BTr readies shift to non-restricted trading of securities

MANILA, Philippines - The Bureau of the Treasury is ready to transition to a non-restricted trading across all peso-denominated, coupon-bearing government securities on Feb. 2.

This initiative, which would allow government securities to be traded between various entities, regardless of their tax category or classification, in any accredited government securities trading market, was originally scheduled to be implemented last Nov. 24, 2014 but the BTR moved it to Jan. 5 this year.

It was eventually moved to Feb. 2 to allow market players to prepare for the full implementation of a non-restricted trading environment. 

Transfers of the bonds across tax categories would be monitored by a tax-tracking facility that would provide an environment where holders of the bonds belonging to any tax classification would be allowed to transfer the bonds and settle the same between and among themselves.

The tax-tracking facility would compute the appropriate final withholding tax on accrued interest due from a seller for each transaction on the basis of the seller’s holding period.

Securities held by government-owned and controlled corporations (GOCCs) and local government units (LGUs) may be transferred prior to maturity only with GOCCs and LGUs which maintain securities account in the book entry of the BTr.

Tax-exempt institutions currently account for 21 percent of government securities, mostly held-to-maturity.

Finance Secretary Cesar Purisima said the lifting of trading restrictions would allow the BTr to designate or employ facilities or systems that would enhance the existing  capabilities of the Registry of Scripless Securities (RoSS).