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BSP okays new IOU custodianship, registry rules

This will complement existing initiatives to expand investment opportunities for the public and at the same time ensure that their interests are adequately protected.

Joshua Lao

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Monetary authorities on Friday approved the amendments to the securities custodianship and securities registry operations to simplify the licensing process while expanding both the client base and the number of financial institutions that offer the services.

According to the Bangko Sentral ng Pilipinas (BSP), the amendments are part of its commitment to developing the domestic capital market further while beefing up investor protection.

“This will complement existing initiatives to expand investment opportunities for the public and at the same time ensure that their interests are adequately protected,” BSP Governor Benjamin Diokno said.

He explained the move would help bring in more players in the industry while ensuring that only BSP-supervised financial institutions (BSFI) with proper risk management and governance systems and the technology can offer IOU services.

Diokno stressed the enhanced rules would require qualified BSFI to notify the BSP and submit a certification of compliance with the pre-qualification requirements.

“The pre-qualification requirements emphasize the importance of the independence of the securities custodianship operations from the securities underwriting, dealing or brokering operations of the BSFI,” it said.

“The amended regulations also allow BSFI to perform securities custodianship/registry services for a related party provided that appropriate safeguards and controls on related party transactions are adopted to prevent conflict of interest on the said arrangement,” it added.

However, the central bank said the revised rules would provide an option for a securities seller to perform a self-managed securities custodianship arrangement.

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