"It is a prudential measure because when (banks) go into NDFs, just like any other derivative product, they carry a risk and therefore for prudence banks have to set aside the necessary amount of capital to cover the risk," the Manila Times newspaper quoted Governor Amando Tetangco as saying. Deputy Governor Nestor Espenilla confirmed the central bank had finished consulting with banks, but said it was premature to say when the rules would be issued. Present rules provide a market risk weight of 10 percent for NDFs. Authorities have expressed concern about activity in the NDF market, worried the offshore dollar-based derivatives were being used for speculation. But the central bank said it did not plan to phase out the instruments. The rise in NDF volumes, which the central bank said had led to increased peso volatility, was a result of strong fund inflows as investors moved away from developed economies in search of higher yields in emerging markets.