Bangko Sentral boosts settlement system rules
The Bangko Sentral ng Pilipinas (BSP) is proposing new rules to clarify the circumstances under which participants in the country’s settlement system could face suspension or termination, outlining specific offenses and the rationale behind such actions.
Stakeholders have until Dec. 12 to comment on a draft circular that would amend the provisions covering participants of the peso Real-Time Gross Settlement (RTGS) system.
The country’s lone peso RTGS system is the PhilPaSSplus platform, which provides instant transaction-by-transaction settlement. It is owned and operated by the BSP.
Under the proposed rules, suspension will mean the “temporary cessation of participation in the payment system.”
A participant’s settlement account and clearing member ID will be deactivated in such a case.
Suspension may be triggered by penalties resulting from disciplinary proceedings. A participant could also be suspended if it is placed under insolvency, bankruptcy or rehabilitation.
The BSP said suspensions could also serve as a “preventive measure” to protect the interests of the payment system or its participants while addressing issues that could compromise the orderly functioning of the system. Access may be restored once the BSP determines that the underlying risks have been resolved, the draft document read.
Exit mechanism
Meanwhile, a participant may also be terminated from the payment system if they choose to voluntarily withdraw. This could include surrendering secondary licenses, such as banking permits, which would disqualify an entity from accessing the platform.
Voluntary withdrawal is subject to BSP approval, and participants under disciplinary proceedings will not be allowed to submit a formal withdrawal request.
Involuntary withdrawal may occur once a termination penalty is deemed final and has been imposed on a participant.
The closure of operations by a decision of the Monetary Board or any lawful authority could also disqualify an entity from using the system.
Access may likewise end in the case of mergers or consolidations, with the merged or acquired entity losing participation following transaction approval.
For financial market infrastructures and clearing switch operators, the BSP said the suspension or termination of their access to the payment system must be tackled on a case-by-case basis.
“The Bangko Sentral shall issue an advisory on the suspension or cessation of participation of any of the above-mentioned participants,” the proposed circular read.
