Regulation for Central Securities Depositories and Securities Clearing and Settlement Systems

This document was prepared by the Superintendence of the Securities Market for the purpose of facilitating the consultation of the current provisions of the Regulation for Central Securities Depositories and Securities Clearing and Settlement Systems, approved by the Fifth Resolution of the National Securities Council, R-CNMV-2019-18-MV, dated July 2, 2019, and the Fourth Resolution of the National Securities Council, R-CNMV-2026-07-MV, dated April 21, 2026 (hereinafter, the “R-CNMV-2026-07-MV”); which are published at: https://simv.gob.do/resoluciones/

REGULATION FOR CENTRAL SECURITIES DEPOSITORIES AND SECURITIES CLEARING AND SETTLEMENT SYSTEMS

TITLE I GENERAL PROVISIONS

CHAPTER I Object and Scope

Article 1. Object. This Regulation aims to develop the provisions relating to securities clearing and settlement systems and the activity of central securities depositories, in accordance with what is established by Law No. 249-17 on the Securities Market, promulgated on December 19, 2017, and in compliance with international standards in this matter.

Article 2. Scope. The provisions of this Regulation shall apply to securities clearing and settlement systems and their administrators, as well as to central securities depositories, hereinafter referred to as “the Entities.”

CHAPTER II Definitions

Article 3. Definitions [Modified by Article 1 of R-CNMV-2026-07-MV]. For the purposes and effects of this Regulation, the terms and concepts detailed below shall have the following meaning:

1. Senior Management. It is composed of a part of the key management personnel, specifically the General Manager or Chief Executive Officer and the persons who report directly to him. The members of senior management are responsible for planning, directing, and controlling the strategies and operations of the company that have been previously approved by the Board of Directors.

2. Root Cause Analysis [Incorporated by Article 1 of R-CNMV-2026-07-MV]. A systematic process by which the entity identifies the fundamental origin of an incident, beyond its immediate effects, with the objective of understanding what technical, human, or control failures allowed its occurrence.

3. Institutional Client. An institutional investor who is a client of a clearing member and who has the status of participant in a central securities depository, which, even if not constituted as a clearing member, the entity administering the clearing and settlement system allows to instruct transfer orders directly, through a centralized trading mechanism or order registration system.

4. Non-stressed market volatility conditions. Range of price fluctuations during a trading day, with a probability of occurrence equal to or greater than one percent (1%), as determined by the administrators of clearing and settlement systems, based on the use of academically accepted price volatility calculation models.

5. Council. It is the National Securities Council of the Dominican Republic.

6. Digital Document. Information encoded digitally on a logical or physical medium in which electronic, magnetic, optical, or similar methods are used that constitute a representation of legally relevant acts, facts, or data.

7. Credit Exposure. Potential loss determined as the difference between the market value of one or more pending settlement operations and the value of said operations according to the agreed prices. If the clearing and settlement system requires that the credit exposure be assumed by the defaulting party, then from the seller's perspective, credit exposure is positive when the market price is higher than the agreed price, and from the buyer's perspective, credit exposure is positive when the market price is lower than the agreed price.

8. Current Credit Exposure. Credit exposure evaluated at the moment of a hypothetical default that may occur at the time of measurement.

9. Future Credit Exposure. Credit exposure evaluated at the end of the time window that elapses between the hypothetical default that may occur at the time of measurement and the moment when positions are finally settled, or losses are covered and pending obligations are closed (close-out period).

10. Settlement Date. The date on which securities and funds, as applicable, are transferred to the respective accounts of the buyer and seller of a securities transaction, extinguishing the pending obligations between them, generated by said transaction.

11. Contained Incident [Incorporated by Article 1 of R-CNMV-2026-07-MV]. An operational or security incident whose propagation has been stopped, and regarding which the entity has managed to restore control over the affected processes, systems, or services, allowing the initiation of the technical root cause analysis, without risk of escalation or additional impact on the service or third parties.

12. Indemnification. Economic compensation that may be established in the internal regulations in favor of a clearing member or its clients, acting through the former, resulting from the damage or prejudice that may be caused to them due to the delivery of securities and/or cash on a date or time different from the originally stipulated one.

13. Financial Market Infrastructure. A multilateral system among securities market participants, including the system operator, that is used for the purpose of clearing, settling, or recording payments, securities, derivatives, or other financial transactions. Financial market infrastructures include central securities depositories, clearing and settlement systems, payment systems, and central counterparty entities.

14. Gross Settlement. Settlement of transfer orders for securities or funds individually, transaction by transaction, based on their total value.

15. Net Settlement. Settlement of the balances resulting from the netting of debits and credits of obligations between two (bilateral settlement) or more participants (multilateral settlement).

16. Law. It is Law No. 249-17 on the Securities Market of the Dominican Republic, promulgated on December 19, 2017.

17. Law No. 155-17. Law No. 155-17 against money laundering and the financing of terrorism that replaces and repeals Law No. 72-02 on money laundering from the illicit traffic of drugs, promulgated on June 1, 2017.

18. Clearing Member. Participants authorized to operate in clearing and settlement systems.

19. Structured Transaction. It is a transaction derived from a contractual agreement, which involves a series of linked transactions, with settlement on different dates, determining the yield of said transaction from the result of the set of individual operations.

20. Multi-level Participation. A mechanism by which an institutional client instructs directly transfer orders for its own operations, through a centralized trading mechanism or order registration system, through an agreement for such purposes signed with a clearing member of a clearing and settlement system, without the former being subject to the rules of the system administrator, with the custody accounts associated with said client being debited or credited only.

21. Depository Participant. A legal person who, in accordance with what is provided in paragraph II of Article 309 of the Law, may access the services of central securities depositories as participants.

22. Recovery. Set of actions that an entity may take to maintain the viability of the company as a going concern and the continuous provision of critical services, in the event of any financial loss, liquidity deficit, or capital insufficiency, whether due to business weaknesses, infrastructure losses, or other causes. It includes actions to replenish financial resources contributed to equity and exhausted liquidity agreements, if applicable.

23. Custody Risk. Risk of loss regarding assets held in custody in the event of insolvency, negligence, fraud, poor administration, or inadequate maintenance of a custodian's records.

24. Credit Risk. Risk that a party will not settle an obligation for its total value at maturity or at any time in the future. Credit risk is broken down into: replacement risk and principal risk.

25. Investment Risk. Risk of loss faced by an entity when investing its own assets or those of its participants, such as collateral.

26. Replacement Risk. Risk that originates in the inability of one of the participants to fulfill the delivery of securities or cash, leaving its counterparty with the need to replace, at current market prices, the agreed transaction.

27. Principal Risk. Risk that the seller of a security delivers said instrument but does not receive payment, or that the buyer of a security makes the payment but does not obtain said instrument. In this way, principal risk corresponds to the possibility of losing the full value of the securities or funds transferred.

28. Liquidity Risk. Risk that a party will not settle a cash delivery obligation for its total value when it matures, but on a subsequent undetermined date, forcing other participants to resort to other sources of cash to honor their respective commitments.

29. General Business Risk. Risk of deterioration of the financial position value of an entity (as a going concern) as a result of the fall in its income or the increase in its expenses, in such a way that expenses exceed income and generate a loss attributable to capital that must be charged against its equity.

30. Operational Risk. Risk that deficiencies that may occur in information systems or loss due to lack of adequacy or failure of internal processes, human errors, management failures, or alterations caused by personnel and of internal and/or internal controls applicable, or due to external events that result in the reduction, deterioration, or interruption of services provided by an entity.

31. Systemic Risk. Risk that the inability of one or more participants to fulfill their obligations as planned implies that other participants are unable to fulfill their obligations at the corresponding maturity, causing a chain reaction on the rest of the financial market and eventually a collapse of it.

32. Holder. Who possesses the ownership right of the securities deposited in the custody account of a central securities depository, which may be a depository participant, an autonomous estate administered by a depository participant, or a client of a securities intermediary, whose custody account was opened by the latter in accordance with what is provided in Article 311 of the Law.

33. Simple Transactions. These will be known in this way, the transactions that generate a contract or mandate that only give rise to a single bilateral transaction, which is not linked to other transactions or other proposals for single or integral yield.

34. Internal Audit Unit. The internal audit unit is responsible for the follow-up and permanent evaluation of the institution's internal control system, guaranteeing through a systematic audit plan that all units comply with the norms, policies, and procedures approved by the Board of Directors, as well as compliance with legislation and the requirements of regulatory bodies. This unit will report directly to the Board of Directors or the audit committee.

35. Users. In the case of central securities depositories, it refers to their participants, and in the case of clearing and settlement systems, it refers to the clearing members.

Article 3-1. Legal Nature [Incorporated by Article 2 of R-CNMV-2026-07-MV]. Central securities depositories are joint-stock companies constituted in accordance with the Companies Law, whose exclusive corporate object is the keeping of the accounting record of book entries through which the securities registered in the Register are represented and the administration of clearing and settlement systems for public offer securities. Central securities depositories may exercise the functions and powers authorized by the Law and this Regulation.

TITLE II COMMON PROVISIONS APPLICABLE TO CENTRAL SECURITIES DEPOSITORIES AND TO STOCK EXCHANGES THAT ADMINISTER CLEARING AND SETTLEMENT SYSTEMS

CHAPTER I General Provisions

Article 4. Application of international principles. In the development and implementation of the regulation applicable to financial market infrastructures, as well as in the supervision of these systems, the Superintendence will adopt the Principles for Financial Market Infrastructures (PFMI), issued jointly by the Committee on Payments and Settlement Systems (CPSS) and the International Organization of Securities Commissions (IOSCO) or the one that modifies or replaces them.

CHAPTER II Corporate Governance

Section I. General Provisions

Article 5. Internal Audit. The Entities shall be subject to audits oriented to evaluate the adequacy of operational, technological, financial, and accounting procedures, the review of the control environment, and the control mechanisms implemented in accordance with the risk management system. Such evaluations shall be carried out by an internal audit unit of the entity, which will report directly to the Board of Directors or the audit committee, and will act in accordance with the instructions issued by the internal regulations and the internal audit policy, as well as internationally recognized standards in internal audit matters.

Article 6. Notification of changes in senior management. The Entities must notify the Superintendence of the start and end dates in office of each person serving in senior management, no later than one (1) business day after the event.

Section II. Board of Directors

Article 7. Role of the Board of Directors in risk management. In addition to what is provided by the Law, the Corporate Governance Regulation issued by Single Resolution, R-CNMV-2019-11-MV, dated April 2, 2019, of the National Securities Council (hereinafter, “Corporate Governance Regulation”) and internal regulations, the Board of Directors shall be the highest responsible party for the management of the risks of the Entities and the clearing and settlement systems they administer and shall equally be responsible for approving a clear and documented risk management framework, which includes the entity's risk tolerance policy, assigns responsibilities and lines of accountability for risk decisions, and addresses decision-making in crisis and emergency situations. Likewise, it must regularly monitor the development of risk management and the results of internal control instances in operational, credit, and liquidity risk, business risk, and all those identified in the entity's risk management framework.

Article 8. Conflicts of interest. In addition to the annual corporate governance report referred to in Article 221 of the Law and the minimum content established by the Corporate Governance Regulation, the Entities must expressly identify conflicts of interest and, in particular, reveal to the Superintendence the possible existence of such conflicts in the following circumstances:

1. When a member of the Board of Directors, personally or as linked to third parties, has interests that compete with those of the administered clearing and settlement system or its administering entity;
2. When the entity is a company linked to a society administering centralized trading mechanisms or to a financial market infrastructure and the development of new services for the securities market is evaluated;
3. When a member of the Board of Directors, personally or as linked to third parties, has interests that may affect their fairness in the treatment of users of the clearing and settlement system;
4. When services are subcontracted with linked companies; and
5. When the development of operational and financial security mechanisms is evaluated together with profitability objectives, which could result in a detriment to the former.

Paragraph I. In the presence of conflicts of interest, as indicated in these numerals, when analyzing or making decisions, the member or members of the Board of Directors in conflict must abstain from participating in the discussion and decision-making, a fact that must be recorded in the minutes of the respective committee or council session.

Paragraph II. The corporate governance report must refer to the mechanisms implemented for the appropriate resolution of identified conflicts of interest.

Section III. User Committee

Article 9. User Committee. User committees shall be composed of at least three (3) representatives from the different participants of the depository, in the case of central securities depositories, and three (3) representatives from the different clearing members of the clearing and settlement system. The user committees will advise the Board of Directors of the entities on the fundamental provisions that affect their members, at minimum regarding the development of new services, the security of the clearing and settlement system, efficiency and service level, as well as the pricing structure, and their opinions will not be binding.

Paragraph I. The advice of the user committee will be free from any direct influence of the Board of Directors of the Entities. Through an internal regulation, approved by the Board of Directors, the Entities will define the mandate of each user committee they establish, the corporate governance system necessary to guarantee its independence and its operational procedures, as well as the admission criteria and the mechanism for electing the members of the user committee. The internal regulation of the committee will be made public and will ensure that the user committee reports directly to the Board of Directors and meets periodically.

Paragraph II. Without prejudice to the right of the Superintendence to be duly informed, the members of the user committee will be subject to confidentiality rules. If, according to the internal regulation of the user committee, it is determined that one of its members has a real or potential conflict of interest regarding a specific issue, said member will not be authorized to vote on the matter.

Paragraph III. The internal regulation of the committee must establish provisions that allow for adequate rotation between representatives of the participants of the central securities depository and the clearing members respectively, so that no depository participant and clearing member, or belonging to the financial group of those, has a representative in the respective committee for more than two (2) consecutive years.

CHAPTER III Provision of Services

Section I. Fees

Article 10. Fees. The entities must establish a fee manual with a clear description of the fees for their services, at the level of each individual service, including their policies on any available discount.

Paragraph I. Fees may be established based on the following concepts: a) For participation in the administered clearing and settlement system; b) For the custody of securities in deposit based on the amounts custodied; c) For the clearing and settlement of operations based on the volume of instructions entered or amounts settled; d) For the transfer of securities to facilitate the settlement of operations; e) For the transfer of securities under the free delivery of payment modality; f) For the registration of liens and other real rights on deposited securities; g) For the extrajudicial execution of pledged guarantees on book-entry securities; h) For acting as a paying agent; i) For the use of technological services for the benefit of participants as users; j) For the administration of collateral; and k) For the collection of activities inherent or complementary to those indicated.

Paragraph II. The types of fees may be fixed or variable based on a price applicable to each operation performed or each unit of service contracted. Except for the differentiations made under what is provided in paragraph of Article 46 of the Law, fees cannot make distinctions based on the type, nature, or nationality of the participant.

Paragraph III. The quality of shareholder of the entity must not influence the design of the fee structure.

Article 11. Fee Study [Modified by Article 3 of R-CNMV-2026-07-MV]. The Entities must present a fee study when a proposed increase equal to or greater than twenty percent (20%) in one or more fees in the current manual is proposed, either individually or jointly, taking as reference the accumulated variation of the impacted concepts within the period of twelve (12) months counted from the last approved update. The incorporation of new services will not require the presentation of a new fee study, but must be supported by an annex that is integrated into the most recent study presented.

Paragraph I. In case that the modifications made over time do not exceed the established percentage, the fee study must be updated every five (5) years.

Paragraph II. The fee study must be classified as reserved information, and the update of the fee study, which supports fee changes, must be sent to the Superintendence prior to the modification of the fee manual.

Paragraph III. The Superintendence may make observations to the fee study in the process of...