Automatic Approval for the Promotion of Foreign Financial Services
The Superintendence of Finance of Colombia (SFC) introduced, by means of External Circular 035 of December 27th, 2019, the automatic authorization of collaboration agreements for the promotion of foreign financial services or products entered into by a local stock brokerage firm or a local financial corporation and a foreign financial entity provided they comply with the following requirements. Prior to this regulatory update, the promotion of foreign financial services or products was subject to the prior approval of the collaboration agreement by the SFC, which could take between 4 and 8 months.
Requirements that the local stock brokerage firm or local financial corporation shall comply with:
- At least one year of operation as a supervised entity by the SFC;
- That it has not been subject to penalties imposed by the AMV or by the SFC related to noncompliance with the laws that govern the promotion of foreign financial services or products within the year prior to the date of execution of the collaboration agreement;
- That it has not been subject of an administrative order, takeover or rescue provision by the SFC related to noncompliance with the regime applicable to the promotion of foreign financial services or products within the year prior to the date of execution of the collaboration agreement.
Requirements that the foreign financial institution shall comply with:
- That it is subject in its home jurisdiction to the supervision of an authority that is a member of the Basel Committee on Banking Supervision or the OECD;
- That it has not been subject to a penalty, order or similar measure issued by the competent authority in its home jurisdiction in connection with the products to be promoted in Colombia, within the year prior to the date of execution of the collaboration agreement;
- That the products and/or services to be promoted in Colombia have been offered in its home jurisdiction at least one year prior to the execution of the collaboration agreement;
- In the case of the promotion of investment funds, both the administration company and/or the general partner and each of the investment vehicles to be promoted must be subject to supervision and/or registered with an authority abroad that is a member of the Basel Committee on Banking Supervision or the OECD.
If all the above conditions are met, the authorization process will consist of filing all the required documents, along with a certification issued by the legal representative of the local stock brokerage firm or financial corporation declaring:
- That the foreign financial entity complies with the above conditions and with the applicable regulations, specifically pursuant to Part 4 of Decree 2555 of 2010;
- That the entities that will develop the collaboration agreement are subject to the supervision of a competent authority.
Once the documents have been filed, the parties may immediately begin the execution of the collaboration agreement.
On the contrary, if not all the provided requirements are met, the authorization will be subject to the individual authorization regime according to which the prior authorization of the SFC is required for the parties to start executing the collaboration agreement. As mentioned, SFC’s approval could take up to 8 months, time in which the parties of the collaboration agreement are not allowed to start executing the contract.
With this amendment, the Regulator's purpose to make the rules of the securities market more flexible is put forward, with the objective of smoothing the entry of new foreign players who diversify the products and services offered in Colombia.
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