The Bangko Sentral ng Pilipinas (BSP) has approved sweeping reforms to foreign exchange (FX) regulations aimed at enhancing risk management options for market participants and supporting the development of the country’s capital market.
Through BSP Circular No. 1212, the Monetary Board has expanded the list of allowable FX hedging instruments involving the Philippine peso. The revised rules now include non-deliverable swaps, non-deliverable cross-currency swaps, and FX options—on top of existing instruments like FX forwards and swaps.
The changes reflect the BSP’s policy thrust to provide individuals and businesses—such as overseas Filipino households, exporters, and importers—greater access to tools that mitigate risks from exchange rate and interest rate fluctuations.
In addition to broadening the instrument set, the BSP has lifted the requirement for deliverable FX forwards to match the maturity of the underlying FX exposure. Under the amended rule, these instruments may now have equal or shorter maturity periods, allowing for more flexible hedging strategies when matching derivatives are not available.
The circular also clarifies regulatory expectations for banks dealing in FX derivatives on their own behalf and when transacting with clients. It introduces a digital platform for registering foreign investments, streamlining compliance and enhancing transparency.
Banks will have a six-month transition period to adjust systems and processes in line with the new guidelines. Circular No. 1212 will take effect 15 banking days after its publication in the Official Gazette or a newspaper of general circulation.
