Emerging Markets Rates and Currencies Handbook

accomplished Application to Purchase FX. - FCY Purchase exceeding USD1MM per day: duly accomplished Application to Purchase FX and additional supporting documents. - FCY Purchase (regardless of amount) to settle transactions involving netting arrangements and/or e- commerce market participants: duly accomplished Application to Purchase FX and additional supporting documents. Non-trade transactions with specific amounts and due dates may be hedged subject to submission of documentation. Trade Flows Import Trade flows Trade transactions, excluding netting arrangements and/or digital payments through e-commerce market participants, up to USD1MM of resident corporations (for payments to non-residents) need to be supported by a BSP prescribed Application to Purchase FX Form. Transactions over USD1MM would need to be supported by an Application to Purchase FX and documents listed under Appendix 1.5 (Minimum Documentary Requirements for the Sale of Foreign Exchange Relating to Import Transactions) of the FX Manual as follows: - Letter of credit, documents against payment, documents against acceptance: original shipping documents and proof of reporting to BSP of DA importation. - Open account/direct remittance: original shipping documents and proof of reporting to BSP of OA importation, and invoice. - Direct remittance: original shipping documents. - Advance payment: purchase order, sales contract or proforma invoice, letter of undertaking to the effect that if the importation is cancelled, the importer shall inwardly remit the FX refunded by the foreign supplier and sell same for pesos to the FX selling bank on the same date. For trade transactions involving netting arrangements and/or digital payments through e-commerce market participants, Application to Purchase FX Form and additional supporting documents will be submitted to the bank, regardless of FCY amount purchased. - Netting arrangements: certified true copy of netting agreement, netting statement using BSP prescribed form (Annex Z.1 Statement of Receivables and Payables under Intercompany Netting Arrangements), and letter of undertaking by the net importer (1) to make available the supporting documents upon request by the BSP, through the reporting bank; (2) that there will be no double purchase of FX for the transactions covered by the statement; and (3) that transactions covered by the intercompany netting arrangement do not include payments related to foreign loans and investments, may be submitted. - Digital payments through e-commerce market participants: certified true copy of contract between resident counterparty and e-commerce market participant, and Transaction Summary Report. FX forwards and swap transactions are allowed where the resident corporation is hedging market risk or covering funding requirements. Regulations do not allow double hedging at any given point in time and the total notional amount of the FX forward for swap should not exceed the amount of the underlying FX obligation. FX forwards and swap transactions may be subject to submission of supporting documents listed under Appendix 18 of the FX Manual (Guidelines and Minimum Documentary Requirements for Foreign Exchange Forward and Swap Transactions). The transaction is subject to Citi’s KYC processes for FX forwards where a resident corporation sells a foreign currency and buys PHP. There are generally no supporting documents required for this case. On the other hand, supporting documents are required where a resident corporation buys foreign currency and sells PHP. For swap transactions where a resident corporation sells/buys USD, the transaction is subject to Citi’s KYC policies on the first leg of the swap. The documentary requirements needed on the second leg of the swap depends on the nature of the underlying exposure. Conversely, where a resident corporation buys/sells USD, supporting documents are required to settle the first leg of the swap transaction. Capital Flow and FDI Funding / Capital Infusion (sell FCY / buy PHP) - A certificate of inward remittance is provided by Citi. This is needed to obtain a BSP registration document called the Bangko Sentral Registration Document (BSRD). The BSRD is one of the required documents for capital and dividend repatriation. Private Sector Foreign Currency Loans (not publicly- guaranteed) - All private sector loans that are not publicly guaranteed and not covered by Section 24.3 of the BSP FX Manual (types of loans that are exempt from BSP approval and registration) shall be registered with the BSP if these are to be serviced with FX resources of