THE CENTRAL BANK is allowing financial institutions to set their own minimum balance for investment management accounts provided this is not lower than P100,000, making these products available to more people.
Circular No. 1109 signed by Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno on Feb. 4 revised the P1-million minimum balance for investment management accounts based on standards under the Manual of Regulations for Banks and for Non-Bank Financial Institutions.
“BSP-supervised financial institutions should consider the adequacy of their risk management processes and operational capabilities in setting the minimum amount for their investment management accounts,” it said.
The circular now allows for a lower investment amount provided the carrying balance and contribution will not fall below the minimum investment required, except in cases where the reduction is due to investment losses and/or fund management fees.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the easing of rules on investment management accounts will help push financial inclusion.
“More people would have greater access to more sophisticated and professionally managed investment funds with prospects of higher returns commensurate with higher risks involved,” Mr. Ricafort said in a text message.
Companies will also benefit from the revised rules, Mr. Ricafort said.
“This initiative is also part of further development of the country’s capital markets, allowing more of the investing public to tap funds that invest in various securities that are alternative sources of financing for many businesses,” he added.
The BSP circular also allows the commingling of funds from different investment management activities as long as P100,000 is allocated for each activity.
Funds are allowed to be channeled into investments in local and international government securities, exchange traded equities, and commercial papers registered with the Securities and Exchange Commission. Securities issued by local banks, except those through trust units, are also allowed.
“The risks associated with commingling of funds, such as market liquidity risk, shall be fully disclosed to the clients,” it said.
The investment manager is expected to be in charge of determining how many activities can be commingled based on its operational capability.
Withdrawals from the account are allowed as long as the minimum balance of at least P100,000 is maintained and an order has been given to the investment manager. — L.W.T. Noble