On January 12, 2024, the Financial Market Commission (CMF) issued General Rule 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:
(a) Crowdfunding platforms.
b) Alternative transaction systems.
c) Credit and investment advisory services.
d) Custody of financial instruments.
e) Order routing and intermediation of financial instruments.
Regarding these services (“FinTech services”), NCG 502 regulates the following matters (among others):
- Registry of Financial Service Providers: Law No. 521 requires FinTech service providers to be registered in this registry. NCG 502 regulates the application for registration, the cancellation of this registration and how to avail oneself of the exceptions established with respect to certain requirements.
- Application for authorization: In addition to the above-mentioned registration, providers of this type of services must obtain an operating authorization from the CMF. NCG 502 regulates how to obtain this authorization.
- Updating of information: From the date of application for the aforementioned authorization and while such authorization is in force, FinTech service providers must keep updated the information established in NCG 502, according to the type of service in question.
- Disclosure and information delivery obligations: Requirements are established regarding the disclosure of information required from FinTech service providers, which must implement policies, procedures and controls in this regard. Exempt from these requirements are those who provide investment advisory services, credit counseling, crowdfunding 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 Securities Market.
- Corporate governance and risk management: Requirements are established in this area, which must be observed in a proportional manner, taking into account the nature of the entity, its business model and organizational structure, in order to make its capacity to respond to risks compatible with its economic and financial viability.
- Equity and guarantees: Minimum net worth and collateral requirements are established for entities providing financial instrument intermediation and financial instrument custody services, as well as collateral requirements for entities providing order routing services.
- Operational capacity: The form of accrediting the operational capacity required for the service providers of alternative transaction systems, 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 may perform without requiring authorization as a complementary activity (for example, those who have authorized the activity of intermediation and custody of financial instruments may perform foreign exchange operations without requiring authorization as a complementary activity).
- Effective date: This regulation is effective as of February 3, 2024. Additionally, the following is established:
– Providers of crowdfunding platform services, alternative transaction systems, credit counseling, custody of financial instruments, routing of orders and intermediation of financial instruments, must submit before February 3, 2025 the respective applications for registration and authorization for the activities they have been performing as of February 3, 2024.
– Regarding investment advisory service providers, the deadline for submitting such applications was until February 3, 2024, as established in General Rule No. 494. This deadline is maintained.
– Obligations to update and supplement information are established for those who were already registered in the Registry of Financial Service Providers at the effective date of NCG 502, in accordance with the requirements of this regulation.
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Gustavo Cuevas Manríquez