The Bankers Association of the Philippines (BAP) has voiced its full support for the Bangko Sentral ng Pilipinas’ (BSP) move to establish a dependable yield curve based on actively traded securities, aimed at stimulating high-volume transactions within the market.
In a statement, the BAP acknowledged that compared to other markets in the region, the Philippines still strives to develop a more robust and dynamic securities market.
At present, the market actively trades 5-year, 7-year, and 10-year securities, with strong market interest observed in the 12-year, 15-year, and 20-year bonds. These securities play a crucial role in providing the banking industry with the necessary foundation for pricing various bank products, including loans, mortgages, investments, and marking-to-market of banks’ portfolios.
The BAP said the Philippine market benefits from a globally recognized benchmark methodology that is employed in more than 100 jurisdictions.
The Philippine BVAL benchmarks, currently administered by the BAP as a Securities and Exchange Commission (SEC)-licensed administrator, maintain their credibility by effectively addressing scenarios involving limited market activity.
The BAP ensures compliance with the International Organization of Securities Commissions (IOSCO) principles for financial benchmarks, which have been accepted by the Philippine board of accounting professionals and supported by regulatory issuances from the BSP and SEC.
It reiterated its commitment to actively collaborate with regulators to ensure that any future benchmark implementation undergoes comprehensive system-wide testing, accreditation, and widespread acceptance among all stakeholders in the market.