Friday, 19 June 2009Makati Shangri-La Hotel

BSP Proposed Changes in Clearing Rules

Chamber of Thrift BanksGeneral Membership Meeting

BSP Proposed Changes in Clearing Rules

Objectives

Minimize/Eliminate BSP Settlement Risk

Level Playing Field for TB and KB

Lay Groundwork for Reduction of Float Days

BSP Proposed Changes in Clearing Rules

Original BSP Proposal

All Banks to Go on Next Day Value for Clearing Credits

Mandatory Overdraft Clearing Lines

Risk Based Credit Evaluation

Current BSP Proposal

BSP Proposed Changes in Clearing Rules

Current Clearing Time Highlights

D + 0 4:30PM Outward Clearing ECS Cut-off D+0

4:45PM Results of Outward Clearing ECS Available

5:00PM Check Document Exchange Cut-off

5:45PM Completion of BSP Treasury RP & IBCL for Liquidity and Reserve/Shut down of PhilPass for D+0

12:00PM – 2:00AM (D +1)

Completion of Check Document Exchange

D + 1 7:30AM ECS of D+0 Morning Returns Cut-off (Value D+0)

7:45AM Results of Morning Returns ECS available

7:45AM– 8:45AM BSP Treasury RP & IBCL for Losses in AM Returns

D + 1 4:30PM Outward Clearing ECS Cut-off D+1

BSP Proposed Changes in Clearing Rules

Changes in Clearing Timeline

D + 1 7:30AM ECS for D+0 Mandatory Returns ECS for Unfunded Checks of D+0 for Value D+0

D + 1 4:30PM ECS for Outward Clearing and Technical Returns of D+0 Only for Value D+1

BSP Proposed Changes in Clearing Rules

Impact of Changes

Mandatory PM Funding of Bank DDA Based on Clearing Results of D+0 – Unfunded Bank’s DDA may Result in Unwinding of Bank’s Clearing Items

Incoming Returns (Due to Insufficiency of Customer Funds) will Result in Adjustment of Bank’s DDA of D+0 Done AM of D+1 with Value D+0 Due to Netting Effect of Unfunded Returns

BSP Proposed Changes in Clearing Rules

How Changes May Be Accomplished

On Line Operations

Centralization of Clearing Operations in Manila

Use of ECS Data in Early Determination of Unfunded Items

Fast Determination of Thrift Banks NOW Accounts’ Unfunded Items

BSP Proposed Changes in Clearing Rules

Implication - Customers

Education on Impact of Changes on Account Handling

Funding of Accounts cannot be on a Catch Up Mode

No Client Selection of which Items to Return

Centralized Clearing will Cut Float Period for Regional and Inter-regional Checks

BSP Proposed Changes in Clearing Rules

Implication - Banks Same Day Clearing Credit for Cir 163 Thrift Banks

Centralized Clearing will Cut Float Period of Regional and Inter-regional Checks

Credit Implication of Bills Purchase Lines

Time Pressure for Clearing Operations

Higher Efficiency in Branch Operations

Treasury Management of Funding Value Dated Returns

Income Implications on Changes in Handling of Returns

Cost Implications on Centralization

Reputational Risk of Unwinding

Target Implementation DateTarget Implementation Date

January 31, 2010January 31, 2010

BSP Proposed Changes in Clearing Rules

Open ForumOpen Forum

BSP Proposed Changes in Clearing Rules