THE Bangko Sentral ng Pilipinas (BSP) has approved the guidelines on the management of treasury activities by commercial banks to lessen the operational risks arising from said transactions.
In a statement on Monday, the central bank announced that the monetary board, in its meeting in mid-October, approved the regulations on the Treasury activities of BSP-supervised financial institutions (BSFIs), as well as changes to the “fit and proper rules.”
“The new regulations set the BSP’s expectations on BSFIs’ management of operational risk arising from their Treasury activities, as lapses may bring about significant losses and exposures to compliance and reputational risks,” the central bank said.
“Owing to the significant role played by the Treasury function in the pursuit of a BSFIs’ strategic objectives, the guidance underscores the need for BSFIs to act ethically and with utmost integrity, especially in the context of their active participation in financial markets,” the central bank added.
The BSP said that the new regulations is set to place the vital role of management to the board of directors and senior management in practicing and establishing the standards of good behavior, including adherence to market conduct rules.
“BSFIs are expected to have codes of conduct specific to the Treasury unit, in addition to any institution or industry-wide codes that personnel adhere to, and policies and procedures to ensure that the provisions of the code are upheld,” the BSP said.
The regulations also set out a requirement to distinguish between functions performed by a Treasury unit and to segregate conflicting duties such as risk taking and recording, and reconciliation and settlement.
The qualifications for directors and officers were also amended to “explicitly relate the assessment of a person’s integrity and probity to his reputation in the market, as well as his ability to comply with market conduct rules.”
“Noncompliance with the regulators will lead the BSP to deploy the appropriate supervisory enforcement actions, in the manner set out in the BSP Supervisory Enforcement Policy,” the central bank said.