Hi! I am Nina Lasala, former Treasurer of the Philppines. This blog is meant to be an open forum for investors, fellow finance professionals, and other interested parties to discuss the state of Philippine Debt Management.

Tuesday, March 08, 2005

Questions an Investor in Philippine government Securities might want to raise....

RE Circulars 392 and 428 - Questions a Small Investor, Regulator, Government, PDS investor, a GSED, an Accredited Third Party Custodian, Mid-office personnel, Backroom or Support Personnel, Compliance Officer and a BAP member might want to raise ……

A. QUESTIONS OF AN INVESTOR IN GOVERNMENT SECURITIES

1. What added safeguards can I expect to enjoy under this new regime with a 3rd party custodian? Now with BTr Ross , I can check with BTr if my securities account was credited by my GSED. I don’t have to do this everyday and it does not cost me a single cent to make that inquiry. What other types of report rendition do I need?

2. Can you tell me what it will cost me if I will be referred to a Third Party Custodian?

3. Are you telling me that the Third Party Custodians are the better credit risks than government? Or that the Third Party Custodians are the better risks than my bank? Perhaps, I should stop dealing with my bank altogether?

4. Why do I need a Third Party Custodian when my investment is only for Php100,000 at 6% net for 3 months? I heard that the transaction fee for a Third Party Custodian will cost me Php900.00, how about the other charges? Perhaps my GSED took a cut of 1% on a security it bought at 7% that was sold to me at 6%, but that translates to only Php250.00 vs. the Php900.00. What will happen to my earnings?

5. What will executing a Special Power of Attorney in favor of the Third Party Custodian constitute? Why can’t my bank explain what this is all about? Why does someone else have to handle my investment? I used to do it by myself. How come I now have to authorize someone else to act for me?

6. I trust my bank that is why I deal with them, why will I be referred to a total stranger and I am told this is for my protection?

7. Price Transparency? BTr can make prices available via SMS, via my cellphone, how transparent can it get? I am in Mindanao, how can I participate in a fixed income bourse in Manila?

8. Portfolio valuation? I don’t need this, perhaps, the bigger accounts do but BTr will also make available a benchmarking procedure that is more superior than market’s. As a small investor, I usually hold my securities up to its maturity. I don’t trade it, the little I will earn from lending my securities will go to naught .

9. I heard that if I were a Retail Treasury Bond holder, I need not elect a Third Party Custodian, why is this so? There are also foreign Insurance companies who got exemptions from this rule, why the disparate application of the rules?

10. If only the big accounts will be enrolled for the Third Party Custodianship and their portfolios can be used to short the market ,what happens to the price of my investment?

11. When can I expect to trade my securities to a dealer other than the bank I bought it from? Do I need this facility if my investment is only for Php100,000? What would a ¼% saving fetch for a 30 day instrument with a principal of Php100,000 net of vat and other charges?

12. Are they serious when they claim this is for my and the other small investors’ protection?

6 Comments:

Anonymous Anonymous said...

Naisip din ba ng sumulat ng circulars ang ganitong epekto sa maliliit na investors?

10:36 AM

 
Anonymous Anonymous said...

To the first poster:

No they didn't. They only thought about how this will affect them when they set up the FIE and the PDTC. Everyone in the market knows where this all originated from.

3:54 PM

 
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