Amid radical moves to liberalise the Philippine banking system, regulators are getting ready to pry loose the local foreign exchange market from the control of the country’s largest financial institutions, the Philippine Daily Inquirer learned.

In particular, the Bangko Sentral ng Pilipinas wants control over and accountability for the lucrative pesodollar trade —where almost $1 billion is traded every day between both currencies—to shift away from the Bankers Association of the Philippines (BAP) to a more democratized though stilltobedetermined institution.

“The proposition for the industry is that, right now, the foreign exchange market is basically run by a club called the BAP,” BSP Governor Nestor Espenilla Jr. said. “If something happens, the expectation is that BAP is supposed to run after the erring party.”

“But it’s also difficult to run after them because trading is high frequency and it’s inside [their group],” he added.

At present, the pesodollar foreign exchange market is, by convention and established tradition, run by the BAP, which is the umbrella organisation of the country’s biggest banks. It works closely with the central bank, which can influence market policies, but Espenilla pointed out that the ultimate determinant of the market’s policies was the “club” itself with unclear lines of accountability to authorities, regulators and market players.

As such, the central bank recently circulated a proposal to the BAP and its members that would break up the foreign exchange “cartel” and shift its roles and responsibilities to socalled “multilateral” entities. Instead of the current “bilateral” agreements between bank members of the BAP, the new system would be composed of groups of banks and other market participants bound together by multilateral agreements.

The proposed scheme may also result in the dismantling of the newly created foreign exchange trading platform managed by Bloomberg for the BAP. Instead, the BSP proposal called for “market mechanisms that will satisfy the transparency requirements of market participants, the public and regulators.” – Philippine Daily Inquirer

Rio Tinto to sell $3.5 bn worth of interest in Freeport

Anglo Australian mining giant Rio Tinto confirmed yesterday that it planned to sell its participating interest in Papua’s Grasberg mine in Indonesia , the world’s largest gold and second largest copper mine, for $3.5 billion.

Grasberg mine is currently owned by PT Freeport Indonesia (PTFI), a subsidiary of United Statesbased gold and copper miner FreeportMcMoRan.

London-based Rio Tinto says it is discussing the sale with stateowned mining holding PT Indonesia Asahan Aluminium (Inalum) and FreeportMcMoran, Rio Tinto says in a statement published in the company website.

The government has appointed Inalum to buy PTFI’s shares, in line with a law that requires foreign mining companies to divest 51 per cent of their shares to Indonesian entities. PTFI has long been in talks with the government on the divestment.

The process been taking place since early 2017, with the government initially aiming to conclude negotiations by the end of 2017. However, the government extended the divestment deadline for Freeport until 2019 with the issuance of Energy and Mineral Resources Ministerial Regulation No 25/2018 earlier this month.

However, Rio Tinto said a final decision had not been made. “No agreement has been reached and there is no certainty that a binding agreement will be signed,” the firm says.

FreeportMcMoRan and Rio Tinto established an unincorporated joint venture in 1995, which gave the latter control of 40 percent interest up to 2022 in certain assets and future production above specific levels in one of the blocks at Grasberg. |– The Jakarta Post

Hyflux seeks court protection to reorganise debt pile

Hyflux, a Singaporean firm that won accolades in the 2000s for its entrepreneurial chief executive, has applied to the Singapore High Court to begin reorganising its liabilities and businesses, as it tries to find room amid the prolonged weakness in Singapore’s power market to carry on with business.

Yesterday, the water treatment firm said it and five of its subsidiaries – Hydrochem (S), Hyflux Engineering, Hyflux Membrane Manufacturing (S), Hyflux Innovation Centre and Tuaspring – had entered a court application that automatically qualifies them for protection under a 30-day moratorium against their creditors’ claims.

The firm has appointed WongPartnership as its legal advisers and Ernst & Young Solutions as its financial advisers. – The Straits Times