Resolution JPRF-V-2023-072: Reforming Regulations for the Provider and Administrator of the Single Stock Market System (SIUB)

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-V-2023-072 THE FINANCIAL POLICY AND REGULATION BOARD CONSIDERING: That, Article 226 of the Constitution of the Republic of Ecuador prescribes that state institutions, their agencies, dependencies, public servants, and persons acting by virtue of state authority shall exercise only the competencies and powers attributed to them in the Constitution and the law; having the duty to coordinate actions to fulfill their purposes and ensure the enjoyment and exercise of rights recognized in the Constitution; That, Article 227 of the Fundamental Norm establishes that public administration constitutes a service to the community governed by the principles of effectiveness, efficiency, quality, hierarchy, decentralization, concentration, coordination, participation, planning, transparency, and evaluation; That, Article 304 of the Magna Carta determines the objectives of commercial policy, including those specified in numbers 1, 2, and 3, which correspond to: developing, strengthening, and dynamizing internal markets based on the strategic objective established in the National Development Plan; regulating, promoting, and executing corresponding actions to boost the country's strategic insertion into the global economy; and strengthening the national productive apparatus and production; That, Article 339 of the same Constitution orders that the State will promote national and foreign investments and establish specific regulations according to their types, granting priority to national investment; stating that investments will be oriented with criteria of productive diversification, technological innovation, and generation of regional and sectoral equilibria; That, Article 13 of the Organic Monetary and Financial Code, Book I, reformed by the enactment 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 services policy and regulation; That, Article 14 of the aforementioned Code, Book I, in its numbers 1 and 2, determines that, within the scope of the Financial Policy and Regulation Board, it corresponds to formulate credit, financial (including insurance policy, prepaid comprehensive health care services, and securities) policies, as well as issue regulations that allow maintaining the integrity, solidity, sustainability, and stability of the national financial, securities, insurance, and prepaid comprehensive health care services systems, in accordance with Article 309 of the Constitution of the Republic of Ecuador; establishing that, to fulfill these functions, it will issue norms in matters within its competence, without altering legal provisions; being able to issue regulations by segments, economic activities, and other criteria; That, the Organic Monetary and Financial Code, Book I, in Article 14.1, prescribes that, for the performance of its functions, the Financial Policy and Regulation Board must fulfill certain duties and exercise specific powers; among which are those determined in its numbers 1, 9, and 27, which are: to regulate the creation, constitution, organization, activities, operation, and liquidation of securities entities; to issue the non-prudential regulatory framework for all securities entities, which will include, among others, norms on transparency and information disclosure, market integrity, and consumer protection; and, to exercise the other functions, duties, and powers assigned to it by the aforementioned Code and the law;

Resolution No. JPRF-V-2023-072 Page 2 of 7

---

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 Securities Market Law, contained in the second Book of the Organic Monetary and Financial Code, when referring to the object and scope of said Law, determines in its Article 1 that its purpose is to promote an organized, integrated, efficient, 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 and trust administrators, 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 immediately after 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: 1) public faith; 2) investor protection; 3) transparency and publicity; 4) symmetric, clear, true, complete, and timely information; 5) free competition; 6) equal treatment of securities market participants; 7) application of good corporate practices; 8) respect and strengthening of the regulatory authority of the Financial Policy and Regulation Board, subject to the Constitution of the Republic, public policies of the Securities Market, and the Law; and, 9) promoting financing and investment in the national development regime and a democratic, productive, efficient, and solidary market. 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, 4, and 6, which are, respectively: to establish the general policy of the securities market and regulate its functioning; to issue the resolutions necessary for the application of the aforementioned Law; and, to regulate the creation and functioning of securities houses, rating agencies, stock exchanges, the provider and administrator society of the single stock market SIUB, the central depositories for compensation and settlement of securities, fund and trust administrators, as well as the services they provide; That, Article 10 ibidem, when referring to the attributions and functions of the Superintendence of Companies, Securities, and Insurance, states that, in addition to the functions indicated in the Companies Law, the supervisory body will exercise the functions of surveillance, audit, intervention, and control of the securities market with the purpose that the activities of this market are subject to the legal order and attend to the general interest; That, Article 48 of the aforementioned Organic Code prescribes the obligations that stock exchanges must fulfill; That, the third unnumbered article added immediately after Article 50 ibidem states that, in order to have a unique stock market in our country that is orderly, integrated, transparent, equitable, and competitive and that observes the application of good corporate practices among stock exchanges, the existence of a single stock market system is established, which has the object of allowing, through an information platform, the negotiation of securities and financial instruments registered in the Public Registry of the Securities Market and in stock exchanges, even those traded in the REB; stating that, for this effect, a joint-stock company must be constituted and obtain operating authorization from the Superintendence of Companies, Securities, and Insurance. This joint-stock company will have as its exclusive and exclusive corporate object to provide and administer a single stock market system; That, the functioning and organization of the provider and administrator society of the Single Stock Market System will be regulated by the Financial Policy and Regulation Board, by provision of the aforementioned Article 48 of the Organic Monetary and Financial Code, Book II (Securities Market Law);

Resolution No. JPRF-V-2023-072 Page 3 of 7

---

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 Fiftieth Fourth Transitory Provision of the Organic Monetary and Financial Code, Book I, prescribes: "Transitory Regime of Resolutions of the Codification of the Monetary and Financial Policy Board. The resolutions contained in the Codification of Monetary, Financial, Securities, and Insurance Resolutions of the Monetary and Financial Policy Board and the norms issued by control bodies will maintain their validity until the Monetary Policy Board and the Financial Policy and Regulation Board resolve what corresponds, within the scope of their competencies."; That, through Letter S/N of May 23, 2023, the Quito Stock Exchange and the Guayaquil Stock Exchange, through their respective Presidents, present to the Financial Policy and Regulation Board various projects for reforms to the regulations corresponding to the Securities sector contained in the Codification of Monetary, Financial, Securities, and Insurance Resolutions; among them, that which refers to "reforms to the regulations applicable to SIUB (REDEVAL)". For this effect, they also presented the justifications for the proposed reforms; That, the Technical Secretariat of the Financial Policy and Regulation Board, through Memorandum No. JPRF-ST-2023-053-M of July 14, 2023, sends to the President of the Board the following reports: i) Technical Report No. JPRF-CTVS-2023-003 of July 13, 2023, issued by the Technical Coordination of Policy and Regulation of the Securities and Insurance System of the Board, which states that in consideration of the operational impact of the application of the "Norm that governs the Provider and Administrator Society of the Single Stock Market System-SIUB- and the services it provides" of Title X "Single Stock Market System (SIUB)" contained in Title X "Single Stock Market System (SIUB)", of Book II "Securities Market" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, a reform is necessary, in order to adapt said norm to the development and unfolding of the securities sector, and to seek improvements in its operability, in aspects pertaining to the requirements, obligations, and prohibitions of the Provider and Administrator Society of the Single Stock Market System; and, ii) Legal Report No. JPRF-CJF-2023-0026 of July 13, 2023, issued by the Legal Coordination of Policy and Financial Norms of the Board, which concludes that the Financial Policy and Regulation Board, as responsible for formulating policy and regulation for the securities sector, has legal competence and authority to: (i) regulate the creation, constitution, organization, activities, operation, and liquidation of securities entities; (ii) issue the non-prudential regulatory framework for all securities entities, which will include, among others, norms on transparency and information disclosure, market integrity, and consumer protection; and, (iii) exercise the other functions, duties, and powers assigned to it by the aforementioned Code and the law; in accordance with Article 14.1, numbers 1, 9, and 27 of the Organic Monetary and Financial Code, Book I; and that, the Financial Policy and Regulation Board has the attribution to: (i) establish the general policy of the securities market and regulate its functioning; (ii) issue the resolutions necessary for the application of the Securities Market Law; and, (iii) regulate the creation and functioning of the provider and administrator society of the single stock market SIUB, as well as the services they provide; in accordance with Article 9, numbers 1, 4, and 6 of the Organic Monetary and Financial Code, Book II (Securities Market Law). Likewise, the Financial Policy and Regulation Board has the legal attribution to regulate the functioning and organization of the provider and administrator society of the Single Stock Market System, by virtue of what is established in the third unnumbered article added immediately after Article 51 of the Organic Monetary and Financial Code, Book II (Securities Market Law);

Resolution No. JPRF-V-2023-072 Page 4 of 7

---

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 Financial Policy and Regulation Board, in ordinary session held by technological means, convened on July 14, 2023, and carried out via video conference on July 18, 2023, reviewed the Memorandum No. JPRF-ST-2023-053-M of July 14, 2023, issued by the Technical Secretariat of the Board; as well as the aforementioned reports from the Technical Coordination of Policy and Regulation of the Securities and Insurance System and from the Legal Coordination of Policy and Financial Norms, in addition to the draft resolution corresponding; That, the Financial Policy and Regulation Board, in ordinary session held by technological means, convened on July 14, 2023, and carried out via video conference on July 18, 2023, reviewed and approved the following Resolution; and, In exercise of its functions, RESOLVES: ARTICLE FIRST.- The text of number 11 of Article 2 of Chapter I "Norm that governs the provider and administrator society of the Single Stock Market System-SIUB- and the services it provides", Title X "Single Stock Market System (SIUB)" of Book II "Securities Market" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, is substituted by the following: "11. Sworn declaration made before a public notary by the members of the highest administrative body and its administrators, in accordance with what is provided in Article 3 of Chapter IV "Administrators and Members of the Board of Directors of Market Participants", of Title IV "Common Provisions to Registration in the Public Registry of the Securities Market" of this Book." ARTICLE SECOND.- The text of number 15 of Article 2 of Chapter I "Norm that governs the provider and administrator society of the Single Stock Market System-SIUB- and the services it provides", Title X "Single Stock Market System (SIUB)" of Book II "Securities Market" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, is substituted by the following: "15. Fill out the registry form in the system according to the format established by the Superintendence of Companies, Securities, and Insurance." ARTICLE THIRD.- Number 16 of Article 2 of Chapter I "Norm that governs the provider and administrator society of the Single Stock Market System-SIUB- and the services it provides", Title X "Single Stock Market System (SIUB)" of Book II "Securities Market" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, is eliminated. ARTICLE FOURTH.- The text of number 3 of Article 3 of Chapter I "Norm that governs the provider and administrator society of the Single Stock Market System-SIUB- and the services it provides", Title X "Single Stock Market System (SIUB)" of Book II "Securities Market" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, is substituted by the following: "3. Install the necessary equipment and devices for the use of the system in the stock exchanges and in each of the securities intermediaries authorized by said exchanges, when necessary, who will have the obligation to keep them operational, in accordance with the contract with the stock exchanges to provide the single stock market system."

Resolution No. JPRF-V-2023-072 Page 5 of 7

---

Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas Financial Management Governmental Platform. Yellow Block, 5th floor | Postal Code: 170507 | Quito - Ecuador | ARTICLE FIFTH.- The text of number 11 of Article 3 of Chapter I "Norm that governs the provider and administrator society of the Single Stock Market System-SIUB- and the services it provides", Title X "Single Stock Market System (SIUB)" of Book II "Securities Market" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, is substituted by the following: "11. Sign contracts with stock exchanges, authorized securities intermediaries, central depositories for compensation and settlement of securities, central counterparty entities; and, with third parties for access to the system for informational purposes. The object and scope of the contracts must be established based on the nature and powers of those who sign them." ARTICLE SIXTH.- The text of number 15 of Article 3 of Chapter I "Norm that governs the provider and administrator society of the Single Stock Market System-SIUB- and the services it provides", Title X "Single Stock Market System (SIUB)" of Book II "Securities Market" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, is substituted by the following: "15. Use the registry of issuers and securities to be traded, provided by the Stock Exchanges, which includes the characteristics and necessary information for their correct identification, negotiation, and registration." ARTICLE SEVENTH.- The text of number 18 of Article 3 of Chapter I "Norm that governs the provider and administrator society of the Single Stock Market System-SIUB- and the services it provides", Title X "Single Stock Market System (SIUB)" of Book II "Securities Market" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, is substituted by the following: "18. Use the updated registry of securities operators and public officials authorized to operate provided by the Stock Exchanges." ARTICLE EIGHTH.- Number 5 of Article 4 of Chapter I "Norm that governs the provider and administrator society of the Single Stock Market System-SIUB- and the services it provides", Title X "Single Stock Market System (SIUB)" of Book II "Securities Market" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, is eliminated. ARTICLE NINTH.- Article 1 of Chapter IV "Administrators and Members of the Board of Directors of Market Participants", Title IV "Common Provisions to Registration in the Public Registry of the Securities Market", of Book II "Securities Market" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, is substituted by the following: "Scope: The provisions of this chapter must be subject to administrators, legal representatives, and members of the Board of Directors of stock exchanges, fund and trust administrators, rating agencies, external auditors, securities houses, the central depositories for compensation and settlement of securities, and the Provider and Administrator Society of the Single Stock Market System."

Resolution No. JPRF-V-2023-072 Page 6 of 7

---

Address: Av. Amazonas between Pereira and Unión Nacional de Periodistas Financial Management Governmental Platform. Yellow Block, 5th floor | Postal Code: 170507 | Quito - Ecuador | ARTICLE TENTH.- The text of Article 3 of Chapter IV "Administrators and Members of the Board of Directors of Market Participants", Title IV "Common Provisions to Registration in the Public Registry of the Securities Market", of Book II "Securities Market" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions, is substituted by the following: "Art. 3.- Documents to be presented.- The companies indicated in Art. 1 of this chapter, as part of the application for registration and operating authorization, must present the following documentation regarding the administrators, legal representatives, of each of the members of the Board of Directors; and, of the members of the investment committee in the case of fund and trust administrator companies, and of the auditors in the case of external audit firms:

1. Sworn declaration before a Public Notary of not being subject to the following prohibitions: a. Not having been convicted by a final judgment, to pay obligations with institutions of the financial system or for tax obligations, as well as those who have failed to comply with an award issued by an Arbitration Tribunal, while the obligation is pending; b. Not having been judicially declared insolvent or in a state of bankruptcy. For the Provider and Administrator Society of the Single Stock Market System, it must be included that they are not under civil interdiction and are not the debtor against whom a creditor composition process is being followed; c. The legal representatives and administrators of companies that have been subjected to preventive composition or concordat processes and who have confirmed annotations in the final instance by the Comptroller General of the State or the Administrative Litigation Chambers of the provincial courts, as the case may be; d. Not being impeded from exercising commerce and not having been convicted of crimes against property, persons, public faith, or Public Administration; as well as those sanctioned with disqualification or removal from their position by the Superintendence of Companies, Securities, and Insurance or of Banks or of the Popular and Solidarity Economy, stock exchanges, or self-regulation associations. For the Provider and Administrator Society of the Single Stock Market System, it must be certified that they have not been removed by the control body during the last five (5) years; e. Not having been convicted by a final judgment for the crimes typified in the Law on Narcotic and Psychotropic Substances; f. Not being disqualified from holding public office in general, or executive positions in institutions of the financial system or commercial companies. For the Provider and Administrator Society of the Single Stock Market System, it must be included not having firm obligations with the Internal Revenue Service or with the Ecuadorian Social Security Institute, during the last sixty days; g. Not having been convicted or sanctioned by any administrative or judicial authority;

Resolution No. JPRF-V-2023-072 Page 7 of 7

---

Address: Av. Amazona