On the 30th of August 2016 the Resolution number 673/2016 (henceforth the “Resolution”) was published in the Oficial Gazette of the National Securities Commission (henceforth the “CNV”). The Resolution modifies the “regulations” of the CNV and creates the figure of the “Hacedor de Mercado” (Market Maker).
The Market Maker’s main role is to foster the simplification of the negotiation for the investors and effect a higher liquidity and competitiveness in order to obtain the most favorable conditions when the exchange transactions are conducted.
In accordance with the foreign legislations already containing this figure, the results have been positive, as the figure generated continuous and profound prices moderating the sudden oscilliations and increasing the registration volumen.
The Resolution defines the Market Maker as an Agent of Clearing and Settlement with the following characteristics:
- It has to be authorized and registered with the CNV,
- Enpowered by the market in which it operates in order to act
- Actions in compliance with what is determined by the market (enpowerment, action and registration). Those have to keep a record of the Market Maker and the corresponding regulations have to be presented before th CNV for their prior approval.
The Market Maker’s functions are set out in article 71 of the CNV Regulations:
- Liquidity provision of the types and/or instruments operated with, by means of the purchase and sales offers with a mínimum diferential between their respective prices under the conditions and regulations of each Market.
- Act on one’s own account
Finally, the Resolution sets basic guidelines so the markets regulate the activity of the Market Makers. They include:
- Registration and enrollement requirements
- Whether the action will be exclusive or plural
- The rights and obligations of the Market Maker
- Types and/or instruments negotiated in the Market by those who will operate the Market Maker.
- Income the action will recieve
- Demands of minimum presence during the negotiating session
- Maximum diferential between prices of the purchase and sale offers that can be maintained by the type and/or instrument during its presence in the negotiating session.
- Minimum permanence of the offers corresponding to the Market Maker’s customer orders, displayed on the negotion systems’ screens, prior to them being applicable against its offers of this nature.
The Resolution comes into effect on the 1st of September 2016.