BSP tightens grip

The Bangko Sentral ng Pilipinas (BSP) has tightened the rules on the treasury operations of banks and other financial institutions amid the uncertainties in the global financial market brought about by the impending interest rate hike in the US and the economic slowdown in China.

The BSP said the Monetary Board approved the treasury regulations on the treasury activities of BSP-supervised financial institutions as well as the changes to the fit and proper rule.

The regulator said the new rules set the central bank’s expectations of BSP-supervised financial institutions’ management of operational risk arising from their treasury activities.

The BSP believes that lapses in addressing operational risks from treasury activities could bring about significant losses and exposures to compliance and reputational risks.

 “Owing to the significant role played by the treasury function in pursuit of a BSP supervised financial institutions’ strategic objectives, the guidance underscores the need to act ethically and with utmost integrity, especially in the context of their active participation in financial markets,” the central bank said.

The new regulations, the BSP said, highlights the role played by the board of directors and senior management in setting the tone at the top and establishing standards of good behavior including adherence to market conduct rules.

The regulator added BSP-supervised financial institutions should have codes of conduct specific to the treasury unit in addition to any institution or industry-wide codes that personnel adhere to as well as policies and procedures to ensure the provisions of the code are upheld.

Under the new rules, the BSP said supervised financial institutions should distinguish between the difference functions performed by a treasury unit and should segregate conflicting duties.

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