Money Market Placements PDF

MONEY MARKET PLACEMENTS presented by Group 2 Banking and Financial Institution  money market placements Money market placements are low-risk debt instruments that mature in one (1) year or less. Money market investments are ideal for investors who a...

MONEY MARKET PLACEMENTS presented by Group 2 Banking and Financial Institution  money market placements Money market placements are low-risk debt instruments that mature in one (1) year or less. Money market investments are ideal for investors who are looking for short-term placements that will give better yield than a regular savings account. Money market investments are relatively safe and used as parking for excess funds that you might use in a year or less  money market placements It facilitates the smooth functioning of the economy by providing a platform for participants to meet their immediate cash needs and manage liquidity. How does the money market work? The money market operates through the interaction of various participants, including governments, corporations, financial institutions, and individual investors. Types of Instruments Traded in the Money Market 1 Treasury bills 2 Commercial papers 3 Certificate of Deposit 4 Repurchase Agreements MONEY MARKET PLACEMENTS OF RURAL BANKS Banks shall not accept money market placements from any RB unless the latter presents a certification under oath stating: (a) that it has no overdue special time deposits; that it has no past due obligations with the Bangko (b) Sentral or other government financial institutions; (c) the amount of its current obligations, if any, with said government financial institutions; the amount of its total outstanding money market placements. However, (d) in no case shall such banks sell receivables to RBs without recourse. Bank's special services provide essential financial solutions that cater to the needs of corporate clients, institutional investors, and high-net-worth individuals. Banks offer these placements as part of their suite of specialized services designed to manage liquidity, enhance returns, and provide secure investment options.  Bank's special services provide several benefits 1 Liquidity: They are short-term investments, usually ranging from a few days to a year, offering quick access to funds. Low Risk: Money market instruments are generally low- 2 risk, as they are often issued by governments or highly rated corporations. 3 Steady Returns: Although they offer lower returns than riskier investments, they provide steady and predictable interest rates.  BSP Provisions SALES AND MARKETING GUIDELINES FOR FINANCIAL PRODUCTS a BSFI shall have appropriate policies, procedures and controls in place to ensure the suitability of the products being offered to its clients. It shall ensure that (1) the client understands the nature of the transaction and the risks involved and (2) the transaction meets the client’s financial objectives and is aligned with the client’s risk tolerance. It shall also provide sufficient, accurate and comprehensible information about the products, including inherent risks, in a clear and balanced manner to enable its clients to make informed financial decisions.  Transfers of funds When investors or businesses engage in money market placements, they often need to transfer funds between accounts or institutions. Banks facilitate this as part of their special services, Debit from Investor’s Account: The financial institution debits the specified amount from the investor’s account. This can be done through Bank Account Transfer, Wire Transfer, Clearing and Settlement  BSP Provisions ISSUANCE AND OPERATIONS OF ELECTRONIC MONEY It is the policy of the Bangko Sentral to foster the development of efficient and convenient retail payment and fund transfer mechanisms in the Philippines. The availability and acceptance of e-money as a retail payment medium will be promoted by providing the necessary safeguards and controls to mitigate the risks associated in an e-money business. foreign exchange foreign exchange (FX) involves the conversion of one currency into another for investment purposes, especially when money market instruments are denominated in foreign currencies. This process is tightly regulated by the Bangko Sentral ng Pilipinas (BSP) to ensure transparency, security, and alignment with the country’s foreign exchange policies  BSP Provisions A EXPANDED FOREIGN CURRENCY DEPOSIT UNIT INVESTMENTS IN FOREIGN CURRENCY DENOMINATED STRUCTURED PRODUCTS Policy statement. The Bangko Sentral encourages banks to diversify their EFCDU investment portfolios in order to stabilize earnings, control maturity mismatches and minimize over concentration of exposures.  BSP Provisions A EXPANDED FOREIGN CURRENCY DEPOSIT UNIT INVESTMENTS IN FOREIGN CURRENCY DENOMINATED STRUCTURED PRODUCTS Scope EFCDUs of UBs and KBs without expanded derivatives authority may invest, for their own account, in foreign currency-denominated structured products issued by banks and SPVs of high credit quality: Provided , That the revenue streams of such products may only be linked to interest rate indices and/or foreign exchange rates other than those that involve the Philippine Peso: Provided, further, That the minimum all-in return of such investments may not be lower than zero. For purposes of this Section, structured products do not include asset backed securities, credit-linked notes and other similar instruments  BSP Provisions Guidelines for Virtual Currency (VC) Exchanges the Bangko Sentral to provide an environment that encourages financial innovation while at the same time ensure that the Philippines shall not be used for money laundering (ML) or terrorist financing (TF) activities and that the financial system and financial consumers are adequately protected. The Bangko Sentral does not intend to endorse any VC, such as bitcoin, as a currency since it is neither issued or guaranteed by a central bank nor backed by any commodity.  Clearing system is the process of transmitting, reconciling and, in some cases, confirming payment orders prior to settlement, and the establishment of the final obligations for settlement.  BSP Provisions Adoption of National Retail Payment System (NRPS) Framework The National Retail payment system Framework (NRPS) framework covers all retail payment-related activities, mechanisms, institutions and users. lt applies to all domestic payments which are denominated in Philippine Peso (Php), and which may be for payments of goods and services, domestic remittances or fund transfers.  The clearinghouse stands between the buyer (investor) and the seller (issuer or another investor) to ensure the transaction is completed correctly. It matches the buy and sell orders from different market participants, ensuring both sides agree on the terms, Once the trade is matched and validated, the clearinghouse coordinates the transfer of funds and the money market instrument. This ensures the buyer receives the instrument and the seller receives the funds.  BSP Provisions CHECK CLEARING OPERATIONS Banks shall observe the clearing procedures in accordance with the PCHC Clearing House rules and regulations for the clearing of checks including the Banks’ responsibility to verify the accuracy of reports and directly communicate with the concerned party regarding any clearing discrepancy or error noted in the course of proving their incoming/outgoing clearing items. Window clearing systems are typically used for real-time or same-day settlement of financial transactions, including money market placements. These transactions are often processed outside of the usual interbank clearing cycles, making window clearing essential for immediate or near- immediate liquidity  BSP Provisions SETTLEMENT OF INSTANT RETAIL PAYMENTS A clearing participant or its settlement sponsor shall maintain with the Bangko Sentral a demand deposit account (DDA) which shall be used specifically for the settlement of the clearing participant’s net clearing obligations arising from instant retail payments;  BSP Provisions SETTLEMENT OF INSTANT RETAIL PAYMENTS Should the clearing participants determine that the funds in their DDAs for instant retail payments are excessive after taking into account their highest potential clearing obligations, the clearing participants shall be allowed to withdraw from their DDAs to enable them to make optimal use of their funds Thank You! PAVIA LACRO BARROGA TIBLAN PAJELA