Limits on Foreign Exchange Purchases by Philippine Residents from AABs for Outward Investments

o Sentral ng PiLl Pinas

Circular-Letter No. 044 Series of 2008

TO : To All Authorized Agent Banks (AABs)

Subject : Limits on Foreign Exchange Purchases by Philippine Residents from AABs for Outward Investments

guidelines shall be observed in complying with the limits on the foreign exchange purchase of Philippine residents from AABs for purposes of outward investments under Section 44 of Circular No. 1389, dated 13 Aprif 1993, as amended: Pursuant to Circular No. 590 dated 27 December 2007, the following

year from AABs without prior BSP approval for the purpose of outward investments. purchase foreign exchange in an amount not exceeding Us$30 million per 1. A Philippine resident, whether an individual or corporate, may

accounts (other than pooled funds) shall be considered as part of the foreign exchange purchased by the principal or trustor of such accounts for purposes of determining compliance with the annual limit. 2. Purchase of foreign exchange by individually managed or trusteed

(which does not apply to AABs) shall be reckoned on a calendar year basis. 3. The compliance with the annual limit of foreign exchange purchases

No. 1389 dated 13 April 1993, as amended, shall also be subject to the applied on a per fund basis in addition to the original US$30 million annual limit for the QI's proprietary investments. annual limit of Us$30 million. However, in cases where a Ql is iegaily obligated to create and maintain separate funds, the annual limit shall be 4. A Qualified investor (Ql), as defined under Section 44 of Circular

its proprietary investments. Any approved increase in the annual limit shall BSP or the QI requests for a further increase in its fimits. stand as the Qis new annual limit until the same has been withdrawn by the 5. A QI may apply for an increase in the US$30 million annual limit for

for funds it is legally obligated to maintain (e.g. insurance companies general fund for the collected premiums; variable accounts for its variable insurance). This does not include individually managed or trusteed funds 6. A Qi may also separately apply for an increase in the annuaf limit

Page 2 of 4 7 To illustrate:

five (5) separate funds, three (3) of which (funds A, B, and C) are individually pooled funds. The principal/trustor of fund A is Mr. A; for fund B is Mr. B; and for fund C is the Board of Trustees-JKL Retirement Fund. managed or trusteed accounts while two (2) (funds D and E) are trusteed Consider a fund manager XYZ (classified as a QI) that manages

a. XYZ is entitled to purchase foreign exchange from AABs without BSP approval of up to US$30 milfion per year for:

1) Fund A - through a manager or trustee, except for interest in pooled exchange from AABs for outward investments within the investments, then XYZ can only purchase foreign exchange equivalent to the excess of the annual Jimit over the outstanding purchases of foreign exchange. For this purpose, Mr. A executes a certification on the total purchases of foreign of Circular No. 388 dated 26 May 2003, as amended. Such documents required under said Circular, when XYZ purchases calendar year. In case Mr. A has directly or indirectly (i.e: funds) exchange for the calendar year pursuant to Item C.3 of Annex B certification shail be presented to the AAB, together with other foreign exchange for outward investments of fund A. purchased -- provided that Mr. A has not purchased any foreign any foreign exchange for outward

2) Fund B purchases of foreign exchange. For this purpose, Mr. B through a manager equivalent to the excess of the annual limit over the outstanding executes a certification on the total purchases of foreign of Circular No. 388 dated 26 May 2003, as amended. Such foreign exchange for outward investments of fund B. exchange funds) investments, then XYZ documents required under said Circular, when XYZ purchases calendar year. exchange for the calendar year pursuant to Item C.3 of Annex B certification shall be presented to the AAB, together with other purchased provided that Mr. B has not purchased any foreign from In case AABs or any can only purchase foreign exchange trustee, for M. foreign outward B has except for interest in pooled directly or indirectly (i.e. exchange investments within the foroutward

3) Fund C - provided that JKL Retirement Fund, through either its in pooled funds) purchased any foreign exchange for outward Board of Trustees or Trustee, has not purchased any foreign calendar year. In case JKL Retirement Fund has directly or investments, then XYz can only purchase foreign exchange equivalent to the excess of the annual Jimit over the outstanding exchange from AABs for outward investments within the indirectly (i.e. through a manager or trustee, except for interest

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to the AAB, together with other documents required under said total purchases of foreign exchange for the calendar year 26 May 2003, as amended. Such certification shall be presented Circular, when XYZ purchases foreign exchange for outward purchases of foreign exchange. For this purpose, the Board of Trustees-JKL Retirement Fund executes a certification on the pursuant to Item C.3 of Annex B of Circular No. 388 dated investments of fund c.

4) The Board of Trustees-JKL Retirement Fund or the trustee of increased limit, XYZ may purchase up to the extent of the increased limit, net of' outstanding purchases of foreign exchange, if any. JKL Retirement Fund may also apply with the BSP for a higher annual limit for the retirement fund. In case of an approved

5) Fund D - XYZ may apply for a higher annual limit. The foreign exchange purchases of the interest holders/participants in the pooled fund shall not be considered in determining the annual iimit of the interest holders/participants.

6) Fund E - XYZ may apply for a higher annual fimit. The foreign exchange purchases of the interest holders/participants in the pooled fund shall not be considered in determining the annual limit of the interest holders/participants.

7) Proprietary funds - XYZ may apply for a higher annuai limit, in addition to the funds it maintains/manages.

b. The foreign exchange purchases from AABs for outward investmentsmade by principal/trustor of funds A and B shall be consolidated with the annual US$30 million individual investor limit of Mr. A and Mr. B. For example: XYZ on behalf of the individual

1) If XYZ has already purchased a total of US$30 million in investments in 2008. 2008 for outward investments of fund A, then Mr. A may no longer purchase foreign exchange from AABs for outward

2) If XYZ has purchased a total of US$20 milion for outward investments of fund B, Mr. B may still purchase up to year. Us$1C million from AABs for outward investments in the same

3) If Mr. A has aiready purchased US$25 million from AABs for outward investments, XYZ may only purchase up to US$5 million for outward investments of fund A in the same year.

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c. If Mr. B is the principal/trustor of funds A and B, which are both Mr. B's outstanding purchases of foreign exchange. individually managed or trusteed accounts, then the annual limit of XYZ for funds A and B taken together is US$30 million, net of

d. The foreign exchange purchases from AABs for outward fund C shall be consolidated with the annual US$30 million investor limit of JKL Retirement Fund. For example: Investments made by XYZ on behalf of JKL Retirement Fund for

1) If XYZ has already purchased a total of US$30 million in from AABs for outward investments in 2008 without applying 2008 for outward investments of fund C, the Board of Trustees- JKL Retirement Fund may no longer purchase foreign exchange with the BSP for a higher annual limit with the BSP.

2) If XYZ has purchased a total of US$10 million in 2008 for AABs for outward investments in the same year without applying for a higher annual limit. outward investments of fund C, the Board of Trustees-JKL Retirement Fund may still purchase up to US$20 million from

3) If the Board of Trustees-JKL Retirement Fund has purchased fund c in the same year without applying for a higher annual Iimit. US$25 million from AABs for outward investments, XYZ may only purchase up to US$5 million for outward investments of

Please be guided accordingly.

Me&

Monetary Stability Sector DIWA C. GUINIGUNDO Deputy Governor

:3 July 2008