BSP Proposed Changes in
Clearing Rules
Chamber of Thrift Banks
General Membership Meeting
Friday, 19 June 2009
Makati Shangri-La Hotel
BSP Proposed Changes in Clearing Rules
Objectives

Minimize/Eliminate BSP Settlement Risk

Level Playing Field for TB and KB

Lay Groundwork for Reduction of Float Days
BSP Proposed Changes in Clearing Rules
Original BSP Proposal

All Banks to Go on Next Day Value for Clearing Credits

Mandatory Overdraft Clearing Lines
Current BSP Proposal

Risk Based Credit Evaluation
BSP Proposed Changes in Clearing Rules
Current Clearing Time Highlights
D+0
4:30PM
Outward Clearing ECS Cut-off D+0
4:45PM
Results of Outward Clearing ECS Available
5:00PM
Check Document Exchange Cut-off
5:45PM
Completion of BSP Treasury RP & IBCL for Liquidity
and Reserve/Shut down of PhilPass for D+0
12:00PM – 2:00AM
(D +1)
D+1
7:30AM
ECS of D+0 Morning Returns Cut-off (Value D+0)
7:45AM
Results of Morning Returns ECS available
7:45AM– 8:45AM
D+1
Completion of Check Document Exchange
4:30PM
BSP Treasury RP & IBCL for Losses in AM Returns
Outward Clearing ECS Cut-off D+1
BSP Proposed Changes in Clearing Rules
Changes in Clearing Timeline
D+1
7:30AM
ECS for D+0 Mandatory Returns ECS for
Unfunded Checks of D+0 for Value D+0
D+1
4:30PM
ECS for Outward Clearing and Technical
Returns of D+0 Only for Value D+1
BSP Proposed Changes in Clearing Rules
Impact of Changes

Mandatory PM Funding of Bank DDA Based on Clearing
Results of D+0 – Unfunded Bank’s DDA may Result in
Unwinding of Bank’s Clearing Items

Incoming Returns (Due to Insufficiency of Customer
Funds) will Result in Adjustment of Bank’s DDA of D+0
Done AM of D+1 with Value D+0 Due to Netting Effect
of Unfunded Returns
BSP Proposed Changes in Clearing Rules
How Changes May Be Accomplished

On Line Operations

Centralization of Clearing Operations in Manila

Use of ECS Data in Early Determination of Unfunded Items

Fast Determination of Thrift Banks NOW Accounts’
Unfunded Items
BSP Proposed Changes in Clearing Rules
Implication - Customers

Education on Impact of Changes on Account Handling

Funding of Accounts cannot be on a Catch Up Mode

No Client Selection of which Items to Return

Centralized Clearing will Cut Float Period for Regional
and Inter-regional Checks
BSP Proposed Changes in Clearing Rules
Implication - Banks

Same Day Clearing Credit for Cir 163 Thrift Banks

Centralized Clearing will Cut Float Period of Regional and
Inter-regional Checks

Higher Efficiency in Branch Operations

Credit Implication of Bills Purchase Lines

Time Pressure for Clearing Operations

Treasury Management of Funding Value Dated Returns

Income Implications on Changes in Handling of Returns

Cost Implications on Centralization

Reputational Risk of Unwinding
BSP Proposed Changes in Clearing Rules
Target Implementation Date
January 31, 2010
BSP Proposed Changes in Clearing Rules
Open Forum