Technical Standards for Stock Market Repo Operations of Insurance Companies

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv
CNBCR-05/2026
NCF-17
TECHNICAL STANDARDS FOR STOCK MARKET REPO OPERATIONS OF INSURANCE COMPANIES Approval: 30/06/2026 Validity: 15/07/2026

THE COMMITTEE OF STANDARDS OF THE CENTRAL RESERVE BANK OF EL SALVADOR, CONSIDERING:

I. That Article 85 of the Insurance Companies Law stipulates that the Superintendency shall establish the manner in which the accounting of insurance companies must be kept, as well as the criteria for consolidating their operations and financial statements; a regulatory power that, by virtue of the entry into force of the Law on Supervision and Regulation of the Financial System, was transferred to the Central Reserve Bank, through its Committee of Standards.

II. That Article 85, second paragraph, of the Insurance Companies Law, establishes the manner in which the accounting obligations of insurance companies will be determined, the accounting principles of mandatory application, the rules on the formulation of their annual accounts, the criteria for valuing the elements comprising them, as well as the regime for approval, verification, deposit, and publicity of said accounts, all with the objective that the real liquidity and solvency situation of the insurance companies be reflected.

III. That Article 2, first paragraph, of the Law on Supervision and Regulation of the Financial System, establishes that the Financial Supervision and Regulation System has as its objective to preserve the stability of the financial system and ensure its efficiency and transparency, as well as to ensure the safety and solidity of the members of the financial system in accordance with what is established in said Law, other applicable laws, regulations, and technical standards issued for this effect, all in concordance with best international practices on the matter.

IV. That Article 35, first paragraph, of the Law on Supervision and Regulation of the Financial System, establishes that directors, managers, and other officials holding positions of direction or administration in the members of the financial system must conduct their business, acts, and operations complying with the highest ethical standards of conduct and acting with the due diligence of a good merchant in their own business.

V. That Article 35, letter f), of the Law on Supervision and Regulation of the Financial System establishes that it is the obligation of the supervised entities the adequate accounting disclosure of the economic and financial reality, having to have the backing of their internal and external audits.

VI. That Article 99, third paragraph, letter c), of the Law on Supervision and Regulation of the Financial System, establishes that it is the responsibility of the Committee of Standards of the Central Reserve Bank of El Salvador to approve the Technical Standards for the elaboration, approval, presentation, and dissemination of the Financial Statements and supplementary information of the members of the financial system; for the determination of accounting obligations and principles in accordance with which they must keep their accounting and the establishment of criteria for the valuation of assets, liabilities, and the constitution of provisions and reserves for risks.

VII. That in accordance with Article 101, fourth paragraph, of the Law on Supervision and Regulation of the Financial System, the powers to approve, modify, and repeal technical standards that must be complied with by the members of the financial system and other supervised entities are transferred to the Central Reserve Bank of El Salvador.

THEREFORE,

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

AGREES to issue the following:

TECHNICAL STANDARDS FOR STOCK MARKET REPO OPERATIONS OF INSURANCE COMPANIES

CHAPTER I
OBJECT, SUBJECTS, AND TERMS

Object
Art. 1.- These Standards have as their objective to regulate the application and accounting valuation of stock market repo operations.

Subjects
Art. 2.- The subjects obliged to comply with the provisions established in these Standards are:
a) Insurance companies incorporated in El Salvador; b) Branches of Foreign Insurance Companies, established and authorized in the country; and c) Cooperative Associations that provide insurance services incorporated in the country.

Terms
Art. 3.- For the purposes of these Standards, the terms indicated below have the following meaning:
a) Central Bank: Central Reserve Bank of El Salvador; b) Stock Market Repo: is a financial operation by means of which the reporting party (reportado) becomes a debtor to another subject called the reporting counterparty (reportador), who provides a sum of money to the former, which is guaranteed by the former with securities; an operation that is reversed at the end of the agreed term; and c) Superintendency: Superintendency of the Financial System.

CHAPTER II
OPERATIONS OF THE REPORTING PARTY (REPORTADO)

Art. 4.- Repo operations cause in the reporting party:
a) An increase in liquidity and an increase in financial obligations by the transacted value; and b) The transfer of the documents delivered as collateral to the account “1205 Transferred Investments”; both records must be made simultaneously.

On the same date of the operation, the value of the corresponding premium must be recorded as a financial expense in the account “4701040 Expenses for securities sold in repo”. The premium can be deferred when the term of the transaction is greater than sixty days, in which case, the account “1901090 Advance Payments and Deferred Charges – Others” must be used. Its application to the expense account will be made as the cited term elapses.

Art. 5.- When the reported institution returns the amount of money and receives the securities, it must reclassify the transacted value to its original accounts.

CHAPTER III
OPERATIONS OF THE REPORTING COUNTERPARTY (REPORTADOR)

Art. 6.- Repo operations cause in the reporting counterparty a decrease in liquidity and an increase in the account “130108 Stock Market Operations”.

The debit in the aforementioned account must be for the value of the transacted securities plus the discount, when applicable.

The discount must be registered as a deferred credit, crediting the account “290109 Deferred Income – Others”; the recognition of the income will be made as it is earned.

Art. 7.- The premium produced by the transaction of securities at par value is recorded when the transaction cycle ends. If the income is effected at the moment of acquisition, it may be deferred when the term is greater than 60 days; in this case, the provisions of the last paragraph of the previous article will apply.

Art. 8.- When the reporting institution receives the repayment of the money, it must increase liquidity and credit the account “130108 Stock Market Operations” at the same time it must amortize the proportion of the deferred income with a credit to the account “5706090 Others – Other income”; in the case of having received the premium in advance.

CHAPTER IV
OTHER PROVISIONS AND VALIDITY

Art. 9.- The commission of the brokerage house and that of the stock exchange must be accounted for as an expense on the date it is paid.

Sanctions
Art. 10.- 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. 11.- These Standards repeal the “Standards for the Accounting Record of Stock Market Repo Operations Performed by Insurance Companies” (NCS-007), approved by the Board of Directors of the Superintendency of the Financial System in Session No. CD-30/1998 of May 20, 1998, whose Organic Law was repealed by Legislative Decree No. 592, which contains the Law on Supervision and Regulation of the Financial System, published in the Official Journal No. 23, Volume No. 390, of February 2, 2011.

Unforeseen Aspects
Art. 12.- Aspects not provided for in the matter of regulation in these Standards will be resolved by the Central Bank through its Committee of Standards.

Validity
Art. 13.- These Standards will enter into force as of the fifteenth of July of two thousand twenty-six.