Suitability of Stockbrokers

On September 27, 2012 the General Resolution No. 610/2012 (the “Resolution”) of the National Securities and Exchange Commission (“NSEC”) was published in the Official Gazette. The Resolution establishes the obligation of taking an assessment test for those who sell products and advice investors on the capital markets.

As part of the measures designed to protect the investing public, the Public Offering Law No. 17,811, section 41 subsection (c), provides that it is required to be suitable for the position, and to have moral and financial liability, in the opinion of the respective market, in order to be a stockbroker.

As the NSEC is the exclusive enforcement authority of the regime of transparency of public offering, it must regulate the way in which the information and control of the measures described above will be performed. Among its powers, the NSEC can require entities under its jurisdiction to implement mechanisms it considers appropriate. This measure is based on providing adequate information to those who access capital markets, especially financial consumers.

For these reasons, all self-regulated markets under the NSEC jurisdiction must set a Suitable Advisors Registry (the “Registry”) of those individuals performing the activity of selling, promotion or providing any advice or activity involving contact with the investing public.

In order to be enrolled in the Registry and to be considered suitable, interested parties must prove they have succeeded in one of the training programs recognized and registered for this purpose by the NSEC. Training programs must include a minimum of 80 teaching hours along with the dictation of certain regulated contents.

The permanence in the Registry will be valid for five (5) years from the date of registration, and must be revalidated after the deadline performing a new test which includes the corresponding regulatory updates. Also, the registration must be revalidated in the case the individual ceases in his activities for a period longer or equal to two (2) years.

The Resolution provides an exception to the requirement of a training program in relation to those who prove before the relevant organization that they have three (3) uninterrupted years in the performance of their duties, through proof of an actual employment relationship, and the manifestation of three (3) committees or clients.

Finally, the Registry must be public and updated by each entity, ensuring anyone interested the free access through the NSEC website – or the corresponding website of each entity.

The Resolution came into force on January 1st 2013.

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