Circular RUNOR 1 - 290. Computable Net Worth of Exchange Houses and Agencies and Guarantees to be Constitute

“1998 – Year of the Municipalities”
BANCO CENTRAL DE LA REPUBLICA ARGENTINA
COMMUNICATION "A" 2744 29/07/98
__________________________________________________________________ TO FINANCIAL ENTITIES:
Ref.: Circular
RUNOR 1 - 290.
Computable Net Worth of Exchange Houses and Agencies and Guarantees to be Constitute.

We address you to inform you that this Institution adopted the following resolution:

"1. Substitute Point 1.3. of Chapter XVI of Circular RUNOR - 1 (text according to Communications "A" 422 and 1863) with the following:

"1.3. Minimum Capital.
1.3.1. Minimum Requirements.
1.3.1.1. Exchange houses and agencies must maintain the minimum net worth indicated below:

CATEGORY	EXCHANGE HOUSES	EXCHANGE AGENCIES
	(in thousands of pesos)
I	1.327,7	663,8
II	796,6	398,3
III	531,0	265,5
IV	265,5	132,7

1.3.1.2. The categories indicated encompass entities located in the following jurisdictions:

CATEGORY	JURISDICTION
I	City of Buenos Aires and the following districts of the Province of Buenos Aires or those that may be created in the future through splitting or segregation: Almirante Brown, Avellaneda, Berazategui, Esteban Echeverria, Ezeiza, Florencio Varela, General San Martín, Hurlingham, Ituzaingó, José C. Paz, La Matanza, Lanús, Lomas de Zamora, Malvinas Argentinas, Merlo, Moreno, Morón, Presidente Perón, Quilmes, San Fernando, San Isidro, San Miguel, Tigre, Tres de Febrero and Vicente López.
II	Cities of Córdoba, Mendoza and Rosario.
III	Cities of Bahía Blanca, La Plata, Mar del Plata, San Carlos de Bariloche and the following departments of the Province of Mendoza: Godoy Cruz and the part of the departments of Guaymallen, Las Heras, Maipú and Luján, integrating the so-called "Greater Mendoza".
IV	Rest of the country.

1.3.1.3. Entities that possess any subsidiary in a higher category jurisdiction must maintain the net worth required for that latter category, without prejudice to what is established in point 1.3.2.

1.3.2. Additional Requirements
The net worth referred to in point 1.3.1 must be increased by 10% for each branch or office in operation or that may be authorized in the future.

1.3.3. Non-compliance.
Non-compliance with the minimum capital fixed in the previous point may result in the suspension for 30 calendar days of the authorization to operate.
In the event that such deviation is not regularized during the suspension period, the Central Bank may order the revocation of said authorization.

1.3.4. Net Worth.
1.3.4.1. For the purposes indicated in these regulations, net worth is defined as integrated by the following concepts:
1.3.4.1.1. Integrated capital.
1.3.4.1.2. Adjustments to capital and/or due to restatement of items.
1.3.4.1.3. Received advances with irrevocable character regarding capital increases.
1.3.4.1.4. General (legal, statutory, and discretionary) and special reserves, from books.
1.3.4.1.5. Unassigned results from previous years and the current year, with negative or positive sign depending on whether they are losses or gains, respectively.

1.3.4.2. For the purposes of all regulations related to capital, its integration and increase, contributions may be made:

1.3.4.2.1. By crediting accounts opened in local financial entities (authorized to receive funds from AFJP) or banks abroad that have -in the latter case- an international rating not lower than "A", granted by one of the risk rating agencies included in the list inserted in point 2.3. of Section 2. of the Regulations on evaluation of financial entities (text according to Communication "A" 2713) and
1.3.4.2.2. In securities quoted on stock exchanges and markets of the country or abroad on a daily basis and by relevant transactions in whose amount the eventual liquidation of these holdings does not distort their market value.""

2. Replace Point 1.5. of Chapter XVI of Circular RUNOR - 1 (text according to Communication "A" 422) with the following:

"1.5. Guarantees.
1.5.1. Exchange houses, agencies and offices must constitute a guarantee of $ 50,000, which must respond to the compliance with the provisions regulating the activity of the entities.

1.5.2. It may be integrated in any of the following forms:

1.5.2.1. Securities quoted on stock exchanges and markets of the country on a daily basis and by relevant transactions in whose amount the eventual liquidation of these holdings does not distort their market value.
To this end, a pledge will be constituted in favor of the Central Bank of the Argentine Republic regarding the aforementioned securities deposited in the Caja de Valores S.A., according to the procedure authorized for this purpose.

1.5.2.2. Certificates of fixed-term deposits issued by local financial entities (authorized to receive funds from AFJP) or banks abroad that have -in the latter case- an international rating not lower than "A", granted by one of the risk rating agencies included in the list inserted in point 2.3. of Section 2. of the Regulations on evaluation of financial entities (text according to Communication "A" 2713).
The deposit certificate must be issued in the name of the exchange house, agency or office, as applicable, and to the order of the Central Bank of the Argentine Republic, where it will remain in custody until its maturity.

1.5.2.3. Guarantees in favor of the Central Bank of the Argentine Republic granted by local financial entities (authorized to receive funds from AFJP) or banks abroad that have -in the latter case- an international rating not lower than "A", granted by one of the risk rating agencies included in the list inserted in point 2.3. of Section 2. of the Regulations on evaluation of financial entities (text according to Communication "A" 2713).
The documents representing these guarantees must be sent to the Central Bank of the Argentine Republic by the granting financial entity/bank.

1.5.3. Non-compliance with the effective provision of the fixed guarantee may result in the suspension for 30 calendar days of the authorization to operate.
In the event that such deviation is not regularized during the suspension period, the Central Bank may order the revocation of said authorization.

1.5.4. The constituted guarantees expire once 180 days have elapsed from the date of cancellation of the authorization, unless there is a contrary judicial order or legitimate opposition from the Central Bank.

1.5.5. In cases where the firms are suspended or under investigation, the bonds must be maintained even if the entities request their extinction, unless they are totally replaced by cash deposits or by securities quoted on stock exchanges and markets of the country or abroad on a daily basis and by relevant transactions in whose amount the eventual liquidation of these holdings does not distort their market value.""

3. Substitute Point 2.6. of Chapter XVI of Circular RUNOR - 1 (text according to Communication "A" 776) with the following:

"2.6. Guarantees.
2.6.1. Exchange brokers, whether natural or legal persons, must constitute a guarantee in favor of the Central Bank of the Argentine Republic of $ 10,000, which responds to the compliance with the provisions regulating their exercise.
The constitution of the guarantee must be concretized prior to the initiation of activities.
When it concerns a society that carries out the activity, a guarantee equivalent to 25% of the current amount for each of the designated attorneys must be constituted.

2.6.2. The guarantee may be integrated in any of the following forms:

2.6.2.1. Securities quoted on stock exchanges and markets of the country on a daily basis and by relevant transactions in whose amount the eventual liquidation of these holdings does not distort their market value.
To this end, a pledge will be constituted in favor of the Central Bank of the Argentine Republic regarding the aforementioned securities deposited in the Caja de Valores S.A., according to the procedure authorized for this purpose.

2.6.2.2. Certificates of fixed-term deposits issued by local financial entities (authorized to receive funds from AFJP) or banks abroad that have -in the latter case- an international rating not lower than "A", granted by one of the risk rating agencies included in the list inserted in point 2.3. of Section 2. of the Regulations on evaluation of financial entities (text according to Communication "A" 2713).
The deposit certificate must be issued in the name of the exchange broker and to the order of the Central Bank of the Argentine Republic, where it will remain in custody until its maturity.

2.6.2.3. Guarantees in favor of the Central Bank of the Argentine Republic granted by local financial entities (authorized to receive funds from AFJP) or banks abroad that have -in the latter case- an international rating not lower than "A", granted by one of the risk rating agencies included in the list inserted in point 2.3. of Section 2. of the Regulations on evaluation of financial entities (text according to Communication "A" 2713).
The documents representing these guarantees must be sent to the Central Bank of the Argentine Republic by the granting financial entity/bank.

2.6.3. The constituted guarantees expire once 180 days have elapsed from the date of cancellation of the authorization, unless there is a contrary judicial order or legitimate opposition from the Central Bank of the Argentine Republic.

2.6.4. In cases where exchange brokers are suspended or under investigation, the bonds are maintained even if the guarantors request their extinction.""

4. Replace point 1.14. of Chapter XVI of Circular RUNOR - 1 (text according to Communication "A" 422) with the following:

"1.14. Report on financial statements.
The report on the financial statements at the end of the annual fiscal year of exchange houses and agencies must be performed by a professional registered in the "Register of Auditors", authorized by the Superintendence of Financial and Exchange Entities and must contain at minimum the following:

1.14.1. Title.
1.14.2. Addressee.
1.14.3. Complete identification of the financial statements examined, of the exchange house or agency to which it corresponds and of the date or period to which they refer.
1.14.4. Scope of the work performed.
1.14.5. Special clarifications prior to the opinion that allow adequate interpretation of the information or reference, if applicable, to the disclosure made regarding them through notes to the financial statements (Statements that actually represent qualifications or exceptions that do not receive the corresponding treatment in the opinion paragraph or of the opinion must not be included).
1.14.6. Opinion or statement on whether the examined financial statements reasonably present the net worth of the entity at the corresponding date and the results of its operations for the year ended at that date, in accordance with professional accounting standards and those established by the Central Bank of the Argentine Republic.
1.14.7. Opinion on whether the financial statements agree with the entries made in the entity's accounting records and if these latter are kept in accordance with current legal provisions and the regulatory norms of the Central Bank of the Argentine Republic.
1.14.8. The special data required to comply with legal provisions related to social security.
1.14.9. The assertion that the capital covers the amount required by current regulations.
1.14.10. The information that money laundering regulations have been observed.
1.14.11. Place and date of issuance.
1.14.12. Signature of the public accountant, with the pertinent clarification and certification by the Professional Council of Economic Sciences in which he is registered. When it concerns societies of professionals registered in the professional councils, their name may be placed below the signature of the public accountant who signs the opinion, stating their status as a partner and noting whether that signature commits or does not commit the cited society.
The intervening professional may add any other opinion, qualification or note that he considers necessary to satisfy the requirements formulated by the bodies that regulate the exercise of his profession and always provided that this does not distort the minimum requirements established by this Central Bank.""

5. Admit that exchange houses and agencies may, for the purposes of complying with what is established in point 1.14. of Chapter XVI of Circular RUNOR - 1 (text according to point 4. of this communication), use the services of professionals who currently perform this task in them, provided they meet the minimum seniority requirement (three years) in this matter and other conditions established regarding external auditors of financial entities (Points 2.1.1. to 2.1.7. of the "General Provisions on External Audits")

6. Suppress Point 1.15. of Chapter XVI of Circular RUNOR - 1 (text according to Communication "A" 422).

7. Order that exchange houses, agencies, offices and brokers must comply with the constitution of the guarantee established in this communication, no later than within 180 calendar days following the date of dissemination of this measure.

8. Repeal, from the date of this communication, the provisions on reserves and operational limits referred to in Point 1.4. of Chapter XVI and its pertinent information regime (Formula 1755)."

We salute you very attentively.
BANCO CENTRAL DE LA REPUBLICA ARGENTINA
Juan Carlos Isi Raúl O. Planes
Submanager of Norms for Financial Entities Manager of Open Market

WITH COPY TO EXCHANGE HOUSES, AGENCIES, OFFICES AND BROKERS