Stockbrokers and Brokerage Firms producers’ activity

By Circular No. 3539 -dated March 1, 2010- (the “Circular”) the Mercado de Valores de Buenos Aires S.A. (the “Merval”) modified the regulation of stockbrokers and brokerage firms producers’ activities, ruled in Article 42 of the Merval’s Internal Rules.

A producer of a stockbroker and/or a brokerage firm is that individual or entity whose business is to refer clients to the stockbrokers and/or the brokerage firms for a fee. 

The Circular repealed Circular No. 3529 (the “Repealed Circular”) which, among other things, expressly set forth that the individuals or entities that occasionally refer clients to stockbrokers and brokerage firms for a fee would not be considered as producers.  The Repealed Circular had added that these persons could not introduce themselves as broker producers nor market their activity.  

The need for the producers’ activity to be on a permanent basis is set forth in Article 42 of the Merval’s Internal Rules.  In fact, the violation of that article leads to the expiration of the pertinent referral agreement.  The Circular makes no statement (as opposed to the Repealed Circular) about occasional activities, which is not necessary due to the clarity of such Article. 

Accordingly, all references to persons (whether individuals or legal entities) performing typical producers’ activities without being producers or being registered with the Registry of Producers of the Merval have been eliminated. 

The requirements for the producers to obtain the registration before the Registry of Producers of the Merval are the same as the ones stated in the Repealed Circular.  Among them, we can highlight the filing of the services agreement executed between the producer and the stockbroker or brokerage firm and the need to pass a qualification exam. 

The Circular’s effective date was March 15, 2010.