CMF Regulations Regarding The Fintech Law
On January 12, 2024, the Financial Market Commission (CMF) issued General Standard No. 502 (NCG 502), which provides instructions on the provision of technology-based services regulated by the FinTech Law (Law No. °21,521). These services are the following:
- Collective financing platforms
- Alternative transaction systems
- Credit and investment advice
- Custody of financial instruments
- Routing of orders and intermediation of financial instruments.
Regarding these services (“FinTech services”), NCG 502 regulates the following matters (among others):
- Registry of Financial Services Providers: Law No. 521 requires that FinTech service providers register in this registry. NCG 502 regulates the application for registration, the cancellation of this registration and the way to take advantage of the exceptions established with respect to certain requirements.
- Authorization request: In addition to the registration indicated above, providers of this type of services must obtain an operating authorization from the CMF. NCG 502 regulates how to obtain this authorization.
- Information update: From the date of request for the aforementioned authorization and while said authorization is in force, FinTech service providers must keep the information established by NCG 502 updated, according to the type of service in question.
- Information disclosure and delivery obligations: Requirements are established regarding the disclosure of information required of FinTech service providers, who must implement policies, procedures and controls in this regard. Exceptions from these requirements are those who provide investment advisory services, credit advisory services, collective financing platform and alternative transaction system exclusively to qualified investors referred to in letter f) of article 4 Bis of Law No. 18,045 on the Investment Market. Values.
- Corporate governance and risk management: Requirements are established in this matter, which must be observed proportionally, taking into account the nature of the entity, its business model and organizational structure, in order to make its ability to respond to risks compatible with its economic and financial viability.
- Equity and guarantees: Minimum equity and guarantee requirements are established for entities that provide intermediation services for financial instruments and custody of financial instruments, as well as guarantee requirements for entities that provide order routing services.
- Operational capacity: The way to accredit the operational capacity required for alternative transaction system service providers, order routing, intermediation and custody of financial instruments is established.
- Inherent activities: The list of activities that are considered inherent to the line of business regulated by law is established, which FinTech service providers can carry out without requiring their authorization as a complementary activity (for example, those who have authorized the activity of intermediation and custody of instruments. financial institutions, can carry out currency exchange operations without requiring your authorization as a complementary activity)
- Validity: This regulation applies from February 3, 2024.
Additionally, the following is established:
- Providers of collective financing platform services, alternative transaction systems, credit advice, custody of financial instruments, order routing and intermediation of financial instruments, must submit the respective applications for registration and authorization before February 3, 2025. for the activities they have been carrying out as of February 3, 2024.
- Regarding investment advisory service providers, the deadline to submit such requests was before February 3, 2024, as established by General Standard No. 494. This period is maintained.
- Obligations to update and complement information are established for those who are already registered in the Registry of Financial Services Providers on the date of entry into force of NCG 502, in accordance with the requirements of this standard.