Finance Secretary Carlos Dominguez III has cited the reforms being undertaken by the Bureau of the Treasury (BTr) to develop the domestic capital market, among them, the launching of its first government securities (GS) repurchase (repo) transaction, which is among its initiatives to enhance funding and trading liquidity in the local bond market.

Dominguez underscored the importance of these reforms in a speech read for him by Finance Undersecretary and Chief Economist Gil Beltran on the occasion of the BTr’s first repo that highlighted the celebration of the Bureau’s 120th foundation anniversary, which was preceded by its ceremonial system login using the New Registry of Scripless Securities (NRoSS).

According to National Treasurer Rosalia De Leon, in a repo transaction, one party sells the GS to another for cash with the agreement that this will be repurchased back at an agreed date.

Dominguez said the inaugural GS repo transaction “represents one of the key reforms of the Bureau: the development of the local debt market program.”

“This program enhances funding and trading liquidity in the GS market because it allows market participants to actively take positions in GS as well as provide bid and offer quotes. All in all, this enhances price transparency in all transactions,” he said.

Meanwhile, the BTr’s use of the NRoSS, which conforms to best practices and international standards, will modernize the auction platform and registry of securities, which, in turn, will help eradicate possible operational and reputation risks.

De Leon said “repos launched today is a true sale, deliver out repurchase agreements governed by the Global Master Repurchase Agreement (GMRA). Technically, it is a sale and purchase of a certain security with an obligation to return the same at a future date.”

Along with the launching of the “repo,” the BTr also recognized the country’s Top Ten Enhanced GS Eligible Dealers (GSED)-Market Makers, which will grant these awardees additional privileges such as market consultations and funding syndication.

The top ten are BDO Universal Bank Inc., Bank of the Philippine Islands, China Banking Corp., Citibank, Development Bank of the Philippines, First Metro Investment Corp., Landbank of the Philippines, Metropolitan Bank & Trust Co., Rizal Commercial Banking Corp., and Security Bank Corp.

The awards are based on the performance of the GSEDs in the primary and secondary markets and the support they have extended to various government initiatives to develop the local currency debt market.

Dominguez pointed out that such privileges given to the GSED-Market Makers also come with corresponding obligations.

“We will expect them to help enhance the GS market liquidity and support the future debt market development initiatives of the Treasury. In short, this is not just an award. It seals our partnership with obligations and advantages on each side,” the finance chief said.

De Leon said the BTR’s repo “aims to deepen liquidity in the secondary government securities (GS) market by paving the way for market making among GS Eligible Dealers (GSEDs).”

“It will now allow dealers to post buying and selling rates without keeping an inventory of GS, which exposes them from potential losses due to adverse market movements. Repos would provide a source of liquidity both from the cash and securities side, which they can use in their funding needs and providing bid/offer rates resulting in a more efficient and liquid domestic debt markets,” she added.

Dominguez said the reforms being done at the BTr, currently headed De Leon, are among the numerous efforts of the Department of Finance (DOF) to apply new technologies for greater efficiency and more transparency.

“I am happy that the Treasury is fully utilizing available communication technologies to empower its engagement with the market. Doing so improves both efficiency and transparency. These are the essential virtues of e-government,” Dominguez said.

“The Department of Finance, after all, spearheads the effort to cut red tape, make the bureaucracy more responsive to citizens and make government an enabler for the community,” he added.

Dominguez noted that in the government’s main revenue agencies—the Bureaus of Internal Revenue (BIR) and of Customs (BOC)—collections have improved with the introduction of new digital technologies.

“We are now able to build databases across government agencies to better serve our clients, the people,” he said.

In congratulating the BTr on its 120th anniversary, Dominguez lauded the Treasury for its “good work for the Republic.”

“We have come a long way since the first national treasurer kept money in a vault and disbursed it in cash. Today, the Treasurer of the Philippines presides over a complex operation that includes trading public securities and looking after the cash position of the entire Republic,” Dominguez said.