Resolution Amending Articles 7 and 12 of the Standard on the Integration of the Nicaraguan Capital Market with Other Foreign Markets

RESOLUTION No. CD-SIBOIF-1436-1-MAR19-2024
Dated March 19, 2024
STANDARD AMENDING ARTICLES 7 AND 12 OF THE STANDARD ON THE INTEGRATION OF THE NICARAGUAN CAPITAL MARKET WITH OTHER FOREIGN MARKETS

The Board of Directors of the Superintendence of Banks and Other Financial Institutions.

CONSIDERING

I
That Article 214 of Law No. 587, "Capital Markets Law," published in La Gaceta, Official Journal No. 222, of November 15, 2006, contained in Law No. 974, "Law of the Nicaraguan Legal Digest on Banking and Finance Matters," published in La Gaceta, Official Journal No. 164, of August 27, 2018, and its updates (Legal Digest Law), establishes that the Board of Directors of the Superintendence of Banks and Other Financial Institutions may issue general norms to regulate transactions with foreign securities traded on stock exchanges, issued by foreign issuers, provided they meet the requirements regarding information and registration in their country of origin and when these requirements are at least equivalent to those required in Nicaragua.

II
That in the exercise of the power established in Article 214 of the aforementioned Law No. 587, on February 15, 2022, the Standard on the Integration of the Nicaraguan Capital Market with Other Foreign Markets was approved, contained in Resolution No. CD-SIBOIF-1296-5-FEB15-2022, published in La Gaceta, Official Journal No. 38, of February 25, 2022, which aims to regulate the mechanisms for trading securities through remote operators, within the framework of agreements or conventions signed among themselves, both between the Superintendencies or Regulatory Commissions of the securities markets, and between the stock exchanges of the different countries involved in the trading.

III
That it is necessary to amend Articles 7 and 12 of the aforementioned standard to expand the types of guarantees admitted for the trading of securities through remote operators, including instruments with a higher degree of liquidity, which facilitate their realization.

IV
That in accordance with the considerations expressed above and based on the powers established in Article 6, letter b) and Article 208, of the aforementioned Law No. 587, "Capital Markets Law."

In exercise of its powers,

HAS ISSUED

The following,

Resolution No. CD-SIBOIF-1436-1-MAR19-2024
STANDARD AMENDING ARTICLES 7 AND 12 OF THE STANDARD ON THE INTEGRATION OF THE NICARAGUAN CAPITAL MARKET WITH OTHER FOREIGN MARKETS

FIRST: Articles 7 and 12 of the Standard on the Integration of the Nicaraguan Capital Market with Other Foreign Markets, contained in Resolution No. CD-SIBOIF-1296-5-FEB15-2022, published in La Gaceta, Official Journal No. 38, of February 25, 2022, are amended, which shall read as follows:

"Article 7. Authorization and registration of foreign remote operators.- The stock exchanges authorized by the Superintendence shall establish in their internal regulations the procedures for the authorization of foreign remote operators. These, once authorized by a stock exchange, shall request their registration with the Superintendence and attach the following information to their application:
a) Trade name and corporate name or designation. b) Address, telephone, email, website. c) Personal identification document and other legal details of the persons serving as the chief executive, compliance officer, and stockbrokers. d) Authorization credential from the stock exchange of their country of origin. e) Certification of registration or authorization from the regulator of their country of origin. f) Deed of incorporation and bylaws of the remote operator registered in the competent registry, which must be constituted as a joint-stock company in accordance with the commercial code or legislation of their country of origin. g) Guarantee provided in favor of the stock exchange, the amount of which must be at least equal to the amount required for national stock exchange seats in accordance with the regulations on the matter. This guarantee may be constituted through a bond contracted with an insurance company authorized to operate in Nicaragua or with cash, deposit certificates constituted in Nicaragua or in the country of origin of the remote operator, public debt securities issued in Nicaragua or in the country of origin of the remote operator, and negotiable serial debt securities issued by multilateral credit organizations or member countries of the Organization for Economic Co-operation and Development (OECD). In the event that such a guarantee is constituted with cash or any of the aforementioned securities, the stock exchanges and clearinghouses must include in the conventions they sign according to Article 5 of this standard the guarantee regime to comply with what is established in this article. In said conventions, the entities that will custodian the securities and their risk rating, the conditions for deposits and cash safeguarding, the mechanisms to execute the guarantees, the term and method for replenishing or modifying them, among other relevant aspects of the process of constitution, valuation, and execution thereof. The content of these conventions must receive no objection from the Superintendent. h) Power of representation of the person designated by the remote operator to act in Nicaragua as its attorney-in-fact and a copy of their identity document, who must have experience in the banking or securities industry, with broad and sufficient powers to be notified of any administrative and/or judicial proceedings. Said representative may not cease their functions until another representative is formally designated before the Superintendence. The documents referred to in letters c) through h) above must be presented in notarially certified copies. i) Original letter from the stock exchange regarding the admission of the remote operator and a notarially certified copy of the agreement or convention referred to in Article 5 of this standard. Having received the complete information and finished the review of the application, the Superintendence shall proceed to issue the resolution authorizing the registration of the foreign
remote operator within a maximum period of 30 days. No registration fees shall be charged, provided that this practice is reciprocal; otherwise, the fee applied to national stock exchange seats shall be charged."

"Article 12. Regulations of stock exchanges.- For the application of this standard, the internal regulations of stock exchanges authorized by the Superintendence must include at minimum the following aspects:
a) Procedures for the authorization of foreign remote operators, within the framework of conventions signed with other stock exchanges. b) Regulations for local stock exchange seats, authorized as remote operators in other markets. c) Requirements for the authorization of stockbrokers for foreign remote operators. d) Procedures and controls for the settlement of operations of foreign remote operators. e) System for recording operations in other markets and information to the public. f) Supervision of operations of foreign remote operators. g) Constitution, valuation, monitoring, and execution of guarantees. Stock exchanges must inform the Superintendence of any case of possible irregularity committed by a foreign remote operator, as well as apply sanctioning procedures, if necessary. Additionally, stock exchanges must publish relevant or important facts regarding the business of foreign remote operators that must be disclosed for the protection of investors. These relevant facts must be reported to the stock exchanges immediately by the foreign remote operator or its authorized representative in Nicaragua. Stock exchanges must also have a robust and secure technological platform that allows the installation of electronic trading systems that provide direct access to remote operators from other countries as local users."

SECOND: This standard shall enter into force upon its notification, without prejudice to its subsequent publication in La Gaceta, Official Journal.

(Signature) Legible Magaly María Sáenz Ulloa (Signature) Illegible (Luis Ángel Montenegro E) (Signature) Illegible Fausto Reyes (Signature) Illegible (Silvio Moisés Casco Marenco) (Signature) Illegible (Ervin Antonio Vargas Pérez) (Signature) Illegible Secretary.
SAÚL CASTELLÓN TÓRREZ
Ad Hoc Secretary, Board of Directors SIBOIF