CNV Proposes New Broker-Dealer Subcategory

On December 2, 2021, the Argentine Securities and Exchange Commission (the “CNV,” after its acronym in Spanish) issued General Resolution No. 914 submitting to public consultation a draft regulation to establish a new broker-dealer subcategory named Agro-Industrial Broker-Dealer (“ALyC I AGRO”).

Under the draft regulation, the ALyC I AGRO will be able to carry out  the brokerage of grains, general agricultural and agro-industrial activities, and accessory activities, in addition to the activities allowed for integral broker-dealers.

The draft regulation includes, among others, the following provisions:

• Exchanges and clearing agents authorized by the CNV will have to implement, at least once every quarter, the audit procedures applicable to the ALyC I AGRO.
• Upon opening the client’s account, the ALyC I AGRO will have to require an express authorization stating that the funds must be transferred to the client's bank account or invested according to client’s instructions and risk profile after thirty calendar days from when the clients’ funds are accredited (or liquid balances are conformed) in the agent's accounts for an amount exceeding the equivalent of 1,500 Units of Acquisition Value (“UVA”), updated pursuant to the Reference Stabilization Ratio (“CER”).
• Entities that request their registration as ALyC I AGRO must: i) be authorized and/or registered with the Ministry of Agriculture, Livestock and Fisheries for the development of the abovementioned complementary activities, and ii) be a member of at least one exchange authorized by the CNV and participate in the intermediation of forward transactions related to trading of agricultural or agro-industrial derivatives, submitting proof of compliance with this requirement within three months from the date of registration in CNV.
• The ALyC I AGRO must open the necessary custody accounts to maintain a clear segregation and individualization of its own assets, the client’s assets, other agent’s assets and other agent’s clients’ assets. Further, a scheme of bank accounts will have to be implemented (and submitted to the CNV) allowing a clear distinction between the accounts used for commercial and operative transactions from those related to capital market transactions.
• The minimum net worth required for ALyC I AGRO is the equivalent to 1,411,000 UVA, updated by the CER.
• Within two business days following the closing of each week, the ALyC I AGRO must submit the information related to the total amount of third parties’ liquid balances.
• The ALyC I AGRO must implement procedures to ensure the existence of measures, records and accounts clearly defined and divided according to the different activities carried out by the entity, setting aside client funds.
• Among other functions, the compliance and internal control officers of the ALyC I AGRO must oversee compliance and application of procedures aimed at safeguarding client and regulatory investment liquid balances.