Treasury to use new settlement system for auctions next week

THE BUREAU of the Treasury (BTr) will use a new settlement system starting next week as part of efforts to modernize its auction platform and the registry of securities.

In a memorandum posted on the Treasury’s website on Wednesday, the bureau said the submission of bids, confirmation of awards and settlement of results in government securities (GS) auctions shall be made through the National Registry of Scripless Securities (NRoSS) system starting Aug. 28.

The BTr added that the current manual bidding process will be observed in case of inability of government securities eligible dealers (GSED) to access the NRoSS due to technical reasons.

“We will, however, require a certification from your IT officer that access or connectivity to NRoSS cannot be established citing reasons thereafter,” the Treasury added in the memorandum.

The Treasury currently uses two systems for the GS issuance: the Automated Debt Auction Processing System and the Registry of Scripless Securities.

However, these systems “lack the robustness and functionality” to support current and foreseen business requirements, the Treasury said.

In a separate circular, the bureau said the usage of the NRoSS system is part of its system modernization project. The system will “service the settlement and recording of coupon-bearing government securities across different tax status of investors.”

The use of the system is also interfaced with the Philippine Payment and Settlement System of the Bangko Sentral ng Pilipinas (BSP) via the Real Time Gross Settlement to achieve real-time, final and irrevocable delivery-versuspayment.

The new system will “modernize the auction platform and registry of securities, eradicating possible operational and reputation risks,” the Treasury said.

This will also “consolidate auction and registry information for data mining and analytics to support policy making,” conforming to international standards and the industry’s best practices, it said.

The transition to the new system is part of the 18-month debt market reform plan of the BTr, BSP, the Securities and Exchange Commission and the Department of Finance envisioned to be in place by early 2019 designed to increase the supply of short-term securities, among others.

Under the reform program, regulators are also looking to set rules on derivatives and repo markets, create “reliable financial benchmarks” for valuation of debt instruments, establish a reliable yield curve, as well as introduce a repurchase program for banks and other financial players.

A bond trader said the new settlement system will make transactions with BTr “smooth and more transparent.”

“We’re moving to NRoSS from the current RoSS system. That will be the new settlement system for smooth and more efficient transaction,” the trader said in a phone interview. •