The  Monetary  Board  in  its  Resolution  No.  141  dated  25  January  2018, approved  the  following  amendments   to  the  guidelines   governing   the  basic security  deposit  requirement  for  the  faithful  performance  of  trust  and  other fiduciary duties, investment management activities, securities custodianship operations, and duties of personal Equity Retirement Account (PERA) Administrators.

Section  1.  Coverage   and  Scope.  All  BSP-supervised   financial  institutions (BSFIs), authorized to engage in trust and other fiduciary business, investment management  activities  or securities  custodianship  operations,  or accredited  by the Bangko Sentral as PERA Administrator are covered by this Circular.

Section 2. Compliance with the Basic Security Deposit for the Faithful performance of (1) Trust and other Fiduciary Activities and (2) Investment Management Activities of Banks, Quasi-Banks and Trust Corporations. subsections X405.1 and 4405Q.1 of the Manual of Regulations for Banks (MORB)/Manual  of Regulations  for Non-Bank  Financial  Institutions  (MORNBFI) on  the  basic  security  deposit  for  the  faithful  performance  of  trust  and  other fiduciary business, subsections X415.1 and 4415Q.1 of the MORB/MORNBFI  on the basic security deposit for the faithful performance of investment management activities, and subsection 4112T.1 of the MORNBFI on the basic security deposit for the faithful performance  of trust and other fiduciary business and investment management activities of trust corporations, are amended to clarify the guidelines on the basic security deposit requirement, as follows:

a.      œSubsection   X405.1/4405Q.1 Basic  security  deposit.  Bangko  Sentral- supervised  financial  institutions  (BSFIs)  authorized  to engage  in trust  and other fiduciary business shall deposit with the Bangko Sentral eligible government securities, pursuant to subsection X405.2 /4405Q.2, as security for the faithful performance of its trust and other fiduciary duties equivalent to at least one percent (1%) of the book value of the total trust, other fiduciary and investment management assets: provided, That at no time shall such deposit be less than P500,000.

œxxx 

b.      œSubsection   X415.1/4415Q.1   Basic  security  deposit.  Bangko  Sentral- supervised financial institutions (BSFIs) authorized to engage in investment management  activities shall deposit with the Bangko Sentral eligible government   securities,   pursuant   to   Subsections   X405.2   /4405Q.2,   as security for the faithful performance  of its investment management  activities equivalent  to  at  least  one  percent  (1%)  of  the  book  value  of  the  total investment management  assets: Provided, that at no time shall such deposit be less than P500,000.

œxxx 

c.      œSubsection   4112T.1  Basic  security  deposit.  Trust  Corporations   duly authorized  by  the  Monetary  Board,  shall  deposit  with  the  Bangko  Sentral eligible government  securities, pursuant to Subsection  4112T.2, as security for the faithful performance of trust and other fiduciary duties and investment management  activities  equivalent  to 0.05%  of the  total  book  value  of the AUM: Provided, That at no time shall the basic security deposit be less than P500,000. Provided, further, That after the first year of operation, the basic security deposit shall be based on the trust rating of the most recent report of examination of the Trust Corporation, as shown in the table below:

Trust Rating Required Basic Security Deposit 4 P500, 000 or 0. 03% of the total book value of t he AUM, whichever is higher 3 P500, 000 or 0. 05% of the total book value of t he AUM, whichever is higher 2 P500, 000 or 0. 10% of the total book value of t he AUM, whichever is higher 1 P500, 000 or 0. 20% of t he total book value of t he AUM, whichever is higher

œThe basic security deposit shall be in the form of government securities acceptable to the Bangko Sentral, pursuant to Subsection 4112T.2: provided That the Trust Corporation shall not withdraw, transfer or replace such earmarked securities, without prior written approval of the Bangko Sentral.

œxxx 

Section  3. Assets Eligible as Compliance  with the Basic Security  Deposit for the Faithful Performance of (1) Trust and other Fiduciary Business; (2) Investment Management Activities; and (3) Securities Custodianship Operations.  Subsections  X405.2 and 4405Q.2 of the MORB/MORNBFI  on the basic security deposit for the faithful performance of trust and other fiduciary business,  Subsections  X415.2  and  4415Q.2  of  the  MORB/MORNBFI  on  the basic security deposit for the faithful performance of investment management activities, Subsections  X441.13/4441Q.13/4144N.13 of the MORB/MORNBFI  on the basic security deposit for the faithful performance of securities custodianship operations,  and  Subsection  4112T.2  of  the  MORNBFI  on  the  basic  security deposit for the faithful performance of trust and other fiduciary business and investment management activities of trust corporations, are amended to 1) delete unavailable  securities,  effective  immediately,  from  the  enumeration  of  assets eligible as compliance with the basic security deposit requirement,  and 2) allow government securities, regardless of tenor, as mode of compliance with the basic security deposit requirement, effective 31 March 2018.

a.    œSubsection X405.2/4405Q.2. Eligible securities.

Government  securities  which  shall  be  deposited  in  compliance  with  the above basic security deposit shall consist of evidence of indebtedness of the Republic of the Philippines or of the Bangko Sentral or any other evidence of indebtedness or obligations the servicing and repayment of which are fully guaranteed  by  the  Republic  of  the  Philippines;  or  such  other  kinds  of securities which may be declared eligible by the Monetary Board: Provided, That such securities  shall be free, unencumbered,  and not utilized for any other purpose: Provided, further, That such government securities shall have remaining maturity of not more than three (3) years from the date of deposit with the Bangko Sentral.

œThe requirement for the abovementioned government securities to have remaining maturity of not more than three (3) years from the date of deposit with the Bangko Sentral shall no longer apply starting 31 March 2018. 

b.      œSubsection   X415.2/4415Q.2.    Eligible   securities.   The   provisions   of Subsections X405.2/4405Q.2 on eligible securities shall govern the basic security  deposit  requirement  for  faithful  performance  of  investment management activities. 

c.    œSubsection     X441.13/4441Q.13/4144N.13.    Basic    security    deposit. Securities held under custodianship whether booked in the Trust Department or carried in the regular books of the bank/quasi-bank/trust  entity/NBFI shall be subject to a security deposit for faithful performance of duties at the rate of 1/25 of one percent (l%) of the total face value of securities held under custodianship, or P500,000 whichever is higher.

œHowever, securities held under custodianship where the custodian also performs  securities  lending  as  agent  shall  be  subject  to  a  higher  basic security deposit of one percent (1%) of the total face value of securities held under custodianship.

œCompliance shall be in the form of eligible government securities deposited with the Bangko Sentral, pursuant to existing regulations governing security for the faithful performance of trust and other fiduciary business under Subsections X405.2 to X405.4 / 4405Q.2 to 4405Q.4. 

d.    œSubsection  4112T.2.  Eligible  Securities.  The  provisions  of  Subsection 4405Q.2 on eligible securities shall govern the basic security deposit requirement for faithful performance of trust and other fiduciary business and investment management activities of trust corporations. 

Section 4. Methodology in Determining Compliance with the Basic Security Deposit  for the Faithful  Performance  of Trust  and other  Fiduciary  Duties and Investment  Management  Activities.  Subsections  X405.3 and 4405Q.3 of the MORB/MORNBFI  on the valuation of securities and basis of computation  of basic security deposit requirement for trust and other fiduciary business, and subsections   X415.3/4415Q.3   of  the   MORB/MORNBFI   on  the   valuation   of securities and basis of computation of basic security deposit requirement for investment management activities, are amended to prescribe the methodology in determining  compliance  with  the  basic  security  deposit  for  the  faithful performance of trust and other fiduciary business and investment management activities, effective 31 March 2018:

1.     Government  securities  used as compliance  with the basic security  deposit shall be valued using fair value methodology,  subject to applicable haircuts, instead of amortized cost; and

2.     The base amount upon which the basic security deposit rate shall be applied shall be the quarter-end balance of total trust, investment management  and other fiduciary assets, instead of the average of the month-end balances of total  trust,   investment   management   and  other   fiduciary   assets   of  the preceding calendar quarter.

a.   œSubsection   X405.3/4405Q.3.   Valuation   of   securities   and   basis   of computation of the basic security deposit requirement.

œFor purposes of determining compliance with the basic security deposit under this Section:

œa.   Prior to 31 March 2018:

(1) The amount  of securities  so deposited  shall be based on their book value, that is, cost as increased or decreased by the corresponding discount or premium amortization.

(2) The  base  amount  for  the  basic  security  deposit  shall  be  the average of the month-end balances of total trust, investment management and other fiduciary assets of the immediately preceding calendar quarter.

œEffective  3l  March  2018,  the  provisions  under  Items  œa.(1),  and
œa.(2) , shall no longer apply.

œb.  The following provisions on the valuation of eligible assets and computation   of  the  basic  security  deposit  requirement   shall  be adopted starting 31 March 2018:

(1) Government  securities  deposited  with the Bangko  Sentral shall be measured at fair value according to the marking-to-market guidelines for government securities prescribed under Appendix 33a/Q-20, subject to applicable haircuts.

The haircuts that shall be applied to the government  securities shall be, as follows:

Residual Maturity of Government Security

Minimum Haircut (in Percent) for Basic Security Deposit

3 years and below

0 . 0

> 3 years up to 5 years

2 . 0

> 5 years

4 . 0

(2) The base amount for the basic security deposit shall be the total trust,  investment  management  and  other  fiduciary  assets reported as of the end of the calendar quarter. 

b.   œSubsection   X415.3/4415Q.3.   Valuation   of   securities   and   basis   of computation of the basic security deposit requirement.

œFor purposes of determining compliance with the basic security deposit under this Section:

œa.   Prior to 31 March 2018:

(1) The amount  of securities  so deposited  shall be based on their book value, that is, cost as increased or decreased by the corresponding discount or premium amortization.

(2) The  base  amount  for  the  basic  security  deposit  shall  be  the average of the month-end balances of the total assets of the investment management funds of the immediately preceding calendar quarter.

œEffective  31  March  2018,  the  provisions  under  Items  œa.(1),  and
œa.(2)  shall no longer apply.

œb.  The following provisions on the valuation of eligible assets and computation   of  the  basic  security  deposit  requirement   shall  be adopted starting 31 March 2018:

(1) Government  securities  deposited  with the Bangko  Sentral shall be measured at fair value according to the marking-to-market guidelines for government securities under Appendix 33a/Q-20, subject to applicable haircuts.

The haircuts that shall be applied to the government  securities shall be as follows:

Residual Maturity of Government Security

Minimum Haircut ( in Percent) for Basic Security Deposit

3 years and bel ow

0 . 0

> 3 years up to 5 years

2 . 0

> 5 years

4 . 0

(2) The base amount for the basic security deposit shall be the total investment management assets reported as of the end of the calendar quarter. 

Section 5. Compliance with the Basic Security Deposit Requirements. Subsections X405.4 and 4405Q.4 of the MORB/MORNBFI  on compliance period for the trustee or fiduciary, Subsections X415.4 and 4415Q.4 of the MORB/MORNBFI  on compliance period for the investment manager, and Subsection   4112.T.4   of  the  MORNBFI   on  compliance   period  for  the  trust corporation,  are  amended  to require  banks/quasi-banks/trust   corporations  that are authorized to engage in trust and other fiduciary business and investment management activities, to comply with the basic security deposit requirement on a quarterly basis as well as at the time of withdrawal, replacement or redemption of the government securities deposited with the Bangko Sentral within the quarter period.

a.      œSubsection X405.4/4405Q.4.  Compliance period; sanctions. The trustee or  fiduciary  shall  have  thirty  (30)  calendar  days  after  the  end  of  every calendar quarter or a thirty (30)-calendar day grace period within which to deposit with the Bangko Sentral, the securities required under this Section.

œEffective 31 March 2018, the trustee or fiduciary shall also comply with the basic security deposit requirement in the following manner:

a.   Quarterly compliance. The trustee or fiduciary shall comply with the basic security   deposit   requirement   on   a   quarterly   basis.   In   determining quarterly compliance, the fair value of government securities used as compliance with the basic security deposit requirement shall be reckoned as of the end of the calendar quarter and the base amount for the basic security deposit requirement provided under X405.3/4405Q.3 shall be applied.

œHaircuts for government securities prescribed under Subsection X405.3/4405Q.3 shall be applied on the fair value of the government securities used as compliance with the basic security deposit.

œThe  trustee  or  fiduciary  shall  have  a  thirty  (30)-calendar  day  grace period  after  the end  of every  quarter  within  which  to deposit  with  the Bangko  Sentral,  government  securities  pursuant  to existing  regulations to comply with the basic security deposit requirement as of the preceding quarter-end.

b.   Compliance upon withdrawal, replacement or redemption. The trustee or fiduciary  shall  ensure  that  it  will  continue  to  comply  with  the  basic security deposit requirement after every withdrawal, replacement or redemption of government securities within the quarter period. In determining compliance, the basic security deposit requirement shall be the amount computed as of the quarter-end preceding the date of withdrawal, replacement or redemption pursuant to Subsection X405.3/4405Q.3. The fair value of the remaining government securities, adjusted for relevant haircuts, shall also be based on amounts reported as of the quarter-end preceding the date of withdrawal, replacement or redemption, pursuant to subsection X405.3/4405Q.3.

œBanks/quasi-banks/trust entities shall develop and maintain systems to ensure compliance with the required basic security deposit as prescribed under existing regulations.

œThe following sanctions shall be imposed for any deficiency in the basic security deposit for the faithful performance of trust, investment management and other fiduciary duties:

œa.   On the bank/QB:

œi.  Monetary penalty/ies:

 

 

Penalty per
calendar day

Offense/ Trust Asset Size

First

Second

Third and subsequent offense

TBs/RB s wi th Limited Trust Authority

P300.00

P400.00

P500.00

 

UBs / KBs/ TBs with Full Trust

Up to P500 million

P600 .00

P700 .00

P800.00

Above P500 million but not exceedi ng P1 billion

P1 ,000.00

P1,250.00

P1,500.00

Abov e P1 billion but not exceedi ng P10 billion

P2 ,000.00

P3,000.00

P4,000.00

Above P10 billion but not exceeding p50 billion

P5,000.00

P6,000.00

P7,000.00

Above P50 billi on.

P8,000.00

P9,000.00

P10,000.00

œA bank or quasi-bank/trust  entity which incurs a deficiency with the  basic   security   deposit   within   the  quarter,   or  reports   a deficiency  with the basic  security  deposit  as of the end of the quarter and fails to deposit government securities to comply with the said requirement within the thirty (30)-calendar day grace period,  shall  be  considered  deficient  with  the  basic  security deposit requirement from the date the deficiency is incurred up to the date the deficiency  is corrected  or the succeeding  quarter- end, whichever comes earlier.

œii.  Non-monetary   penalty   beginning   with   the  third   offense   (all banks)- prohibition against the acceptance of new trust and other fiduciary accounts and from renewing expiring trust and other fiduciary contracts up to the time the violation is corrected.

œxxx 

b. œSubsection   X415.4   /  4415Q.4 Compliance period;   sanctions. The investment  manager  shall  have  thirty  (30)  calendar  days  after  the  end  of every calendar quarter or a thirty (30)-calendar day grace period within which to  deposit  with  the  Bangko  Sentral,  the  securities   required  under  this Section.

œEffective 31 March 2018, the investment manager shall also comply with the basic security deposit requirement in the following manner:

œa.  Quarterly  compliance.  The  investment  manager  shall  comply  with  the basic security deposit requirement on a quarterly basis. In determining quarterly compliance, the fair value of government securities used as compliance with the basic security deposit requirement shall be reckoned as of the end of the calendar quarter and the base amount for the basic security deposit requirement provided under Subsection X415.3/4415Q.3 shall be applied.

œHaircuts for government securities prescribed under Subsection X415.3/4415Q.3 shall be applied on the fair value of the government securities used as compliance with the basic security deposit.

œThe  investment  manager  shall  have  a  thirty  (30)-calendar  day  grace period  after  the end  of every  quarter  within  which  to deposit  with  the Bangko Sentral, securities pursuant to existing regulations to comply with the basic security deposit requirement as of the preceding quarter-end.

œb. Compliance   upon   withdrawal,   replacement   or  redemption.   The investment manager shall ensure that it will continue to comply with the basic security  deposit  requirement  after every withdrawal,  replacement or redemption of government securities within the quarter period. In determining compliance, the basic security deposit requirement shall be the amount computed as of the quarter-end preceding the date of withdrawal,  replacement  or redemption  pursuant  to Subsection  X415.3 /4415Q.3.   The   fair   value   of  the   remaining   government   securities, adjusted for relevant haircuts, shall also be based on amounts reported as of the quarter-end preceding the date of withdrawal, replacement or redemption, pursuant to subsection X415.3/4415Q.3.

œBanks or quasi-banks/trust  entities shall develop and maintain systems to  ensure   compliance   with  the  required   basic   security   deposit   as prescribed under existing regulations.

œThe following sanctions shall be imposed for any deficiency in the basic security deposit for the faithful performance of investment management activity:

œa.   On the bank/QB:

œi.  Monetary penalty/ies:

 

 

Penalty per
calendar day

Offense/ Trust Asset Size

First

Second

Third and subsequent offense

TBs/RB s wi th Limited Trust Authority

P300.00

P400.00

P500.00

 

UBs / KBs/ TBs with Full Trust

Up to P500 million

P600 .00

P700 .00

P800.00

Above P500 million but not exceedi ng P1 billion

P1 ,000.00

P1,250.00

P1,500.00

Abov e P1 billion but not exceedi ng P10 billion

P2 ,000.00

P3,000.00

P4,000.00

Above P10 billion but not exceeding p50 billi on

P5,000.00

P6,000.00

P7,000.00

Abov e P50 billion.

P8,000.00

P9,000.00

P10,000.00

œAn investment manager which incurs a deficiency with the basic security  deposit  within the quarter,  or reports  a deficiency  with the basic security deposit as of the end of the quarter and fails to deposit securities to comply with the said requirement within the thirty   (30)-calendar   day   grace   period,   shall   be   considered deficient  with  the  basic  security  deposit  requirement  from  the date the deficiency is incurred up to the date the deficiency is corrected   or  the  succeeding   quarter-end,   whichever   comes earlier.

œxxx 

c.      œSubsection  4112T.4  Compliance  period.  The  Trust  Corporation  shall have thirty (30) calendar days after the end of every calendar quarter or a thirty (30)-calendar day grace period within which to deposit with the Bangko Sentral additional securities required due to increase in the AUM. In cases of changes in the trust rating, the reckoning period of the thirty (30) days shall be the quarter-end from receipt of the Report of Examination. Appropriate sanctions provided below shall be imposed on the Trust Corporation and/or the  erring  officer  for  failure  to  deposit  the  required  securities  within  said period or for incurring any deficiency during a particular quarter due to failure to replace matured and/or withdrawn securities deposits.

œEffective  31 March  2018,  the trust corporation  shall also comply  with the basic security deposit requirement in the following manner:

œa. Quarterly compliance. The trust corporation shall comply with the basic security   deposit   requirement   on   a   quarterly   basis.   In   determining quarterly compliance, the fair value of government securities used as compliance with the basic security deposit requirement shall be reckoned as of the end of the calendar quarter and the base amount for the basic security  deposit  requirement  provided  under  Subsection  4112T.3  shall be applied.

œHaircuts   for   government    securities   prescribed    under   Subsection 4112T.3 shall be applied on the fair value of the government  securities used as compliance with the basic security deposit.

œThe trust corporation shall have a thirty (30)-calendar  day grace period after the end of every quarter within which to deposit with the Bangko Sentral,  securities  pursuant  to  existing  regulations  to  comply  with  the basic security deposit requirement as of the preceding quarter-end.

œb. Compliance upon withdrawal, replacement or redemption. The trust corporation  shall  ensure  that  it will  continue  to comply  with  the  basic security deposit requirement after every withdrawal, replacement or redemption of government securities within the quarter period. In determining compliance, the basic security deposit requirement shall be the amount computed as of the quarter-end preceding the date of withdrawal, replacement or redemption pursuant to Subsection 4112T.3. The  fair  value  of  the  remaining  government  securities,  adjusted  for relevant  haircuts,  shall  also  be  based  on  amounts  reported  as  of the quarter end preceding the date of withdrawal, replacement or redemption pursuant to Subsection 4112T.3.
                                                         
œTrust corporations shall develop and maintain systems to ensure compliance with the required basic security deposit as prescribed under existing regulations. 

Section 6. Compliance with the Basic Security Deposit Requirements. Subsection 4112T.5 of the MORNBFI is amended to align regulations on the imposition of sanctions on trust corporations with that of other BSP-supervised financial institutions.

œSubsection 4112T.5 Sanctions. Without prejudice to the imposition of sanctions for capital deficiency, the following sanctions shall be imposed for any deficiency  in the basic security deposit for the faithful performance  of trust and other fiduciary duties and investment management activities:

œa.  On the Trust Corporation

œ(1) Daily monetary  penalty of P1,000 or one tenth of one percent (1/10 of 1%)  on  the  amount  of  the  deficiency   reckoned   per  calendar   day, whichever is higher but not to exceed P10,000 per calendar day, shall be assessed on the Trust Corporation. A trust corporation which incurs a deficiency with the basic security deposit within the quarter, or reports a deficiency with the basic security deposit as of the end of the quarter and fails to deposit securities to comply with the said requirement within the thirty (30)- calendar day grace period, shall be considered deficient with the basic security deposit requirement from the date the deficiency is incurred  up  to the  date  the  deficiency  is corrected  or the  succeeding quarter-end, whichever comes earlier.

œ(2) xxx

œxxx 

Section 7. Compliance with the Basic Security Deposit for the Faithful performance of Trust and Other Fiduciary Activities. Subsections X960.5/4960Q.5 of the MORB/MORNBFI are amended to align regulations on compliance  with  the  basic  security  deposit  requirement  for  administrators  of Personal  Equity  and  Retirement  Account  with  that  of  other  BSP  supervised financial institutions.

œSubsection X960.5/4960Q.5. Security for the faithful performance of administrators. xxx 

œFor this purpose, eligible government securities shall consist of evidence of indebtedness  of the Republic of the Philippines or of the Bangko Sentral or any other  evidence  of indebtedness  or obligations  the servicing  and repayment  of which are fully guaranteed by the Republic of the Philippines or such other kinds of securities  which may be declared  eligible by the Monetary  Board: Provided, That such securities shall be free, unencumbered, and not utilized for any other purpose: provided, further, That such government securities shall have remaining maturities of not more than three (3) years from the date the securities have been earmarked in favor of the Bangko Sentral.

œThe  requirement  for  the  above-mentioned  government  securities  to have remaining maturity of not more than three (3) years from the date of deposit with the Bangko Sentral shall no longer apply starting 31 March 2018.

œa.  Valuation of securities and basis of computation of the basic security deposit requirement.

œPrior to 3l March 2018:

œ(i)  For purposes of determining compliance with the security for the faithful performance   of  Administrators   under  the  PERA  Act,  the  amount  of securities so earmarked shall be based on their book value, that is, cost as increased or decreased by the corresponding discount or premium amortization.

œ(ii) The base amount for the basic security deposit shall be the average of the month-end balances of administered assets for the immediately preceding calendar quarter.

œEffective 31 March 2018, the provisions under Item œa(i)  above shall no longer apply. The following provisions on the valuation of government securities shall be adopted starting 31 March 2018:

œGovernment securities deposited with the Bangko Sentral shall be measured at fair value according to the marking-to-market  guidelines for government securities under Appendix 33a/Q-20, subject to applicable haircuts.

œThe haircuts that shall be applied to the government securities shall be as follows:

Residual Maturity of Government Security

Minimum Haircut (in Percent) for Basic Security Deposit

3 years and below

0 . 0

> 3 years up to 5 years

2 . 0

> 5 years

4 . 0

œb.  Compliance  period;  Sanctions.  The Administrator  shall have one (1) week from  the  end  of  every  calendar  quarter  within  which  to  replenish  any deficiency  in the  security  requirements  as abovementioned,  by depositing with the Bangko Sentral, government  securities  pursuant  to existing regulations to comply with the basic security deposit requirement.

œEffective 31 March 2018, the Administrator shall also comply with the basic security deposit requirement in the following manner:

œi.   Quarterly  compliance.  The  Administrator  shall  comply  with  the  basic security   deposit   requirement   on   a   quarterly   basis.   In   determining quarterly compliance, the fair value of government securities used as compliance with the basic security deposit requirement shall be reckoned as of the end of the calendar quarter and the base amount for the basic security deposit requirement  provided under Item œa  of this Subsection shall be applied.
                                                              !
œHaircuts for government securities as provided under Item œa  of this subsection shall be applied on the fair value of the government securities used as compliance with the basic security deposit.

œii. Compliance   upon  withdrawal,  replacement   or  redemption.  The Administrator shall ensure that it will continue to comply with the basic security deposit requirement after every withdrawal, replacement or redemption of government securities within the quarter period. In determining compliance, the basic security deposit requirement shall be the amount computed as of the quarter-end preceding the date of withdrawal, replacement or redemption pursuant to Item œa  of this subsection.   The  fair  value  of  the  remaining   government   securities, adjusted  for  the  relevant  haircuts,  shall  also  be  based  on  amounts reported as of the quarter-end preceding the date of withdrawal, replacement or redemption pursuant to Item œa  of this subsection.

œAdministrators  shall  develop  and  maintain  systems  to  ensure compliance with the required basic security deposit as prescribed under existing regulations.

œAn  Administrator   which  incurs  a  deficiency  with  the  basic  security deposit within the quarter, or reports a deficiency with the basic security deposit  as of the  end  of the  quarter  and  fails  to deposit  securities  to comply with the said requirement  within the one (1)-week grace period, shall be considered deficient with the basic security deposit requirement from the date the deficiency is incurred up to the date the deficiency is corrected or the succeeding quarter-end, whichever comes earlier.

œAny non-compliance with the security requirements shall be subject to Sections  36 and 37 of R.A. No. 7653 also known  as the New Central Bank Act without prejudice to the imposition of other sanctions as the Monetary  Board may consider  warranted  under the circumstances  that may  include  the  suspension  or  revocation  of  the  entity's  authority  to engage in PERA administration, and such other sanctions as may be provided by law. 

Section 8. Effectivity. This Circular shall take effect fifteen (15) calendar days following  its  publication  either  in  the  Official  Gazette  or  in  any  newspaper  of general circulation in the Philippines.