Resolution JPRF-V-2025-0157: Reforming Sections on Public Offering and Issuance of ETF Quotas and Investment Funds

Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas Government Financial Management Platform. Red Block, 8th floor | Postal Code: 170507 | Quito - Ecuador | Resolution No. JPRF-V-2025-0157 THE FINANCIAL POLICY AND REGULATION BOARD CONSIDERING: That Article 82 of the Constitution of the Republic of Ecuador prescribes that the right to legal certainty is based on respect for the Constitution and the existence of prior, clear, public legal norms applied by competent authorities; That number 6 of Article 132 of the aforementioned Constitution grants public regulatory bodies the authority to issue norms of a general nature in matters within their competence, without altering or innovating legal provisions; That Article 226 of the Fundamental Norm stipulates that State institutions, their bodies, dependencies, public servants, and persons acting by virtue of a State power shall exercise only the competencies and faculties attributed to them in the Constitution and the law; having the duty to coordinate actions to fulfill their purposes and make effective the enjoyment and exercise of rights recognized in the Constitution; That Article 227 of the Magna Carta establishes that public administration constitutes a service to the community governed by the principles of effectiveness, efficiency, quality, hierarchy, decentralization, coordination, participation, planning, transparency, and evaluation; That Article 13 of the Organic Monetary and Financial Code, Book I, reformed from the promulgation of the Organic Reformatory Law to the Organic Monetary and Financial Code for the Defense of Dollarization, created the Financial Policy and Regulation Board, part of the Executive Function, as a public law legal entity, with administrative, financial, and operational autonomy, responsible for formulating credit, financial, securities, insurance, and prepaid comprehensive health care service policy and regulation; That Article 14 ibidem, Book I, in numbers 1 and 2, determines that, within the scope of the Financial Policy and Regulation Board, it corresponds to formulate credit and financial policy, including securities policy; as well as to issue regulations that allow maintaining the integrity, solidity, sustainability, and stability of the securities system; establishing that, for the fulfillment of these functions, the referred Board will issue norms in matters within its competence, without being able to alter legal provisions; being able to issue regulations by segments, economic activities, and other criteria; That the Organic Monetary and Financial Code, Book I, in its Article 14.1, prescribes that, for the performance of its functions, the Financial Policy and Regulation Board must fulfill certain duties and exercise certain faculties; among which are those indicated in numbers 1, 9, 16, 25, and 27, which are: regulate the creation, constitution, organization, activities, operation, and liquidation of securities entities; issue the non-prudential regulatory framework for all securities entities, which will include, among others, norms on accounting, transparency and disclosure of information, market integrity, consumer protection; regulate the constitution, operation, and liquidation of funds and fiduciary businesses related to the securities market; apply the provisions of this Code and resolve cases not provided for in it, within its competence; and, exercise the other functions, duties, and faculties assigned to it by the Organic Code and the law; That the last paragraph of Article 14.1 ibidem mandates that all norms and policies issued by the Financial Policy and Regulation Board in the exercise of its functions, duties, and faculties must be backed by duly founded and argued technical reports; That Article 25.1, number 1, of the aforementioned organic code determines, within the functions of the Technical Secretariat of this Board, the elaboration of technical and legal reports that support the regulation proposals that the Financial Policy and Regulation Board will issue; That General Provision Twenty-Ninth of the Organic Monetary and Financial Code, Book I, prescribes: “In the current legislation where mention is made of the 'Monetary and Financial Policy and Regulation Board', replace it with 'Financial Policy and Regulation Board'.”; That Transitory Provision Fiftieth-Fourth of the previously mentioned Code determines the transitional regime for resolutions of the Codification of the Monetary and Financial Policy and Regulation Board, establishing that: “(...) Resolutions contained in the Codification of Monetary, Financial, Securities, and Insurance Resolutions of the Monetary and Financial Policy and Regulation Board and norms issued by control bodies will maintain their validity until the Monetary Policy and Regulation Board and the Financial Policy and Regulation Board resolve what corresponds, within their competencies.”; That the Securities Market Law, contained in Book II of the Organic Monetary and Financial Code, when referring to the object and scope of said Law, determines in its Article 1 that its object is to promote an organized, integrated, effective, and transparent securities market, in which securities intermediation is competitive, orderly, equitable, and continuous, as a result of true, complete, and timely information; whose scope covers the securities market in its stock and over-the-counter segments, stock exchanges, trade associations, securities houses, fund administrators and trusts, rating agencies, issuers, external auditors, and other participants who in any way act in the securities market; That the Securities Market Law, in its unnumbered article added following Article 1, prescribes that the guiding principles of the securities market that guide the actions of the Financial Policy and Regulation Board, the Superintendence of Companies, Securities and Insurance, and participants are: i) public faith; ii) investor protection; iii) transparency and publicity; iv) symmetric, clear, true, complete, and timely information; v) free competition; vi) equal treatment of securities market participants; vii) application of good corporate practices; viii) respect and strengthening of the regulatory power of the Financial Policy and Regulation Board, subject to the Constitution of the Republic of Ecuador, public policies of the Securities Market, and the Law; and, ix) promote financing and investment in the national development regime and a democratic, productive, efficient, and solidarity market; determining that these principles must always be interpreted in the sense that most favors the investor; That Article 9 of the Organic Monetary and Financial Code, Book II (Securities Market Law), enumerates the attributions that currently correspond to the Financial Policy and Regulation Board in the context of this Law, among which are those indicated in numbers 1, 3, 4, 6, 10, 13, and 25 which are: (i) establish the general policy of the securities market and regulate its functioning; (ii) promote the opening of capital and financing through the securities market, as well as the use of new instruments that can be traded in this market; (iii) issue the necessary resolutions for the application of this Law; (iv) regulate the creation and functioning of securities houses, rating agencies, stock exchanges, the provider and administrator society of the unique stock system SIUB, compensation and settlement depositories for securities, fund administrators and trusts, as well as the services they provide; (v) regulate the public offering of securities, establishing the minimum requirements that securities offered publicly must have; as well as the procedure for the information that must be disseminated to the public to adequately reveal the financial situation of issuers; (vi) regulate registrations in the Public Registry of the Securities Market and its maintenance; and, (vii) establish the norms that are necessary to prevent cases of conflict of interest and affiliation of market participants; That Article 76 letter c) of the Securities Market Law provides that, within the classification of investment funds, there are exchange traded funds, defined as those that: “cannot invest in projects, but exclusively in securities admitted to stock quotation. These funds may replicate the same composition of a stock index. The Monetary and Financial Policy and Regulation Board will establish the norms for the constitution of exchange traded funds and the negotiation and registration of their quotas, which constitute negotiable securities in the securities market.”; That Article 15 of the Organic Administrative Code, with reference to the principle of responsibility, provides that the State will respond for damages as a consequence of the lack or deficiency in the provision of public services or the actions or omissions of its public servants or subjects of private rights who act in the exercise of a public power delegated by the State and its dependents, controlled or contractors, with the State making effective the responsibility of the public servant for intentional or negligent acts or omissions, stating that no public servant is exempt from responsibility; That the Technical Secretary of the Financial Policy and Regulation Board, through Memorandum No. JPRF-SETEC-2025-0040-M of May 28, 2025, submits to the President of the Board the Technical Report No. JPRF-CTVS-2025-005 of May 28, 2025, issued by the Technical Coordination of the Securities and Insurance System Policy; as well as the Legal Report No. JPRF-CJF-2025-024 of May 28, 2025, issued by the Legal Coordination of Financial Policy and Norms of this Board; That the Financial Policy and Regulation Board, in an extraordinary session held by technological means, convened on May 28, 2025, and carried out via video conference on May 30, 2025, reviewed Memorandum No. JPRF-SETEC-2025-0040-M of May 28, 2025, issued by the Technical Secretary of the Board; as well as the aforementioned Technical Report No. JPRF-CTVS-2025-0005 and Legal Report No. JPRF-CJF-2025-024, in addition to the corresponding resolution project; That the Financial Policy and Regulation Board, in an extraordinary session held by technological means, convened on May 28, 2025, and carried out via video conference on May 30, 2025, reviewed and approved the following Resolution; and, In exercise of its functions, RESOLVES: ARTICLE FIRST.- Substitute the text of Article 8 of Section II “Issuance and Public Offering”, Chapter XI “Public Offering of Quotas of Investment Exchange Traded Funds”, Title II “Public Offering and Issuance of Generic Securities”, Book II “Securities Market” of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, with the following: “Art. 8.- On the issuance of new participation quotas.- In the case of new issuances of participation quotas of existing exchange traded funds, which does not correspond to an issuance by tranches, investors must acquire said quotas in primary public offering processes at their last current value, for which they must observe what is provided in Article 8.1.” ARTICLE SECOND.- Incorporate Article 8.1 in Section II “Issuance and Public Offering”, Chapter XI “Public Offering of Quotas of Investment Exchange Traded Funds”, Title II “Public Offering and Issuance of Generic Securities”, Book II “Securities Market” of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, with the following text: “Art. 8.1.- New issuances of participation quotas of exchange traded funds constituted and registered in the Public Registry of the Securities Market.- To carry out a new issuance of participation quotas of exchange traded funds, the legal representative of the fund must obtain authorization from the Superintendence of Companies, Securities and Insurance for the public offering and registration of the new issuance of participation quotas in the Public Registry of the Securities Market, in accordance with the terms and conditions of the reforms to the constitution contract of the exchange traded fund and its internal regulations; and, as provided in Section I of Chapter XI, Title II of the Codification of Monetary, Financial, Securities, and Insurance Resolutions. For this effect, the presentation of a new public offering prospectus will be necessary, which must be approved by the Superintendence of Companies, Securities and Insurance and will contain, in addition to the information and requirements established in Article 7 of this chapter, the following:

1. Cover: a. Amount of the issuance b. Amount of previously placed quotas c. New amount of the quota issuance to be offered
2. Summary of information about the fund: a. Determination of the amount of the exchange traded fund's equity, number of quotas into which it is divided, classes, and nominal value of each of the quotas. b. Total amount of previously placed quotas; new amount of quota issuance to be offered and classes of quotas, if any. c. Copy of the reformed internal regulations. d. Copy of the reform deed of the constitution contract of the fund.” ARTICLE THIRD.- Substitute the text of number 4 of Article 3 of Section I “Constitution and Authorization of Investment Funds”, Chapter II “Investment Funds”, Title XII “Institutional Investors”, Book II “Securities Market” of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, with the following: “4. Denomination and indication that it is an administered, collective, or exchange traded fund.” ARTICLE FOURTH.- Substitute the text of Article 6 of Section II “Registration in the Public Registry of the Securities Market”, Chapter II “Investment Funds”, Title XII “Institutional Investors”, Book II “Securities Market” of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, with the following: “Art. 6.- Registration and authorization of administered, collective, and exchange traded investment funds: for the Superintendence of Companies, Securities and Insurance to register these funds, it must previously approve the internal regulations and, in the case of administered funds, the format of the incorporation contract. For the registration of these funds in the Public Registry of the Securities Market, the fund and trust administrator must present to the Superintendence of Companies, Securities and Insurance the following documentation:
3. General documentation: a. Application for registration and authorization of fund operation, signed by the legal representative, certifying the truthfulness of the attached information. b. Fill out the Registry Form. c. Public deed of constitution of the fund. d. Copy of the electronic services contract signed with companies that provide this type of service. e. Certified copy of the custody contract duly signed between the fund and trust administrator society and the financial institution or centralized compensation and settlement depository for securities, which will act as such and must be subject to what is provided in this codification.
4. Additional requirement for administered funds: a. Calculation formulas and application software programs on the value of the daily unit, commissions, and daily yield. b. Copy of the contract with the distribution agent.
5. Additional requirements for collective funds: a. Public offering prospectus. b. Risk rating granted by a rating agency, authorized by the Superintendence of Companies, Securities and Insurance. c. Project feasibility study. d. Certification issued by the Centralized Compensation and Settlement Depository for Securities stating that the contract has been signed for the quotas to be dematerialized.
6. Additional requirements for exchange traded funds: a. Public offering prospectus; b. Risk rating granted by a rating agency, authorized by the Superintendence of Companies, Securities and Insurance; and, c. Certification issued by the Centralized Compensation and Settlement Depository for Securities stating that the contract has been signed for the quotas to be dematerialized. 4.1. Requirements for new issuances of participation quotas of exchange traded funds constituted and registered in the Public Registry of the Securities Market: a. Certified copy of the reform to the constitution contract and internal regulations of the exchange traded fund, which stipulates a new issuance of participation quotas; b. What is stated in letters a, b, and c of the preceding number.” ARTICLE FIFTH.- Incorporate Section IX “Specific Provisions for Exchange Traded Funds” in Chapter II “Investment Funds”, Title XII “Institutional Investors”, Book II “Securities Market” of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, with the following text: “SECTION IX: SPECIFIC PROVISIONS FOR EXCHANGE TRADED FUNDS Art. 35.- Assemblies of the contributors of exchange traded funds.- Contributors of exchange traded funds will meet in general assemblies, of an ordinary or extraordinary character. Ordinary general assemblies will be held once a year, in accordance with what the internal regulations determine, to resolve, among other points, the designation of the surveillance committee. Extraordinary general assemblies may be convened at any time to address issues related to reforms and compliance with the internal regulations. Art. 36. On the Convocation.- The convocation to the assembly of contributors will be notified and published on the website of the fund and trust administrator with eight (8) days in advance, informing contributors of the place, date, time, and agenda of the assembly. For the calculation of this term, the day of publication nor the day of the celebration of this assembly will be counted. The assembly may validly deliberate, in the first convocation, with the presence of contributors representing more than fifty percent (50%) of the quotas in circulation and in this case its decisions will be taken by simple majority, calculated based on the quotas in circulation, constituting the quorum. If there is no quorum in the first convocation, a new convocation must be held, following the same formalities as the first. In the second convocation, the assembly will be installed with the contributors present and decisions will be taken with the favorable vote of two-thirds of the quotas in circulation constituting the quorum. When the fund administrator has the quality of contributor, it may participate in ordinary or extraordinary assemblies; however, it will not be taken into account within the quorum necessary for decision-making. In any case, for the community of contributors to be able to resolve, in both first and second convocation, the substitution of its administrator, it will require the favorable vote of holders of more than fifty percent (50%) of the quotas in circulation. Art. 37.- On the Surveillance Committee.- The Surveillance Committee will be composed of an odd number of representatives of the fund's contributors, who will be elected in ordinary assembly and will serve for one year in their positions, being able to be re-elected, as determined in the internal regulations. Once the operation of a fund has begun, the administrator will proceed to designate a provisional Surveillance Committee, which will last in its functions until the first ordinary assembly of contributors, which must meet to resolve on the integration of the definitive Surveillance Committee, within a period of six (6) months. Contributors who are: a) related to the administrator; or, b) belong to companies affiliated with the administrator as determined by Title XVIII “Affiliated Companies” of Book II of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, will not be considered as members of the surveillance committee. Art. 38.- Attributions.- The attributions of the Surveillance Committee will be:
7. Verify that the administrator complies with what is provided in the fund's internal regulations and its investment policy;
8. Verify that the information delivered to contributors regarding the management of the fund is sufficient and timely;
9. Report immediately to the control body and to the general assembly of contributors, when they detect the non-compliance with the norms governing the fund and its administrator, being able to request, for this reason, the convocation to an extraordinary assembly of contributors;
10. Inform the assembly of contributors about its work and the conclusions obtained; and,
11. The other attributions that the assembly of contributors determines for the committee. Art. 39. On the reform of the Internal Regulations.- By initiative of the fund and trust administrator, changes to the fund's internal regulations may be proposed to the general assembly of contributors. For this effect, this decision must be taken by more than fifty percent of the total quotas into which the fund is divided on the date of the convocation.