New Regulations of Capital Market Agents

As from April 16, 2018, the CNV published General Resolution No. 731/2018 (“Resolution No. 731”) in the Official Gazette, which substantially modifies regulations applicable to agents.

The amendment redefines the scope of the functions and activities of the agents that were in force until Resolution No. 731: Trading Agent (“AN” or “Agente de Negociación”), Settlement Agent (“ALyC” or “Agente de Liquidación y Compensación”), Global Investment Advisor (“AAGI” or “Agente Asesor Global de Inversión”), External Asset Manager (“AP” or “Agente Productor”), Brokerage Agent (“ACVN” or “Agente de Corretaje de Valores Negociables”), and Capital Market Advisor  (“AA” or “Agente Asesor de Mercado de Capitales”).

Among the amendments introduced by Resolution No. 731, we point out the following:
 

1. Discretionary portfolio management by AN, ALyC and AAGI.
   
   CNV reincorporates the possibility of discretionary management of client portfolios by AN and ALyC, a function that had been limited exclusively to AAGI through General Resolution No. 708/2017.
   
   As a result, it establishes guidelines of operating with clients under a discretional management -total or partial- or under a specific instruction.
    
2. Removal of AA and creation of subcategories AN RUCA and Direct Participant ALyC.
   
   AA category is eliminated, being relegated to AP category. Its activity consisted mainly of providing advice in the capital market field, a function that happens to be fulfilled by AP.
   
   On the other hand, the subcategory AN RUCA (Unique Registry of the Agri-Food Chain) is included in AN. Its function is limited exclusively to recording futures, options and other derivative transactions whose underlying assets are products included in its performance under the RUCA.
   
   In addition, the Direct Participant ALyC (ALyC Participante Directo) is created within the Non-Integral ALyC (ALyC Propio) category, which can only register transactions in futures and options on futures contracts, traded in markets under the supervision of CNV on its own account and with its own funds.
    
3. Related agents within the same economic group.
   
   Different categories of agents can be related within their own economic group to carry out operations on behalf of their clients, provided that such information is disclosed to them.
   
   Accordingly, AP and AAGI are authorized to be part of the same economic group, as has already been allowed in AAGI, AN and ALyC.
    
4. Update of minimum capital amounts.
   
   The amounts with respect to the minimum net worth required to AN, ALyC and ACVN have been updated. The minimum capital of AN and ACVN goes from ARS 1,000,000 to ARS 2,500,000, while for the ALyC category goes from ARS 15,000,000 (Comprehensive ALyC or “ALyC Integral”) and ARS 3,500,000 (Non-Integral ALyC or “ALyC Propio”) to the general sum of ARS 18,000,000, without distinguishing the subcategory.

Finally, the Resolution establishes that agents must adapt to the new regulatory framework before October 1, 2018. The capital requirements should also be met prior to that date, except in the case of ALyC, which should have its new integrated minimum net worth of 100% before January 1, 2019. For re-categorization as AN RUCA or AP, applications should be submitted prior to June 1, 2018.