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Philippines: BSP tightens rules for payment systems
MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has raised the bar anew for designated payment systems (DPS) amid the surge in digital transactions due to mobility restrictions brought about by the pandemic.
BSP Governor Benjamin Diokno said the Monetary Board issued Resolution 1132 last Aug. 26, approving the adoption of the Principles for Financial Market Infrastructure (PFMI) pursuant to the Payment System Oversight Framework (PSOF) and Republic Act 11127 or the National Payment Systems Act (NPSA).
“In line with the thrust of ensuring the safety, efficiency and reliability of the NPS, the BSP shall require the adoption of the PFMI standard by the DPS, pursuant to the PSOF, and the NPSA,” Diokno said.
The circular requires a DPS, whether a systemically important payment system (SIPS) or prominently important payment system (PIPS), to design and conduct its operations consistent with the PFMI.
Each DPS is expected to demonstrate adequate governance and risk management arrangements covering areas including access of participants to the system, management of liquidity, credit, operational, settlement and general business risks, efficiency and transparency.
The circular also sets forth expectations for critical service providers (CSPs) defined under the PSOF. It provides guidance and helps ensure that operations of a CSP are held to the same standards as that of the DPS.
Developed by the Bank for International Settlement and the International Organization of Securities Commissions, the PFMI comprise of international standards for financial market infrastructures such as payment systems, central securities depositories, securities settlement systems, central counterparties, and trade repositories.
It is a set of international standards designed to strengthen financial market infrastructures and make them more resilient to financial crises and participant defaults.
While the standards are principle-based, the PFMI incorporate, in some cases, specific minimum requirement to achieve the same base level for risk management across different financial market infrastructures and countries.
The BSP said the mandatory adoption of the PFMI standard shall be required for DPS, including its participants, to the extent of the roles being performed by said participants in the DPS.
“Aligned with this, the BSP shall use the PFMI assessment technology to determine the observance of relevant principles by the DPS as well as identify possible risks and induce changes in the NPS,” Diokno added.
According to the central bank, the adoption of the standard is very timely given the surge of digital payments in the country, as it ensures payment systems to have safeguards in place that are at par with global practices.
The BSP Monetary Board has designated the Peso Real-time Gross Settlement System operated by the central bank using PhilPaSSplus as the country’s first DPS last July.
Source: https://www.philstar.com/business/2021/09/16/2127365/bsp-tightens-rules-payment-systems