Custody Agents Reinstated, Promissory Note Regulated

Through General Resolution 1046, issued on January 3, 2025, the Argentine Securities Commission (CNV) approved new regulations updating the regulatory framework applicable to Markets and Central Securities Depository Agent (ADCVN), and reincorporating the category of Custody, Registration and Payment Agent (ACRYP), which replaces the current Registration and Payment Agent (ARYP).

 

The ACRYP will be responsible for safekeeping, custody, and payment at maturity of individual issuance negotiable securities that may be traded in Markets. Markets, clearing houses, ADCVN, and ACRYP are also authorized to carry out related and complementary activities, provided these are compatible with said responsibilities and if they have been previously informed to the CNV.

 

The CNV, in line with the provisions of Decree 1124/2024, has regulated key aspects regarding exchange bills, deferred payment checks, promissory notes, warrants, and MSME credit invoices.

 

The key changes the Resolution introduced are:

 

1. Markets

 

Scope and limitations

 

Market activities are restricted to organizing transactions with securities and other specific functions set forth in the Capital Markets Law, exclusively within such scope. Markets may not engage in activities that compete with those of the CNV registered agents, except for market agents (ALyC).

 

Markets may undertake related and/or complementary activities outside of the CNV’s jurisdiction, provided they are compatible with their corporate purpose and comply with the international recommendations and principles provided for Financial Market Infrastructures (MFIs) of the International Organization of Securities Commissions (IOSCO) and of the Committee on Payments and Market Infrastructures (CPMI).

 

Registration in other compatible registries and requirements for overall internal organization

 

Markets may act as ACRYP, if they apply for registration and comply with the established requirements. If so, they must ensure they segregate their operating units and have an adequate organizational structure.

 

Minimum net worth

 

Markets must increase the minimum net equity by 25% for each additional related and/or complementary activity, reflecting it in their quarterly and annual financial statements.

 

External auditing

 

Markets must undergo an annual external audit that produces detailed reports on their operation. This report must be recorded in the administrative body’s minutes book.

 

 

2. Clearing Houses

 

Action framework

 

Clearing houses must submit relevant documentation before the CNV authorizes and registers them [MF1] before the corresponding registry. Their corporate purpose must be settling, clearing, and guaranteeing registered CNV-authorized transactions, and being a central counterparty in guaranteed transactions.

 

Registration in other compatible registries and internal organization general requirements

 

Clearing houses may act as ACRYP by requesting to be registered in such category and after complying with the requirements.

 

If Clearing houses are also registered under the ACRYP category, they must segregate their operations as autonomous operating or business units and have an appropriate organizational structure.

 

Minimum net worth

 

Clearing houses must increase the minimum net equity by an amount equivalent to 25% for each related and/or performed complementary activity.

 

External audit

 

Like Markets, clearing houses must have an annual external audit whose reports will be recorded in the minutes book of the administrative body.

 

 

3. ADCVN [MF2] and ACRYP

 

Scope. ADCVN action framework

 

The ADCVN will act as depositary and central custodian of marketable securities for those marketable securities whose public offering has been granted by the CNV and/or issued by public legal entities, subject to the collective deposit or regular deposit regime.

 

ADCVNs may carry out other related and/or complementary activities that are not under the CNV’s competence, including those performed in areas outside the capital market in accordance with the functions, recommendations, and international principles provided for MFIs by IOSCO and CPMI, as long as they are compatible with the functions assigned to the ADCVN category.

 

Minimum net worth

 

ADCVNs must have a minimum net worth of 25,500,000 Acquisition Value Units (UVA), updated by the CER, and increase it 25% for each related and/or complementary activity they carry out.

 

Authorized depositors

 

Markets that carry out clearing house functions are authorized to act as depositors.

 

In the case of entities implementing global accounts to keep in custody negotiable securities owned by customers, they must have (at least):

 

1) An account structure that allows it to easily identify and segregate positions and guarantees belonging to each agent’s clients.

 

2) Appropriate internal mechanisms and procedures to protect the positions and collateral provided by each broker's clients.

 

3) Systems and controls to ensure compliance with the regulations.

 

Scope of application. ACRYP's framework of action

 

Corporations regularly incorporated in Argentina, including clearing houses, markets, and those financial entities authorized to act as such—which request authorization to operate and be registered before the CNV as ACRYP—must observe and comply with the formalities and requirements in the CNV Rules.

 

 

 

If they are simultaneously registered as ACRYP and in any other category of authorized agent, they must segregate their operations as autonomously operating or business units and have an appropriate organizational structure.

 

ACRYP will be the only category of agent authorized by the CNV to provide services of conservation, custody, and payment of negotiable securities; and registration of book-entry or book-entry negotiable securities, futures contracts, options, and derivative contracts in general.

 

The ACRYP may carry out other related and/or complementary activities not under the CNV's competence, including those carried out in areas outside the capital market in accordance with the functions, recommendations, and international principles IOSCO and the CPMI provide for MFIs, as long as they are compatible with the functions assigned to the ACRYP category.

 

Paying agent

 

ACRYP may provide administrative management services for collecting and paying securities under its custody at maturity; and for settling yields, dividends, credits, and settlements corresponding to the securities whose registries it keeps.

 

Subject to approval of the custody scheme and types of accounts.

 

Agents must submit before the CNV, for its prior approval, the custody scheme implemented and used, and the account scheme implemented and used for the ACRYP services.

 

Minimum net worth

 

ACRYP must have a minimum net worth of 10,000,000 UVA, updated by CER, and increase it by 25% for each related and/or complementary activity carried out.

 

Implementation of ISO 20022 Protocol

 

ACRYP authorized and registered before the CNV must develop and make available to its participants and/or depositors an interface based on the ISO 20022 protocol, giving access to the corresponding functionality. This body will approve the minimum messaging requirements necessary according to the corresponding category of authorized agent.

 

Adequacy of the ADCVNs' and ACRYPs' framework and regulations

 

 

ACDVNs and ACRYPs must adapt their activities and regulations to the framework of action as provided by the Resolution before March 31, 2025, and must submit such regulations before the CNV for prior approval before the same deadline. Likewise, those registered as of the effective date of the Resolution must have 100% of the minimum net worth required as of March 31, 2025.

 

 

4. Segments authorized for secondary negotiation of deferred payment checks

 

Deferred payment checks must be deposited by endorsement in favor of an ACRYP, which must be exclusively Caja de Valores SA, to the extent required by the Check Law 24452.

 

 

5. Custody of the warrants

 

The market[MF3]  may be the custodian of the warrants delivered as collateral or appoint an ACRYP for this. The custodian will have all the corresponding responsibilities and powers.

 

6. Secondary Trading of Bills of Exchange and Promissory Notes

 

Bills of exchange and promissory notes are publicly offered under the terms of the Capital Markets Law and may be traded in authorized markets registered before the CNV.

 

Promissory notes may have a maturity that operates at sight or at a certain time, and the accrual of interest calculated according to any of the following forms may be stipulated, provided that the interest rate, the financial indicator, or reference and the applicable calculation formula are expressly and clearly detailed in it. The detail must be expressed in such way that the methodology to determine the interest is easily accessible, verifiable, and adjusted to transparency criteria:

 

1. interest related to quoted prices, which may be calculated based on the price of a specific good or commodity (e.g., grains, precious metals, or hydrocarbons),
2. interest linked to financial indicators,
3. interest linked to reference rates.

 

Markets will establish the terms and conditions to be observed for negotiating the referred promissory notes at sight or at certain time of sight.

 

For such purposes, the following aspects must be contemplated in such regulations (among others):

 

1. Types of interest to be enabled.
2. Description of the applicable calculation method or methodology and of the reference market to be used for each of the types of interest rates authorized.
3. Relevant statistical data of the last three years of the reference market to be used.
4. Trading period.
5. Mechanisms required to determine its maturity.

 

Transmission, custody, and/or registration of promissory notes

 

For secondary trading, promissory notes must be drawn without designation of beneficiary or issued in favor of a third party, deposited, and kept in custody in an ACRYP authorized and registered with the CNV, at the request of the corresponding depositor and for the client’s account and order.

 

The ACRYP that receives promissory notes in deposit and custody under the these terms must carry out the operations and accounting records in article 103, paragraph g) of Decree-Law 5965/63.

 

ACRYP must implement a computer platform through which all participants and the investing public can access—freely and free of charge—the information on the payments made in connection with the promissory notes traded in authorized markets and registered before the CNV.

 

 

7. Trading certificates of deposit and warrants

 

For secondary trading, certificates of deposit, warrants, and fixed term certificates must be deposited through an endorsement in favor of an ACRYP, authorized and registered with the CNV.

 

Notwithstanding the validation measures markets establish in their regulations, the ACRYP holding the certificates or warrants cannot be obliged to pay for them, and it will not be responsible for their formal errors, nor for the legitimacy of the signatories or the authenticity of the signatures recorded.

 

Secondary negotiation of fixed-term deposit certificates

 

Fixed-term certificates issued for 365 days or longer (as the Argentine Central Bank establishes for such purpose) are publicly offered and may be traded in authorized markets and registered with the CNV.

 

 

8. SME's Electronic Credit Invoices

 

General guidelines for trading in CNV-regulated markets. Custody, registration, and payment at maturity

 

Markets under CNV jurisdiction that decide to enable the trading of MSMEs Electronic Credit Invoices in their environments must contemplate that the SMEs Electronic Credit Invoices have been credited in a principal sub-account and depositor account in an ACRYP.

 

Such agents must implement a computer platform through which the parties subject to the SME-SMEs Electronic Credit Invoice Regime can access—freely and free of charge—the information of the payments made in relation to the SME-SMEs Electronic Credit Invoices negotiated in markets.