Communication A 1482: Single Foreign Exchange Market Operating Rules and Reporting Regime

CENTRAL BANK OF THE ARGENTINE REPUBLIC

COMMUNICATION "A" 1482
09/07/89

TO FINANCIAL INSTITUTIONS AUTHORIZED TO OPERATE IN FOREIGN EXCHANGE, EXCHANGE HOUSES, AGEN- CIES, OFFICES AND FOREIGN EXCHANGE BROKERS:

Ref.: Circulars Foreign exchange operations and move- ment of funds with abroad CAMEX - 1 - 217 and Reporting regime for foreign exchange operations and obligations with abroad RE- FEX - 1 - 48.

We address you and through you all interested parties, to bring to your knowledge that as from the start of activities corresponding to 10.07.89 the Single Foreign Exchange Market will operate in accordance with the following provisions:

I. Single Foreign Exchange Market.

1. Operating hours of the Single Foreign Exchange Market.

The Single Foreign Exchange Market will operate from 10 to 13 hours.

Financial institutions may continue operating until the close of public attention, when dealing with operations with individuals that do not respond to commercial concepts, capital movements or interest.

This exception is extended to Exchange Houses, Agencies and Offices to carry out analogous operations until 16 hours.

Operations carried out after the close of the Market shall not be taken into account for the calculation of the percentage of increase of the Foreign Exchange Position established in Chapter II, Point 2., fourth paragraph hereof. Nevertheless, the limit established regarding the maximum Foreign Exchange Position shall be fully applicable.

In all cases operations carried out from 13 hours must be declared on the date of agreement.

2. Telephone declaration of operations through the foreign exchange operators' desk of the Central Bank of the Argentine Republic.

Authorized operators must declare between 13 and 14 hours all operations agreed for USD 100,000 or higher amounts, or their equivalent in other currencies, including operations carried out with the intervention of Foreign Exchange Brokers and those agreed with the Central Bank as counterparty at special exchange rates. Foreign Exchange Brokers, where applicable, shall do the same immediately upon agreement of the operation.

In the case of operations agreed between authorized operators, the "buyer" shall make the pertinent declaration.

II. Operations with free foreign currency and foreign currency banknotes.

1. Exchange rates.

The Central Bank will set daily the buying and selling exchange rates, spot normal value, for transfer of the US dollar, at which it will operate in this Market. Institutions, houses, agencies and exchange offices shall do the same by applying exchange rates in accordance with those set by the Central Bank, as required by market developments. Likewise, the reduced exchange rates applicable to export, import and cancellation of loans in foreign currency to finance exports shall be made known, according to the regulations in force in the matter.

2. Foreign exchange position.

Financial institutions authorized to operate in foreign exchange must maintain as maximum Foreign Exchange Position the amount resulting from considering 10% of the Non-Immobilized Own Resources corresponding to the month of April last, converted to US dollars by applying the selling exchange rate of the Banco de la Nación Argentina at the close of operations on 27.4.89, that is Australes 77.- per dollar.

Exchange Houses, Agencies and Offices must maintain as maximum spot Foreign Exchange Position the amount resulting from considering 50% of Net Equity after deducting immobilized assets, converted to US dollars by applying the selling exchange rate of the Banco de la Nación Argentina in the former Free Exchange Market or in the Single Exchange Market as applicable, at the close of operations on the day on which its last approved annual balance sheet closed, up to the date.

Financial Institutions, Exchange Houses, Agencies and Offices must be framed within the provisions set forth above, daily, at the close of operations.

Increases in position, with respect to the previous day, may not exceed 10% of the maximum Foreign Exchange Position, always limited until reaching the maximum established in the preceding paragraphs.

3. Permitted operations.

Financial Institutions, Exchange Houses, Agencies and Exchange Offices, within the regulations in force regarding permitted operations for each class and category of operator, may carry out the following operations, which in no case may constitute an arbitrium to dispose of or place lendable resources in Argentine currency.

3.1. Operations with clients.

• Purchases and sales in accordance with the rules that on each occasion

B.C.R.A. COMMUNICATION “A” 1482 9.7.89

are set in the matter.

• Arbitrages, without limitations, provided they are carried out between equal species of different currency.

• Exchange of foreign currency banknotes for foreign exchange, without limitations.

• Exchange of foreign exchange for foreign currency banknotes, limited to operations carried out by cargo and passenger transport and related companies, with international activity, provided they are related qualitatively and quantitatively to said activity; those responding to income from retirement and pension received from abroad; those requested by international organizations, embassies, legations or consulates accredited to the National Government, as well as their officials with diplomatic status and those giving rise to the delivery of traveler's checks, situations that must be verified by the intervening operators.

3.2. Operations between authorized Institutions, Houses, Agencies and Offices.

The Single Foreign Exchange Market will operate with normal value exchange rates. Operations "value today" may be carried out exceptionally when at least one of the parties does so for justifiable needs to cover client operations.

Operations with free currencies and foreign currency banknotes must comply with the following:

• Purchases and sales, limited to the total amount sold and purchased from customers, respectively, including as transactions between entities those agreed with the Central Bank.

• Arbitrage and swaps, including with correspondents on local or foreign markets, without limitations. Operations with local entities that originate from arbitrage or give rise to its execution shall be subject to the limitation established by point 3. above and the first paragraph hereof.

III. Collection and payment operations processed through reciprocal credit agreements.

1. Exchange rates.

The buying and selling exchange rates established by Section II, point 1. of this Communication shall apply.

Consequently, operations carried out by entities with their customers must be channeled to the Central Bank at the buying or selling exchange rates, as applicable, indicated above.

2. Permitted operations.

Collections and payments must comply with the rules in force from time to time on the matter for operations processed through the Single Exchange Market.

In accordance with the preceding paragraph and Point 2.3. hereof, the cancellation of loans in free currencies received to finance exports (Point 1.5. of Circular COPEX-1 and complementary) shall be made through the sale of said currencies against the purchase of the agreement credit received by the exporter.

Likewise, in order to allow the financing of imports through the application of loans received in free currencies, the Central Bank shall proceed with the payment under the agreement against delivery of the corresponding free currencies by the importer. Provided that the operation meets the minimum term requirement established from time to time for imports, for the purposes of its cancellation it shall be considered a commercial operation.

IV. Operations in minted gold and "good delivery" bars.

1. Price.

It shall be set by the operators based on the buying exchange rate established daily by the Central Bank, in accordance with the provisions of Section II point 1., of this Communication.

2. Permitted operations.

Purchases from customers, Purchases and sales to customers, local entities and foreign correspondents, through arbitrage against foreign currency or foreign currency banknotes.

V. Reporting Regime.

1. Operations with customers.

1.1. Private Sector.

1.1.1. Foreign exchange purchases.

Collections from exports, advances, pre-export financing loans, export financing, loans from International Organizations, financial loans and investments in the country by non-residents, must be reported individually, whatever the amount, on form 4001 A or B, as applicable.

The rest of the operations shall be reported globally, classified by concept, on form 4031 A or B.

1.1.2. Foreign exchange sales.

Transactions for all concepts and amounts, it corres-

B.C.R.A. COMUNICACIÓN “A” 1482 9.7.89

ponds to be informed by individual sworn statements on form 4002 A or B as the case may be, except for the operations indicated in point 3.16. of Communication "A" 1483, which must be done globally by currency and country with an attached detail of beneficiaries and amount.

1.2. Public Sector (Government Departments, Enterprises and Agencies).

All operations carried out by this Sector must be reported individually, whatever the amount and concept, using forms 4001 A or B and 4002 A or B, as applicable.

2. Operations between Financial Entities, Exchange Houses, Agencies and Offices and with the Central Bank.

Purchases-sales between the aforementioned operators must be reported on form 116 A or B, while advances and swaps shall be declared on forms 112. In the latter case, for operations in gold, the class and quantity in grams must be detailed in each case.

In order to comply with current customs requirements for shipments abroad of banknotes and gold, a form 112 must be submitted in original and two copies, destined for the National Customs Administration and the intervening reporting entity.

3. Summary of operations and exchange position.

3.1. Financial entities authorized to operate in foreign exchange.

The summary of daily movement shall be reported on form 4009 and the exchange position on form 111.

3.2. Exchange Houses, Agencies and Offices.

The summary of daily movement and the exchange position shall be reported on form 4033.

4. On the responsibility of entities in carrying out foreign exchange operations.

Entities, Houses and Agencies authorized to operate in foreign exchange must take extreme precautions to strictly comply with the following provisions:

4.1. Especially in foreign exchange sales to customers, they must adopt all necessary means to verify that these are real operations, requiring when appropriate, reliable proof of the identity and domicile of the applicants, regularity of the corporate contracts, the customer's habitual conduct in carrying out business in the relevant field and the relationship of the operation with their financial capacity.

They must also request, taking as guidelines the background required for credit operations, any other information and documentation used in generally applicable banking practices, in order to determine that the transaction is real and complies with the foreign exchange rules that make its execution possible.

If the analysis of the orders could presume the attempt or existence of transgressions of the provisions, that circumstance must be immediately brought to the attention of the Inspection Management of this Bank, for the purpose of adopting the corresponding measures.

The determination of irregularities in exchange operations gives rise to the application of the provisions of the Criminal Exchange Law.

Without prejudice to the foregoing, this Bank considers it appropriate to point out that authorization to operate in exchanges is granted on the basis that the entities have suitable personnel and an organization that makes it possible to ensure the performance of legitimate operations. Such aspects are considered fundamental so that the activity of the entities can be carried out under conditions of seriousness and responsibility. Consequently, the verification of deficiencies in that regard affects the attributes necessary to maintain the authorization.

4.2. The mere submission of sworn statements, inquiries and requests related to exchange operations of their clients means that the holders are not disqualified by the Central Bank from operating in exchanges.

They may only process requests for the performance of exchange operations required by disqualified persons or firms when the resolution of this Bank on those requests expressly establishes that such authorization includes the exception to the provision by which the disqualification was communicated.

4.3. Without prejudice to strict compliance with these provisions, entities authorized to operate in exchanges must assign and retain in their possession, at the disposal of the Central Bank, all documentation that justifies the operation being carried out. When the intervened originals are requested by the interested parties, they must supply in their replacement, and so that they may serve as background for the operation, copies duly authenticated by the applicants and by the intervening entities.

When it concerns documentation in a foreign language, it must be accompanied by its corresponding translation.

In the case of export and import operations, the copy of the shipping permit or clearance into the market, as applicable, of the bill of lading shall be considered sufficient documentation

B.C.R.A. COMMUNICATION “A” 1482 9.7.89

and of the receipt proving payment of customs charges, in their original language.

5. General provisions.

5.1. Delivery of forms.

5.1.1. Entities located in the Federal Capital and Greater Buenos Aires districts.

The submission of forms shall be made on the day the transactions are carried out, at the Department of General Secretariat, Sarmiento 476, until 19:00.

5.1.2. Entities located outside the Federal Capital and the Greater Buenos Aires districts.

Category "C" banks shall do so within 24 hours after the close of their operations.

Category "A" and "B" banks, Financial Entities, Exchange Houses, Agencies and Offices, within 48 hours.

5.2. New numerical sequence.

A new numerical sequence must be started for all those operations that, under Chapter V, point 1 of this provision, must be declared individually on forms 4001 A or B and 4002 A or B.

6. Table of concepts.

The conceptual coding shall be carried out in accordance with the detail set forth in the annex.

7. The provisions of the exchange reporting regime that do not conflict with this Communication remain in force.

VI. OTHER PROVISIONS.

1. The provisions of Communication "A" 1435 of 29.5.89 are rendered ineffective, except with regard to the exchange position adjustments of Chapter I, point 2, fifth and sixth paragraphs, whose debt balance may be canceled on any of the indicated dates.

2. The submissions made up to 7.7.89 by the entities, for the purpose of requesting authorization to correct errors in the declaration of operations that were processed through the application of reduced exchange rates, may be regularized directly within the period

up to 17.7.89. For this purpose, the entities must send a note with management intervention explaining the operation carried out, certifying that it complies with the rules and rendering ineffective the request previously submitted.

We greet you very attentively.

CENTRAL BANK OF THE ARGENTINE REPUBLIC

Raúl O. Planes
Exchange Manager

Antonio G. Zoccali
Deputy General Manager

B.C.R.A.
TABLE OF CONCEPTS
PUBLIC AND PRIVATE SECTORS
SINGLE EXCHANGE MARKET
EXCHANGE PURCHASES
Annex to
Com. “A” 1482

Code	Concept
001	Freights earned by Argentine vessels and aircraft abroad.
002	Passages earned by Argentine vessels and aircraft abroad.
011	Export freights.
021	Leasing of vessels.
031	Expenses in the country of foreign vessels and aircraft.
041	Insurance on merchandise.
042	Other insurance.
051	Tourism and travel.
061	Pensions and retirement.
081	Non-prefinanced or advance exports.
082	Prefinanced exports.
083	Exports (transformation of prefinancing of promoted exports or with letters rediscounted by the Central Bank).
084	Advance collections of exports.
085	Settlement of exports collected in advance.
122	Loans to finance exports instrumented with letters rediscounted by the Central Bank.
123	External loans to finance promoted exports, with resources of the entity, Circular OPRAC 1, Cap. I, point 2.3.
125	Short-term loans (up to one year).
126	Long-term loans (more than one year).
128	External loans to prefinance exports.
130	Loans to finance imports from countries with Reciprocal Credit Agreement.

Code	Concept
132	Loans to prefinance exports granted with resources from the collection of local deposits in foreign currency.
135	External loans to prefinance promoted exports with resources of the entity Circular OPRAC 1, Cap. I, Point 2.1.
139	Loans from International Organizations.
141	Investments in the country made by non-residents.
143	Other capital movements.
151	Bank expenses and commissions.
154	Interest.
161	Profits and dividends.
171	Royalties.
174	Technical services.
191	Commercial commissions.
211	Telephone, postal, telegraph and telex rates.
221	Argentine consular collections abroad.
222	Expenses of embassy, legations, consulates and other official representations in the country.
298	Other unspecified concepts.

B.C.R.A.
TABLE OF CONCEPTS
PUBLIC AND PRIVATE SECTORS
SINGLE EXCHANGE MARKET
EXCHANGE SALES
Annex to
Com. "A" 1482

Code	Concept
501	Freight earned by foreign ships and aircraft.
502	Passages earned by foreign ships and aircraft.
511	Export freight.
521	Leasing of ships.
522	Leasing of aircraft.
523	Container rental.
531	Expenses abroad for Argentine ships and aircraft or those leased by Argentine companies.
541	Insurance on merchandise.
542	Other insurance.
551	Tourism and travel.
552	Sale of foreign exchange to foreign tourists from non-bordering countries.
561	Retirements and pensions.
571	Family assistance.
581	Advance payment for imports.
582	Imports against delivery of shipping documents.
583	Imports with deferred payment.
584	Import interest.
585	Import freight.
586	Consular expenses for imports.
587	Payments for imports of drugs and specialties for human use and inputs intended for the manufacture of articles for human health.
589	Lease agreements with option to purchase (leasing).

Code	Concept
590	Payment for repairs of goods or items temporarily exported.
621	Repayment of short-term loans (up to one year).
622	Repayment of long-term loans (more than one year).
623	Repayment of external loans to prefinance exports.
626	Repayment of loans to finance exports instrumented with letters rediscounted by the Central Bank.
627	Repayment of external loans to finance exports promoted with resources of the institution Circular OPRAC 1, Chap. I, point 2.3.
630	Repayment of loans to finance exports from countries with Reciprocal Credit Agreement.
632	Repayment of loans to prefinance exports granted with resources from the collection of local deposits in foreign currency.
633	Repayment of advance collections of unfulfilled exports (Com. "A" 932).
634	Repayment of prefinancing of unfulfilled exports (Com. "A" 932).
635	Repayment of external loans to prefinance exports promoted with resources of the institution Circular OPRAC 1, Chap. I, Point 2.1.
637	Repayment of advance collections of unapplied exports (Com. "A" 932).
638	Repayment of prefinancing of unapplied exports (Com. "A" 932).
639	Repayment of loans from International Organizations.
643	Other capital movements (includes repayment of "on lending" loans).
672	Interest on export financing.
691	Bank expenses and commissions.
692	Commercial commissions.
693	Commissions of representatives or sales agents for Argentine exports.

B.C.R.A.
TABLE OF CONCEPTS
PUBLIC AND PRIVATE SECTORS
SINGLE EXCHANGE MARKET
EXCHANGE SALES
Annex to
Com. “A” 1482

Code	Concept
701	Patents and trademarks.
711	Telephone, postal, telegraph and telex rates.
721	Remittances from embassies and members of diplomatic corps.
722	Consular collections.
726	Salaries of Argentine personnel assigned abroad.
737	Payment and amortization of global contracts for works and services.
740	Subscription to newspapers and magazines.
741	Purchase of books by individuals.
743	Contributions to foreign retirement funds.
744	Purchase of medicines by individuals.
745	Copyrights.
746	Information services (includes registration and purchase of telex directory).
748	Obtaining and legalization of birth, baptism, marriage and death certificates.
749	Membership fees to International Organizations.
751	Medical treatment expenses abroad.
753	Payment of salaries and travel allowances in favor of Argentine diplomats and other official representatives accredited abroad and of obligations incurred during the exercise of their functions.
754	Registration fees for international congresses and meetings.
755	Expenses for attending international fairs and exhibitions.
756	Travel allowances, salaries and fees of hired foreign personnel working in the country.
757	Technical services (includes salaries and fees of foreign personnel).
759	Expenses of commercial representations abroad.
760	Scholarships and study expenses.
761	Interest on financial debt.
762	Payment of default and compensatory interest.
764	Royalties.
767	Alimony payments arising from compliance with court judgments.
768	Fees for lawsuits processed abroad, linked to Argentine export operations.