Argentine Securities Commission Amends Regulations Applicable to Markets and Clearing Houses

On February 21, 2024, the Argentine Securities Commission (CNV) issued General Resolution 993, implementing a series of amendments to the regulations applicable to Markets and Clearing Houses, to adopt the Principles for Financial Market Infrastructures (FMI Principles). These principles had been published by the International Organization of Securities Commissions (IOSCO) and the Committee on Payments and Market Infrastructures (CPMI).

It is important to highlight that, according to the Resolution, the international financial community considers the FMI Principles essential to strengthen and preserve financial stability.

Accordingly, the Resolution amends the CNV Rules as follows:

1. It establishes that the annual external audit reports of Clearing Houses and Markets must inform the state of compliance with the principles and recommendations of the IOSCO and the CPMI, and the provisions in Chapter III of Title VI, Section IV of the CNV Rules.
2. The Risk Committee of Markets and Clearing Houses must annually submit for their administrative body approval a report on the risk management policies and procedures established by said Committee, their degree of compliance, deviations, and proposals for adjustments and/or improvements.
3. When Markets and Clearing Houses guarantee the performance of transactions authorized by the CNV, they must perform the role and functions of a central counterparty, observing the IOSCO and CPMI recommendations, and the FMI Principles.
4. Markets and Clearing Houses must implement a comprehensive risk management framework, aligned with the FMI Principles. This framework must include a series of objectives, policies, mechanisms, procedures, methodologies, and internal standards and measures designed to identify, measure, monitor, and manage events that may affect and/or negatively impact the operations and services they provide, and establish adequate plans for their orderly recovery.
5. The Resolution introduces the "General Risk of the Business" as a risk to be mitigated. For this, subjects must have systems to identify and manage this type of risk, maintaining sufficient net liquid assets financed through their total assets to cover possible general business losses, so that they can continue operating and providing services if such losses occur. They must also have a viable plan to obtain additional capital if their net assets fall below the necessary minimum amount or are close to that amount.
6. The management body will be responsible for approving, implementing, carrying out, and controlling the comprehensive risk management. Thus, it must comply with certain minimum guidelines established in the Resolution. Likewise, the management body's meeting minutes must be submitted to the CNV through the Financial Information Highway (Autopista de la Información Financiera). The risk management policies and procedures approved and implemented must be available to the CNV.
7. Markets that perform Clearing House functions and Clearing Houses that perform central counterparty functions must have a structure and documented mechanisms of good governance, aimed at promoting the effectiveness of their risk management processes, and aligned with the FMI Principles. Additionally, these procedures must be established in the subject's Code of Conduct and include at least:
   1. direct and clear lines of responsibility and accountability,  
   2. relevant public interest considerations and relevant stakeholder objectives,
   3. a comprehensive disclosure framework with clear and comprehensive rules and procedures, providing sufficient information to enable participants to have an accurate understanding of the risks and fees involved.
8. The Markets and Clearing Houses must provide information regarding the assets contributed to the Guarantee Funds, in accordance with the provisions of the Argentine Central Bank (BCRA) regarding the determination of capital requirements for counterparty credit risk in transactions authorized by the CNV and arranged in trading segments guaranteed with central counterparty entities and their consideration as qualified entities. In this sense, the information provided must:
   1. include a detail of the assets and/or securities effectively contributed by Agents registered before the CNV that are financial entities authorized under Law 21526,
   2. be submitted to the BCRA and/or to each of the financial entities acting as Agents.