A cross currency swap is a transaction between two authorized parties that involves an exchange of principal amounts and interest payments in one currency for principal and interest payments in another currency at an agreed upon exchange rate and schedule.
The initiative, spearheaded by the BAP Open Market Committee, enables members to utilize hedging instruments critical to them and in response to the needs and requirements of customers to better manage foreign exchange and interest rate risks. The BAP Open Market Committee, with the strong support of the Money Market Association of the Philippines and ACI Philippines, ensures that the USDPHP CCS market is guided by the rules and regulations of the Bangko Sentral ng Pilipinas and the adoption of the ISDA Master Agreement and Foreign Exchange Global Code.
Market makers in the dollar-peso cross currency swap market include BDO, BPI, Metrobank, PNB, Security Bank, Citibank, DB, HSBC, ING Bank, JP Morgan and Standard Chartered Bank. Banks that signed up as regular participants include China Bank, RCBC, Robinsons Bank, Union Bank, ANZ, Mizuho and MUFG.The USDPHP CCS market involves a Philippine peso fixed rate and a US dollar floating swap with standard tenors of 1 year, 2 years, 3 years, 4 years, 5 years, 7 years and 10 years.