Technical Standards for the Handling of Securities and Transfer of Client Securities by Brokerage Houses

CNBCR-09/2023	NDMC-25
Approval: 09/26/2023	TECHNICAL STANDARDS FOR THE HANDLING OF SECURITIES AND TRANSFER OF CLIENT SECURITIES BY BROKERAGE HOUSES
Effective: 10/11/2023

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

CONSIDERING:

I. That Article 67 of the Securities Market Law establishes that brokerage houses are responsible for the authenticity and physical integrity of the securities they trade, the registration of their last holder in the issuer's records when necessary, and the continuity of endorsements and their authenticity, where applicable.

II. That Article 1, third paragraph, of the Law on Electronic Book Entries for Securities establishes that shares and securities not grouped in issuances may be represented by means of titles or electronic book entries, at the issuer's discretion.

III. That Article 7, literal f), of the Law on Supervision and Regulation of the Financial System establishes that brokerage houses are subject to the provisions of the Law on Supervision and Regulation of the Financial System and, therefore, to the supervision of the Superintendency of the Financial System.

IV. That Article 35, literal g), of the Law on Supervision and Regulation of the Financial System establishes that it is the responsibility of the members of the financial system to ensure the efficient functioning of the systems for recording, processing, storing, transmitting, producing, securing, and controlling information flows.

V. That Article 35, literal k), of the Law on Supervision and Regulation of the Financial System establishes that directors, managers, and other officials holding management or administrative positions in members of the financial system must conduct their business, acts, and operations complying with the highest ethical standards of conduct and acting with the diligence of a good merchant in their own business, being obligated to comply with and ensure that the institution they direct or work for adopts and implements corporate governance standards in the management, direction, and control of their operations.

VI. That Article 99, literal e), of the Law on Supervision and Regulation of the Financial System regulates that it is the responsibility of the Standards Committee of the Central Reserve Bank of El Salvador to establish technical criteria to determine acts and operations considered contrary to stock market practices or sound market practices.

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Alameda Juan Pablo II, between 15th and 17th North Avenue, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv

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CNBCR-09/2023	NDMC-25
Approval: 09/26/2023	TECHNICAL STANDARDS FOR THE HANDLING OF SECURITIES AND TRANSFER OF CLIENT SECURITIES BY BROKERAGE HOUSES
Effective: 10/11/2023

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 HANDLING OF SECURITIES AND TRANSFER OF CLIENT SECURITIES BY BROKERAGE HOUSES

CHAPTER I
OBJECTIVE, SUBJECTS, AND TERMS

Objective
Art. 1.- These Standards aim to regulate the handling of securities and the transfer of client securities by Brokerage Houses.

Subjects
Art. 2.- The subjects obliged to comply with the provisions established in these Standards are the Brokerage Houses.

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 Exchange(es): Stock Exchanges constituted in El Salvador and registered with the Superintendency of the Financial System; c) House(s): Brokerage Houses, authorized and registered with the Superintendency of the Financial System; d) Depository: Company specialized in the Deposit and Custody of Securities, authorized and registered with the Superintendency of the Financial System; and, e) Superintendency: Superintendency of the Financial System.

CHAPTER II
GENERAL PROVISIONS

Supporting Documentation for Operations
Art. 4.- Brokerage Houses, for the purpose of maintaining documents that support the authorization for the handling of securities and the transfer of ownership of their clients' securities, must fill out a form in each of the following cases:

a) Receipt of securities, represented in physical form: At the moment the house receives securities from its clients, which are represented by paper, for deposit in an authorized entity in accordance with the Securities Market Law, and/or custody of the same, in accordance with Annex No. 1 of these Standards; b) Delivery of securities, represented in physical form: At the moment the client requests the delivery of their securities, which have not been dematerialized and are deposited in securities accounts in the holder's name, in accordance with Annex No. 1 of these Standards; and c) Transfer of physical or dematerialized securities recorded in accounts: In the case where the client wishes to perform transfers between accounts in their name, either because they hold more than one account in a depository entity through a House or when it concerns the cases established in Article 12 of the Law on Electronic Book Entries for Securities. For this case, the "Transfer of Securities between Accounts" form, defined in Annex No. 2, shall be used, which must be completed by both the direct participant transferring the securities and the recipient thereof.

Art. 5.- For cases of transfer of securities from the client's account, derived from the fulfillment of operations carried out in a Stock Exchange, the document supporting these operations shall be the buy-sell order that the client issues to the respective house, in accordance with the "Technical Standards for the Process and Registration of Buy and Sell Orders of Securities by Brokerage Houses" (NDMC-01), issued by the Central Bank through its Standards Committee.

Content of Forms
Art. 6.- The minimum information that a House must consider with its clients regarding the deposit, withdrawal, or transfer of physical or dematerialized securities shall be as follows:

a) Annex No. 1: Form for Receipt or Delivery of Physical Securities. b) Annex No. 2: Form for Transfer of Physical or Dematerialized Securities between Accounts.

Art. 7.- The forms must have a serial number, allowing identification of their order. The numbering of the forms shall be independent between the type of each one, with a serial numbering for each type of form, depending on the authorization to which it corresponds.

Art. 8.- The forms may be issued in physical or electronic form by the House, considering that they must be assigned sequentially. The client must sign the form by the means made available by the House to the Client, considering compliance with the legal framework applicable to autograph or electronic signatures.

In the case that the forms are generated electronically, the computer system

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Alameda Juan Pablo II, between 15th and 17th North Avenue, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv

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CNBCR-09/2023	NDMC-25
Approval: 09/26/2023	TECHNICAL STANDARDS FOR THE HANDLING OF SECURITIES AND TRANSFER OF CLIENT SECURITIES BY BROKERAGE HOUSES
Effective: 10/11/2023

must guarantee the timeliness, traceability, integrity, confidentiality, consistency, and security of the information, as well as have periodic mechanisms for backup and recovery of information in cases of fortuitous events or force majeure.

Art. 9.- The forms must be prepared in original and copy. The original receipt shall be delivered to the client, and the copy shall be archived by the respective House.

In the case of cancelled forms, both the original and its copy must be archived within the serial number maintained by the House.

Art. 10.- In the case that the forms are associated with a buy-sell operation, the Houses must reference the number of this form in the corresponding buy-sell order form and vice versa.

Control of Forms
Art. 11.- Houses will be responsible for the filing according to the serial number of the forms supporting the receipt, delivery, and transfer of their clients' securities, simultaneously maintaining an updated control of them, allowing identification by date, by client, and by type of authorized operation. Such control may be kept electronically.

CHAPTER III
OTHER PROVISIONS AND EFFECTIVE DATE

Sanctions
Art. 12.- 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. 13.- These Standards repeal the "Guidelines for the Handling of Securities and Transfer of Client Securities by Brokerage Houses" (RSTG-3/2007) approved on May 10, 2007, by the Securities Superintendency, whose Organic Law was repealed by Legislative Decree No. 592 containing the Law on Supervision and Regulation of the Financial System, published in the Official Journal No. 23, Volume No. 390, dated February 2, 2011.

Unforeseen Aspects
Art. 14.- Aspects not provided for in the regulatory matter in these Standards will be resolved by the Central Bank through its Standards Committee.

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Alameda Juan Pablo II, between 15th and 17th North Avenue, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv

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CNBCR-09/2023	NDMC-25
Approval: 09/26/2023	TECHNICAL STANDARDS FOR THE HANDLING OF SECURITIES AND TRANSFER OF CLIENT SECURITIES BY BROKERAGE HOUSES
Effective: 10/11/2023

Effective Date
Art. 15.- These Standards will enter into effect on October 11, 2023.

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Alameda Juan Pablo II, between 15th and 17th North Avenue, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv

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CNBCR-09/2023	NDMC-25
Approval: 09/26/2023	TECHNICAL STANDARDS FOR THE HANDLING OF SECURITIES AND TRANSFER OF CLIENT SECURITIES BY BROKERAGE HOUSES
Effective: 10/11/2023

Annex No. 1
Model of Form for Receipt or Delivery of Securities (Physical)

Form for Receipt or Delivery of Physical Securities
	No. (Serial)
Name of Brokerage House	Delivery	[ ]
	Receipt	[ ]
Date:		No. Buy/Sell Order	[ ]
Client Name:
Description of Security
1. Issuer
2. Type of Securities	Registered [ ]
	Bearer [ ]
	Order [ ]
3. Certificate Number(s)
4. Holder of the Certificate
5. Endorsed to the order of
6. Nominal Value of the Certificate	7. Number of Titles Delivered
The authenticity and physical integrity of the securities received were verified in accordance with Article 67 of the Securities Market Law.
Name and Signature of the House employee who received the titles	Name and Signature of the Client
Stamp of the Brokerage House

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Alameda Juan Pablo II, between 15th and 17th North Avenue, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv

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CNBCR-09/2023	NDMC-25
Approval: 09/26/2023	TECHNICAL STANDARDS FOR THE HANDLING OF SECURITIES AND TRANSFER OF CLIENT SECURITIES BY BROKERAGE HOUSES
Effective: 10/11/2023

Annex No. 2
Model of Form for Transfer of Physical or Dematerialized Securities between Accounts

Form for Transfer of Securities between Accounts
	No. (Serial)
Name of Brokerage House	Securities Transferred	[ ]
	Securities Received	[ ]
Date:
Client Name:
Reason for requested transfer:
Description of Security to be transferred.

Issuer	Issue	Type of Security	Series or Tranche	Number From-To	Nominal Value	Total	Source Account	Destination Account
1.
2.
3.
4.
5.
6.
7.

Name and Signature of the person authorized by the House to attend to the client	Name and Signature of the Client
Stamp of the Brokerage House

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Alameda Juan Pablo II, between 15th and 17th North Avenue, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv

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CNBCR-09/2023	NDMC-25
Approval: 09/26/2023	TECHNICAL STANDARDS FOR THE HANDLING OF SECURITIES AND TRANSFER OF CLIENT SECURITIES BY BROKERAGE HOUSES
Effective: 10/11/2023

Annex No. 2
Model of Form for Transfer of Physical or Dematerialized Securities between Accounts

Form for Transfer of Securities between Accounts
	No. (Serial)
Name of Brokerage House	Securities Transferred	[ ]
	Securities Received	[ ]
Date:
Client Name:
Reason for requested transfer:
Description of Security to be transferred.

Issuer	Issue	Type of Security	Series or Tranche	Number From-To	Nominal Value	Total	Source Account	Destination Account
1.
2.
3.
4.
5.
6.
7.

Name and Signature of the person authorized by the House to attend to the client	Name and Signature of the Client
Stamp of the Brokerage House

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Alameda Juan Pablo II, between 15th and 17th North Avenue, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv