On 10 July 2021, the Argentine Central Bank (“BCRA”) issued the Communique “A” 7327 (the “Communique”) which extends the sworn statement regarding securities transactions that individuals and legal entities must provide to access the foreign exchange market. The practical effect of the new Communique is to increase the limitations to operate simultaneously in the securities market and the foreign exchange market.
Firstly, the Communique added the exchange of securities for foreign assets to the transactions that individuals and legal entities must declare not to have executed in the 90 (ninety) days prior and subsequent to carrying out a transaction in the foreign exchange market. Notwithstanding this amendment, the affidavit of not having entered into (i) sales in the country of securities with settlement in foreign currency, and (ii) transfers of securities to foreign depositories, is still mandatory as a condition to operate in the foreign exchange market.
In addition, when the person seeking access to the foreign exchange market is a legal entity, the Communique incorporated the following additional sworn declarations as a condition for accessing the foreign exchange market, as of July 12, 2021:
Details of the persons or legal entities that have a direct control relationship over the legal entity seeking access to the foreign exchange market; and
That at the time of requesting access to the foreign exchange market and in the previous 90 (ninety) calendar days, it has not transferred to the country any funds in local currency or other local assets, to any individual or legal person that has a direct control relationship over it, except for those directly associated with regular transactions for the acquisition of goods and/or services.
In the event that, the legal entity seeking access to the exchange market has actually delivered funds in local currency or other liquid local assets to its direct controller, it may also access the exchange market by submitting a sworn statement from its direct controller that it has not entered into sales of securities with settlement in foreign currency in the previous and subsequent 90 days.
Local banks and financial institutions are also included in the requirement to submit these two new sworn declarations for their own operations.
In accordance with these restrictions issued by the BCRA, on July 8, 2021, the Securities Regulator (“CNV”), approved General Resolution 895/2021, to increase the minimum holding periods for the settlement of securities against foreign currency and in foreign jurisdiction. The General Resolution does not incorporate modifications for the settlement of securities against local currency.
The minimum holding period, locally known as “Parking Period”, for securities in the local custodian to be applied to the settlement of transactions in foreign currency and in foreign jurisdiction (i.e., settlement against “Dollar Cable” in a foreign account) was set to two (2) business days. This Parking Period does not apply in the case of purchases of securities with settlement in foreign currency and in a foreign jurisdiction. In the case of sales of securities with settlement in foreign currency, but in local jurisdiction (i.e., settlement against a MEP transfer to a local account), the Parking Period remains one (1) business day. This Parking Period shall not apply in the case of purchases of securities settling in foreign currency.
The Parking Period prior to settlement against foreign currency and in foreign jurisdiction (i.e. settlement against “Dollar Cable” in a foreign account) for locally credited securities from foreign depositories (i.e. acquired from foreign agents) has also been set to two (2) business days. In the case of transactions with settlement in foreign currency and in local jurisdiction (i.e., settlement against a MEP transfer to a local account), the Parking Period remains at 1 (ONE) business day.
Finally, the CNV also modified the maximum limits for weekly transactions in sovereign securities issued by the Argentine Republic for each principal sub-account in the time-priority bidding segment (BYMA), which prior to the entry into force of the General Resolution was one hundred thousand (100,000) nominal amounts (only for securities issued under local law). According to the new General Resolution, the limit was split into (i) fifty thousand (50,000) nominals for securities issued under local law, purchased with settlement in such currency and jurisdiction, and (ii) fifty thousand (50,000) nominals for securities issued under foreign law. These limits continue not to apply to wholesale transactions (MAE/SENEBI).
This report should not be considered as legal or any other type of advice by Allende & Brea or as including all the subjects of the topics described herein.
—————————————————————————————————————————————————— [1] A excepción de las transferencias de títulos valores a entidades depositarias del exterior para participar de un canje de títulos de deuda emitidos por el Gobierno Nacional, gobiernos locales u emisores residentes del sector privado, los cuales se mantienen excluidos de la declaración jurada.
