This launch follows the introduction of updated International Swaps and Derivatives Association (ISDA) definitions on Nov. 15, which feature the Philippine Overnight Reference Rate (ORR) as a new benchmark. The ORR will serve as the main reference for this enhanced market.
Why This Matters
“The enhanced PESO IRS market aims to promote development of yield curves to further support the pricing requirements of short-term credit instruments, such as loans, in the market,” said Paul A. Favila, chair of the BAP Open Market Committee.
“Under this market, the BAP developed the Philippine ORR, which is based on the Bangko Sentral ng Pilipinas’ variable overnight repurchase rate,” he added.
Boost to PH capital market
“Now that the enhanced PESO IRS market has gone live, it is time to work together and ensure that the reforms we have pursued will fulfill their goals,” said Jose Teodoro K. Limcaoco, president of the BAP.
“The launch of the enhanced PESO IRS market, together with the creation of a repo market for government securities, are valuable steps towards growing our Philippine capital market,” he added.
Wide banking support
Sixteen BAP member-banks will serve as market-makers, offering two-way pricing for both short-term and long-term swaps linked to the Philippine ORR.
These banks are BDO, BPI, China Bank, EastWest Bank, Metrobank, Philippine National Bank, Security Bank, Rizal Commercial Banking Corporation, Union Bank, Australia and New Zealand Banking Group, Citi, Deutsche Bank, HSBC, ING Bank, JP Morgan Chase, and Standard Chartered Bank.
In addition to these market-makers, five banks will participate regularly in the market, namely BDO Private Bank, Maybank, Mizuho, MUFG, and SMBC.
Bloomberg will operate as the trading platform for the enhanced PESO IRS market.
