The Bangko Sentral ng Pilipinas (BSP) has issued Circular No. 1126 requiring designated payment systems (DPS) to adopt the Principles for Financial Market Infrastructures (PFMI).
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.
The adoption of the standard is very timely given the surge of digital payments in the country, as it ensures payment systems have safeguards in place which are at par with global practices.
With the DPS conforming with the PFMI to be more resilient to financial crises and participant defaults, public interest is better protected, promoting confidence in the use of payments systems.
The issuance of the circular is pursuant to the Payment System Oversight Framework (PSOF), and the National Payment Systems Act or Republic Act No. 11127.
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.
The Peso Real-time Gross Settlement System operated by the BSP using PhilPaSSplus, was approved by the Monetary Board as the country’s first DPS in July 2021.