Resolution JPRF-F-2023-074: Reforming the Norm for the Segmentation of Popular and Solidarity Financial Sector Entities

Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Financial Management Governmental Platform. Yellow Block, 5th Floor | Postal Code: 170507 | Quito - Ecuador | Resolution No. JPRF-F-2023-074 THE FINANCIAL POLICY AND REGULATION BOARD CONSIDERING: That Article 309 of the Constitution of the Republic of Ecuador states that the national financial system is composed of the public, private, and popular and solidarity sectors and will have specific and differentiated control entities and norms, which will be responsible for preserving its security, stability, transparency, and solidity; That Article 311 of the Magna Carta recognizes that the popular and solidarity financial sector will be composed of savings and credit cooperatives, associative or solidarity entities, communal banks and savings boxes; That the first paragraph of Article 13 of Book 1 of the Organic Code of Monetary and Financial creates 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 the formulation of credit, financial, securities, insurance, and prepaid comprehensive health care service policy and regulation; That subsection h) of numeral 7 of Article 14.1 Ibidem, determines as duties and powers of the Financial Policy and Regulation Board: "(…) h. Establish the segmentation of the entities of the popular and solidarity financial sector."; That Articles 150 and 151 of the aforementioned Code establish that the entities of the national financial system will be subject to the regulation issued by the Financial Policy and Regulation Board; and that the regulation must recognize the nature and particular characteristics of each of the sectors of the national financial system, being able to be differentiated by sector, by segment, by activity, among others; That Article 444 of the cited legal body prescribes: "Regulation and control. Popular and solidarity financial entities are subject to the regulation of the Financial Policy and Regulation Board and to the control of the Superintendence of the Popular and Solidarity Economy, who in the policies they issue will take into account the nature and characteristics of the solidarity financial sector."; That the Fiftieth Transitory Provision added to the aforementioned legal body, by the Organic Reforming Law to the Organic Code of Monetary and Financial for the Defense of Dollarization, determines: "Transitory Regime of Resolutions of the Codification of the Monetary and Financial Policy and Regulation Board. The resolutions contained in the Codification of Monetary, Financial, Securities and Insurance Resolutions of the Monetary and Financial Policy and Regulation Board and the norms issued by the control bodies will remain in force until the Monetary Policy and Regulation Board and the Financial Policy and Regulation Board decide what corresponds, within the scope of their competencies."; That the "NORM FOR THE SEGMENTATION OF THE ENTITIES OF THE POPULAR AND SOLIDARITY FINANCIAL SECTOR" is found in Section I, of Chapter XXXVII "Popular and Solidarity Financial Sector", of Title II "National Financial System", of Book I "Monetary and Financial System", of the Codification of Monetary, Financial, Securities and Insurance Resolutions;

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Financial Management Governmental Platform. Yellow Block, 5th Floor | Postal Code: 170507 | Quito - Ecuador | That the Superintendence of the Popular and Solidarity Economy, through Office No. SEPS-SGD-2022-20607-OF of July 15, 2022, submits for the knowledge and approval of the Financial Policy and Regulation Board, the proposal for the Reforming Norm of Section I "NORM FOR THE SEGMENTATION OF THE ENTITIES OF THE POPULAR AND SOLIDARITY FINANCIAL SECTOR", of Chapter XXXVII "Popular and Solidarity Financial Sector", of Title II "National Financial System", of Book I "Monetary and Financial System", of the Codification of Monetary, Financial, Securities and Insurance Resolutions" aforementioned; That the Technical Secretary of the Financial Policy and Regulation Board, through Memorandum No. JPRF-ST-2023-0055-M of July 14, 2023, submits to the President of the Board the following reports: i) The technical report No. JPRF-CTSF-2023-010 of July 13, 2023, issued by the Technical Coordination of Policy and Regulation of the Financial System, which states that the proposed reforms to the "Norm for the Segmentation of the Entities of the Popular and Solidarity Financial Sector" contained in Section I of Chapter XXXVII, Title II, of Book I of the Codification of Monetary, Financial, Securities and Insurance Resolutions, would allow aligning the secondary norm with the reforms to Book I of the Organic Code of Monetary and Financial in this matter; and, additionally, would allow providing greater precision to the provisions related to the update of the segmentation of the entities of the popular and solidarity financial sector, as well as to the aspects relative to the actions that the control body must carry out in coordination with COSEDE, with which clarity would be given to the norm, providing greater legal certainty in its application in operational processes. ii) Legal Report No. JPRF-CJF-2023-027 of July 14, 2023, issued by the Legal Coordination of Policy and Financial Norms of the Board, which concludes that: "Given the legal considerations indicated, this Coordination considers that the proposal presented by the head of the Superintendence of the Popular and Solidarity Economy, regarding the reform of Section I "NORM FOR THE SEGMENTATION OF THE ENTITIES OF THE POPULAR AND SOLIDARITY FINANCIAL SECTOR", of Chapter XXXVII "POPULAR AND SOLIDARITY FINANCIAL SECTOR", of Title II "NATIONAL FINANCIAL SYSTEM", of Book I "MONETARY AND FINANCIAL SYSTEM", of the Codification of Monetary, Financial, Securities and Insurance Resolutions, is legally viable."; That the Financial Policy and Regulation Board, in an ordinary session held by technological means, convened on July 14, 2023 and carried out through video conference on July 18, 2023, learned of Memorandum No. JPRF-ST-2023-055-M of July 14, 2023, issued by the Technical Secretary of the Board; as well as the aforementioned reports from the Technical Coordination of Policy and Regulation of the Financial System and the Legal Coordination of Policy and Financial Norms, in addition to the corresponding draft resolution; That the Financial Policy and Regulation Board, in an ordinary session held by technological means, convened on July 14, 2023 and carried out through video conference on July 18, 2023, learned of and approved the following Resolution; and,

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Financial Management Governmental Platform. Yellow Block, 5th Floor | Postal Code: 170507 | Quito - Ecuador | In exercise of its functions, RESOLVES: ARTICLE FIRST.- The text of Article 1 of Section I "Norm for the Segmentation of the Entities of the Popular and Solidarity Financial Sector", of Chapter XXXVII "Popular and Solidarity Financial Sector", of Title II "National Financial System", of Book I "Monetary and Financial System", of the Codification of Monetary, Financial, Securities and Insurance Resolutions, is substituted by the following: "Art. 1.- The entities of the popular and solidarity financial sector, according to their asset balance, will be located in the following segments: ARTICLE SECOND.- Article 2 of Section I "Norm for the Segmentation of the Entities of the Popular and Solidarity Financial Sector", of Chapter XXXVII "Popular and Solidarity Financial Sector", of Title II "National Financial System", of Book I "Monetary and Financial System", of the Codification of Monetary, Financial, Securities and Insurance Resolutions, is substituted by the following text: "Art. 2.- According to the value of the assets reported to the Control Body in the financial statements as of December 31 of the immediately preceding year, the location of the entities of the popular and solidarity financial sector in the segments to which they correspond will be updated starting from June 1 of each year and will enter into force from this same date. Entities that from June of each year are located in a lower segment must maintain their action and activity in accordance with the norms of the segment from which they come, for one year from the change of segment. In cases where, on the date of update of the segmentation indicated in this article, the necessary information to carry out the corresponding location is not available, this will be carried out based on the last available financial statements." ARTICLE THIRD.- Article 3 is repealed and Section I "Norm for the Segmentation of the Entities of the Popular and Solidarity Financial Sector", of Chapter XXXVII "Popular and Solidarity Financial Sector", of Title II "National Financial System", of Book I "Monetary and Financial System", of the Codification of Monetary, Financial, Securities and Insurance Resolutions is renumbered.

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Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas, Financial Management Governmental Platform. Yellow Block, 5th Floor | Postal Code: 170507 | Quito - Ecuador | ARTICLE FOURTH.- The following General Provision is added after the Second General Provision of Section I "Norm for the Segmentation of the Entities of the Popular and Solidarity Financial Sector", of Chapter XXXVII "Popular and Solidarity Financial Sector", of Title II "National Financial System", of Book I "Monetary and Financial System", of the Codification of Monetary, Financial, Securities and Insurance Resolutions, with the following text: "THIRD.- The Control Body will notify the changes in segmentation to the Deposit Insurance Corporation, Liquidity Fund and Private Insurance Fund by June 10 of each year. In case of segment change, the new coverage will govern from the date of notification. The entities of the popular and solidarity financial sector, without prejudice to what is stated in the second paragraph of Article 2 of this norm, will assume all existing obligations in the regulations related to Deposit Insurance and Liquidity Fund from the month immediately following the date of notification of the segment change. In case that the aforementioned date coincides with a weekend or holiday, the notification will be made on the next business day." FINAL PROVISION.- This Resolution will enter into force from the present date, without prejudice to its publication in the Official Register. This Resolution shall be published on the website of the Financial Policy and Regulation Board, within a maximum term of two days from its issuance. NOTIFY.- Given in the Metropolitan District of Quito, on July 18, 2023. THE PRESIDENT, Mgs. María Paulina Vela Zambrano The resolution preceding was processed and signed by Master María Paulina Vela Zambrano, President of the Financial Policy and Regulation Board, in the Metropolitan District of Quito, on July 18, 2023.- I CERTIFY. TECHNICAL SECRETARY Dr. Nelly Arias Zavala