BSP, SEC agree to define functions

The Securities and Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas are set to sign a memorandum of agreement (MOA) delineating the regulation of securities issued by banks and other financial institutions.

The final draft indicates that the MOA would reconcile the provisions of the New Central Bank Act, the General Banking Law and the Securities Regulation Code.

Under the proposed agreement, the BSP would focus its regulatory powers on its primary mandate to provide policy direction in the area of money, banking and credit while the SEC would stick to securities regulation.

However, since banks and other financial institutions are no longer exempt from registration requirements under the Securities Code, the BSP would regulate only the securities issued by banks, except their own shares of stocks which would be registered and regulated by the SEC.

Under the agreement, the SEC would have to register/license universal banks before these are allowed to undertake the function of underwriting of securities, as well as register/regulate securities brokerage and dealership activities of banks and their subsidiaries.

While the SEC shall register/regulate all investment houses, investment companies and financing companies, the BSP would regulate and supervise their quasi-banking, fund management and trust functions.

The BSP would regulate and supervise fund management and trust functions of banks and trustee banks of trust funds deposited by pre-need companies but these would be subject to audit by the SEC.

The agreement also provides for a mechanism where the SEC would report to the BSP all financial institutions found to be engaging in banking, quasi-banking, trust or investment management functions without the necessary license from the BSP.

On the other hand, the BSP would report to the SEC any finding of violation of the provisions of the Securities Code or the Corporation Code by banks and other financial institutions regulated by BSP. – Des Ferriols