Duterte to non-bank gov’t entities: Create structure for forex product transactions

FILE PHOTO: A woman exchanges Philippine pesos for dollars at a money-changers stall in Manila on November 5, 2010. AFP PHOTO / JAY DIRECTO

MANILA, Philippines — President Rodrigo Duterte has ordered non-bank government entities to create frameworks for foreign exchange derivatives transactions.

In signing Administrative Order No. 48, the President noted, “[T]here is a need to institute sufficient monitoring safeguards and risk management mechanisms in FX derivatives transactions to protect the National Government’s fiscal and economic interests in non-bank government entities.”

AO No. 48 was approved on May 24 and its copy was distributed to the media on Thursday.

Under the order, the Department of Finance (DOF) is tasked to oversee all foreign exchange derivatives activities of all non-bank government entities such as the Government Service Insurance System, Social Security System, and the Philippine Health Insurance Corporation.

Meanwhile, non-bank government entities are instructed to undertake approval of investment governance frameworks and quarterly reports.

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Covered entities should formulate respective investment governance frameworks, and submit to the DOF a report on foreign exchange derivatives outstanding at the end of every quarter, the order said.

The finance secretary should promulgate implementing guidelines to include the content of the investment governance frameworks of covered entities, it also said.

Administrative Order No. 48 will take effect immediately after its publication in the Official Gazette or in a newspaper of general circulation.