RULES ON SETTLEMENT OF TRANSACTIONS INVOLVING INTERBANK LOANS AND GOVERNMENT SECURITIES UNDER REPURCHASE AGREEMENTS WITH THE BANGKO SENTRAL NG PILIPINAS (BSP)

The Monetary Board, in its Resolution No. 1813, dated October 13,
2000, approved the following amendments to the rules on settlement of
transactions involving interbank loans and government securities under
repurchase agreements with the Bangko Sentral ng Pilipinas (BSP).

Settlement Procedures for Interbank Loan Transactions and
Purchase and Sale of Government Securities under Repurchase Agreements
with the Bangko Sentral ng Pilipinas (BSP). Interbank loan
transactions (call and term) among banks and non-bank financial
intermediaries performing quasi-banking functions (NBQBs) and purchase
and sale of government securities under repurchase agreements (GS/RP)
between and among banks and NBQBs and BSP in connection with the
latter’s Open Market Operations shall be settled gross, on a
trade-for-trade basis and with finality subject to the availability of
balances in the deposit reserves maintained by banks in the BSP in
accordance with the following procedures:

1.         The lender, in the case of lending/borrowing and
purchaser in GS/RP transaction, and the borrower, in the case of
collection/repayment and repurchaser in a GS/RP transaction, should
transmit an IBCL-MIPs (System) Fund Transfer Instructions (Instruction)
to the Philippine Clearing House Corporation (PCHC) which shall forward
the transaction electronically to BSP. Each transacting party shall use
its confidential ID and password to activate the System and
initiate/authorize its transaction. The electronic debit instruction
shall undergo System authentication by the PCHC and BSP. Authentication
confirms that the Instructions contain the proper approvals from
authorized officers of the originating institution.

2.         BSP shall settle in the deposit reserves maintained by
banks and NBQBs in the BSP the individual interbank loan and GS/RP
transaction within the following settlement time frame:

From 9:00 AM to 9:45 AM

Only lending/borrowing to cover shortfall in deposit reserves
with BSP arising from the results of the AM Returned Checks and Other
Clearing Items (COCI) Clearing conducted pursuant to Circular 214,
valued on the same date as the date of original presentation of the COCI
to PCHC and BSP regional clearing centers (RCCs).

From 10:00 AM to 4:00 PM

All interbank loan transactions and GS/RP transactions to be
given value on the date of the loan grant/repayment and GS
purchase/repurchase.

From 5:30 to 6:30 PM

Only lendings/borrowings to cover the shortfall in reserve
deposits with BSP arising from losses arising from the regular afternoon
check clearing to be given value on the date of the loan
grant/repayment and GS purchase/repurchase.

3.         BSP is not obliged to effect the transfer of funds in
the deposit reserves maintained by banks and NBQBs in the BSP if there
is no sufficient balance in said deposit reserves of the transacting
party whose account shall be debited in the BSP books.

This Circular supersedes, amends or modifies provisions of
existing circulars, regulations and agreements that are inconsistent
herewith.

This Circular shall take effect on December 6, 2000.

Adopted: 7 Nov. 2000

FOR THE MONETARY BOARD

(SGD.) RAFAEL B. BUENAVENTURA
Governor