Circular # 344 - Short-term deliverable forward contracts with non-residents

1. The underlying transaction for each short-term deliverable foreign exchange (FX) forward contract should be a BSP-registered foreign investment in government securities for which a Bangko Sentral Registration Document (BSRD) has been issued;

2. The actual delivery/settlement of the forward contract shall coincide with the date of the repatriation of the BSP-registered investments;

3. The value of the forward contract shall not exceed the foreign currency equivalent of the maturity value/net proceeds of the BSP-registered investments computed based on the agreed forward exchange rate;

4. The repatriation and remittance out of the country of the BSP-registered investments must comply with the documentary requirements under existing BSP rules; and

5. The Bank concerned shall submit to the Department of Commercial Banks (DCB) I or II, a weekly report of daily executed forward contracts to sell FX to non-residents with no full delivery of principal, including cancellations, rollovers/renewals thereof, within two (2) banking days after end of reference week, using the attached prescribed form duly signed by the Head of Settlements/Treasury Operations or by an officer of equivalent rank and countersigned by the Compliance Officer.

Delayed, incomplete or erroneous reports shall be subject to a fine of PHP1,200 a day for each day of violation until the correct report is submitted to the appropriate supervising and examining Department.

This Circular shall take effect immediately.