The Central Bank of the Philippines amended its foreign exchange regulations, revising the Manual of Regulations on Foreign Exchange Transactions and related bank reporting requirements to tighten controls on Philippine peso FX derivatives and streamline documentation through expanded electronic submission. The changes reinforce that spot FX purchases and FX derivative hedges tied to a specific underlying transaction cannot exceed the amount of that underlying exposure at any point in time. Authorized agent banks (AABs) may transact FX derivatives with customers only for hedging eligible FX exposures or covering funding requirements, with notional amounts capped by the underlying exposure. Customers can no longer purchase FX for exposures already fully covered by deliverable FX derivatives, while re-entry into a non-deliverable contract for the same underlying after a cancellation or pretermination is restricted to cases where the underlying’s original financial terms have changed. The framework also sets documentary standards and settlement rules, including peso settlement for non-deliverable FX derivatives with residents, tenor limits tied to the underlying exposure (with FX swaps not subject to a tenor restriction), and updated reporting that includes revised cancellation and pretermination reports and separate reporting of peso NDFs booked for a bank’s own account, alongside a new quarterly certification that such own-account peso NDF activity was for legitimate economic purposes. The amendments take effect 15 banking days after publication. Transition provisions allow continued use of existing report forms and processes for certain reports immediately upon effectivity, with revised reports and the new quarterly certification commencing six months after effectivity, while additional issuances will set out detailed procedures for electronic submissions and the implementation of the online system for inward investment registration filings.
Central Bank of the Philippines 2025-04-11
Central Bank of the Philippines revises peso FX derivatives rules and adds quarterly compliance certification for NDF activity
The Central Bank of the Philippines has amended foreign exchange regulations, tightening controls on peso FX derivatives and streamlining documentation via expanded electronic submission. Authorized agent banks can only transact FX derivatives for hedging eligible exposures, with notional amounts capped by the underlying exposure. The framework includes updated reporting requirements, documentary standards, and settlement rules, with specific provisions for peso settlement and tenor limits.