The Monetary Board, the policy-making body of Bangko Sentral ng Pilipinas, approved the risk management guidelines on investment activities of banks and quasi-banks.
The guidelines aim to set out the regulatory expectations in managing risks arising from investment activities considering the exposures of banks/QBs to a wide range of instruments, which include bonds issued by emerging economies, complex structured products and other tradable assets.
“The issuance emphasizes the need to conduct an appropriate due diligence prior to making an investment and on an ongoing basis,” the BSP said.
“The conduct of due diligence reviews for new plain vanilla instruments acquired for trading or short-term profit taking (i.e., to be held in the trading book) may be made at the option of the bank/QB as long as the resulting positions from the investments are still within the set limits,” it added.