP shall refer to the Bangko
		Sentral ng Pilipinas, or its
		successor agency.
	6.	BTr means BTr or National
		Treasury, or its successor
		agency.
	7.	BTr-Managed Funds shall
		refer to funds managed by BTr
		pursuant to law or contract.
No provision.	8.	Competitive Bid or Tender
		means a bid or tender to
		purchase a stated par amount
		of securities at a specified yield
		or rate.
	9.	Dealers are financial institutions
		licensed as such by the SEC in
		respect of Government Securities.
	10.	Dutch or Single Price Auction
		means an auction in which all
		successful bidders pay the same
		price regardless of the bid yields
		or rates that each of them submits.
	11.	English or Multi-Price Auction
		means an auction in which each
		successful competitive bidder
		pays the price equivalent to the
		bid yield or rate that each of
		them submits.
From Section 37:	12.	Financial Institution shall mean	Added the language "under
		corporations organized as such	the appropriate regulatory
Section 37. Definition of Terms. —		primarily to deal in financial	requirements of Bangko
(a) Financial Institutions are corporations		assets through borrowing funds	Sentral ng Pilipinas, the
organized as such primarily to deal in		from savers or investors and	Securities and Exchange
financial assets through borrowing funds		lending funds to users, producers	Commission, or the Insurance
from savers or investors and lending funds		and other financial institutions.	Commission." at the end of
to users, producers and other financial		This may refer to banks,	the sentence for clarity on the
institutions. These may either be done by		non-bank financial	regulatory agencies.
banks, non-bank financial intermediaries,		intermediaries, insurance
insurance companies, securities dealers		companies, securities dealers
or brokers, investment houses, finance		or brokers, investment houses,
companies and mutual funds.		finance companies and mutual
					funds under the appropriate
The term Government-Owned and		regulatory requirements of
-Controlled Corporation shall refer to a		Bangko Sentral ng Pilipinas, the
corporation which is created by special law		Securities and Exchange
or organized under the Corporation Code		Commission, or the Insurance
in which the Government, directly or		Commission.
indirectly, has ownership of the majority
of the capital or has voting control.	13.	"Government-Owned or No revision.	No revision.
		refer to a corporation which is	(Transposed from current DO
		created by special law or	141-95, Section 19, letter (a).)
		organized under the Corporation
		Code in which the Government,
		directly or indirectly, has
		ownership of the majority of
		the capital or has voting control.
	14.	Government Securities for
		purposes of this Department
		Order shall mean securities	New provision. Definition is
		issued by the Republic of the	intended to facilitate
		Philippines and includes	understanding and
		Treasury bills, certificate of	interpretation.
		indebtedness, Treasury bonds,
		notes, securities, and other
		evidence of indebtedness.
	15.	"Government Securities Eligible
		SEC-licensed dealer in
		Government Securities
		accredited by BTr to participate
		in the primary or origination sale
No provision.		of Government Securities.
	16.	"Government Securities Trading
		an SEC-authorized trading
		market accredited by BTr under
		this Order as a secondary
		market for Government
		Securities.
	17.	Local Government Unit shall
		refer to a political subdivision of
		the Republic of the Philippines
		consisting of provinces, cities,
		municipalities, or autonomous
		regional political subdivision
		authorized by law to issue
		bonds or incur indebtedness.
	18.	Market Maker means a GSED
		accredited by BTr who commits
		to provide firm two-way quotes
		in Government Securities in
		accordance with the relevant
		BTr rules and regulations.
	19.	Non-Competitive Bid or
No provision.		to purchase a stated par amount
		of securities at the weighted
		average interest rate resulting
		from the accepted Competitive
		Bid or Tender.
Section 15. Definition. — A manner of sale	20.	Over-the-Counter Method is a	Empowers BTr to allow other
or offering of Special Series/Issues of		manner of primary origination or	types of entities to be
Government Securities for Government-		sale of Government Securities	engaged in the primary or
Owned and -Controlled Corporations		through offer or negotiation to	origination sale of GS
(GOCCs), Tax-Exempt Institutions (TEIs)		entities as may be allowed by	through OTC method,
and Local Government Units (LGUs),		BTr such as but not limited to	where this is limited under
through negotiation, not through auction.		Government-Owned or	the current Department
(As amended by Department Order		Controlled Corporations	Order to GOCCs, TEIs
No. 81-96, Series of 1996, June 10, 1996)		(GOCCs), Local Government	and LGUs.
		Units (LGUs), or Tax-Exempt
		Institutions (TEIs).
	21.	Primary Securities Account	New provision. Definition is
No provision.		shall refer to the securities	intended to facilitate
		account in RoSS maintained	understanding and
		by a participant.	interpretation.
Section 29. RoSS (Registry of Scripless	22.	Registry of Scripless Securities
Securities). — The Secretary, through		or "RoSS" means the electronic	Clarifies the definition of
the Bureau of the Treasury, having floated		registry, which serves as the	electronic registry found in
Treasury Bills and Bonds which are not		official and final record of	current Section 29 to include
represented by a physical certificate shall		ownership or interest in	finality of the record. Also
record their transfers in RoSS, which is		Government Securities. Unless	includes a BTr-accredited
the official registry of ownership of or		the context otherwise requires,	sub-registry as part of the
interest in scripless securities floated by		the term RoSS shall include any	definition.
the Republic of the Philippines.		BTr-accredited electronic
		sub-registry.
	23.	SEC shall refer to the
		Securities and Exchange
		Commission of the Philippines,	New provision. Definition is
		or its successor agency.	intended to facilitate
					understanding and
	24.	Settlement Bank shall refer	interpretation.
No provision.		to BSP or to a bank or
		non-bank financial institution
		designated by a bondholder
		for any settlement of primary
		market purchases, receipt of
		coupon and/or redemption
		payments of Government
		Securities. The Settlement
		Bank must be a member of
		the applicable payment
		system such as BSP
		Philippine Payment and
		Settlement System (PhilPaSS)
		or Philippine Domestic Dollar
		Transfer System (PDDTS).
	25.	Tax-Exempt Institution shall
No provision.		refer to an entity declared and
		certified by the Bureau of
		Internal Revenue as exempt
		from the applicable tax under
		the National Internal Revenue
		Code.
Section 26. Definition. — A manner of sale	26.	Tap Method means a manner	Tap Method is currently open
or offering of Government Securities open		of sale or offering of Government	to all GSEDs, not only Market
exclusively to Government Securities		Securities open exclusively to	Makers. Also, this proposal
Eligible Dealers (GSEDs) and Financial		GSEDs qualifying as Market	will formalize the use of the
Institutions in the event of an acute and		Makers, BTr-Managed Funds,	Facility by BTr-Managed
protracted shortage of government		and other entities or	Funds and expand
securities. (As amended by Department		instrumentalities as may be	participation in the TAP
Order No. 2-98, Series of 1998)		allowed by the Secretary of	Facility to other entities that
		Finance or through BTr.	may be allowed by the
					Secretary of Finance through
					the BTr. Language regarding
					the availability of the facility
					during event of acute and
					protracted shortage of
					government securities was
					deleted to provide flexibility to
					the issuer.
		Part 2			New. Heading added for
No provision.	POWERS OF THE	better organization of the
	SECRETARY OF FINANCE	document.
Section 1. Authority to Borrow. — Under	Section 2. Authority to Borrow. —
Section 1 of R.A. No. 245, as amended	Under Section 1 of R.A. No. 245, as
and R.A. No. 1000, as amended, the	amended, the Secretary of Finance,
Secretary of Finance, with the approval	with the approval of the President	No substantial difference.
of the President of the Philippines, and	of the Philippines, and after	Reference to RA No. 1000 is
after consultation with the Monetary	consultation with the Monetary	in the next paragraph
Board, is authorized to borrow from	Board, is authorized to borrow	Replaced "Treasury Bills and
time to time on the credit of the	from time to time on the credit	Bonds" with "evidence of
Republic of the Philippines such	of the Republic of the Philippines	indebtedness" to allow
sum(s) as in his judgment may be	such sum(s) as in his judgment may	greater flexibility in the form of
necessary to meet public expenditures	be necessary to meet public	borrowing instruments.
authorized by law or to provide for the	expenditures authorized by law or to
purchase, redemption or refund of	provide for the purchase, redemption
any obligation, either direct or	or refunding of any obligation, either
guaranteed, of the Philippine	direct or guaranteed, of the Philippine
Government, and to issue thereof	Government, and to issue thereof
Treasury Bills and Bonds which	evidence of indebtedness which may
may be made payable in	be made payable in Philippine
Philippine currency, or in any	currency, or in any readily
readily convertible foreign	convertible foreign currency.
currency.
	Under Section 1 of R.A. No. 1000,	This provision is a substantial
No provision.	as amended, upon the	reproduction of the provision
	recommendation of the Secretary	of Section 1 of R.A. No. 1000.
	of Finance, the Monetary Board,
	and the National Economic and
	Development Authority, the President
	of the Philippines is authorized to
	issue, preferably in the Philippines,
	or abroad if necessary, in the name
	and in behalf of the Republic of the
	Philippines bonds, including lottery
	bonds, to finance public work and
	projects for economic and social
	development which have high
	economic or social rates of returns
	and which are authorized by law,
	including expropriation of lands for
	subdivision and resale to individuals,
	or to repay or service bonded
	obligations of the Government
	incurred for such projects. The
	bonds issued under the authority
	of this section may be made
	payable both as to principal and
	interest, in Philippine currency
	or any readily convertible
	foreign currency.
Section 2. Issuance of Treasuries. —	Section 3. Issuance of Government	All throughout the term
The exercise of authority to borrow by the	Securities. — The exercise of	Government Securities
Secretary of Finance of such sum(s) as	authority to borrow by the President	replaces the "Treasury Bills",
may be necessary to meet public	of the Philippines or the Secretary	Treasury Bonds and
expenditures shall be through the issue of	of Finance shall be through the	Treasuries terminology in
Treasury Bills and/or Treasury Bonds,	issue of Government Securities,	the current DO. Under the
and shall be undertaken by an Auction	and shall be undertaken by an	proposed DO, Treasury
Committee hereinafter constituted	Auction Committee hereinafter	Bonds and Treasury Bills are
whenever auction is prescribed and by	constituted whenever auction is	referred to as such, where
the Bureau of the Treasury whenever	prescribed and by BTr whenever	specific reference is made,
any other method is authorized.	any other method is authorized.	and collectively, they are
					referred to as Government
					Securities. The term
					Government Securities has
					been defined in the Definition
					of Terms portion of the
					proposed D.O.
Section 3. Terms, Yields, Etc. — The	Section 4. Authority of the Secretary
Secretary of Finance, in consultation with	of Finance to Prescribe the Features
the Monetary Board, shall prescribe the	of Government Securities. — The	Last sentence added for
terms, yields, denominations, maturities,	Secretary of Finance, in consultation	clarity, to supplement the
negotiability, convertibility, call, eligibility,	with the Monetary Board, shall	provision in terms of other
redemption and other features of the	prescribe the terms, yields,	features of GS that are not
Treasury Bills and Bonds, including	denominations, maturities,	mentioned.
documentary stamps tax on the original	negotiability, convertibility, call,
issue and final withholding tax on the	eligibility, redemption and other	Additional sentence:
income derived from Treasury Bills	features of the Government	Other terms and conditions of
and Bonds.	Securities, including documentary	Government Securities issued
	stamps tax on the original issue	pursuant to this Order shall be
	and final withholding tax on the	subject to the provisions of
	income derived from Government	R.A. Nos. 245 and 1000, as
	Securities. Other terms and	applicable.
	conditions of Government
	Securities issued pursuant to this
	Order shall be subject to the
	provisions of R.A. Nos. 245 and
	1000, as applicable.
	Section 5. Authority of the Secretary
	of Finance to Prescribe Standards
	on Secondary Market of Government
No provision.	Securities. — The Secretary of	New. Emphasizes the power
	Finance, through BTr, shall determine	of the Secretary of Finance to
	the appropriate secondary market	prescribe the standards for
	structure for Government Securities,	secondary markets of GS.
	in accordance with relevant laws and	This authority of the Secretary
	regulations, as well as require the	of Finance emanates from
	implementation, through BTr, of an	R.A. 245.
	accreditation framework for GSTMs
	and its participants and provide the
	necessary environment to ensure
	the liquidity of the issues and the
	development of the investor base.
II. FEATURES OF	Part 3
TREASURY ISSUES	CLASSIFICATION, FEATURES,	New. Improved heading.
	PRICING, AND REDEMPTION OF
	GOVERNMENT SECURITIES
	Section 6. Classification of
	Government Securities. — (1)	New. Heading added for
No provision.	Government Securities issued	better organization of the
	pursuant to R.A. No. 245, as	document.
	amended are classified as follows:
Section 4. Treasury Bills. — Treasury Bills	a.	Treasury bills issued on a
shall be issued on a discount basis and		discount basis or at par and
payable on maturity of not more than		payable at maturity without
one (1) year at face amount. They may be		interest. Treasury bills may be
offered for sale through competitive or		offered for sale either on a
non-competitive auction or any other		competitive basis or at a fixed
method as determined appropriate by		rate of discount or at par and
the Bureau of the Treasury. All Treasury		may be made payable at any
Bills bearing the same date of issue and		date not later than one year
the same date of maturity shall constitute		from the date of issue;
one Issue; and consecutive issuance of
Treasury Bills of the same maturity shall
constitute a Series.					This enumeration is contained
	b.	Certificate of indebtedness	in P.D. No. 142, which
		having maturities not exceeding	amended R.A. 245.
No provision.		eighteen months from the date
		of issue; and
Section 5. Treasury Bonds. — Treasury	c.				Treasury bonds, notes, securities
Bonds shall be issued at a discount basis,					or other evidences of indebtedness
at a premium, or at par and payable on					having maturities of one year
maturity of not earlier than one (1) year					or more but not exceeding
but not later than twenty-five (25) years.					twenty-five years from the
They may be offered for sale through					date of issue.
competitive or non-competitive auction
or any other method as determined
appropriate by the Bureau of the
Treasury.
	(2)	Government Securities issued	This part of the enumeration
		pursuant to R.A. No. 1000,	is to cover issuances under
		as amended.	RA No. 1000.
	(3)	Cash management bills and	This provision is an
		other evidences of indebtedness	implementation of the
		not falling under Paragraphs (1)	authority of the Secretary of
		and (2) above, issued by the	Finance under RA 245 to
		Republic of the Philippines.	issue other forms of
					evidences of indebtedness.
	Section 7. Pricing of Government
	Securities; Frequency of Payment. —
	Government Securities may be issued
No provision.	at a	discount basis, at a premium, or	Consolidates current Sections
	at par and payable with or without	4 and 5 which separately
	coupon in accordance with the terms	treated Treasury Bills and
	and conditions of issuance under a	Bonds. The second sentence
	Notice of Offering or public notice	reflects the computational
	issued by the Secretary of Finance	convention for determining
	through BTr. Coupons due on	coupon and the semi-annual
	coupon-bearing Government	coupon payment is the norm
	Securities shall be payable	for GS.
	semi-annually in arrears calculated
	on 30/360-days unless otherwise
	prescribed in the terms and conditions
	of issuance under a Notice of
	Offering or public notice issued
	by BTr.
Section 6. Denomination and Exchange. —	Section 8. Denomination and
		Exchange. — (1) Government	New. This provision is added
		Securities issued in scripless form	to reflect the actual market
		may be transacted in any face	practice for transacting
		amount, subject to such requirements	scripless GS.
		as the BTr may prescribe.
Treasury Bills and Bonds shall be issued	(2)	Government Securities issued in
in denominations of P10,000.00,		certificated form shall be in
P50,000.00, P100,000.00, P500,000.00,		denominations of P10,000.00,	Substantially retains the
P1,000,000.00, P5,000,000.00 and		P50,000.00, P100,000.00,	current Section 6. The
P10,000,000.00. Exchange of these bills		P500,000.00, P1,000,000.00,	proposed language adds a
and bonds from higher to lower and/or		P5,000,000.00 and	proviso which will allow
lower to higher denominations of identical		P10,000,000.00 unless	flexibility in determining
issue and series may be effected at the		otherwise prescribed in the	denomination. Reference to
Bangko Sentral ng Pilipinas until such time		terms and conditions of	BSP has been dropped
as the Bureau of the Treasury can		issuance under a Notice of	considering that the BTr has
assume the responsibility		Offering or public notice issued	already assumed the fiscal
		by BTr. Exchanges of	agency function.
		Government Securities from
		higher to lower and/or lower
		to higher denominations of
		identical issue and series may
		be effected at BTr.
Section 35. Servicing and Redemption. —	Section 9. Servicing and	Substantially the same;
Treasury Bills and Bonds which have	Redemption. — Government	references to R.A. No. 245
been transferred through RoSS may be	Securities issued by the Republic of	and R.A. No. 1000 were
exchanged at any time before maturity, or	the Philippines pursuant to R.A. Nos.	incorporated for clarity.
redeemed at or after maturity, and payment	245 and 1000 as implemented by this
shall be made by the Department of	Order may be exchanged at any
Finance, through the Bureau of the	time before maturity, or redeemed
Treasury, in accordance with RoSS, which,	at or after maturity. Coupon and
in turn, shall pay the person whose name	redemption payments due on
appears in RoSS as owner of the Treasury	Government Securities shall be
Bills or Bonds. (As amended by DOF	made by the Republic of the
Order No. 32-98, Series of 1998,	Philippines, through BTr, to the
March 13, 1998)					person whose name appears in
					RoSS as registered owner of the
					Government Securities.
Section 7. Taxation. — The income derived	Section 10. Taxation. — (1) The	Revisions were made:
from Treasury Bills and Bonds, and	income derived from Government	1.	to cover all government
instruments with recourse as authorized	Securities issued pursuant to R.A.		securities issued pursuant
by Bangko Sentral ng Pilipinas (BSP)	No. 245, as amended, shall be		to RA 245, as amended;
shall be subject to the 20% final income	subject to the applicable final tax
tax to be withheld on discounts valued	rate under the National Internal	2.	to apply the applicable
at the time of issue on every original	Revenue Code in force at the time		final tax rate in alignment
sale which shall be deducted by the	of issue and the rules and		at all times with the NIRC;
buyer from the discounts of the	regulations issued by the Bureau
T-Bills/Bonds and included in the	of Internal Revenue (BIR), to be
remittance of the purchase price.	withheld on discounts valued at the
					time of issue on every original sale
In the case of Treasury Bonds, the 20%	which shall be deducted by the
final income tax shall be withheld on	buyer from the discounts of the
discounts valued at present value on every	Government Securities and included
original sale. Periodic coupon payments on	in the remittance of the purchase
Treasury Bonds shall be subject to the 20%	price. Periodic coupon payments
final income tax to be withheld at the time	on Government Securities shall be
the coupon payments are made.	subject to the applicable final tax
	to be withheld at the time the
	coupon payments are made.
	(2)	Government Securities issued	This provision is for
		pursuant to R.A. No. 1000, as	consistency with the law
		amended, shall not be subject	referred to. For reference, the
		to taxation.	last paragraph of Section 1 of
		Republic Act No. 1000, states
		the tax regime as follows:
		The bonds to be issued under
		this Act shall be exempt from
		taxation, including tax on
		foreign exchange, by the
		Government of the Republic
		of the Philippines or by any
		political or municipal
		subdivision thereof, which fact
		shall be stated on their face in
		accordance with this Act
		under which the said bonds
		are issued; and shall likewise
		be exempt from attachment,
		execution or seizure.
The Documentary stamp tax on the original	(3)	The documentary stamp tax on	No revision with respect to
issue shall be for the account of the issuer.		the original issue of Government	issuances under RA 245. To
		Securities under R.A. No. 245	make a distinction of the tax
		shall be for the account of the	environment of
		issuer.		government securities issued
					under RA 245 and 1000,
					wherein in the latter, the
					bonds are exempt from
					taxation, without qualification.
No other taxes shall be collected on	(4)	No other taxes shall be collected	No substantial revision.
subsequent trading of the securities which		on subsequent trading of the	Recasting is consequential to
have been subjected to tax under the first		securities which have been	the consolidation of the first 2
two paragraphs herein.		subjected to tax under the first	paragraphs in the current
		paragraph herein.	Department Order.
	(5)	Taxation of Government	New. This provision clarifies
		Securities transactions conducted	the tax environment for GS
		under SEC-approved borrowing	transactions under SEC-
		and lending programs of	approved borrowing and
		accredited GSTMs shall be	lending programs of
		governed by rules, regulations	accredited GSTMs
		and issuances of the Bureau of
		Internal Revenue.
	(6)	Taxation of repurchase	New. This provision is to
	agreements covering Government	reiterate the relevant
No provision.	Securities conducted under	provision in the DST Law that
	relevant SEC-approved programs	there are is no DST
	of accredited GSTMs and which	repurchase agreements for
	provide for transfer of title over	clarity and consistency.
	Government Securities subject
	of the repurchase agreement,
	shall be deemed to be covered
	by the exemption from
	documentary stamp tax under
	the relevant provisions of the
	Documentary Stamp Tax Law.
	Part 4	New. Heading added for
IV. UNCERTIFICATED TREASURY		FORM AND REGISTRY OF	better organization of the
ISSUES AND TRANSFERS		GOVERNMENT SECURITIES	document.
Section 28. Issuance. — The Secretary	Section 11. Form of Government
of Finance, through the Bureau of the	Securities. — Government Securities	The proposed revision
Treasury, may issue Treasury Bills and	issued pursuant to R.A. Nos. 245 and	recognizes the current
Bonds which are not presented by a	1000 shall be issued in scripless form	environment where scripless
physical certificate.	unless a physical certificate is	is the norm for government
	otherwise prescribed by the	securities, while still allowing
	Secretary of Finance through BTr.	flexibility to issue in physical
					form, where prescribed.
Section 29. RoSS (Registry of Scripless	Section 12. Registry of Government
Securities). — The Secretary, through the	Securities. — Government Securities
Bureau of the Treasury, having floated	issued by the Republic of the	The provision covers both RA
Treasury Bills and Bonds which are not	Philippines pursuant to R.A. Nos. 245	245 and 1000 issuances. The
represented by a physical certificate	and 1000, as well as all subsequent	language on RoSS was
shall record their transfers in RoSS,	transfers of such Government	transposed to the Definition of
which is the official registry of	Securities, shall be recorded in the	Terms portion of the
ownership of or interest in scripless	RoSS.			Proposed D.O.
securities floated by the Republic of the
Philippines. (As amended by DOF
Order No. 32-98, Series of 1998,
March 13, 1998)
	BTr shall issue such rules, regulations,	The provision is incidental to
	and procedures for the operation of	the power of BTr, as operator
	the RoSS as it deems necessary,	of the registry, to issue what
	desirable and appropriate for the	is necessary to operationalize
	proper performance of its registry	the registry function.
	function.
	Section 13. Sub-Registrar and	New. In line with the move of
	Sub-Registry Records. — The BTr	the Department to ensure a
	may engage a Sub-Registrar which	safe and efficient secondary
	shall maintain the books and records	market structure for debt
	of specific set of accountholders	issuances of the National
	and their transactions.	Government, there is a need
					to recognize varied modalities
	(a)	Qualifications of a Sub-Registrar:	of infrastructure support that
					could enhance our markets.
		i.	The Sub-Registrar must be	An important initiative of the
			a duly licensed entity under	Bureau of the Treasury is the
			the jurisdiction of the BSP	neutralization of the
			and/or the SEC and	secondary market
			authorized to perform	environment of its issues, to
			registry functions;	allow holders of government
					securities of different tax
		ii.	The Sub-Registrar must have	classes to transact between
			the capability to service a	and among each other, while
			tax unification program for	preserving the tax regime for
			trading and settlement of	the issue under tax laws.
			Government Securities in
			a manner acceptable to
			BTr, pursuant to this
No provision.			Order;	Advancements in technology
		have enhanced registry
	(b)	Duties of a Sub-Registrar. The	corporate action systems
		Sub-Registrar shall perform	which are now capable of
		the following duties:	supporting a tax-neutral
					secondary market for debt
		i.	It shall maintain an electronic	issues. These systems can be
			sub-registry book, which	engaged by the registry,
			shall contain all records of	considering the benefits these
			transfers of ownership;	could provide to the
					government securities market,
		ii.	It shall electronically interface	in terms of liquidity,
			with a BTr-accredited GSTM	settlement, and potential for
			that provides services relative	growth. BTr's RoSS sub-
			to clearing and/or settlement	registry is functioning as such
			processes;	for non-peso denominated
					government issues, and is
		iii.	It shall perform such other	capable of likewise servicing
			duties as may be prescribed	the peso-GS market. The
			or required by BTr for the	dollar tranches of the recently
			efficient and effective	issued Multicurrency Retail
			recording of transactions	Treasury Bonds are already
			on Government Securities.	traded and settled in a tax-
					neutral environment.
	(c)	The Sub-Registry records shall	Neutralizing the tax
		form part of the official records	environment allows the
		of RoSS.		government issue to be
					geared and prepared towards
					regionalization, which is part
					of the government's goals
					in the foreseeable future.
Section 31. Transfers. — Treasury Bills and	Section 14. Recording of Transfers. —	Aligns the provision to current
Bonds may be validly transferred by making	Government Securities may be validly	regulatory environment where
appropriate entries in RoSS maintained by	transferred by making appropriate	GS are issued in scripless
the Bureau of the Treasury. Transfer in	entries in RoSS. Such transfers	form, and are recorded in
RoSS has the effect of delivery of such	shall have the effect of legal delivery	book entry form. Hence,
Treasuries in bearer form or duly	of such Government Securities.	removed references that are
indorsed in blank of government securities					applicable to the physical
payable to order or a person whose					environment — bearer form,
name is specified. (As amended by					indorsed in blank or indorsed
DOF Order No. 32-98, Series of 1998,					to a specified person.
March 13, 1998)
					Also, uses the term
					Government Securities to
					replace "Treasury Bills and
					Bonds"
Section 32. Proof of Transfer through	Section 15. Finality of Transfer
RoSS. — When Treasury Bills and Bonds	through RoSS. — Records of
are transferred through entries in RoSS	transfers of Government Securities	Title of the provision was
of the Bureau of the Treasury, that	through entries in RoSS shall be	changed to more accurately
record shall be binding on the parties to	binding on the parties to the transfer,	reflect the content of the
the transfer, and shall be final, conclusive	and shall be final, conclusive and	provision.
and irrevocable unless RoSS had	irrevocable. The procedure by which,
acknowledge receipt of a contrary notice	and the exact time at which such	No substantial change.
before the entry was made. The	entries are created shall be governed
procedure by which, and the exact	by the rules of RoSS as prescribed
time at which such entries are created	by BTr.
shall be governed by the rules of RoSS.
(as amended by DOF Order No. 32-98,
Series of 1998, March 13, 1998)
Section 33. Pledge. — A pledge of	Section 16. Pledge of Government
Treasury Bills and Bonds which have	Securities. — A pledge of Government
been transferred through entries in	Securities which have been transferred
RoSS of the Bureau of the Treasury	through entries in RoSS shall be
shall be constituted, and the Treasury	constituted, and shall accordingly be
Bills and Bonds shall accordingly be	considered delivered, in accordance
considered delivered, in accordance	with Articles 2093 and 2095 of the Civil
with Articles 2093 and 2095 of the	Code (RA No. 386) when RoSS certifies	No substantial change.
Civil Code (RA No. 386) when RoSS	by an appropriate entry that the
certifies by an appropriate entry that the	Government Securities have been
Treasury Bills and Bonds have been	segregated and/or earmarked in favor
segregated and earmarked in favor of	of the pledgee.
the pledgee. (As amended by DOF
Order No. 32-98, Series of 1998,
March 13, 1998)
Section 34. Involuntary Liens on	Section 17. Involuntary Liens and	Provision updates the current
Government Treasuries held by	Encumbrances on Government	language, considering the
RoSS. — Treasury Bills and Bonds which	Securities Recorded in RoSS. —	assumption of the fiscal
have been transferred through book-	Involuntary liens, garnishment,	agency by the BTr. Reference
entries in the record of Bangko Sentral ng	attachment, execution, or other	to the Rules of Court more
Pilipinas until such time RoSS can	legal processes against Government	clearly states the
assume the responsibility may be attached	Securities recorded in RoSS shall	requirements for legal
only by legal process upon the person in	comply with the provisions of the	process against GS subject to
whose name the BSP or RoSS holds the	Rules of Court promulgated by the	the limitation under RA 245
account. (As amended by DOF Order No.	Supreme Court of the Philippines	and 1000.
32-98, Series of 1998, March 13, 1998)	subject to R.A. Nos. 245 and 1000
					prescribing limitation on garnishment
					or execution on Government
					Securities.
	Article II		New. Heading added for
No provision.		PRIMARY MARKET OF		better organization of the
		GOVERNMENT SECURITIES		document.
III. METHOD OF ORIGINATION	Section 18. Methods of Origination. —
	The following are the recognized
A. Auction Method (Definition in current	methods of issuing Government
Section 8 is reproduced in the Definition of	Securities: (a) Auction Method	New. Merely lays the basis for
Terms portion of this matrix, to compare	(b) Over-The-Counter Method, and	contents of Article II.
the same against the proposed definition	(c) Tap Method. The Secretary of
under the Draft amendments.)	Finance through BTr may prescribe
					such other methods of origination
					in issuing Government Securities.
		Part 1	New. Heading added for
		AUCTION METHOD	better organization of the
					document.
	Section 19. Auction Process. —
	Auctions of Government Securities	New. Recognizes the
No provision.	may be conducted under a Dutch or	methods of auction as stated
	Single Price Auction, English or	in the new Section 19.
	Multi-Price Auction, or such other	Reflects the types of action
	auction process as announced	that may be adopted for
	by BTr.			Government Securities.
	V. DEALERS ELIGIBLE TO BID AT	Section 20. Participants in Auction of
	PRIMARY OR ORIGINATION SALE	Government Securities. — (1) Any
	OF GOVERNMENT SECURITIES	financial institution may be accredited
					to participate as an accredited GSED
Section 36. Except as may be modified by	in the primary origination or auction of	Substantially the same as
the Secretary of Finance, when necessary	Government Securities in accordance	predecessor Section 36, but
and as he may deem appropriate, any	with the requirements of BTr. Except	clarifies the meaning that any
Financial Institution licensed by the Bangko	as may otherwise be prescribed by	institution may be accredited
Sentral ng Pilipinas, Insurance Commission,	BTr, an accredited GSED or	as a GSED or financial
or Securities and Exchange Commission to	financial institution shall meet the	institution to participate it the
deal in securities shall be eligible to	following criteria:	primary origination or auction
participate in the primary sale of					of Government Securities,
government securities as long as they					provided the requirements
meet the following criteria:					enumerated are met.
a. Unimpaired capital and surplus account	(a)	Unimpaired capital and surplus	Definition of Unimpaired
as defined in Section 37 (b) hereof, of		account at any one time as	capital and surplus was
at least P100.0 Million at any one time.		prescribed by BSP, the SEC, or	transposed from definition of
This must be proven by certification from		the Insurance Commission. For	terms in Section 37, which
Bangko Sentral ng Pilipinas or the		purposes of this Order, the term	defined the same as follows:
Securities and Exchange Commission or		unimpaired capital and surplus
the Insurance Commission;		shall mean the combined capital	Section 37, b. Unimpaired
		accounts of a financial institution	Capital and Surplus means
		and refer to its unimpaired	the combined capital
		paid-in capital and earned	accounts of a financial
		surplus. The term "surplus" shall	institution and refer to its
		refer to the excess of the assets	unimpaired paid-in capital and
		over the liabilities and paid-in	earned surplus. The term
		capital of the financial institution,	surplus shall refer to the
		but excluding the reserves set	excess of the assets over the
		aside for valuation purposes, and	liabilities and paid-in capital of
		reserves for liabilities and	the financial institution, but
		deferred income tax, and other	excluding the reserves set
		capital adjustments;	aside for valuation purposes,
					and reserves for liabilities and
					deferred income tax, and
					other capital adjustments.
b. Certification by Bangko Sentral ng	(b)	Certification by BSP, SEC, or
Pilipinas, Securities and Exchange		Insurance Commission as to
Commission or Insurance Commission		compliance with Paragraph (a)
that the institution is in good standing; and		above including a certification that
		the financial institution is in good
		standing; and
c. For purposes of participating in the	(c)	For purposes of participating in
auction, such Financial Institution defined		the primary origination or sale of
in Section 37 (a) hereof shall have an		Government Securities, such	No substantial change.
account with the Bangko Sentral ng		Financial Institution shall have a
Pilipinas where the settlement of the		deposit account with a Settlement
award may be debited, in order to		Bank, where the settlement of the
avoid making the deposit prior to the		award may be debited.
bidding. (As amended by DOF Order
No. 32-98, Series of 1998,	(d)	Necessary interface, electronic or	New. This provision clarifies
March 13, 1998)		otherwise, to effect participation	that there is a technological
		in the methods of origination and	requirement to participate in
		settlement of Government	the primary market.
		Securities as prescribed by BTr.
	Accredited GSEDs may participate in	New. This provision will allow
No provision.	competitive and non-competitive	GSEDs to participate in
	auction.			both competitive and
					non-competitive auctions.
	(2) Persons other than accredited	New. This provision will pave
	GSEDs may be allowed to participate	the way for participation of
	in the Auction on a non-competitive	retail investors in the primary
	basis in accordance with the rules	auction of Government
	and regulations that will be issued	Securities.
	by BTr.
Section 37. Definition of Terms. —
(a) Financial Institutions — see Definition
of terms portion of the proposed
amendments for comparison.
b. Unimpaired Capital and Surplus —					See remarks in the relevant
transposed to (a) of the enumeration					sections.
in the proposed Section 20. See
remarks field there.
Section 9. Public Notice of Offering. —	Section 21. Public Notice of
The Secretary of Finance may, from time to	Offering. — The Secretary of
time, by public notice offer Treasury Bills	Finance through BTr may, from
and Bonds for sale and invite tenders,	time to time, by public notice offer
therefore, through the Bureau of the	Government Securities for sale and
Treasury. The Treasury Bills and Bonds	invite tenders therefor. All tenders
so offered, and tenders received shall	or bids for Government Securities	Introduces the concept of
be subject to the terms and conditions	of accredited buyers shall be	accredited buyers who are
imposed under these rules and	transmitted through the Auction	GSEDs, financial institutions
regulations, except as they may be	System. The Government Securities	and other persons recognized
modified by the Secretary of Finance,	so offered, and tenders received shall	as participants in the primary
in consultation with the Monetary Board,	be subject to the terms and conditions	or origination sale of
which shall be made part of the public	imposed under this Order, except as	Government Securities.
notice of offering. The Public Notice	they may be modified by the Secretary
of Offering shall be transmitted	of Finance, in consultation with the	Auction System under the
through the Bureau of the Treasury's	Monetary Board, which shall be made	proposed provision covers
Automated Debt Auction Processing	part of the public notice of offering.	both ADAPS and other
System (ADAPS) and/or by any other	The public notice of offering shall be	electronic auction system/s
method as may be prescribed by the	transmitted electronically to accredited	that may be used by the BTr.
Bureau of the Treasury and shall	buyers through an Auction System
indicate such information as may be	and/or by any other method as may
deemed appropriate by the Secretary	be prescribed by BTr and shall
of Finance. (As amended by	indicate such information as may be
Department Order No. 74-98, Series	deemed appropriate by the Secretary
of 1998, dated October 27, 1998)	of Finance through BTr.
	In cases where the announced auction
	cannot be conducted due to a	New. To provide flexibility in
	declared holiday or suspension of	cases when a scheduled
No provision.	work or banking day, or fortuitous	auction falls on an
	event, the auction for Government	unplanned holiday.
	Securities shall automatically adjust to
	the next succeeding business day or
	as may be announced by the BTr.
Section 10. Submission of Tenders. —	Section 22. Submission of Bids or
Tenders in response to a public notice shall	Tenders. — Unless otherwise
be transmitted to the Bureau of the	prescribed by the Secretary of
Treasury through ADAPS, which is capable	Finance through BTr, bids or
of electronically managing the tender of	tenders in response to a public notice
Treasury Bills and Bonds, in the case of	of offering of Government Securities	Removed manual entry in the
GSEDs and in official tender forms required	shall be transmitted to BTr through	case of Non-GSEDs to
by the BTr before the prescribed cut-off	the Auction System.	eliminate the distinctions
time for receiving tenders for manual entry					between GSEDs and non-
to BTr's ADAPS, in the case of					GSEDs and their manner of
NON-GSEDs. (As amended by					transmitting bids or tenders
Department Order No. 74-98, Series					through the Auction System.
of 1998, dated October 27, 1998)
In case of system failure, power outages	In case of system failure, power
or as may be authorized by the Secretary	outages or as may be prescribed by
of Finance, tenders shall be submitted in	the Secretary of Finance through BTr,
official tender forms required by the	tenders for purchase of Government	Substantially the same.
Bureau of the Treasury before the	Securities shall be submitted in official
prescribed cut-off time for receiving	tender forms required by BTr before
tenders for manual entry to the Bureau	the prescribed cut-off time for
of the Treasury's ADAPS.	receiving tenders for manual entry to
					the Auction System.
Each tender shall be unconditional and shall	Each tender shall be unconditional
be for an amount of not less than P10.0	and shall be for a minimum nominal	Substantially the same, but
Million (maturity value) for dealers and 1.0	amount of P10.0 million and in	removed distinction
Million (maturity value) for nondealers.	multiples of P1.0 million thereafter,	between dealers and non
	unless otherwise prescribed by the	dealers.
					Secretary of Finance through BTr.
In case of Treasury Bills, bids shall be	Unless otherwise provided in the public
stated in three (3) decimal places e.g.,	notice of offering, yields of submitted	Provides flexibility to the
13.000%. Bids for Treasury Bonds shall	tenders for Government Securities	issuer, to prescribe a different
be in multiples of 1/8 of 1% e.g.,	shall be stated in three (3) decimal	requirement for yields of
13.125%.	places.			submitted tenders.
Non-competitive tenders shall be accepted
at the weighted average yield of the
accepted competitive tenders. (as	No provision.		Transposed to last sentence
amended by Department Order No. 74-98,					of proposed Section 26.
Series of 1998, dated 27 October 1998)
Section 11. Receipt and Processing of	Section 23. Receipt and Processing of
Tenders by the Bureau of the Treasury. —	Tenders. - Tenders for Government
Tenders transmitted through the Bureau	Securities electronically transmitted
of the Treasury, prior to the cut-off time	by accredited buyers through the
fixed under Section 10 hereof, for the	Auction System prior to the cut-off
receipt of tenders shall automatically be	time fixed for the receipt of tenders
acknowledged by the ADAPS or stamped	shall automatically be acknowledged
with the time-dated clock by the	by BTr through the Auction System.
Securities Origination Division-Bureau of	In case of any downtime of the
the Treasury (SOD BTr), as the case	Auction System, tenders for
may be. Neither the Department of	Government Securities shall be
Finance nor the Bureau of the Treasury	submitted in the prescribed tender
shall bear any liability whatsoever for	form within the prescribed cut-off	Substantially the same.
any errors in tenders received or for	time and manually stamped in the
delays in the transmission of tenders.	time-dated receiving system by the
(as amended by Department Order	Securities Origination Division of BTr.
No. 74-98, Series of 1998, dated 27	The BTr shall not be liable for any
October 1998)					errors in tenders received or for
					delays in the transmission of tenders
					beyond the prescribed cut-off period
					for submission and receipt of tenders.
All tenders received on time shall be	Section 24. Auction Committee. —	Duly authorized
deliberated upon immediately after the	All tenders received on time shall be	representative of Deputy
cutoff time set by the Auction	deliberated upon immediately after	Treasurer of the Philippines
Committee composed of the Secretary	the cut-off time set by the Auction	for Operations included. BSP
of Finance or any representative	Committee composed of the Secretary	Treasury Department
designated by him/her, as	of Finance, as Chairperson; the	represented by it Head or a
Chairperson; the Treasurer of the	Treasurer of the Philippines as Vice	duly authorized
Philippines as Vice Chairperson; the	Chairperson; the Assistant Secretary	representative. SEC
Assistant Secretary for the Domestic	for the Domestic Finance Group of	representative updated from
Finance Group of the Department of	the Department of Finance or duly	Director of Brokers and
Finance as Member; the Deputy Treasurer	authorized representative as	Exchanges Department to
of the Philippines for Operations as	Member; the Deputy Treasurer of	Market Regulation
Member; the Deputy Governor for the	the Philippines for Operations or duly	Department.
Banking Services Sector, Research and	authorized representative as Member;
Treasury of the Bangko Sentral ng	the Deputy Governor for the Banking
Pilipinas or his/her authorized	Services Sector, Research and
representative, as Member; the Director	Treasury of the BSP or duly authorized
of the Treasury Department of the	representative, as Member; the Head
Bangko Sentral ng Pilipinas as Member;	of the Treasury Department of the
and the Director of the Brokers and	BSP or duly authorized representative,
Exchange Department of the Securities	as Member; and the Director of the
and Exchange Commission or his/her duly	Market Regulation Department of the
authorized representative as Member.	SEC or duly authorized representative,
At least four (4) members shall	as Member.
constitute a quorum to do business.
The Deputy Treasurer of the Philippines
for Operations shall also act as the
Executive Officer. The Auction
Committee staff support shall be
provided by the appropriate division
of the Bureau of the Treasury.
Third to the last sentence of preceding	At least four (4) members of the
paragraph.					Auction Committee shall constitute a
					quorum to do business.
Second to the last sentence of the second	The Deputy Treasurer of the Philippines
paragraph.					for Operations shall also act as the
					Executive Officer of the Auction
					Committee.
The Secretary of Finance may designate	The Secretary of Finance may designate
an additional member(s) in the Auction	an additional member(s) in the Auction
Committee as he may deem appropriate.	Committee as he may deem appropriate.	No revision.
(As amended by Department Order No.
3-01, Series of 2001 dated 26 February
2001 and Department Order No. 25-04,
Series of 2004, dated 30 July 2004).
(Last sentence of 2nd paragraph of this	The Auction Committee staff support
provision in the current Department Order)	shall be provided by the appropriate
					division of BTr.
Section 12. Award by the Auction	Section 25. Award for Tenders. —	Deleted reference to non-
Committee. — The Auction Committee	The Auction Committee shall make a	GSEDs. The Executive Officer
shall make a decision as to the amount	decision as to the amount and rate of	is the person designated to
and rate of the awards. Such decision	the awards. Such decision shall be	confirm the transmitted
shall be transmitted to the winning GSEDs/	transmitted immediately to the	decision. And the Vice
Non-GSEDs through the Bureau of the	winning accredited buyers through	Chairman is the person
Treasury's ADAPS/BTr's SOD	the Auction System, except on any	designated to download the
immediately after a Committee decision is	downtime of the Auction System in	confirmed and awarded
confirmed. A member of the Auction	which case the decision of the Auction	Government Securities to the
Committee shall be assigned to confirm	Committee shall be transmitted	primary securities account
the transmitted decision. The Auction	manually in the prescribed notice of	in ROSS, subject to receipt of
Committee shall then download the	award form of BTr. The Executive	auction proceeds.
awarded securities to the winning bidders'	Officer of the Auction Committee or
Principal Securities Account in the RoSS.	duly authorized representative shall
A member of the Auction Committee	confirm the transmitted decision. The
shall likewise be designated to confirm	Vice Chairman shall authorize the
the downloaded information. Thereafter,	posting of the confirmed and awarded
the Auction Committee shall sign a	Government Securities to the winning
print-out of the auction results summary.	accredited buyer's Primary Securities
(As amended by Department Order No.	Account in RoSS, subject to receipt
74-98, Series of	1998, dated 27		of auction proceeds. A print-out of
October 1998).					the auction results summary shall be
					signed by the members of the
					Auction Committee.
Section 13. Apportionment of Awards	Section 26. Apportionment of Awards
and Reservation of Right. — Unless	and Reservation of Right. — Unless
otherwise as may be provided by the	otherwise provided in the public
Secretary of Finance, the lowest rate	notice of offering by the Secretary
offered by competitive bidders will be	of Finance through BTr, the lowest
accepted in full down to the amount	rate offered by bidders for Competitive
required after deducting the total	Bids will be accepted in full down to the
amount of non-competitive bids from	amount required after deducting the
the total amount of issue(s). At cut-off	amount of Non-Competitive Bids from
level, if the same rate appears in two	the total amount of issue(s). At cut-off
(2) or more tenders, and it is necessary	level, if the same rate appears in two	Substantially the same. The
to accept only part of the amount offered	(2) or more Competitive Bids or	last sentence was transposed
at such rate, the amount accepted at	Tenders, and it is necessary to	from the last paragraph of the
such rate shall be prorated in	accept only part of the amount	current Section 10.
accordance with the respective amounts	offered at such rate, the amount
applied for. If the amount is the same,	accepted at such rate shall be
the proration of odd amount is applied	prorated in accordance with the
randomly. The rate of non-competitive	respective amounts applied for. If the
bids shall be reckoned from the average	amount is the same, the proration
of the rates tendered by accepted	of odd amount shall be applied in
competitive bids.					accordance with the terms and
					conditions as stated in the public
					notice of offering. Non-Competitive
					Bids or Tenders shall be accepted at
					the weighted average yield of the
					accepted Competitive Bids or
					Tenders.
The Auction Committee reserves the right to	The Auction Committee reserves the
accept or reject any or all tenders or parts	right to accept or reject any or all
of the tenders and to award less than	tenders or parts of the tenders and	No revision.
the amount applied for and any action it	to award less than the amount
may take shall be final. (As amended by	applied for and any action it may
Department Order No. 32-98, Series of	take shall be final.
1998, March 13, 1998)
Section 14. Payment of Awards. —	Section 27. Payment of Awards. —	The proposed section is to
Payment on awarded issues must be made	Payment on awarded issues shall	provide flexibility on
or completed on Wednesday for Treasury	be made or completed in accordance	settlement of payment for
Bills and Thursday for Treasury Bonds. In	with the prescribed settlement cut-off	awards and clarifies
the event of a holiday or fortuitous event,	time of BTr. In the event of a national	settlement convention in case
the settlement shall be adjusted and	or local holiday or fortuitous event	of holidays or fortuitous
dealers notified accordingly.	when no settlement of the	events taking place on
	Government Securities and/or cash	settlement date.
					can be effected, the settlement date
					shall be adjusted to the next business
					day. Due notice shall be issued by
					BTr through the Auction System, or in
					the prescribed notice form of BTr in
					case of any downtime of the
					Auction System.
On settlement date, the concerned	On settlement date, BTr shall instruct
GSED/Non-GSED shall instruct Bangko	the debiting of the winning accredited
Sentral ng Pilipinas (BSP) to debit their	buyer's Settlement Bank account and
Demand Deposit Account and credit the	the crediting of the deposit account	Removed reference to non-
Demand Deposit Account of the	of the Treasurer of the Philippines	GSED as participants in the
Treasurer of the Philippines maintained	under Section 47 of this Order.	auction, adopting instead the
with the Bangko Sentral ng Pilipinas,					reference to "accredited
which in turn, shall send a credit advice					buyers".
to the Bureau of the Treasury. (As
amended by Department Order No.
74-98, Series of 1998, dated 27
October 1998)
Section 30. Award. — Subject to the
provisions of Chapter III hereof, the
Bureau of the Treasury, having accepted					This provision was dropped in
tender(s) for Treasury Bills and Bonds					the proposed D.O.
which are not represented by a physical					considering that BTr has
certificate, shall make the award through	No provision.		already assumed the registry
Bangko Sentral ng Pilipinas until such					function.
time RoSS can assume the responsibility,
which shall transfer the Treasuries to
the bidder(s) in accordance with Section
32 below. (As amended by DOF Order
No. 32-98, Series of 1998,
March 13, 1998)
B. Over-the-Counter	Part 2

	OVER-THE-COUNTER METHOD
(Definition in current Section 15 is	Section 28. Terms of
reproduced in the Definition of Terms	Over-the-Counter Sale of Government
portion of this matrix, to compare	Securities. — The BTr shall issue a	New. Issuance of GS through
the same against the proposed	public notice of offering prescribing	OTC method shall be
definition under the Draft	the terms and conditions for the	preceded by a public notice
amendments.)	over-the-counter origination or sale	which shall prescribe the
	of Government Securities.	terms and conditions.
Section 16. Authority to Sell					This provision was dropped
Over-the-Counter. — With the approval	No provision.		as the same is already in
of the President of the Philippines, the					Section 2 of the proposed
Secretary of Finance, may after consultation					D.O. (Powers of the Secretary
with the Monetary Board, authorize the					of Finance).
over-the-counter sale of Government
Securities subject to the terms and
conditions as may be prescribed by the
Secretary of Finance.
Section 17. * Scope. — Idle funds in excess	Section 29. Allowable Funds; Scope
of normal operating requirements, as	of Investment. — GOCCs and LGUs
hereinafter defined, of GOCCs and LGUS	shall be allowed to purchase
shall be invested in medium-term and	Government Securities using investible
longterm government securities, special	funds or idle funds in excess of normal
short term government securities and/or	operating requirements in the case
fixed term deposits with the Bureau of the	of LGUS. The phrase "idle funds in
Treasury. The phrase "idle funds in	excess of normal operating
excess of normal operating requirements"	requirements" shall generally mean	Deleted reference to medium
shall generally mean the level of funds	the level of funds which an entity can	term, long term, special short
which an entity can freely invest in	freely invest in Government Securities	term GS and fixed term
government securities and/or fixed term	after considering provisions for	deposits, but maintained the
deposits after considering provisions	coverage of such (1) regular and	requirement that only
for coverage of such (1) regular and	recurring operating expenses such as	investible funds or idle funds
recurring operating expenses such as	salaries and wages, repairs and	in excess of normal operating
salaries and wages, repairs and	maintenance, inventories and supplies,	requirements, may be
maintenance, inventories and supplies,	debt servicing, etc. within the context	invested in GS by GOCCs
debt servicing, etc. within the context	of the entity's cash operating cycle;	and LGUs.
of the entity's cash operating cycle; and	and (2) local counterpart commitments
(2) local counterpart commitments for	for capital expenditures within the
capital expenditures within the current	current fiscal year. In case of LGUs,
fiscal year. In case of LGUS, unremitted	unremitted national collections and
national collections and funds set aside	funds set aside for payments of
for payments of obligations to	obligations to government
government corporations/cooperatives	corporations/cooperatives shall not
shall not form part of their idle funds.	form part of their idle funds.
(b) Current holdings of Treasury Bills
of GOCCs/TEIs, except the amounts					The provision was dropped as
needed for operations, shall be converted,					the GOCCs and LGUs are no
through the Securities Origination Division,	No provision.		longer required to convert
Bureau of the Treasury, into medium-term					their holdings as prescribed
and long-term government securities,					under the current provision.
special short-term government securities,
and/or fixed term deposits as and when
they mature;
(c) Newly, internally-generated excess	New and internally-generated excess
funds, i.e., funds which have not been	funds of GOCCs, i.e., funds which	Deleted limitation on
previously invested in government	have not been previously invested in	investment outlets of GOCCs
securities nor sourced from equity or	Government Securities nor sourced	and TEIs.
subsidy from the national government,	from equity or subsidy from the National
of GOCCs/TEIs, at their option, may be	Government may also be invested in
invested into special 364-day Treasury	Government Securities.
Bills, Special Treasury Bonds and/or fixed
term deposits;
(d) Temporary idle funds of LGUs shall be	Temporary idle funds of LGUs qualifying
invested in medium-term/long term	as local counterpart commitments for
government securities as may be allowed	capital expenditures within the current
by their cash requirements, and provided	fiscal year may also be invested in
that such investments will not delay the	Government Securities as may be	Deleted limitation on
implementation of its projects. (Department	allowed by their cash requirements,	investment outlets of
Order No. 81-96, Series of 1996,	and provided that such investments	LGUs.
June 10, 1996)					will not delay the implementation of
					covered projects.
Section 18. OTC Investment. — GOCCs/	Section 30. Form and Cut-off Time. —
TEIs/LGUs placements shall be phoned in	Placements of GOCCs, LGUs, and	Deleted certain operational
or faxed to the Securities Origination	TEIs shall be transmitted to BTr	details to allow greater
Division, Liability Management Service,	(Attention: Securities Origination	flexibility.
Bureau of the Treasury on or before	Division, Liability Management
11:00 A.M., Monday to Friday.	Service) in the prescribed placement
	forms and in accordance with such
	time as may be prescribed by BTr.
	Placements may be submitted in hard
	copy or via facsimile or any other
	mode of transmission acceptable to	New. This provision is
	the BTr. The BTr may lawfully rely	added to provide a cover to
	and execute such placement	the BTr for effecting a
No provision.	instruction within the settlement	settlement instruction from
	cut-off time for settlement payment	the GOCC/LGU/TEI
	with the Settlement Bank. The BTr	concerned.
	shall not be liable for damages or
	losses on the GOCC, LGU or TEI
	for effecting settlement payment
	instructions.
On or before 4:00 P.M., on the day of	On or before 4:00 P.M. on the day
placement, investing GOCCs/TEIs/LGUs	of placement, the GOCCs /LGUs/TEIs
shall send a written confirmation of	shall submit the duly executed
placement, in duplicate, to the Bureau	placement form, in duplicate, to BTr
of the Treasury, which, in turn, shall	(Attention: Securities Origination	Substantially the same.
accomplish the lower portion of which	Division, Liability Management
and return a copy of the same to	Service). Submitted placements of
concerned GOCCs/TEIs/LGUs.	GOCCs, LGUs and TEIs shall be
(Department Order No. 81-96,	acknowledged by BTr (Securities
Series of 1996, June 10, 1996)	Origination Division, Liability
	Management Service).
Section 19. GOCCs Placement. — (a)	(See Definition of Terms)	See remarks in the relevant
(provides definition of GOCC - hence, is					section.
reproduced in the Definition of Terms
portion of this matrix, for comparative
purposes)
	Section 31. Pricing of Placements. —
	Pricing of Government Securities
	offered or issued to GOCCs, LGUs
	and TEIs shall be as prescribed by BTr.
(b) The applicable yield rates for Treasury
Bills issued to GOCCs shall be at a
uniform rate equivalent to the lowest
accepted yield rate of the immediately
preceding Treasury Bills auction, subject
to the confirmation by the Secretary of
Finance that the rate is acceptable to him.
(As amended by Department Order No.
74-98, Series of 1998, dated	Pricing conventions for
27 October 1998)					GOCCs/LGUs/TEIs will be in
					accordance with BTr's pricing
(c) Treasury Bonds issued to GOCCs shall	guidelines, to allow greater
be priced based on the current market yield.	flexibility.
The applicable coupon rate shall be based
or the rate corresponding to the auctioned	No provision.
Treasury Bonds, subject to the confirmation
by the Secretary of Finance. (As
amended by Department Order No.
74-98, Series of 1998, dated
27 October 1998)
Section 20. TEIs Placement. — (a) Prior to	Section 32. Specific Requirements	Clarifies that these
the actual over-the-counter purchase of	for TEI Accounts. — A TEI or its	requirements are only upon
government securities, the TEI or the	managing bank/financial institution	account opening, with tax
managing bank and financial institution	shall:			exempt status.
shall:
1. Submit to the Securities	(a)	To open a tax-exempt RoSS
Origination Division, Liability Management		securities account, submit to
Service a (i) Certified copy of current		the Securities Origination
ruling (not more than a year) from the		Division, Liability Management
Bureau of Internal Revenue regarding		Service a (i) Certified copy of
its status as a tax-exempt institution;		current ruling (not more than a
(ii) Copy of the Board Resolution duly		year) from the Bureau of
certified by the Corporate Secretary		Internal Revenue regarding its
authorizing the placement (directly for		status as a tax-exempt
managed funds or indirectly through		institution; (ii) Copy of the	Clarified that the Board
designated trustee bank/financial		Board Resolution or as	Resolution requirement could
institution in the case of managed		embodied in the Secretary's	be complied with by
trust funds) in government securities;		Certificate duly certified by the	presentation of a Secretary's
and (iii) Copy of the covering trust		Corporate Secretary authorizing	Certificate which embodies
agreement; and		the placement (directly for	the board action.
		managed funds or indirectly
		through designated trustee
		bank/financial institution in the
		case of managed trust funds)
		in Government Securities; and
		(iii) Copy of the covering trust
		agreement; and
2. Perform all acts and undertaking	(b)	Perform all acts and undertaking
connected therewith including the		connected therewith including
designation of person(s) authorized		the designation of person(s)	No revision.
to exercise such functions.		authorized to exercise such
					functions.
(b) Minimum amount of placement of	Section 33. Amount of Placements. —	Formalizes existing minimum
TEIs shall be in P1.0 Million and in even	The minimum amount of placement	placement for GOCCs and
multiple of P100,000.00.	shall be P500,000 for GOCCs and	LGUs. No revision for TEIs.
					LGUs, and P1.0 Million for TEIs,
					and in even multiples of
					P100,000.00 in any case.
(c) Treasury Bills issued to TEIs shall
be priced at a discount based on 90%
of the weighted average interest rate
of the immediately preceding regular
weekly auction applicable to
corresponding Treasury Bills.
(d) Treasury Bonds issued to TEIs
shall be priced based on the current
market yield with a coupon rate
based on the 90% of the coupon
rate applicable to the corresponding
auctioned Treasury Bonds. Interest
shall be payable semi-annually in					These matters shall be
arrears based on 360-days a year					covered by implementing
consisting of 12 months of 30 days					circulars to be issued by the
each. (As amended by Department					BTr which will prescribe the
Order No. 32-98, Series of					pricing convention for
1998, March 13, 1998)					GOCCs/LGUs/TEIs. Note that
					the proposed Section 31
Section 21. LGUs Placement. —	No provision.		states that these pricing
(a) The applicable yield rates for					conventions are to be
Treasury Bills issued to LGUs shall					prescribed by the BTr.
be at a uniform rate equivalent to
the weighted average yield rate (WAYR)
of the immediately preceding Treasury
Bills auction, subject to confirmation by
the Secretary of Finance that the rate
is acceptable to him.
(b) Treasury Bonds issued to LGUs shall
be priced based on the current market
yield. The applicable coupon rate shall be
based on the rate corresponding to the
auctioned Treasury Bonds, subject to
the confirmation by the Secretary of
Finance. (As amended by Department
Order No. 74-98, Series of 1998,
dated 27 October 1998)
Section 22. Settlement. — Settlement of	Section 34. Settlement of GOCC,
GOCCs/TEIs/LGUs OTC investment shall	LGU and TEI Placement. —
be on the same day as placement date.	Settlement of GOCC, LGU and TEI	No substantial change.
					over-the-counter placement shall be
					on the same day as placement date.
Upon placement/maturity of government	Upon placement/maturity of	Removed language referring
securities, the Bureau of the Treasury,	Government Securities, BTr RoSS	to assumption of registry
pending assumption of responsibility by	shall credit/debit the concerned	function by RoSS as the
RoSS, shall credit/debit concerned	GOCC/LGU/TEI RoSS Primary	same is already in place.
GOCCs/LGUs/TEIs Securities Account	Securities Account.
maintained in the book-entry of the Bureau
of the Treasury. Simultaneously, the
Settlement Bank shall correspondingly
debit/credit the GOCCs/LGUs/TEIs Cash
Account and credit/debit TOP's Account
with the Settlement Bank. (As amended
by Department Order No. 32-98, Series
of 1998, March 13, 1998)
(See last sentence of immediately	Simultaneously, the Settlement Bank
preceding item.)	shall correspondingly debit/credit the		No revision.
					GOCCs/LGUs/TEIs Cash Account
					and credit/debit TOP's Account
					with the Settlement Bank.
Section 23. Evidence of Ownership. —	Section 35. Proof of
Treasury Bills and Treasury Bonds shall	Over-the-Counter Placement. —
be evidenced by the Bureau of the	Government Securities placement	No substantial change.
Treasury's acknowledgement of the	of GOCCs, LGUs or TEIs shall be
placement. (Department Order No. 81-96,	evidenced by the acknowledgment of
Series of 1996, June 10, 1996)	the placement in the executed
					placement document.
Section 24. Transfer. — GOCCs/LGUs	Section 36. Transfers. — Government
may sell their government securities prior	Securities held by GOCCs, LGUs and
to maturity only with GOCCs/LGUs	TEIs may be transferred prior to
which maintain Securities Account in the	maturity to any person, regardless of
book-entry of the Bureau of the	tax classification, in any BTr-accredited
Treasury or subsequently in RoSS. In	GSTM.
the same manner, TEIs may sell their
government securities prior to maturity
only to TEIs which maintain Securities
Account in the book-entry of the Bureau	This provision puts in place
of the Treasury or subsequently in	the tax-neutral trading and
RoSS.					settlement environment for
					Government Securities, to
Transfer from a GOCC/LGU					allow all holders of GS to
to authorized GOCC/LGU shall be					freely transact with one
effected by an appropriate book-entry					another regardless of tax
in the Bureau of Treasury or subsequently					classification provided the
in RoSS. (As amended by Department					GSTM has tax tracking
Order No. 32-98, Series of 1998,					facilities.
March 13, 1998)
Section 25. Pledge. — Pledge of	No provision.
government securities issued to
GOCCs/TEIs/LGUs shall be deemed
constituted when the Bureau of the
Treasury, pending assumption of
responsibility of RoSS, certifies
by book-entry that the government
securities have been segregated
and earmarked in favor of the
pledgee. (As amended by
Department Order No. 32-98,
Series of 1998, March 13, 1998)
C. Tap Method.	Part 3
	TAP METHOD	Renumbered for consistency
					with the numbering
					methodology in the proposal.
Section 26. Definition. — (Definition in					Definition in current Section
current Section 26 is reproduced in the					26 is reproduced in the
Definition of Terms portion of this matrix,					Definition of Terms portion of
to compare the same against the					this matrix, to compare the
proposed definition under the Draft					same against the proposed
amendments.)					definition under the Draft
					amendments.
However, the newly established SMALL					Reference to the Small
INVESTOR'S PROGRAM (SIP) shall be	No provision.		Investors Program was
open to SEC licensees and accredited					deleted as the same has
agents of the BTr, not necessarily GSEDs.					been absorbed in the BTr's
(As amended by Department Order No.					Retail Treasury Bond
74-98, Series of 1998, dated					Program.
27 October 1998)
Section 27. Authority to Sell other than	Section 37. Participants. — The tap
through Auction and through Negotiation. —	facility shall be available to Market
As an additional window for Treasury Bills	Makers, BTr-Managed Funds and
and Bonds, the sale through tap method	other entities or instrumentalities as
is hereby adopted under the following	may be allowed by the Secretary of	Modified the participants to
terms and condition:	Finance or through BTr.	only Market Makers, and
					expanded to include
a. The tap window may be accessed					BTr-Managed Funds and
by GSEDs/Fis from Monday through					other entities or
Friday. Likewise, in the case of the					instrumentalities as may be
Small Investor's Program (SIP), the					allowed by the Secretary of
window may be accessed from					Finance, through BTr.
Monday through Friday subject to
settlement on the day of placement.
b. The issue ceiling, yield and amount	Section 38. Methods of issuance and
for Treasury Bills and Bonds available on	Features of GS issued under Tap. —
tap shall be as announced or as	Primary origination or sale of
negotiated by the Bureau of the Treasury.	Government Securities through tap
(As amended by Department Order No.	shall be announced through a public	Substantially the same.
15-99, Series of 1999, dated	notice of offering. The issue ceiling,
January 12, 1999)					yield and amount for Government
					Securities available on tap shall be
					as announced or as negotiated by BTr.
No provision.	Article III	New. Heading added for
	SECONDARY MARKET FOR	better organization of the
	GOVERNMENT SECURITIES	document.
	Part 1
		GENERAL PROVISIONS
	Section 39. Secondary Market	New. This provision
	Transfers. — Transfers of	emphasizes that secondary
	Government Securities in a BTr-	market activities are covered
	accredited GSTM shall be governed	by the Department order, as
	by this Order and the applicable rules	well as SEC regulations.
	and regulations issued by the
	Secretary of Finance through BTr,
	the rules and regulations of the SEC
	and the rules and conventions of
	such BTr-accredited GSTM.
	Section 40. Transfers Across Tax	New. This provision sets forth
	Categories. — Transfers of	the tax-neutral trading and
	Government Securities between	settlement environment,
	market participants shall be	under which entities of
	allowed regardless of tax status,	different tax classifications
	subject to the rules and regulations	can transfer between and
	to be issued by BTr to ensure	among each other, subject to
	the proper assessment and	rules and regulations to be
	collection of taxes.	issued by the BTr.
	Section 41. Accreditation of
	Secondary Market Participants. —
	The BTr shall promulgate the
	appropriate rules and regulations	New. This provision sets forth
	to classify and accredit	the responsibility of the BTr to
	participants in the secondary	accredit and classify GS
	market of Government Securities	market participants on the
	based on their activities therein	basis of their commitments to
	and their participation in a	the issue.
	Government Securities
	Trading Market. The participants
	that may be allowed are Market
	Makers, Dealers and Brokers.
	Notwithstanding the foregoing,
	the Secretary of Finance
	through BTr shall have the
	power, in accordance with
No provision.	this Order, to further and
	additionally classify and
	accredit participants in the	New. Notwithstanding the
	secondary market, prescribe	preceding paragraph, the
	standards and qualifications	Secretary of Finance retains
	defined by it for such	residual oversight powers
	classifications, establish a	over the secondary market
	hierarchy of market participants	and its participants, under
	based on their commitment	Section 4 of R.A. No. 245.
	to the Government Securities
	market, including incentives
	to ensure accredited
	participants' ability to
	support its commitments to the
	Government Securities market
	and enhance liquidity in the
	secondary market.
	The BTr shall prescribe mechanisms
	to monitor compliance with
	commitments and take such actions	New. This provision is
	as are necessary to enforce the	necessary and incidental to
	classification system, including	the accreditation powers of
	suspension/revocation of	the BTr, to implement and
	incentives, suspension/revocation	enforce the same.
	of the accreditations granted
	and such other actions necessary
	and incidental hereto to protect
	the Republic of the Philippines
	and the investing public from
	fraud or loss.
	Section 42. Special Covenants of
	all Accredited Secondary Market
	Participants. — All accredited
	participants, by application for	New. This provision is
	any such accreditation of whatever	necessary and incidental to
	classification, are deemed to have	the accreditation powers of
	given consent to the disclosure	the BTr, to implement and
	to BTr of their activity in the	enforce the same.
	Government Securities market
	by a GSTM. No other written
	consent shall be deemed necessary
	to give effect hereto, other than
	the accreditation granted by BTr
	under this Order and implementing
	issuances issued by BTr in
	relation hereto.
	Part 2			New. Heading added for
	GS TRADING MARKET	better organization of the
	ACCREDITATION STANDARDS	document.
	Section 43. Market Structure. — The
	Secretary of Finance through BTr	New. This provision is to
	may accredit any trading market as	recognize the non-exclusive
	a GSTM; provided, the GSTM is	nature of a trading market that
	duly recognized by the SEC under	may be accredited as a
	applicable law, rules and regulations.	GSTM.
	Section 44. Documentation. — A
	GSTM shall be accredited as such	New. This provision sets
No provision.	by BTr through a Listing Agreement	forth the operational
	or other appropriate document	documentation prior to
	showing BTr's consent to have	accreditation of the GSTM.
	Government Securities traded
	and settled on such GSTM.
	Section 45. GSTM Rules. — The	New. This provision requires
	GSTM shall adopt such rules and	the GSTM to prescribe the
	conventions as are necessary to	rules and regulations for the
	give effect to its obligations under	participants in that trading
	its accreditation.	market.
	Section 46. Minimum Requirements
	for GSTM. — A GSTM shall comply	New. The issuer is interested
	with the following minimum	in ensuring that all GSTMs
	requirements to be qualified for	are aligned in their service to
	accreditation:		the issue, providing services
					at par with one another, so
	I.		GS Trading Market Facilities.	that all investors in
					government securities enjoy
		a.	Transaction Modes. The	the same rights and benefits
			GSTM shall allow negotiated	regardless of their chosen
			transactions and/or automatic	market. The issuer should be
			matching processes, or any	able to exercise a prerogative
			other transaction modes as	of setting down minimum
			may be notified to the BTr.	standards for its secondary
					market, and impose a
		b.	Retail Market Structure. The	requirement that all market
			GSTM shall allow retail	providers should be capable
			investors to participate therein	of providing this minimum.
			in accordance with relevant
			regulation and at the trading
			lots prescribed by BTr.
		c.	Accessibility. The GSTM shall
			be accessible as much as
			possible on a nationwide
			basis. The GSTM shall be
			deemed to be in compliance
			herewith where regional or
			key cities in provincial areas
			are capable of accessing the
			trading system directly.
		d.	Regulatory environment. The
			GSTM shall be under the
			oversight of a Self-Regulatory
			Organization (SRO) duly
			recognized as such by the
			Securities and Exchange
			Commission, with rulemaking
No provision.			and enforcement powers, and
			independent compliance and
			surveillance functions as
			required under the Securities
			Regulation Code or its
			successor law.
	I. *	GSTM Participants. The GSTM
		shall include the participation of
		brokering entities, dealing entities
		and qualified investors.
	II.	Monitoring Facilities on Market
		Participants. The GSTM shall
		have facilities required to monitor
		and report on the secondary
		market performance of GS
		Market Participants accredited
		by BTr, based on performance
		criteria prescribed by BTr.
	III.	Price Transparency. The GSTM
		shall have price transparency
		mechanisms consisting of public
		dissemination facilities that
		capture transaction data and
		disseminate the same in
		accordance with timeliness
		standards under applicable
		regulation.
	IV.	Liquidity Facilities for Failed
		Trades Management and to
		Support Trading Activities
		a.	Cash Liquidity Programs.
			The GSTM shall operate
			programs that seek to
			address cash liquidity
			concerns of its participants,
			which shall serve as part
			of the GSTM's failed trades
			management activities. Such
			cash liquidity programs shall
			have the following essential
			features:
			(1)	SRO. Cash Liquidity
				Programs shall be under
				the oversight of a duly
				registered Self-Regulatory
				Organization (SRO);
				provided, however, that
				the SRO may exempt
				certain entities or activities
				from its SRO oversight
				with concurrence of the
				SEC.
			(2)	Risk Mitigation
				Mechanisms. Cash
				Liquidity Programs shall
				have in place mechanisms
				that mitigate risks, such
No provision.				as, but not limited to,
				collateralization of
				transactions.
			(3)	Collateral Administration
				and Management. Cash
				Liquidity Programs shall
				include the participation
				of an entity that shall
				take delivery of collateral
				with the task of monitoring
				and acting to maintain
				collateral levels at agreed
				upon levels and conduct
				resolutions processes.
			(4)	Regulatory Approval.
				Such Cash Liquidity
				Programs must be
				approved by the
				relevant regulatory
				authorities having
				jurisdiction over the
				GSTM and the
				participants
				contemplated.
		b.	Securities Liquidity Programs.
			The GSTM shall operate
			programs that seek to
			address securities liquidity
			concerns of its participants,
			which shall serve as part
			of the GSTM's support
			for the trading activities of
			its participants. Such
			securities liquidity programs
			shall have the following
			essential features:
			(1)	SRO. The Securities
				Liquidity Program shall
				be under the oversight
				of a duly registered
				Self-Regulatory
				Organization (SRO);
				provided, however,
				That the SRO may
				exempt certain entities
				or activities from its
				SRO oversight with
				concurrence of the SEC.
			(2)	Risk Mitigation
				Mechanisms. Securities
				Liquidity Programs shall
				have in place mechanisms
				that mitigate risks, such
				as, but not limited to,
				collateralization of
				transactions.
			(3)	Collateral Administration
No provision.				and Management.
				Securities Liquidity
				Programs shall include
				the participation of an
				entity that shall take
				delivery of collateral
				with the task of
				monitoring and acting
				to maintain collateral
				levels at agreed upon
				levels and conduct
				resolutions processes.
			(4)	Regulatory Concurrence.
				Such Securities Liquidity
				Program shall have been
				approved by the relevant
				regulatory authorities
				having jurisdiction over
				the GSTM and the
				participants
				contemplated.
	V.		Trading Programs that Promote
			Equality of Access. The BTr
			shall establish trading programs
			that enhance market access
			and allow equality of access
			by its participants, which
			Programs shall be implemented
			through the GSTMs accredited
			by it. The GSTM shall provide
			facilities to ensure that
			counterparty risks are
			sufficiently mitigated through
			the use of bilateral
			counterparty limits, margin-based
			trading limits, pre-delivery and
			such other mechanisms to
			mitigate counterparty risk.
	VI.		Settlement Standards. The
			GSTM shall observe the
			following settlement standards:
		a.	Straight-Through Process.
			The GSTM shall provide
			for settlement on a
			straight-through process
			mode, to ensure minimization
			of operational inefficiencies.
		b.	Delivery-versus-Payment.
			The GSTM shall settle trades
			conducted on its systems on
			a delivery-versus-payment
			(DvP) mode. Such settlement
			may allow investors to settle
			directly into their cash and/or
			securities accounts.
		c.	Clearing Authority. The GSTM
			shall ensure that its clearing
No provision.			and settlement processes
			use intermediaries that are
			authorized by the Securities
			and Exchange Commission
			to perform the clearing and
			settlement process of the
			GSTM.
	VII.		Other Capabilities. The GSTM
			shall likewise have the following
			capabilities.
			a.	Business Continuity Plan
				(BCP) and Disaster
				Recovery Program (DRP)
				Requirements. The GSTM
				shall provide BTr a copy of
				its DRP and BCP.
			b.	Ability and Undertaking to
				Link with Existing Markets
				and Payment Systems.
				All GSTMs shall have the
				capability to link with
				existing GSTMs and
				payment systems.
			c.	Electronic Interface. All
				GSTMs shall have
				automated interface with
				the RoSS.
VI. MISCELLANEOUS		ARTICLE IV	Renumbered Heading, for
		MISCELLANEOUS	consistency with the
					numbering methodology of
					the proposal.
Section 38. Demand Deposit Account. —	Section 47. Deposit Account. — The	Replaced "Treasury Bills and
The Treasurer of the Philippines maintains	Treasurer of the Philippines shall	Bonds" with "Government
a Demand Deposit Account with the	maintain a deposit account with the	Securities" and added a
Bangko Sentral ng Pilipinas to which	Bangko Sentral ng Pilipinas or	reference to RA No. 1000.
all proceeds from the sale of Treasury	authorized government depository	The "Demand Deposit
Bills and Bonds under R.A. No. 245, as	bank to which all proceeds from	Account" has been replaced
amended, shall be credited and all	the sale of Government Securities	with "Deposit Account" to
payments for redemption of Treasury	under R.A. No. 245, as amended,	cover multi-currency GS. Also
Bills and Bonds shall be charged.	and R.A. No. 1000, as amended,	included payment of interest
	shall be credited and all payments	in the final sentence, for
	for interest and redemption of	completeness of coverage.
	Government Securities shall be
	charged.
Section 39. Reservation as to	Section 48. Reservation as to Terms
Terms of these Rules and	of these Rules and Regulations. —
Regulations. — The Secretary of	The Secretary of Finance reserves	No revision.
Finance reserves the right to amend,	the right to amend, supplement, revise,
supplement, revise, prescribe or	prescribe or withdraw all or any of the
withdraw all or any of the provisions	provisions of these rules and
of these rules and regulations at any	regulations at any time, or from
time, or from time to time.	time to time.
Section 40. Inconsistent Circulars,	Section 49. Inconsistent Circulars,
Memoranda and Orders. — All	Memoranda, and Orders. — This
circulars, memoranda or orders	Order expressly supersedes and	This provision provides for an
inconsistent herewith are hereby revoked	repeals Department Order No.	express repeal of Department
or modified accordingly.	141-95, as amended. All circulars,	Order 141-95, for clarity.
	memoranda or orders inconsistent
	herewith are hereby revoked or
	modified accordingly.
Section 41. Transitory Provision. — The	Section 50. Transitory Provision. —
CBP/BSP accreditation of government	The BTr is hereby authorized to	This provision is to provide for
securities dealers shall be valid up to 30	implement the requirements of this	time for both the BTr and the
June 1996, thereafter, the rules and	Order in such manner deemed	market participants to adjust
regulations embodied in this Circular,	appropriate under the circumstances,	to the requirements as
specifically Sections 36 and 37, shall	and shall further prescribe the	prescribed in the proposed
govern the eligibility of securities dealers	transitory provisions necessary to	Department Order. The
to participate in the auction. Therefore,	ensure a smooth transition from the	issuance of implementing
all interested securities dealers shall	present state of the Government	circulars will require a
submit to the Bureau of the Treasury	Securities market to the environment	consultation period and
the documentation requirements of	contemplated under this Order.	process with the market as
Section 36 hereof not later than 30					well as a determination of
April 1996. Acknowledgment by BTr					their readiness to adapt to the
means eligibility to bid.					new regime.
Section 42. Effectivity of this	Section 51. Effectivity. — These	No substantial changes.
Regulation. — These revised rules	Omnibus Revised Rules and
and regulations shall take effect	Regulations shall take effect
immediately.	immediately.

EXECUTIVE SUMMARY OF THE PROPOSED REVISIONS TO DEPARTMENT ORDER 141-95

Changes in Form

The proposed Department Order introduces several style changes that are aimed at easing interpretation of the language and intent of the Order. In particular, these style changes involve: (a) addition of a substantial preamble that sets forth the legal basis and purpose of the Order; (b) addition of a section on definition of terms to ensure consistency of interpretation of terminology frequently used in the Order; (c) rational organization of the provisions under headings that group related matters together; and (d) deletion of language that provided operational details for the implementation of the provisions of the Order to ensure appropriate flexibility in operationalizing the Order. Where possible, language was introduced to ensure that the scope of the proposed Order could cover locally issued foreign currency-denominated Government Securities.

Note on the Preamble.

The proposed Department Order opens with a preamble that provides the background for the revisions, and the policy and environmental justifications therefor, mapping the same out against the general mandate of the Secretary of Finance under applicable laws, specifically Republic Act Nos. 245 and 1000. Specific mention is made of the following important underlying policy considerations for the Order:

(a) To lift current transactional barriers that should not impede liquidity, since advances in technology and law have already been made. In particular, technological advances allow recording of ownership down to the level of beneficial ownership and tracking of taxes despite transactions that cross tax classes. These have already been used to support trading and settlement for US dollar tranches of the recently issued Multicurrency Retail Treasury Bonds.

 Furthermore, legal and regulatory frameworks now recognize the electronic recording of beneficial ownership and require delivery of securities bought to beneficial owners or their agents. As such, the tracking can be put in place to ease transfer restrictions that are present in the current DO 141-95. DHaEAS

(b) The establishment of an orderly environment and appropriate oversight over the secondary market for Government Securities. The proposed Order sets forth a regulatory structure that is consistent with relevant laws, rules and regulations which now require the existence of organized secondary markets under the regulatory oversight of the Securities and Exchange Commission, even for securities which are exempt under the Securities Regulation Code, such as Government Securities, to protect the Republic of the Philippines and the investing public from fraud or loss.

(c) Investor protection. Investor protection dictates that all investors in GS should be able to enjoy parity of liquidity and secondary market facilities in any secondary market structure where such investor is serviced.

Changes in Substance

(1) General Provisions:

a. Taxation (Section 10 of the proposed Order, Section 8 of the current Order). The current provision has been enhanced to clarify the tax regime for the outright spot market, essentially reproducing the current provision, but neutralizing language that was overly particular that could become unresponsive to changes in law and regulation. In particular, the tax rate of 20% final tax on coupons provided for in the current Department Order was made broad to refer to "applicable final tax rate under the National Internal Revenue Code" to allow for changes in the tax laws or application of treaty rates. Moreover, additional language was introduced to implement tax provisions in tax laws and regulations regarding securities lending transactions and repurchase agreements.

b. Sub-Registry (Section 13 of the proposed Order and in the Definition of Terms, no provision in the current Order). The definition of the registry now encompasses a BTr-accredited sub-registry. The qualifications and functions are provided for in the Order. In line with the policy to ensure a safe and efficient secondary market structure for debt issuances of the National Government, there is a need to recognize varied modalities of infrastructure support that could enhance our markets.

 An important initiative of the Bureau of the Treasury is the neutralization of the secondary market environment of its issues, to allow holders of government securities of different tax classes to transact between and among each other, while preserving the tax regime for the issue under tax laws.

 Advancements in technology have enhanced registry corporate action systems which are now capable of supporting a tax-neutral secondary market for debt issues. These systems can be engaged by the registry, considering the benefits these could provide to the government securities market, in terms of liquidity, settlement, and potential for growth. BTr's RoSS sub-registry is functioning as such for non-peso denominated government issues, and is capable of likewise servicing the peso-GS market. The dollar tranches of the recently issued Multicurrency Retail Treasury Bonds are already traded and settled in a tax-neutral environment.

 Neutralizing the tax environment will allow the government issue to be geared and prepared towards regionalization, which is part of the government's goals in the foreseeable future. DTIcSH

c. Tax-Unification (Section 36 of the proposed Order, Section 24 of the current Order; also Section 40 of the proposed Order, no parallel provision in the current Order). The proposed Order allows the transfer of Government Securities between and among all holders of Government Securities at any time prior to maturity, regardless of tax classification, in a BTr-accredited GS Trading Market which is required under the Order to have a tax tracking capability. This puts in place the tax-neutral trading and settlement environment for Government Securities, which will allow enhanced liquidity and depth in the GS market and prepare the Government issue for regionalization efforts.

(2) Primary Market Provisions:

a. OTC Method (Definition 20 in the proposed Order). The BTr is empowered to allow other types of entities to be engaged in the primary or origination sale of GS through the OTC method, where this is currently limited to GOCCs, LGUs and TEIs under the current Order.

b. Settlement Bank (Definition 24 in the proposed Order). Settlement Banks for primary market purchases, receipt of coupon and/or redemption payments of Government Securities may be the BSP, a bank or a non-bank financial institution that is a member of the applicable payment system (such as BSP PhilPaSS or the PDDTS).

c. Tap Method (Definition 26 in the proposed Order). The TAP Method is currently open to all GSEDs. The proposed Order changes this coverage to Market Makers, BTr-Managed Funds and other entities as may be allowed by the Secretary of Finance, through the BTr.

d. Participants in the Auction of Government Securities (Section 20 of the proposed Order, Section 36 of the current Order). Financial institutions and GSEDs that meet the requirements may be accredited to participate in the auction of GS. An additional qualification of technological capability by way of interface to the auction and settlement systems was introduced. Accredited GSEDs will be allowed to participate in competitive and non-competitive auctions. The provision likewise recognizes that persons other than accredited GSEDs may participate on a non-competitive basis in accordance with BTr requirements thereon, to pave the way for retail participation in the primary auction when the time comes.

e. Auction Systems (Definition 2 of the proposed Order, no provision in the current Order). The proposed definition will allow BTr to accredit other auction systems.

f. Other provisions: CSHEAI

i. Where the auction falls on a holiday (Section 21, paragraph 2 of the proposed Order). The proposal provides that the auction date shall be automatically adjusted to the next business day or as may be announced by the BTr.

ii. Submission of Bids or Tenders (Section 22 of the proposed Order). The proposal removed manual entry as a mode of transmission of non-GSEDs to eliminate the distinction between GSEDs and non-GSEDs and their manner of transmitting bids or tenders through the Auction System.

iii. Payment of Awards where settlement date falls on a holiday. The proposal provides that settlement of awards shall take place on the next business day.

iv. Investment of Allowable Funds by GOCCs and LGUs (Section 29 of the proposed Order). The proposal deletes the reference to medium term, long term and special short term GS and fixed term deposits, but maintained the requirement that only investible funds or idle funds in excess of normal operating requirements may be invested in GS by GOCCs and LGUs. Furthermore, the proposal drops the requirement that GOCCs and LGUs are required to convert their holdings. Limitations on investment outlets of GOCCs. LGUs and TEIs have likewise been deleted.

(3) Secondary Market Provisions: Power of the Secretary of Finance to Prescribe Standards on Secondary Markets (Section 5 of the proposed Order, no provision in the current Order). The proposed Order emphasizes the power of the Secretary of Finance to prescribe the standards for secondary markets for GS, which power emanates from Republic Act No. 245. GS Trading Markets must be aligned in their service to the issue, providing services at par with one another, so that all investors in government securities enjoy the same rights and benefits regardless of their chosen market. The issuer should be able to exercise a prerogative of setting down minimum standards for its secondary market, and impose a requirement that all market providers should be capable of providing this minimum. In exercising this power, the following provisions are also introduced into the proposed Order:

a. Governing Regulations for Secondary Market Transfers (Section 39 of the proposed Order, no provision in the current Order). The proposed Order provides that secondary market transfers of GS shall be governed by the proposed Order, applicable rules and regulations of the Secretary of Finance through the BTr, rules and regulations of the SEC, and rules and conventions of a BTr-accredited GS Trading Market.

b. Accreditation of Secondary Market Participants (Section 40 of the proposed Order, no provision in the current Order). The proposed Order sets forth the responsibility of the BTr to accredit and classify market participants on the basis of their commitments to the issue. These classifications are given as Market Makers, Dealers and Brokers, but may be amplified by the Secretary of Finance through the BTr if so warranted. The BTr is also given the responsibility to ensure that appropriate mechanisms are in place to monitor and enforce the accreditations of the entities accredited. cDIHES

c. Special Covenants of Accredited Secondary Market Participants (Section 41 of the proposed Order, no provision in the current Order). The proposed Order deems applicable confidentiality provisions to be waived where an accreditation is granted by the BTr to ensure that information sharing can take place between the GS Trading Market and the issuer to enforce the commitments of accredited entities.

d. Market Structure of the Secondary Market (Section 43 of the proposed Order, no provision in the current Order). The proposed Order requires a BTr-accredited GS Trading Market to be duly recognized by the SEC under applicable law, rules and regulations.

e. Requirements for GS Trading Markets (Sections 44-46 of the proposed Order, no provisions in the current Order). The proposed Order requires BTr-accredited GS Trading Markets to have rules and conventions to give effect to its commitments as a GS Trading Market, and provides for the minimum requirements in the following aspects:

i. Trading Facilities — (1) Transaction Modes, (2) Retail Market Structure; (3) Accessibility; (4) Regulatory Environment

ii. Participants — (1) Brokers, (2) Dealers, (3) Qualified Investors

iii. Monitoring Facilities

iv. Price Transparency

v. Liquidity Facilities for Failed Trades Management and to Support Trading Activities — Cash and Securities Liquidity Programs with SRO, Risk Mitigation Mechanisms, Collateral Administration and Management, and Regulatory Approval

vi. Trading Programs that Promote Equality of Access

vii. Settlement Standards — (1) STP, (2) DvP, and (3) clearing authority

viii. Other Capabilities — (1) Business Continuity Plan, (2) Ability and Undertaking to Link with Existing Markets and Payment Systems, and (3) Electronic Interface with RoSS SHECcD