Resolution No. JPRF-A-2022-022 — Approves the Operating Regulations of the Financial Policy and Regulation Board

Resolution No. JPRF-A-2022-022 THE FINANCIAL POLICY AND REGULATION BOARD CONSIDERING: That, through the Organic Law Reforming the Organic Code of Monetary and Financial Law for the Defense of Dollarization, published in the First Supplement of the Official Register No. 443, of May 3, 2021, the Organic Code of Monetary and Financial Law was reformed; That, through Article 13 of the Organic Code of Monetary and Financial Law, the Financial Policy and Regulation Board was created, part of the Executive Branch, as a public law legal entity, with administrative, financial, and operational autonomy, responsible for the formulation of financial, securities, insurance, and prepaid comprehensive health care services policy; and its composition and functioning are determined; That, Article 14.1 of the same legal body determines that for the performance of its functions, the Financial Policy and Regulation Board must comply with various duties and exercise faculties, among them, "(...) 20. Issue the operating regulations of the Financial Policy and Regulation Board"; That, the Technical Secretariat of the Financial Policy and Regulation Board, through memorandum No. JPRF-SETEC-2022-0026-M of March 9, 2022, sent to the President of the JPRF, the technical-legal report No. JPRF-CJ-2022-0014 of March 9, 2022, and its extension No. JPRF-CJ-2022-0015 sent with memorandum No. JPRF-SETEC-2022-0027-M of March 15, 2022, which supports the pertinence of this resolution; That, the Financial Policy and Regulation Board, in an extraordinary session held by technological means convened on March 15, 2022, and carried out through video conference on March 16, 2022, resolved to issue the norms that regulate its functioning; and, In exercise of the attributions and duties conferred upon it by Article 14.1 of the Organic Code of Monetary and Financial Law, the Financial Policy and Regulation Board issues the following:

OPERATING REGULATIONS OF THE FINANCIAL POLICY AND REGULATION BOARD

CHAPTER I OF THE OBJECT AND SCOPE

Article 1.- Object.- The purpose of these regulations is to regulate the functioning of the sessions of the Financial Policy and Regulation Board and other particulars related to them.

Article 2.- Scope.- These norms are applicable to the members, participants, and attendees of the Board's sessions. It also applies, in aspects related to the functions of the members, the Technical Secretariat, and the Technical Secretary.

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CHAPTER II OF THE BOARD

Article 3.- Board.- The Financial Policy and Regulation Board is the body of the Executive Branch with headquarters in the Metropolitan District of Quito, responsible for the formulation of credit, financial, securities, insurance, and prepaid comprehensive health care services policy and regulation.

The Financial Policy and Regulation Board is composed of three full-time members. Also participating in the Board's deliberations, with voice but without vote, are the President of the Monetary Policy and Regulation Board, the Superintendent of Banks, the Superintendent of Companies, Securities and Insurance, the Superintendent of Popular and Solidarity Economy, the President of the Board of Directors of the Corporation for Deposit Insurance, Liquidity Fund and Private Insurance Fund; and, a delegate of the entity in charge of public finances.

The Financial Policy and Regulation Board will elect from among its members a President and a Substitute President, for a term of two (2) years, who may be re-elected only once.

The participants of the Board may delegate their participation, through the corresponding administrative act, in accordance with the current legal framework.

Article 4.- Absence of the President.- In the event of temporary absence of the President of the Financial Policy and Regulation Board, the Substitute President will act in their place. In the event of definitive absence of the President of the Financial Policy and Regulation Board, the Substitute President will act in their place for the remainder of the term of the titular.

Article 5.- Functions.- The functions, duties, and faculties of the Board are:

1. Regulate the creation, constitution, organization, activities, operation, and liquidation of financial, securities, insurance, and prepaid comprehensive health care services entities;
2. Regulate the financial activities carried out by entities of the national social security system;
3. Evaluate risks to financial stability and issue macroprudential regulations within the scope of its competence, in consultation with the Monetary Policy and Regulation Board, without prejudice to its independence;
4. Issue the Code of Ethics;
5. Present annual reports to the President of the Republic;
6. Present to the President of the Republic proposals for modification of legislation in financial matters:
7. Issue the prudential regulatory framework to which financial, securities, insurance, and prepaid comprehensive health care services entities must adhere, a framework that must be coherent, not give rise to regulatory arbitrage, and cover, at least, the following: a. Prudential liquidity indices required of entities of the financial system; b. Establish the interest rate system, as provided for in Article 130 of the Organic Code of Monetary and Financial Law, Book I, for the active and passive operations of the national financial system and other interest rates required by law, promoting the development of prudent credit: Minimum capital levels, technical equity, and risk weightings of assets, their composition, method of calculation, and modifications; c. Levels of concentration of credit and financial operations; and, applicable provisions for said operations. These levels may be defined by segments, economic activities, and other criteria; d. Risk management, internal control environment, corporate and cooperative governance, and market discipline; e. Conditions and limits on the amounts of bonds, guarantees, sureties, or any other contingent that entities of the national financial system grant to any natural or legal person; f. Establish moratoriums for the constitution of new financial, securities, insurance, and prepaid comprehensive health care services entities; g. Require the suspension of the application of norms issued by control bodies when they are not in accordance with the general policies defined by the Financial Policy and Regulation Board; and, h. Establish the segmentation of entities of the popular and solidarity financial sector.
8. Know, for the purposes foreseen in the preceding numerals, about the results of the control carried out by the superintendencies referred to in the Organic Code of Monetary and Financial Law, and about the reports that, within the scope of their competencies, these superintendencies and the Corporation for Deposit Insurance, Liquidity Fund and Private Insurance Fund present, regarding the state of the national financial system and the system of securities, insurance, and prepaid comprehensive health care services;
9. Issue the non-prudential regulatory framework for all financial, securities, insurance, and prepaid comprehensive health care services entities, which will include, among others, norms of accounting, transparency and information disclosure, market integrity, and consumer protection;
10. Promote financial inclusion processes and the full exercise of financial users' rights;
11. Establish the system to define the charges for the services provided by financial, securities, insurance, and prepaid comprehensive health care services entities, as well as non-financial entities that grant credit; and, the expenses with third parties derived from active operations in which users of these entities incur, promoting financial innovation and financial inclusion processes;
12. Establish the system to define the commissions that financial entities may charge commercial establishments for the use of the credit, debit, and other similar nature card payment service;
13. Issue secondary regulations related to the Deposit Insurance, Liquidity Fund, and Private Insurance Fund;
14. Exercise the following attributions in matters of approvals and authorizations: a. Approve annually the budget of public financial sector entities, their reforms, as well as regulate their execution; and,

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b. Authorize financial, securities, insurance, and prepaid comprehensive health care services entities to carry out new activities or operations that, although not prohibited, are necessary to fulfill the objectives of financial, credit, securities, insurance, and prepaid comprehensive health care services policy, in accordance with the regulations issued for this effect. 15. Establish, within the scope of its competencies, any measure that contributes to: a. Prevent and seek to eradicate fraudulent and prohibited practices, including money laundering and the financing of crimes such as terrorism, considering current and applicable international standards; b. Protect the privacy of individuals regarding the dissemination of their personal information, as well as national security information; c. The creation of products oriented to promote and facilitate the financial inclusion of priority attention groups. d. Foster financial inclusion, promoting the participation of financial, securities, insurance, and prepaid comprehensive health care services entities. 16. Regulate the constitution, operation, and liquidation of funds and fiduciary businesses related to the securities market; 17. Dictate the norms that regulate insurance and reinsurance; 18. Regulate the fiduciary management of entities of the public financial sector; 19. Regulate the constitution, organization, functioning, liquidation, and registration of complementary pension funds and their investments, as well as the minimum requirements to exercise the position of administrators; 20. Issue the operating regulations of the Financial Policy and Regulation Board and the Code of Ethics; 21. Require non-binding comments from entities of the national financial system, control bodies, and others considered necessary, regarding preventive regulation proposals, prior to their approval; 22. Appoint the Technical Secretary of the Financial Policy and Regulation Board; 23. Present annually, during the first quarter of each year, to the President of the Republic and the National Assembly the accountability report. Additional reports may be presented when required by the First Mandatary or when the Financial Policy and Regulation Board considers it relevant; 24. Present to the President of the Republic proposals for modification of financial, credit, securities, insurance, and prepaid comprehensive health care services legislation; 25. Apply the provisions of the Organic Code of Monetary and Financial Law and resolve cases not foreseen in the same, within the scope of its competence; 26. Establish, with the purpose of stimulating development, economic reactivation, and financial stability, with adequate technical backing, the system of interest rates and provisions applicable to credit, financial, commercial, and other operations, which may be defined by segments, economic activities, and other criteria. In the execution of these parameters, the principles of financial stability and solidity will be considered and guaranteed at all times; and, 27. Exercise the other functions, duties, and faculties assigned by Law.

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CHAPTER III OF THE PRESIDENT

Article 6.- Functions.- The functions of the President of the Board are the following:

1. Exercise the legal, judicial, and extrajudicial representation of the Financial Policy and Regulation Board;
2. Execute and give compliance to the decisions of the Financial Policy and Regulation Board;
3. Convene, install, preside, direct, suspend, and close the ordinary and extraordinary sessions of the Financial Policy and Regulation Board;
4. Convene extraordinary sessions at the request of two of the Board members;
5. Propose the agenda for the ordinary and extraordinary sessions of the Financial Policy and Regulation Board;
6. Open, direct, suspend, and close the deliberations of the ordinary and extraordinary sessions of the Financial Policy and Regulation Board;
7. Specify the matters to be deliberated, order the vote once the deliberation is closed, and dispose that the results be proclaimed;
8. Sign, with the Technical Secretary, the minutes of the sessions of the Financial Policy and Regulation Board;
9. Grant the floor to the members and attendees of the sessions of the Financial Policy and Regulation Board;
10. Supervise the actions of the Technical Secretariat of the Financial Policy and Regulation Board;
11. Comply and enforce the content of these Regulations; and,
12. Those other duties entrusted to him by the Financial Policy and Regulation Board, within the scope of his competence.

CHAPTER IV OF THE MEMBERS

Article 7.- Members.- The members of the Financial Policy and Regulation Board have the following duties and rights:

1. Receive the summonses with a minimum advance provided for in Article 16 of these Regulations, having the agenda and corresponding support documents available to them;
2. Inform about the existence of a subsequent conflict of interest to the Board and excuse themselves from acting in the respective session or agenda item, as appropriate;
3. Obtain the information required to fulfill their functions;
4. Participate in the deliberations during the sessions;
5. Vote positively or negatively. Abstention is not allowed;
6. Request the President to suspend the convened session, in case of not having received the inherent support information on the topics to be addressed;
7. Present policy and regulation proposals within the scope of competence of the Board; and,
8. The other functions inherent to their status as members.

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Article 8.- Actions of the members.- The members of the Board must observe standards of ethical conduct in the performance of their functions, act with honesty, independence, impartiality, and without consideration for their private interests, avoiding conflict of interest.

Article 9.- Policy and regulation proposals.- The policy and regulation proposals presented by the Superintendent of Banks; the Superintendent of Companies, Securities and Insurance; the Superintendent of Popular and Solidarity Economy; the President of the Monetary Policy and Regulation Board; and, the legal representative of the Corporation for Deposit Insurance, Liquidity Fund and Private Insurance Fund, must be signed by the proponent, and the reports of the institutional technical and legal areas must be attached to them, with the respective draft resolution, the latter, in editable and PDF format.

The proposals with the information described in this article must be presented to the Board in physical and/or electronic media.

The proposing authorities may participate in the deliberations of the respective sessions, personally or through their delegates, prior request and authorization of the President of the Board.

The Board will promote processes of consultation, coordination, and internal reviews prior to policy and regulation proposals within the scope of its competence.

CHAPTER V OF THE TECHNICAL SECRETARIAT

Article 10.- Functions of the Technical Secretariat.- The functions of the Technical Secretariat of the Board are the following:

1. Prepare the technical and legal reports that support the policy and regulation proposals that the Financial Policy and Regulation Board will issue;
2. Carry out the analysis of the impacts of the application of policy and regulation proposals, as well as of the approved regulations;
3. Generate or compile information for the formulation of policies and regulations that fall within the competence of the Financial Policy and Regulation Board to issue;
4. Drive and coordinate the realization of investigations or studies on various aspects of the competence of the Financial Policy and Regulation Board;
5. Provide technical and administrative support to the Financial Policy and Regulation Board; and,
6. Those other duties assigned by the President of the Financial Policy and Regulation Board.

Article 11.- Functions of the Technical Secretary.- The functions of the Technical Secretary of the Board are the following:

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1. Plan, coordinate, and direct the activities and functions of the Technical Secretariat;
2. Carry out, at the President's disposal, the summonses to the Board sessions attaching the agenda with the documentation and support reports for each topic to be treated in the session, in the place designated for this effect. This information will be delivered in physical and/or digital media to the members and participants;
3. Keep the minutes of the sessions and maintain the archives of the Financial Policy and Regulation Board;
4. Certify the resolutions of the Financial Policy and Regulation Board;
5. Those other duties assigned by Law and the Financial Policy and Regulation Board, such as: a. Bring to the knowledge of the Board members the summonses for ordinary and extraordinary sessions, the agenda, and the support documents of the sessions, prior to the approval of the President of the Board. b. Attend and participate in Board sessions with informative voice; c. At the request of the President of the Board, verify the quorum, read the agenda; and, prior to its approval, require Board members to inform about the existence of a subsequent conflict of interest, in the terms determined in the fourth and fifth paragraphs of Article 7 of the Organic Code of Monetary and Financial Law, Book I, and record said pronouncement in the minutes; d. Read the resolutions and documents submitted to the knowledge of the Board, as disposed by the President; e. At the President's request, require the vote of the Board members on the point being treated, for which he will previously publicly inform the terms of the motion presented; f. Verify the voting and proclaim the results by order of the President of the Financial Policy and Regulation Board; g. Certify and notify the decisions of the Financial Policy and Regulation Board; h. Draft and prepare the minutes of the Board sessions based on the recordings, within a term not greater than ten (10) days from its closure; i. Sign together with the President of the Board the minutes of the sessions, set forth the corresponding reasons regarding the attendees, delegates, and votes recorded in the Board's resolutions, and certify them; j. Notify the resolutions and other dispositions of the Board, to the members, participants, and whoever corresponds. The notification will be carried out attaching a copy of the corresponding resolution; k. Deliver to the Board members certified copies of the resolutions and approved minutes of the sessions, when requested; l. Be responsible for the publication of the resolutions of the Financial Policy and Regulation Board in the Official Register and on the institutional web portal, as appropriate; m. Codify and keep updated the Board's Regulations; n. Maintain, administer, and safeguard, duly ordered and paginated, under his responsibility, the documentary and magnetic archive of the sessions; o. Keep secret the matters so classified by the Board;

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p. Keep an ordered list of all reserved files and information, in the terms determined in Article 17 of the Organic Code of Monetary and Financial Law, Book I; q. Receive and certify the presentation of communications, petitions, writings, and any other request addressed to the Board; r. Confer certified copies of Board documents, required by competent authority. In the case of reserved information, it will be delivered prior to the authorization of the President of the Board; and, s. Receive and manage the requests, consultations, complaints, and administrative appeals filed against the Board's resolutions.

Article 12.- Absence of the Technical Secretary.- In the event of the absence of the Technical Secretary, the President will assign these functions to the holder of the Technical Coordination, in order to maintain the functioning of the Board's collegiate body.

CHAPTER VI OF THE SESSIONS

Article 13.- Sessions.- The Board sessions will be held for the specific purpose of knowing, treating, and resolving the topics determined in the summons. The Board sessions may be ordinary or extraordinary and will be held in any place.

Ordinary sessions will be held every month and will be convened by the President of the Board.

Extraordinary sessions will be convened by the President of the Board ex officio or at the request of at least two of its members, to treat specific topics.

The quorum required for the installation and voting of the session is the total number of its members, without prejudice to one or more members being temporarily absent during the course of the session.

In the event that the President of the Board is temporarily absent during the development of the session, the Substitute President will preside in order to continue its development.

Interventions in in-person or virtual sessions must be recorded through the respective technological means; however, at the disposition of the President of the Board, those matters declared as reserved may not be recorded.

Attendees to the sessions may participate observing the agenda, prior authorization of the President of the Board, and must keep the secrecy imposed by Law.

At the request of one of the members, the President may suspend the treatment and resolution of any point on the agenda for the time he considers necessary.

The members of the Board, as well as the participants in the deliberations of the Board sessions, will act autonomously, will not seek or accept instructions from third parties, and will keep confidentiality regarding the matters known, treated, and deliberated within the Board that have been classified as reserved.

Article 14.- Form of the Board sessions.- The Board sessions may be...