Electronic Means in the Intermediation of Securities

The Argentine Securities Commission (Comisión Nacional de Valores -“CNV”) has issued General Resolution No. 612/2012. This resolution reiterates the obligations and duties that brokers have when acting in the public offer of securities and futures and options, and enables them to use e-mails and their websites to open accounts, authorize transactions, provide the Explanatory Report that the CNV requires to be given to clients, and deliver orders in the context of primary and secondary placements. The CNV authorized that orders be given on the phone, as well, provided that the conversations can be registered and recorded and the client may be identified. As regards communications by e-mails and websites, brokers must print and keep records of instructions given by clients in their files.

The duties of brokers have been reiterated and require that brokers:

1. Know their clients to allow them to assess their financial situation, experience and investment objectives, and adapt their services to such ends, arbitrating the means and proceedings necessary for such purposes. A self-evaluating questionnaire that allows for the assessment of the risk aversion of the client can be implemented. If the broker perceives any investment to be inadequate, considering the risk profile made for its client, a documented record of their adverse opinion, of the communication of such circumstance to the potential investor and its opinion about the matter must be issued.
   Brokers are also required to include the following in the account opening agreements, depending on the type of authorization given to the broker by the client, which shall include: a description of the rights and obligations of each party, details of the actions to be performed by the broker that require prior authorization from the client, description of costs, description of market risks, detailed explanation of the risks taken in case of failure to comply of the broker, and reference to the rules applicable to the relationship between the parties.
   As mentioned, the new regulation has admitted that the account opening, the authorizations to perform operations, the delivery of the Explanatory Report and customer’s orders can also be made via email and through the website enabled by the broker, as long as it is subject to certain security standards. The broker must print the relevant documentation, including emails and registrations to Internet pages, and keep records in the file of each client.
2. Register upon receipt and promptly, any -written or verbal order- of their clients, so that they keep updated records on the occasion -day, hour, minutes and seconds-, quantity, quality, price and any other circumstance related to the order that they have received, which may be necessary for its identification and tracking.
3. Give absolute priority to their clients’ interests, refraining themselves from multiplying transactions unnecessarily and without benefit to the clients, and/or incurring in conflict of interests. In case of conflict of interests between different clients they will avoid giving priority to any of them in particular.
4. Make available to their customers any information they know about, which is not privileged, may have direct and objective influence in the decision-making process.
5. Act with loyalty towards their clients. The personnel employed in the activities that sell, promote or provide any kind of advice or activity involving contact with the public investors must be registered in the "Register of Suitable Advisors" under the terms of Articles 40, 41, 42 and 43 of Chapter XXI, prior to the commencement and to the continuance of such activities.
6. Inform the CNV and the self-regulatory entity where they are registered, of any economic, family and other links with third parties that, acting for their own account or for others, could lead to conflicts of interest with their clients.
7. Indicate clearly on all its stationery, documentation, posters, websites and/or other related media linked to the publicity and dissemination of its activity, the full name of the self-regulatory entity where they are enrolled.

Additionally, when they act on their own account or for their own portfolio, brokers must:

1. Let their counterparts know about such circumstance prior to closing the relevant transaction.
2. Register such transactions through identified tickets when operating on their own account.
3. Avoid any practices that may mislead, deceive or in any other manner invalidate the consent of their counterparties or other market participants.