JPRF-V-2024-0117 — Reforming Stock Trading Mechanisms to Align with the Securities Market Law — BCE — EC

| Postal Code: 170507 | Quito - Ecuador |
THE FINANCIAL POLICY AND REGULATION BOARD
CONSIDERING:
That Article 82 of the Constitution of the Republic of Ecuador prescribes that the right to legal security is based on respect for the Constitution and the existence of prior, clear, public legal norms applied by competent authorities; That Article 226 of the Magna Carta provides that State institutions, their agencies, dependencies, public servants, and persons acting by virtue of a state power shall exercise only the competencies and faculties attributed to them in the Constitution and the law; having the duty to coordinate necessary actions for the effective fulfillment of rights recognized in the Constitution; That Article 227 of the Fundamental Norm determines that public administration constitutes a service to the community governed by the principles of effectiveness, efficiency, quality, hierarchy, decentralization, coordination, participation, planning, transparency, and evaluation; That Article 13 of the Organic Monetary and Financial Code, Book I, 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 service policy and regulation; That Article 14, numbers 1 and 2, of the aforementioned Organic Code, regarding the scope of competence of the Financial Policy and Regulation Board, determines that it corresponds, among others, to formulate securities policy; as well as to issue regulations that allow maintaining the integrity, solidity, sustainability, and stability of the securities system; That numbers 1, 7, 9, 14.b., 15 a., 25, and 27 of Article 14.1 of the aforementioned Organic Monetary and Financial Code, Book I, establish that it corresponds to the Financial Policy and Regulation Board, among other faculties, the following: i) regulate the creation, constitution, organization, activities, operation, and liquidation of securities entities; ii) issue the prudential regulatory framework to which securities entities must adhere; iii) issue the non-prudential regulatory framework for all securities entities, which will include, among others, norms on accounting, transparency and information disclosure, market integrity, and consumer protection; iv) authorize securities entities for new activities or operations that, without being prohibited, are necessary for the fulfillment of securities policy, according to the regulations issued for this effect; v) establish, within the framework of its competencies, any measure that helps prevent and seek to eradicate fraudulent and prohibited practices, including money laundering and the financing of crimes such as terrorism, considering current and applicable international standards; vi) apply the provisions of said organic code and resolve cases not provided for in it, within the scope of its competence; and, vii) exercise the other functions, duties, and faculties assigned to
it by the Organic Monetary and Financial Code and the law; That Article 25.1, number 1, ibid prescribes, within the functions of the Technical Secretariat of this Board, the elaboration of technical and legal reports that support the regulation proposals to be issued by the Financial Policy and Regulation Board;

| Postal Code: 170507 | Quito - Ecuador |
That the Twenty-Ninth General Provision of the Organic Monetary and Financial Code, Book I, prescribes: "In the current legislation where mention is made of the 'Monetary and Financial Policy and Regulation Board', replace it with 'Financial Policy and Regulation Board.'; That the Fiftieth Transitory Provision of the previously mentioned Code determines the transitional regime of resolutions of the Codification of the Monetary and Financial Policy and Regulation Board, establishing that: "(...) 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 control bodies will remain in force until the Monetary Policy and Regulation Board and the Financial Policy and Regulation Board resolve what corresponds, within the scope of their competencies."; That the Securities Market Law, contained in Book II of the Organic Monetary and Financial Code, when referring to the object and scope of said Law, determines in its Article 1 that its objective is to promote an organized, integrated, effective, 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 act in any way in the securities market; That the Securities Market Law, in its article numbered added 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: i) public faith; ii) investor protection; iii) transparency and publicity; iv) symmetric, clear, true, complete, and timely information; v) free competition; vi) equal treatment for securities market participants; vii) application of good corporate practices; viii) respect and strengthening of the regulatory power of the Financial Policy and Regulation Board, subject to the Constitution of the Republic of Ecuador, public policies of the Securities Market, and the Law; and, ix) promote financing and investment in the national development regime and a democratic, productive, efficient, and solidary market; determining that 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, 2, 4, 5, 6, 8, 19, 21, and 25, which are, respectively: (i) establish the general policy of the securities market and regulate
its operation; (ii) promote the development of the securities market, by establishing policies and mechanisms for promotion and training on the same; (iii) issue the necessary resolutions for the application of the law in question; (iv) issue general norms based on which stock exchanges can dictate their self-regulation norms; (v) regulate the creation and operation of securities houses, stock exchanges, the provider and administrator society of the unique stock system (SIUB) and the compensation and settlement depositories for securities, as well as the services they provide; (vi) establish control norms and reserve constitution norms for issuers; (vii) authorize the related activities of stock exchanges and securities houses that are necessary for the adequate development of the securities market; (viii) regulate concerning activities and operations of the securities market, accounting and operation registration systems, and other aspects of the performance of participants in the market; and, (ix) establish the necessary norms to prevent cases of conflicts of interest of market participants;

| Postal Code: 170507 | Quito - Ecuador |
That Article 49 ibid, when referring to authorized forms of negotiation, defines them as organized means of negotiation in the securities market that allow the orderly meeting of offers and demands and the execution of corresponding negotiations by securities intermediaries, with the Financial Policy and Regulation Board being competent to establish authorized negotiation mechanisms, which must use a single transactional system for the stock market case; That the Acting Technical Secretary of the Financial Policy and Regulation Board, through Memorandum No. JPRF-ST-2024-0076-M of July 11, 2024, submits to the President of the Board the Technical Report No. JPRF-CTSV-2024-005 of July 11, 2024, issued by the Technical Coordination of Policy and Regulation of the Securities and Insurance System; as well as the Legal Report No. JPRF-CJF-2024-034 of July 11, 2024, issued by the Legal Coordination of Policy and Financial Norms of this Board, as well as the respective draft resolution; That the Financial Policy and Regulation Board, in an ordinary session held by technological means, convened on July 15, 2024, and carried out via video conference on July 18, 2024, reviewed the Memorandum No. JPRF-ST-2024-0076-M of July 11, 2024, issued by the Acting Technical Secretary of the Board; as well as the aforementioned Technical Report No. JPRF-CTSV-2024-005 and Legal Report No. JPRF-CJF-2024-034, 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 15, 2024, and carried out via video conference on July 18, 2024, reviewed and approved the following Resolution; and, In exercise of its functions, RESOLVES:
ARTICLE FIRST.- The text of the first paragraph of Article 10 of Section II "Maintenance of Registration in the Public Registry of the Securities Market and Submission of Continuous Information", Chapter IV "Public Offering of Commercial Paper", Title II "Public Offering", Book II "Securities Market" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions is substituted by the following:
"Art. 10.- Electronic dissemination of information: Commercial paper issuing companies must inform the market through the securities intermediary of their intentions to place commercial paper, through the Unique Stock System SIUB, at least fifteen (15) minutes prior to the entry of the firm bid during the development of the electronic round for informational purposes or with the advance time determined in the joint self-regulation norms of the stock exchanges, which in no case may be less than fifteen (15) minutes, a detail of at least the amount to be offered, term range of the commercial paper, class, interest rate, and method of readjustment if applicable, destination of the resources from the placements; and, amortization of capital and interest if applicable."
ARTICLE SECOND.- Article 1 of Section I "Common Terms for Stock Negotiations", Chapter III "Norm Regulating Stock Negotiation Mechanisms", Title VII "Stock Exchanges", Book II "Securities Market" of the Codification of Monetary, Financial, Securities, and Insurance Resolutions is substituted by the following text:
"Art. 1.- Definitions: The terms used in this norm shall be understood according to the following definitions:

| Postal Code: 170507 | Quito - Ecuador |
Notice: Communication in which the securities house or authorized public official electronically informs the stock exchanges and the market in general about the purchase and sale of securities it wishes to carry out in the stock market through auctions. This notice will be made with an advance of at least thirty (30) minutes from the start of the auction, in accordance with what is established in this regulation or with the advance time that will be determined in the joint self-regulation norms of the stock exchanges, which shall not be less than thirty (30) minutes. Matching: It is the process by which the conditions of a buy bid and a sell bid coincide with each other according to authorized negotiation mechanisms, which leads to the closure of an operation. Automatic matching without bid: It is the process by which supply bids and demand bids for securities are automatically awarded by the system, which leads to the closure of operations for non-crossed operations. Non-liquid equity operations are excluded. Matching with bid: It is the process by which supply bids and demand bids in crossed operations and non-liquid equity securities operations are exposed to the market for a period of time for the start of price or yield improvement; in this process any authorized intermediary may intervene by formulating a new offer or demand that will be taken into account for the purposes of allocation, which will be carried out at the end of said period and between the valid supply and demand bids that have better price or rate conditions, as applicable. Operation closure: It is the perfection of an operation that obliges both parties to fulfill the conditions of the respective bids. Stock round closure: End of a stock round or session, according to the schedules established by the stock exchanges. Bid conditions: Firm and market bids may be subject to execution conditions, depending on the type of security. Conditions in the execution of fixed-income securities:
Minimum volume: It is a bid that implicitly carries the condition of negotiating at least the minimum volume determined at the time of bid entry.
Conditions in the execution of equity securities:
a. By drip or hidden volume: Shows the system only a part of the volume to be negotiated and the shown volume will be executed, the rest will be considered for all effects as new bids, whose characteristic is hidden volume. b. Package bid: The system may allow the entry of package offers when the amount offered is equal to or greater than one percent (1%) of the subscribed capital of the company, on the date of negotiation. The system will allow the entry of package demands only to match such offers. Stock days: These are the days that stock exchanges fix as working days.

| Postal Code: 170507 | Quito - Ecuador |
Securities issuers: These are entities authorized to publicly offer the securities they issue, which are registered in the Public Registry of the Securities Market and in stock exchanges, including the Special Stock Registry - REB as a permanent segment of the stock market.
Value date: It is the date on which the buyer and seller commit to fulfilling the terms of the operation, through the delivery of the sold security or financial instrument, as well as the payment of the agreed price.
Suspension period: It is the thirty (30) minute period during which the system temporarily suspends the entry of bids, matching, and operation closures for equity securities in the electronic round, because the matching price of an operation of the same equity security exceeds the established price range limits; so that the market can react by presenting buy or sell bids for the same security, to define and balance the new reference price. In this modality operates the figure of random closure, such that in the last thirty (30) seconds of the suspension period, randomly, the system will end the period without the exact moment of termination being known by market participants. Bidding rules: The minimum improvement accepted in equity bids is one percent (1%) of the nominal value of the security. For fixed-income securities, the minimum improvement will be twelve and a half hundredths (12.5) of a point on the nominal annual yield rate and when they have no term it will be five hundredths (5) of a point of the price. Crossed operation: It is the operation in which the same securities house ends up as buyer and seller of the same security or financial instrument; but acting on behalf of different principals or for its own portfolio. Crossed operations may only be carried out using the matching with bid methodology within the electronic round mechanism. Bidding period: It is the two (2) minute period in which price improvement is allowed, to match a bid or carry out a crossed operation. During said period any operator may intervene by formulating a new offer or demand with the object that it be taken into account for the purposes of allocation. In this modality operates the figure of random closure, such that in the last thirty (30) seconds a closure will occur randomly, after which the system will consider the operation closed without the exact moment of termination being known by market participants or in the period determined in the joint self-regulation norms of the stock exchanges. Bid: Reflects the position of an operator in the market. Bids can be buy or sell. Bid (Action): It is the action of price improvement in the offer or in the demand, carried out by securities operators during the "bidding period" of the electronic round. On the demand side, the bid is the action of price improvement in which the assignment of the operation corresponds to the demand bid that presents the highest price, among those bids that exceed the matching price.

| Postal Code: 170507 | Quito - Ecuador |
On the supply side, the bid is the action of price improvement in which the assignment of the operation corresponds to the supply bid that presents the lowest price, among those that are below the matching price.
Only price improvements may be entered, considering the following:
1. If the first improvement is on the supply side, only offers may be entered; and,
2. If the first improvement is on the demand side, only demands may be entered.
Price range for equity securities: It is the maximum and minimum price permitted for the matching of an equity securities operation.
The initial range for the day results from the application of the allowed variation percentage to the previous day's closing price. The variation percentage for the purposes of establishing the price range is:
1. Liquid Securities: Those that have been the subject of closed operations that marked price during at least seven (7) rounds within the last thirty (30) stock days. The variation percentage is ten percent (10%) to calculate the minimum and maximum range, on the last closing price.
2. Non-liquid Securities: All those that do not meet the condition established in the previous numeral 1. There are no limits for the variation percentage.
Electronic Round: It is the securities negotiation mechanism for securities registered in the Public Registry of the Securities Market and in stock exchanges, in which offers, demands, matching, and operation closures are carried out, according to the negotiation methodologies established in this resolution.
In this mechanism, which is implemented through the computer platform provided by the Unique Stock System -SIUB-, and provided by stock exchanges for the stock negotiation of securities in the schedule they determine in their self-regulation norms, only securities houses participate through their operators and authorized public officials.
Serialized Auction for the negotiation of securities of the public and private sector: It is a securities negotiation mechanism for securities registered in the Public Registry of the Securities Market and in stock exchanges, in which within a negotiation period the presentation of offer and demand notices, matching, and operation closures is carried out, according to the norms established in this resolution. In this mechanism, which is implemented through the computer platform provided by the Unique Stock System -SIUB-, and provided by stock exchanges for the stock negotiation of securities in the schedule they determine in their self-regulation norms, only securities houses participate through their operators and authorized public officials.

| Postal Code: 170507 | Quito - Ecuador |
Types of bid: Two types of bids are allowed:
1. Firm: Those that are registered with a defined price.
Every crossed bid is firm; the operator is obliged to indicate in the registration that it is a crossed order, the price and conditions of the bid.
Every fixed-income security bid is firm.
2. Market: Those that must be executed at the best buy or sell price.
Bid unit: It is the basic and particular unit of a certain stock security.
Every bid must be a multiple of the bid unit associated with the security. The following bid units are defined:
1. Maximum lot: It is the quantity factor (added to the minimum) in which one can quote in the market under lot or fractionate an operation, established by the issuer.
2. Minimum lot: It is the minimum value that can be quoted in each of the values established by the stock exchanges.
If