BSP raises single-issuer exposure limit for UITFs

THE BANGKO SENTRAL ng Pilipinas (BSP) has raised the single-entity exposure limit of unit investment trust funds (UITFs) invested in exchange-traded equity securities to 20% from 15%.

However, this additional 5% exposure must only be composed of investments in exchange-traded equity securities of the same entity or issuer, according to BSP Circular No. 1234 Series of 2026 signed by BSP Governor Eli M. Remolona, Jr.

The central bank also relaxed exposure restrictions for equity index-tracking UITFs, allowing them to exceed this 20% cap to match the actual benchmark weighting of the index component issuer. Previously, the ceiling was at 15% or the weighting of the issuer, whichever is higher.

However, UITFs’ combined exposure to any entity and its related parties must remain at a maximum of 15% of the fund’s market value.

UITFs are composed of funds pooled from retail investors that are managed by a trust company or a bank’s trust department that are invested in instruments like securities, debt, and stocks.

“The TE (trust entity) shall be cognizant of the aggregate investments of a UITF in any entity and its related parties, and shall have adequate tools and controls in place to effectively manage the overall risk exposure,” the BSP said in the new circular.

The BSP is also requiring trust entities or a bank or nonbank financial institution managing the UITF to notify the appropriate BSP supervising department by the next banking day when an exposure limit is breached.

According to the central bank, the notice must be signed by the trust officer or its equivalent, and indicate when the breach occurred, how the breach happened, and the actions done or to be taken to restore compliance with the ceiling.

Meanwhile, breaches tied to mark-to-market investment movements are still required to be reported within 30 days, but all other types of breaches must be addressed immediately, the BSP said.

Trust entities are also mandated to inform the central bank once the breach has been corrected. — Katherine K. Chan