Consultation Procedure on a New Regulation Applicable to Broker-Dealers, Payment Service Providers, and SMEs Platforms is Submitted

On August 28, 2024, the Argentine Securities Commission (CNV) issued General Resolution 1015, submitting for consultation procedure amendments to the regulation of the performance of broker-dealers (ALyC), modalities of order intake, communication, advertising actions, and dissemination of agents' services. The CNV stated that implementing different technological systems will allow agents to offer their services in a much more agile and simple way, while accessing a wider and more varied range of potential clients, making visible a wide range of alternatives to expand the publication, dissemination and offering channels.

The CNV also warned that, sometimes, these systems and their underlying economic and contractual links are carried out with entities that are not under its regulation scope. Therefore, it stated that it is essential to update the regulations in force regarding the means used to attract potential or future clients; that it should consider the advertising that agents carry out for such purposes and the services they offer according to their different registration categories.

Likewise, and considering the amendments Law 27739 introduced to the Argentine Criminal Code Amendment Law and the provisions of General Resolution 994, the Registry of Virtual Asset Service Providers (PSAV) was included in the CNV's regulations. Consequently, it is necessary to establish the parameters to regulate the interaction between the parties registered in the Registry and the ALyC.

Accordingly, the Resolution incorporates within the framework of ALyCs’s functions:

1.         Referring clients to other entities registered before the CNV in the PSAV Registry—meaning contacting the client with the PSAV with which the corresponding agreement has been subscribed—the ALYC not being responsible for the potential investments and/or investment decisions adopted.

2.         Referring clients to other ALYCs, provided that (a) the agent acting as referrer is a financial institution registered and regulated by the Argentine Central Bank (BCRA), and (b) both agents belong to the same economic group, controlling, controlled, and related parties.

3.         Receive referenced clients from third parties registered before the CNV, including those agents related to the same economic group, controlling, controlled, and related parties; and financial entities and/or PSP and/or platforms for financing MSMEs, according to the corresponding legal regimes established by the BCRA.

The Resolution stipulated that, for advertising and/or dissemination actions, agents must respect the scope of their corporate purpose, according to their registration category. Likewise, it regulated the advertising and/or dissemination actions through third parties, indicating that the agreement entered into for such advertising must be made available to the CNV, and may only be entered into with these entities:

1.         Third parties registered before the CNV, including those agents related to the same economic group, controlling, controlled, and related parties.

2.         Financial institutions, PSPs, and/or platforms for financing SMEs.

Advertising and/or dissemination must allow differentiation between the agent's own services and those of third parties—according to the corporate purpose—as well as the functions and/or framework of action of their respective categories. In turn, these requirements must be complied with:

a)         The scope of advertising and/or dissemination in the agent's own digital media must exclusively comprise the availability of the web domain of the subjects mentioned above, which may function as a reference link with respect to the third party's website, without implying direct access to it.

The parties involved may not be registered before the CNV in the same category of agent, except for those that are simultaneously an ALyC and a financial institution.

b)         The publicity must be framed within the activities that may be carried out by the ALyC within the framework of its functions.

c)         The parties involved must make available, on their corresponding websites, the necessary means to guarantee direct and independent access, according to the functions of each registration category.

Agents must—through the Financial Information Regime (AIF)—inform the intervening third party or parties and the means used, indicating their internet domains and/or URL for downloading applications for mobile devices, if applicable.

On the other hand, the Resolution modifies the modalities for receiving orders and instructions, establishing that each of the modalities agents implement must be clearly and precisely detailed in the corresponding procedures manual. If agents use computer tools provided by a third party, they will be responsible for any contingency that prevents its normal operation.

Likewise, agents must make available to clients at least one way of receiving orders and instructions as an alternative if the main means suffers any type of contingency. They must also keep all documentation related to the collection of orders and instructions for at least five years. Agents must take the necessary measures and carry out the necessary actions to protect the documents to avoid their destruction, loss, misuse, and disclosure of confidential information.

To capture orders and instructions through digital means, if using the services of tools or platforms as an order capture modality through digital means, the procedures manual must include:

1. security and contingency plans and policies in the event of failures in the system,
2. traceability of the issued orders, including date, hour, minutes, and seconds
3. availability for clients to print, file, and send—through the agreed digital means—the order sent to the agent.

Agents may use the services that PSPs’ platforms and the Platforms for the Financing of SMEs registered before the BCRA provide. If agents choose capturing orders through private communication networks, these must be detailed in the procedure manual and comply, among others, with these requirements:

1.         An overall description of the system.

2.         An express indication of the e-mail address and/or telephone number to be used, which must be the agent's.

3.         Security and contingency plans and policies in the event of system failures.

4.         Traceability of issued orders, including date, hour, minutes, and seconds.

 

Agents must keep available for the CNV the documentation required for each type of order gathering and instructions implemented with clients.

Finally, regarding the modalities of contact with clients, agents must establish contact channels with their clients, to receive queries, provide information, advice, and adequately and timely address any other claim or request. Each of the channels must be detailed in the required procedure manual, which must also establish the steps customers must follow if they have to use alternative means of capturing orders when the main and usual means is not operative.