The Argentine Securities Commission Creates License for Private Banking

The Comisión Nacional de Valores (“CNV”), which is the Argentine Securities regulator, has created a license providing for the registration of local agents that advise Argentine residents on investments in local and foreign capital markets. This regulation has been long awaited by the market and provides a regulatory framework for those carrying out certain international private banking activities in Argentina. The aim of this regulation is to foster an onshore industry that, due to regulatory uncertainties, was significantly weakened during the last decade.

The CNV created a new license for agents called Global Investment Advisors (Agente Asesor Global de Inversión).  Under this license, Global Investment Advisors are, on regular basis, authorized to: (i) advise on investments in the capital markets, (ii) manage transaction orders, and/or (iii) manage investment portfolios. Since Global Investment Advisors will be licensed by the CNV, they will be subject to its supervision.

The Global Investment Advisor must have at least one agreement with a local broker dealer for the execution of orders. The Global Investment Advisor must execute foreign securities transactions through a local broker dealer or with a foreign broker dealer —who must be regulated by a Securities Commission and be in a jurisdiction deemed cooperative under tax transparency regulations with whom the Global Investment Adviser must have an agreement.

Agreements with local and foreign broker dealers can provide for the payment of referral fees to the Global Investment Advisor by assigning a share of the foreign brokers´ fees to such Global Investment Advisor. If the Global Investment Advisor has discretionary powers to manage the client´s investment portfolio, then the transaction orders cannot be placed with a foreign or local broker dealer of the same economic group.

The Global Investment Adviser cannot carry out certain activities which are related to other regulatory licenses, such as custody of securities or funds, collection of payments on behalf of a client or receiving and transferring securities of its clients. All the employees of the Global Investment Advisor who develop activities related to advice, order placements and portfolio management, must be registered as qualified advisors (Registro de Idoneos) with the CNV.

The Global Investment Advisors must be an Argentine corporation (sociedad anónima) whose exclusive corporate purpose has to be to provide the services of Global Investment Advisor and cannot have another license from the CNV. They must at all times have a minimum net worth of ARS 2.5 million (approximately USD 150,000 at the foreign exchange rate of the date of the resolution).

This regulation will be effective as of September 30, 2017.