The Filipino trade and Exchange Corp. (Pdex) will be introduce the first peso-de land of the countryNext week nominated interest -free hedge as part of the efforts to stimulate ACTivity in the market for fixed -income income.
Pdex President and Chief Executive Officer Antonino A. Nakpil said that the bond treatment platform will launch a newly derived product called Gronds Bond Forward Contracts, which will initially be available to banks.
“We are launching that (government bond contracts) next week, Monday (3 February). We are enthusiastic about that because that is the first PUUR Filipino peso-connected interest-free hedge, “he told reporters on the sidelines of a recent financial executives Institute of the Philippine event in Makati City.
“It will first be available for the banks, first the inter-dealer, and later to customers who may find useful,” he added.
Mr Nakpil said earlier that the Securities and Exchange Commission has approved the market framework and infrastructure to offer the trade of contracts of the government bonds on January 2.
According to Mr Nakpil, bond-forward contracts, which designate a fixed price for a debt protection on a future date and have market participants cover the interest rates, offer a new dynamic to the fixed-income markets of the country.
“It’s a derivative, it’s a new thing. It will be arranged in a way that is unique. We do not create futures contract as in the traditional sense. It is a forward expression of what has been established as a method for covering in the Futures markets. We use a freely available forward expression thereof, “he said.
“It’s a first. We will see if it works. We think it will work. It is not a futures contract, so there is no influence on it, “he added.
Mr Nakpil said that the new product is not intended for retail investors because of the complicated nature.
“We only allow the dealers and then qualified investors. In short, only professionals. This is not intended for the investors of the retail trade. “Said Mr. Nakpil.
“Some contracts are not intended for retail investors, especially if there is leverage. As soon as you have leverage such as Futures contracts, it becomes complicated, “he added.
Looking for comment, said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort in a Viber messy that will help to further develop the capital markets in the country.
“This will offer greater flexibility to manage interest risks on the local market and would give market players the opportunity to at least cover their market risks or take trading positions on the basis of their opinion on interest rate direction,” Mr. Ricafort said.
He noted that this would enable local markets to accept standards in more developed markets to meet the requirements of investors.
This year, the PDEX wants P600 billion in indemnities of corporate bonds.
The federal trade platform saw P360 billion in 2024 and missed its target of P400 billion.
However, Mr Nakpil said that the target can be changed due to geopolitical risks.
“We are not sure of the P600 billion. We will concentrate again. We will see if it is available this year, “he said. – Revin Mikhael D. Ochave