The Bangko Sentral ng Pilipinas, the Philippines central bank and regulator, is expected to issue blanket credit derivatives licenses to foreign banks and domestic institutions in the coming months. "This is a very positive step," said Bryan Yap, co-head of emerging markets-Asia; fixed-income and derivatives trading at Deutsche Bank in Singapore. The regulator allows some derivatives products, such as credit-linked notes, but each trade must be approved by the central bank. "We're still studying [blanket licenses] but it's one of our priorities," said Deodora San Pedro, an official in the supervisory reports and studies office at the BSP. She added that the study should be published in the coming months, declining further comment.
BSP has been speaking with several derivatives houses, according to Yap. "They've been very keen on gaining a further understanding of the products." Market officials believe the regulations may also allow onshore asset managers greater access to credit derivatives.
A credit trader at a bulge bracket house said a more open credit derivatives market is a welcome move and that new regulations will boost interest. "It's good to see this market loosening up," he added. However, he noted that it will take some time before there is a dramatic increase in the volume of transactions from the handful now, as only a limited number of end users have traded these products.
