Nina Lasala, former national treasurer who was forced to resigned for her opposition to the Bangko Sentral ng Pilipinas’ Third Party Custodian regulations, has turned to blogging to give her side on the issue. You may read her blog at http://lowerphildebt.blogspot.com/
Meanwhile, below is a copy of a manifesto by Bureau of Tresury officials and employees. sent to me by Ardythe :
While it is a pleasure to communicate various issues with the general public, it is unfortunate that this manifesto is about dissatisfaction and dismay. Much to our desire to avoid taking the subject of this humble piece to the attention of everybody, we, officials and employees of the Bureau of the Treasury (BTr) could not help submitting this due to the urgency of the matter and its serious effect on the capital market in particular and the whole national economy in general.
In case the public does not know it yet, we would like to inform all women and men from all walks of life that the Bangko Sentral ng Pilipinas (BSP) is divesting the BTr of the electronic record of scripless debt of the republic. Ruled as legal by the Department of Justice, the divestment is in favour of the fixed income exchange (FIE) and third party custodians comprising of six big boys in the banking industry — five foreign banks (HSBC, Citibank, etc.) and one local bank (BPI). (One day after the ruling, the DOJ secretary washed hands saying the BTr may appeal.)
It might as well be told that with the transfer of the government’s fiscal agency function to the BTr from the defunct Central Bank of the Philippines by virtue of RA 7653 (New Central Bank Act), the Philippine financial market witnessed the advent of scripless securities. This ushered in a dramatic shift from paper certificates of Treasury Bills and Treasury Bonds to scripless (or paperless) electronically-auctioned and electronically-recorded government debt. Through scripless securities the government did away with the safekeeping, inventory, handling, transporting, and disposal of physical treasury certificates. The government saves big amount of money through scripless securities.
It is imperative for government to retain its own record of debt as basis for service and redemption. Relegating this record to private parties such as FIE (meaning “shame” in the dictionary) and third party custodians is dereliction from sovereign duty. With this, the BTr saw to it that the electronic systems of auctioning (ADAPS — Automated Debt Auction Processing System) and recording government debt (RoSS — Registry of Scripless Securities) are powerful and have very great capacity to accommodate individual accounts and ready for real time gross settlement. Moreover, the systems reduce international securities identification number (ISIN) in the market for easy trade and pricing, a welcome development for convenient securities trading in the domestic and foreign markets. But all of these gains would come to nothing with BSP’s imprudent move, which they call capital market reform. How can a reform be called as such when it is retrogressive, when it will just take the capital market back to the era of private sector schemes that have defrauded many? It was before ADAPS and RoSS that multiple sales of securities happened (1993), depriving the government of so much fund that was paid in redeeming same securities sold several times, such fund loss a telling blow to the national budget. But with the innovative systems installed at the BTr, the Treasury put an end to recurring money market scams, risks and inefficiencies in trade, thereby considerably reducing government’s cost of borrowing.
And here come the FIE and third party custodians bent on implementing a substitute for the systems operating at the BTr for almost 10 years now, systems that were built by our very own and beloved BTr, harnessing and mustering the intellectual and physical resources of its officials and employees without even the slightest help from the BSP. Granting but not admitting that the proposed system of BSP etal is at par with ADAPS and RoSS, the cost it would entail the government to shoulder is beyond justification. Since securities dealers to be served by the FIE and third party custodians have to pay the necessary fee of about P32 billion per month (based on P2 trillion domestic debt) against RoSS’ fee of P700 thousand per month, they (dealers) have no other recourse but to pass the imputed cost on the government in the form of higher bids at every auction of treasury bills and treasury bonds.
And yet the BSP is calling those opposing the custodianship scheme as defender of the status quo, insulting the sacred battle cry of both historical and contemporary political protesters. But we agree and even enjoy to be called by that euphemism because we are indeed defending the present status of RoSS and ADAPS – efficient, accurate, safe and economical. One final thing is sure. While the third party custodians are “executively” salivating as they reap the fruits of their opportunism, the people are being subjected to so much suffering and miseries, victims of the harsh policy outcome of the whole deceptive undertaking.