Technical Standards for Information Requests to Pension Fund Administrators for Control of Investments

CNBCR-11/2022	NSP-41
Approval: 12/30/2022	TECHNICAL STANDARDS FOR THE INFORMATION REQUEST TO PENSION FUND ADMINISTRATORS FOR THE CONTROL OF THE INVESTMENTS THEY MAKE WITH RESOURCES OF THE PENSION FUNDS
Validity: 03/01/2023

THE COMMITTEE OF NORMS OF THE CENTRAL RESERVE BANK OF EL SALVADOR,

CONSIDERING:

I. That by Legislative Decree No. 614, dated December 20, 2022, and published in the Official Diary No. 241, Volume No. 437 of December 21, 2022, the Comprehensive Law of the Pension System was approved.

II. That Article 2, letter g) of the Comprehensive Law of the Pension System, establishes that each Pension Fund Administrator will manage a Pension Fund, which will be constituted by the set of individual savings accounts for pensions and the solidarity guarantee account, and will be separated from the assets of the Administrator.

III. That Article 45 of the Comprehensive Law of the Pension System establishes that the Central Bank, through its Committee of Norms, will issue the corresponding accounting regulations in which the accounting obligations of the Administrators and the pension fund will be determined, the accounting principles of mandatory application, and the provisions for the formulation of Financial Statements. All of this with the objective that the real financial situation of the Administrators is reflected.

IV. That Article 159 of the Comprehensive Law of the Pension System establishes that the Central Reserve Bank of El Salvador will issue the Technical Standards and Resolutions necessary to allow the development of what is established in the aforementioned Law.

V. That in accordance with Article 6 of the Law on Supervision and Regulation of the Financial System, it is the responsibility of the Financial System Superintendence to supervise the compliance with applicable provisions and the functioning of the Pension Savings System; the investments made with resources of the Pension Funds; the constitution, maintenance, operation, and application of minimum profitability guarantees and special guarantee contributions, among others.

VI. That in order to obtain greater agility in the validation and sending of electronic information, accessibility, security, and availability of the information of the operations of the Pension Funds carried out by the Administrators of said funds, it is necessary to issue Standards, incorporating aspects derived from the provisions of the Comprehensive Law of the Pension System.

VII. That in accordance with Article 99, letters a) and b) of the Law on Supervision and Regulation of the Financial System, the Central Reserve Bank of El Salvador is the institution responsible for the approval of technical standards related to the transparency of information by the supervised entities.

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CNBCR-11/2022	NSP-41
Approval: 12/30/2022	TECHNICAL STANDARDS FOR THE INFORMATION REQUEST TO PENSION FUND ADMINISTRATORS FOR THE CONTROL OF THE INVESTMENTS THEY MAKE WITH RESOURCES OF THE PENSION FUNDS
Validity: 03/01/2023

THEREFORE,

by virtue of the regulatory powers conferred by Article 99 of the Law on Supervision and Regulation of the Financial System,

AGREES to issue the following:

TECHNICAL STANDARDS FOR THE INFORMATION REQUEST TO PENSION FUND ADMINISTRATORS FOR THE CONTROL OF THE INVESTMENTS THEY MAKE WITH RESOURCES OF THE PENSION FUNDS

CHAPTER I
OBJECTIVE, SUBJECTS, AND TERMS

Objective
Art. 1.- These Standards aim to define the information that Pension Fund Administrators must provide to the Financial System Superintendence regarding the operations they carry out with the resources of the Pension Fund they administer, in accordance with what is established in the Investment Regulations applicable to pension funds.

Subjects
Art. 2.- The subjects obligated to comply with the provisions established in these Standards are the Pension Fund Administrators.

Terms
Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning:
a) AEG: Special Guarantee Contribution; b) AFP: Pension Fund Administrator; c) Central Bank: Central Reserve Bank of El Salvador; d) CIAP: Individual Savings Account(s) for Pensions; e) Fund: Pension Fund; f) SP: Pension System; g) SPP: Public Pension System; and h) Superintendence: Financial System Superintendence.

CHAPTER II
REQUIRED INFORMATION

Art. 4.- The AFPs will send a Daily Report and a Monthly Report of the operations they carry out with the resources of the Fund they administer, through the electronic means established by the Superintendence.

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CNBCR-11/2022	NSP-41
Approval: 12/30/2022	TECHNICAL STANDARDS FOR THE INFORMATION REQUEST TO PENSION FUND ADMINISTRATORS FOR THE CONTROL OF THE INVESTMENTS THEY MAKE WITH RESOURCES OF THE PENSION FUNDS
Validity: 03/01/2023

Art. 5.- To develop its supervision and audit activities, the Superintendence is authorized to request the information cited in the preceding article with the frequency and at the time it deems convenient.

Daily Report
Art. 6.- The Daily Report will be composed of the following Annexes:
a) Annex No. 1: General Balance Sheet and Determination of the Fund's Share Value.
Corresponds to the accounts and subaccounts of the General Balance Sheet defined in the "Accounting Manual for Pension Funds" (NSP-40) and their respective modifications; as well as the information on the calculation of the Fund's share value; b) Annex No. 2: Request for Special Guarantee Contribution. Daily request that the AFP must maintain as AEG, to determine if there is a surplus or deficit; c) Annex No. 3: Cash Flow of the Pension Fund. Daily movements of gross income and expenses of the current accounts managed by AFPs in financial entities that are supervised by the Superintendence, as provided in the Technical Standards on their management. Transfer and carry-over movements must be reported in gross terms, that is, on the income side, what corresponds to the compensation of received transfers and carry-overs, and on the expense side, what corresponds to the compensation of transfers and carry-overs sent to other AFPs; d) Annex No. 4: Variation in the Number of Shares of the Managed Fund. Detail of the initial and final balance of the Fund's equity, the AEG, and the voluntary shares of the AFPs, corresponding to the operation date; e) Annex No. 5: Daily Movements of the Pension Fund Portfolio and Securities in Custody. Detail of the movement of investments in financial instruments made with the resources of the Pension Fund. Custody operations will be reported at the moment they are effectively registered in the contracted custody company, in the Central Reserve Bank, or in the AFP's offices; and in the case of the primary market, when the securities or receipts have been book-entry or physically received in the facilities of any of the aforementioned entities, as appropriate, by authorized personnel. Any unjustified difference will be recorded as a custody deficit; f) Annex No. 6: Crediting of Individual Savings Accounts for Pensions and Obtained Profitability. Detail of the crediting, including the subsidy and carry-over sheet and the profitability obtained from the CIAPs; g) Annex No. 7: Daily Control of Coupon Collection. Detail of the collection of coupons, interest, and/or capital, carried out by the AFP; and

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CNBCR-11/2022	NSP-41
Approval: 12/30/2022	TECHNICAL STANDARDS FOR THE INFORMATION REQUEST TO PENSION FUND ADMINISTRATORS FOR THE CONTROL OF THE INVESTMENTS THEY MAKE WITH RESOURCES OF THE PENSION FUNDS
Validity: 03/01/2023

h) Annex No. 9: Operations with Derivative Instruments whose Exclusive Objective is the Hedging of Investment Risks.
Each AFP, for the control of operations with derivatives whose exclusive objective is the hedging of risks of the Fund's investments, must maintain documentation and records containing detailed information of the operations carried out, clearly indicating their characteristics, and must verify compliance with the minimum requirements established in the corresponding regulations.

Art. 7.- When the "OTHERS" account is used in Annexes Nos. 3, 4, and 6, the AFP must specify the concept to which the amount corresponds for the day of the reported operation and the supporting documents for said operation. The submission of this information will be made through the electronic means established by the Superintendence.

Art. 8.- The Daily Report must be sent no later than the seventh calendar day following the date of operations.

When the delivery day corresponds to a non-business day, the reports will be delivered on the next business day.

Monthly Report
Art. 9.- Monthly, each AFP must send to the Superintendence the inventory of financial instruments at the close of each calendar month, valued at the prices provided by the Superintendence corresponding to the closing date, according to Annex No. 8.

Art. 10.- The Monthly Report must be sent no later than the business day following the date of sending the Daily Report corresponding to the last day of the month.

Monetary Units
Art. 11.- All monetary accounts and subaccounts of the Daily Report and Monthly Report will be expressed in United States Dollars. Operations in any other currency will be converted to United States Dollars, possibly taking as reference the exchange rate published by the Central Bank on its website or an international stock or financial information system recognized by the Superintendence.

Substitution of information
Art. 12.- In cases where the Superintendence determines that the substitution of the Daily Report or the Monthly Report is warranted, it will inform the AFP by the means it deems convenient, no later than the next business day of its finding.

In these cases, the AFP must send a letter signed by the President or by an Attorney-in-Fact, duly authorized for this purpose, with the necessary explanations.

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CNBCR-11/2022	NSP-41
Approval: 12/30/2022	TECHNICAL STANDARDS FOR THE INFORMATION REQUEST TO PENSION FUND ADMINISTRATORS FOR THE CONTROL OF THE INVESTMENTS THEY MAKE WITH RESOURCES OF THE PENSION FUNDS
Validity: 03/01/2023

Art. 13.- The AFP must send the new information no later than the business day following the respective notification.

However, if the substitution of the information requires a period longer than established, the AFP must request it through a letter signed by the President or by an authorized Attorney-in-Fact, clearly explaining the causes for which it cannot comply with the deadline established in the previous paragraph.

Art. 14.- If after sending the Reports, the AFP determines that it is necessary to replace them, it must request the respective substitution, justifying it appropriately through a letter signed by the President or by an authorized Attorney-in-Fact.

Non-compliance with the submission date
Art. 15.- The AFP that does not comply with the dates established for the sending of the Daily Report and the Monthly Report must send no later than the dates established in articles 9 and 10 of these Standards, a letter signed by the President or by an Attorney-in-Fact duly authorized for this purpose, in which it clearly explains the causes of the non-compliance, presents the way to solve the delay, and indicates the administrative measures that will be taken to avoid the recurrence of non-compliances. (1)

Reports for non-business days
Art. 16.- The Daily Report and the Monthly Report must be prepared even for non-business days and sent, even if there are no changes or movements on the respective day.

Supporting documentation
Art. 17.- The AFP must keep in its administrative offices the supporting documentation of the investment operations of the resources of the Fund it administers, in a way that facilitates its audit when the Superintendence requires it.

CHAPTER III
INSTRUCTIONS TO COMPLETE THE REPORTS

General instructions
Art. 18.- In the field provided in the Reports, the following information will be indicated: the type or number of Annex of the Report as established by article 6 of these Standards; the code of the AFP assigned by the Superintendence; the date of sending, which refers to the date on which the report is sent to the Superintendence, in the year/month/day format; the type of movement, when applicable; the date of operations, which refers to the date of the day reported, in the year/month/day format, if it is the Daily Report, and in the year/month format, if it refers to the content of the Monthly Report; and the content columns detailed for each Report.

Art. 19.- For the calculation of all operations, eight decimals will be used. The submission of numerical information will be required as follows: the number of shares, the share value, the transacted price, and the valuation price with eight decimals, and the accounting balances and other accounts with two decimals. The eighth decimal will be rounded up to the next digit when the ninth decimal is greater than or equal to five, otherwise, it will not be rounded.

Art. 20.- The description of the accounts for the reports that correspond, must be detailed in uppercase letters and without accents.

CHAPTER IV
OTHER PROVISIONS AND VALIDITY

Sending of information
Art. 21.- The Superintendence will send to the AFPs, with a copy to the Central Bank, the technical details related to the Daily Report and the Monthly Report, which will be communicated within a maximum period of thirty (30) business days following the entry into force of these Standards. The technical details will be limited to the collection of information in accordance with what is regulated in these Standards.

The AFPs must implement the necessary mechanisms for the sending of information within a maximum period of thirty (30) days, counted from the date of having received the note from the Superintendence referred to in the first paragraph of this article.

Art. 22.- The Superintendence will send to the AFPs, with a copy to the Central Bank, the technical details related to the new fields, which will be communicated within a maximum period of thirty (30) business days following the entry into force of these modifications. The technical details will be limited to the collection of information in accordance with what is regulated in these Standards. During this period, the AFP must send the information to the Superintendence by the means it defines.

Art. 23.- The Superintendence will send to the Central Bank, within a period not greater than five business days following the deadline established in article 10 of these Standards, the monthly report referred to in article 9 of these Standards, duly processed, in order to monitor risks for financial stability and generate economic and financial statistics, in accordance with what is established in article 155 of the SP Law.

Links
Art. 24.- The AFPs will designate at least two people responsible for sending to the Superintendence the information on the Reports referred to in these Standards, being the links with the Superintendence to resolve errors, omissions, and irregularities that it contains.

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CNBCR-11/2022	NSP-41
Approval: 12/30/2022	TECHNICAL STANDARDS FOR THE INFORMATION REQUEST TO PENSION FUND ADMINISTRATORS FOR THE CONTROL OF THE INVESTMENTS THEY MAKE WITH RESOURCES OF THE PENSION FUNDS
Validity: 03/01/2023

Sanctions
Art. 25.- Non-compliance with the provisions contained in these Standards will be sanctioned in accordance with what is established in the Law on Supervision and Regulation of the Financial System.

Repeal
Art. 26.- These Standards repeal the "Technical Standards for the Information Request to Institutional Administrators of Pension Funds for the Control of the Investments They Make with Resources of the Pension Funds" (NSP-02), approved by the Committee of Norms of the Central Reserve Bank of El Salvador, in Session No. CN-08/2017, of October 27, 2017.

Unforeseen aspects
Art. 27.- The aspects not provided for in regulatory matters in these Standards will be resolved by the Central Bank, through its Committee of Norms.

Validity
Art. 28.- These Standards will enter into force as of March 1, 2023.

MODIFICATIONS:
(1) Modifications in article 15 and Annexes Nos. 1, 3, and 4, approved by the Central Reserve Bank of El Salvador through its Committee of Norms in Session No. CN-09/2023 of September 26, 2023, with validity as of October 11, 2023.

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