REPUBLIKA NG PILIPINAS.
KAGAWARAN NG PANANALAPI
KAWANIHAN NG INGATANG-YAMAN
(BUREAU OF THE TREASURY)
Intramuros, Manila
TREASURY CIRCULAR NO. _1_- 2018
FEB 1.9 2018
IMPLEMENTING GUIDELINES FOR THE ENHANCED GOVERNMENT
SECURITIES ELIGIBLE DEALERS PROGRAM
4. PURPOSE
This Circular defines the guidelines for the implementation of the Enhanced
Government Securities Eligible Dealers ("SED") Program (the “Program’) of the
Bureau of the Treasury (“BTr’)
2. BACKGROUND
As part of its continuing efforts to develop the domestic government securities
(‘GS’) market, the BTr has recognized ten (10) existing GSEDs as GSED-Market
Makers (GSED-MM) following certain evaluation criteria and ranking provided
hereunder.
The Program is intended to: 1) improve the performance of the primary debt
market; 2) increase the liquidity and depth of the secondary market thereby
reducing the liquidity premium and government's funding costs; and 3) distinguish
existing GSEDs based on their capacity and commitment to support the
development of the GS market. Through this Circular, the BTr shall assign
obligations and privileges that are appropriate to existing GSEDs and the GSED-
Market Makers.
3. EVALUATION CRITERIA FOR GSED-MARKET MAKERS
a. All GSEDs shall be evaluated using the following criteria and will be ranked
accordingly.
Criteria
Bond Volume |
Bill Volume.
| Auction Participation
__ Bid Efficiency
Volume of Trades
Number of Trades
Qualitative Support to BTr vy,
Primary Market
Secondary Market
“Ayuntamiento Building, Cabldo Street comer A. Soriano J. Avenue, Intramuros, Manila 1002b. Primary Market criteria are defined as follows’
i. Bond Volume refers to the total award of a GSED (as percentage of total
award) in Treasury Bond auctions of the BTr at a given period.
ii. Bill Volume refers to the total award of a GSED (as percentage of total
award) in Treasury Bill auctions of the BTr at a given period.
iii, Auction Participation refers to the number of regular Treasury Bond and
Treasury Bill auctions the GSED has submitted at least one (1) bid,
regardless of award.
iv. Bid Efficiency refers to the measure on how the weighted average of the
bids submitted by a GSED that are above the weighted average/coupon rate
for a particular auction deviates from the weighted average/coupon rate
awarded
c. Secondary Market criteria are defined as follows:
i. Volume of Trades refers to the percentage share of total of the volume of
trades (buying or selling) of the GSED for Treasury Bonds (including Retail
Treasury Bonds) and Treasury Bills. This includes the figures for broker
and/or dealer arm/s of the GSED. Frequency of data used is on a monthly
basis.
ii, Number of Trades refers to the percentage share of total number of trades
(buying or selling) of the GSED for Treasury Bonds (including Retail
Treasury Bonds) and Treasury Bills. This includes the figures for broker
and/or dealer arm/s of the GSED. Frequency of data used is on a monthly
basis
d. The Qualitative criterion (i.e., Support to BTr) assesses the cooperation and
support of GSEDs in BTr's capital market development initiatives, special GS
issuances and transactions, and human resource development activities,
among others.
4, RECOGNITION OF GSED-MARKET MAKERS
a. GSED-Market Makers are GSEDs with specific obligations and privileges
outlined in Sections 5 and 6 hereof which are recognized by the BTr as such
following the above evaluation criteria and ranking.
b. Using one (1) year’s worth of data, the BTr shall identify on an annual basis ten
(10) GSED-Market Makers. The BTr reserves the right to revisit the number of
GSED-Market Makers as it may deem fit. VYc. GSEDs not recognized as GSED-Market Makers continue to be GSEDs and
shall be subject to the obligations and privileges herein provided.
5. OBLIGATIONS OF GSED-MARKET MAKERS
GSED-Market Makers shall:
a. Submit at least one (1) competitive bid for their own account in each scheduled
auction at a minimum volume as agreed with the BTr;
b. Provide liquidity to the GS market by quoting effective two-way prices to
customers;
c. Set up an electronic page accessible to the BTr with a third party information
service provider (as agreed with the BTr) where interdealer and customer two-
way quotes will be posted and updated;
d. Contribute to at least a 2% share of total secondary market trading volume of
GS for a given quarter;
. Sign the Global Master Repurchase Agreement (GMRA) with the BTr and with
other GSED-Market Makers for dealing in repo transactions; and
f. Support capital market development initiatives/programs of the BTr.
6. PRIVILEGES OF GSED-MARKET MAKERS
By performing the foregoing obligations, the GSED-Market Makers are entitled to
the following privileges:
a. Submit both competitive and non-competitive bids in the primary auction of
regular issues subject to a maximum of ten (10) bids;
b. Participate in the BTr’s Tap Facility under the terms prescribed in Annex A;
¢. Receive due consideration in terms of participation in special issues and liability
management transactions of the BTr;
d. Participate in the market consultations conducted by the BTr;
e. Enter into a repo transaction with other GSED-Market Makers and GSEDs
covered by the GMRA and governed by the operating guidelines and other rules
and regulations of the GS Repo Program; and Vvf. Pursuant to its market making obligation, enter into a repo transaction with the
BTr to potentially source GS on a last resort basis under the terms as may be
agreed between the parties.
7. OBLIGATIONS OF GSEDS
GSEDs shall:
a. Submit at least one (1) bid, competitive or non-competitive, in fifty percent
(50%) of regular auctions; and
b. Support capital market development initiatives/programs of the BTr.
8. PRIVILEGES OF GSEDS
a. By performing the foregoing obligations, GSEDs are entitled to submit both
competitive and non-competitive bids in the primary auction of regular issues
subject to a maximum of ten (10) bids; and
b. Enter into a repo transaction with other GSED-Market Makers and GSEDs
covered by the GMRA and governed by the operating guidelines and other rules.
and regulations of the GS Repo Program.
9. MONITORING AND EVALUATION OF GSED-MARKET MAKERS AND GSEDS.
a. The BTrwill conduct regular monitoring of compliance by GSED-Market Makers
and GSEDs to their obligations.
b. For GSED-Market Makers, the BTr will conduct periodic surveys to their clients
to check whether two-way prices are effectively quoted
c. The BTrwill send out monthly reports regarding performance of GSED-Market
Makers and GSEDs in the primary and secondary market.
d. Performance will be evaluated every quarter and results thereof including
ranking will be made available for the reference of the GSED-Market Makers.
and GSEDs.
e. The evaluation criteria in Section 3 hereof and the number of GSED-Market
Makers as provided for in Section 4(b) may be revised by the BTr at the end of
each year.10. EFFECTIVITY
This Circular shall take effect immediately.
ROSALIA V. DE LEON
Treasurer of the PhilippinesANNEX A
GUIDELINES FOR THE SALE OF GOVERNMENT SECURITIES
THROUGH THE TAP FACILITY
The Tap Facility shall be opened, upon the discretion of the BTr, immediately
after a Treasury Bond or Treasury Bill auction. Opening of the facility shall be
announced via the BTr website, auction platform or through a third party
information service provider.
Only the ten (10) GSED-Market Makers will be able to access the Tap Facility,
The amount on offer under the Tap Facility shall not exceed the volume offered
in the immediately preceding auction
Applicable yield rate shall be announced by the BTr.
Minimum amount of placement shall be Ten Million Pesos (PHP10,000,000.00)
and any excess thereof shall be in multiples of One Million Pesos
(PHP 1,000,000.00)
Placements under the Tap Facility shall be made through the ADAPS or its
successor system from 2 pm up to 4 pm only on the same day of the auction.
The BTr shall announce results on or before 5:00 pm on the same day.
Awarding of placements shall be on a pro-rata basis.
Terms of the issue (e.g., settlement and issue date) shall be similar to the
auctioned securitylies, Vv