This Monday, March 11, the National Securities Superintendency (Sunaval) authorized brokerage firms to carry out indexed loan operations and margin financing.

The guidelines for these operations are published in circular No. 00004, dated March 11, 2024. The objective is to “promote the development of new financial instruments that contribute to productive leverage, establish the criteria for capital, equity, debt and other liquidity and solvency conditions applicable to securities brokerage companies and brokerage houses, so that they carry out their financial activities in an orderly and transparent manner.”

The circular provides:

• Prior to the first operations, the brokerage firms must present to Sunaval “a product manual on Financial Assets and Liabilities Indexed to Securities and Asset and Liability Margin Financing Operations.”
• The establishment of new equity levels with respect to securities brokerage companies and brokerage houses, which allow preserving the investor’s right to fulfill “the commitments made by the intermediaries.”
• A written framework contract between the parties, detailing “that the client must have a minimum amount for the purchase of the securities subject to the loan by the intermediary. “These operations will be subject to a maximum financing amount.”
• Intermediary institutions in the limited typology must have an initial share capital paid in securities or cash at least equivalent to 40,000 times the reference exchange rate of the currency of greatest value published by the Central Bank of Venezuela (BCV), as of the date of authorization to act as brokerage companies.
• Intermediary institutions must establish a level 1 primary risk guarantee fund, at least 50,000 times up to 99,000 times the reference exchange rate of the highest value currency published by the BCV at the semiannual close.
• Brokerage firms and securities companies must also comply with an equity and risk guarantee index of no less than 50 % and a level 1 index of no less than 50 %.
• Securities brokerage companies in the universal typology must comply with an initial share capital of 40,000 times the exchange rate of the highest value currency published by the BCV and constitute a level 1 primary risk guarantee asset, at least 100,000 times up to 99,000 times the reference exchange rate of the highest value currency published by the BCV at the end of the semiannual period.
• Securities brokerage companies in the universal typology must establish liquid assets equivalent to 55,000 times the exchange rate of the currency with the highest value reflected by the BCV, at the semiannual close.

M.Pino

Source: contrapunto

(Reference image source: Mina Rad on Unsplash)

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