Technical Standards for the Processing and Recording of Buy and Sell Orders for Securities by Stockbrokerage Firms

CNBCR-01/2014
NDMC-01
TECHNICAL STANDARDS FOR THE PROCESSING AND RECORDING OF BUY AND SELL ORDERS FOR SECURITIES BY STOCKBROKERAGE FIRMS Approval: 09/01/2014 Validity: 03/02/2014

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

THE NORMS COMMITTEE OF THE CENTRAL RESERVE BANK OF EL SALVADOR, CONSIDERING:
I. That Article 65 letter a) of the Securities Market Law establishes that stockbrokerage firms shall be obligated to keep records of buy and sell orders they receive by any means.
II. That Article 47 of the Regulations of the Securities Market Law regulates that the minimum content of the order records that stockbrokerage firms receive from their clients, as well as the manner of keeping them, shall be determined by the Superintendence, which, by virtue of the validity of the Law on Supervision and Regulation of the Financial System, now corresponds to the Central Reserve Bank through the Norms Committee.
III. That Article 7 letter f) of the Law on Supervision and Regulation of the Financial System establishes that the supervision of stockbrokerage firms corresponds to the Superintendence of the Financial System.
IV. That Article 35 letter g) of the Law on Supervision and Regulation of the Financial System establishes that members of the financial system are obligated to have efficient functioning of registration, treatment, storage, transmission, production, security, and control systems for information flows.
V. That Article 15 first paragraph of the Special Law for the Prevention, Control, and Sanction of Money Laundering, Terrorism Financing, and Financing of the Proliferation of Weapons of Mass Destruction establishes that obligated subjects, to achieve identification of their clients and users, including the controller, recipient, or ultimate beneficiary, managing associated risks and obtaining appropriate information about commercial relationships entered into or their continuity, must take reasonable measures to carry out due diligence procedures. (3)

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:

CNBCR-01/2014
NDMC-01
TECHNICAL STANDARDS FOR THE PROCESSING AND RECORDING OF BUY AND SELL ORDERS FOR SECURITIES BY STOCKBROKERAGE FIRMS Approval: 09/01/2014 Validity: 03/02/2014

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

TECHNICAL STANDARDS FOR THE PROCESSING AND RECORDING OF BUY AND SELL ORDERS FOR SECURITIES BY STOCKBROKERAGE FIRMS

CHAPTER I
OBJECTIVE, SUBJECTS, AND TERMS

Objective
Art. 1.- These Norms aim to regulate the operations of stockbrokerage firms, observing best operational practices in the records and controls necessary for the receipt, execution, allocation, and settlement of the transactions they perform, which allow providing transparency, fairness, ordering, and competitiveness to the Salvadoran securities market. (2)

Subjects
Art. 2.- The subjects obliged to comply with these Norms are stockbrokerage firms, authorized by the Superintendence of the Financial System to perform securities intermediation in accordance with the Securities Market Law.

Terms
Art. 3.- For the purposes of these Norms, the terms indicated below have the following meaning:
a) Agent(s): Stockbroker agents, understood as representatives of a stockbrokerage firm authorized to perform operations on a Stock Exchange on its behalf; b) Order Allocation: Action of assigning executed orders to the clients who issued them; c) Stock Exchange(es): Securities Exchanges constituted in El Salvador and registered in the Superintendence of the Financial System; d) Firm(s): Stockbrokerage firms, authorized and registered in the Superintendence of the Financial System; e) Order Execution: Compliance by stockbrokerage firms with a buy or sell order for securities issued by a client; f) Orders: Instructions issued by clients to stockbrokerage firms so that, on their behalf, they execute operations in the securities market in accordance with the authorization obtained by the Firms in accordance with the Securities Market Law; g) Order Receipt: Action of a Firm receiving orders issued by clients; h) Order Record: Record of Buy and Sell Orders, which Firms must keep, as expressed in letter a) of Article 65 of the Securities Market Law; i) Computer System: Computer system used by the Firm, through which all orders imparted by their clients will be entered for their control and registration, to be subsequently executed; and j) Superintendence: Superintendence of the Financial System.

CHAPTER II
RECEIPT OF BUY AND SELL ORDERS

Art. 4.- The Firm must have a computer system in which it automatically assigns a sequential number and enters and records in chronological order the orders it receives from clients immediately. This system shall be authorized by the Superintendence and must meet the characteristics established in Article 16 of these Norms.

Buy and Sell Order Form
Art. 5.- The instructions received by the Firm for the purchase or sale of securities from its clients according to agreed means must be entered immediately into the buy and sell order form designed within the computer system. This form must contain at least the following information:
a) Sequential number of orders: Number assigned sequentially and automatically by the system according to the chronological reception of each of the client's orders; b) Client Name: Identification of the natural or legal person on whose behalf the buy and sell order for securities will be made; c) Currency Type: Identification of the currency type; d) Date and time of the order: Specification of the date and time when the buy and sell order for securities is received by the client; e) Client Code: Code assigned according to the Firm's internal controls; f) Account number in the central deposit and custody of securities: Client's securities account that will be involved in the operation; (2) g) Amount: Specification of the total amount the client wishes to trade; h) Method of order receipt: Indication of the method of order receipt, which may be by telephone, electronically, or in writing; i) Order Type: Specification of whether the order issued is to buy or sell securities; j) Order Validity: Deadline for the validity of the order, after which the issued order will have the status of expired; k) Instrument: Detail of the instrument to be traded, considering the necessary characteristics to identify it so that the Firm can execute the issued order, such as Title Type or Instrument, Term, Issuer, Interest Rate, Payment Frequency. In the case of repurchase agreements (repos), the client must designate to the Firm at least the types of securities in which they wish to invest or with which they intend to raise funds, whether public or private; as well as the term of the repo operation; (2) l) Market Type: Identification of the market in which the client desires the order to be executed; m) Price or Yield: Specification of the prices or yields at which the client wishes to trade the securities, including for the tranches they wish to trade with different prices, yields, or price or yield policies. In any case, they may indicate the maximum and minimum price or yield at which the client is willing to accept the operation, depending on whether the operation is a purchase or sale; n) Quantity of securities to trade: Indication of the quantity of securities desired to be traded in total when applicable, according to the nature of the securities, along with the detail of limits in quantities the client wishes to trade with different prices or price policies; o) Person responsible for receiving the order: Identification of the person receiving the order, indicating the agent's number or name of the employee authorized by the Firm to receive it, including their respective signatures; p) Agreed Commission: Specification of the commission in percentage terms that will be charged to the client in the execution of the order. This commission may vary only if it is for the benefit of the client, and must be detailed in the observations field; q) Method of executing the order: Specification of the particularities indicated by the client that the Firm must consider
at the moment of executing the order; r) Observations: Detail of special situations that arise in the execution, cancellation, or expiration of the trading order, including special settlement conditions; and s) Client Signature: Name and signature of the client or the person authorized by them to sign orders on their behalf when required, in accordance with what is established in these Norms. The buy and sell order form shall be prepared by the Firm and must contain at least the information established in this article. (2)

Minimum Information upon Order Receipt
Art. 6.- The Firm must complete the buy or sell order form with the necessary information allowing it to execute the operation at the moment it receives the client's instruction.
The minimum information at the moment of receiving the instruction shall be the client's name, amount, instrument denomination, price or yield ranges for the operation, market type in which it will trade, and the account number in the central deposit and custody of securities when available.

Modifications and Corrections of Orders
Art. 7.- Orders that have been modified totally or partially by client instruction must be documented in a new form, to which the corresponding sequential number, date, and time in the computer system shall be assigned. (2) Corrections shall proceed when the Firm must remedy errors incurred in the process of receiving, operating, and allocating orders, and shall be carried out considering what is established in Articles 54 and subsequent of the Regulations of the Securities Market Law. In any case, the correction made by the Firm implies leaving the original content of the order intact, detailing said corrections in the observations field of the order.

Cancellation of Orders
Art. 8.- Firms may only accept cancellations of instructions issued by their clients when the orders have not yet been executed, for which they must have the corresponding supporting documentation, observing what is established in the third paragraph letter e) of Article 21 of these Norms. (2)

Form Signature
Art. 9.- The forms of orders that are executed must contain complete information and be signed by both the client or person authorized by them, and by the agent or person authorized by the Firm, within a maximum period of three business days after the day the negotiation takes place, in accordance with the Firm's internal procedure. (2) The Firm must ensure that the person signing, in case the orders are not signed by the Client, has the corresponding powers. In any case, the authorization of the person designated by the client to sign the orders must comply with the provisions defined in the intermediation contracts signed by the client with the Firm. Art. 10.- The Firm must not sign orders on behalf of the client at any time, except when dealing with own operations or individual portfolio administration, provided it is authorized to provide this service, for which it must clearly identify such situation. (2)

Communication Means for Order Receipt
Art. 11.- In case the Firm establishes and agrees with the client for the sending of orders using means other than the written note signed by the client, whether by telephone, verbal, mail, or electronic system, these must have supporting documentation of the client's acceptance of the medium they will use to issue their orders, which must meet the following conditions: (2) a) That they guarantee the timeliness, integrity, confidentiality, consistency, and security of the transmitted information; b) That they allow controlling the chronological reception of orders; c) That they send automatic notification to the client of the order's reception by the Firm, when applicable by the nature of the mechanism used; d) That they guarantee the capture of the information required in the buy and sell order forms according to what is established in Article 5 of these Norms; and e) That they allow establishing mechanisms for validating the client's acceptance of the order. In any case, the Firm is responsible for verifying the authenticity and documenting the orders it receives according to any medium agreed upon between the client and itself, establishing mechanisms for validating the client's acceptance of the order. Art. 12.- The client's signature referred to in Article 9 of these Norms will not be required when the Firm uses order receipt by telephone, email, or other electronic means and has control mechanisms allowing it to support and safeguard all instructions that have been issued by clients, for which it must comply with the following conditions: (2) a) Comply with what is established in Article 11 of these Norms; b) Obtain from the client the duly accepted acceptance, in which they clearly specify that their orders will be issued via telephone, email, or other electronic means, therefore, they do not need to be autographically signed by their person or by the person authorized to issue their orders; (2) c) Obtain prior authorization from the client or the person authorized to issue orders on their behalf to perform voice recordings in the case of order receipt by telephone; d) Incorporate into the internal control procedures referred to in Article 21 of these Norms, controls and mechanisms related to:
i. The reliable identification of the client;
ii. The conservation, backup, and safeguarding of all instructions that have been issued by their clients by telephone, email, or other electronic means, without editing and integrally, for the term established in Article 28 of these Norms; (2)
iii. The easy location and identification at any time of the instructions of the orders for which there are voice recordings and of the records in electronic media when they are emails;
iv. The designation of the person responsible for the custody of the backups of client instructions made telephonically, by email, or other electronic means; (2)
e) Incorporate into the contracts that Firms sign with their Clients, in accordance with what is established in the "Technical Standards on the Registration of Clients and Intermediation Contracts Used in the Securities Market by Stockbrokerage Firms" (NDMC-23), approved by the Central Bank through its Norms Committee, a Clause related to the ways the client can make their instructions or buy and sell securities orders to the Firm; which may be by means other than the written note signed by the client, whether via telephone, email, or other electronic medium agreed upon by the parties; (2) f) Repealed; and (2) g) Obtain the authorization of the Superintendence regarding compliance with the conditions required in this article.

Delivery of Receipt to Client
Art. 13.- The order forms shall be issued in original and copy, and the copy must be delivered to the client when the order has been executed and signed.

CHAPTER III
RECORDING OF BUY AND SELL ORDERS

Recording
Art. 14.- The Order Record must be implemented by the Firm, through a computer system that allows control of the receipt, recording, execution, and allocation of its clients' orders. This Record, as well as its modifications, must have prior authorization from the Superintendence, and must be legalized by a public accountant as established in Article 65 of the Securities Market Law and Article 17 of the Law Regulating the Practice of Accounting, respectively. (2) Additionally, this Record must adapt and comply at all times with what is provided in the Regulations of the Securities Market Law and must be available at the Firm's premises.

Content of the Buy and Sell Order Record
Art. 15.- The Order Record must contain, at minimum:
a) The fields necessary to note the received orders, according to what is established in Article 5 of these Norms; (2) b) The status of the orders; when they have not been executed, the conditions under which the client requested them must be specified; the order statuses to be considered shall be valid, executed, expired, cancelled, or annulled; (2) c) Level of order execution, establishing whether the order was executed partially or totally; d) Negotiated amount of the order, as well as the commission assigned to each operation; and e) Number assigned to the executed operation, the day on which said operation was closed or registered in the Stock Exchange's registration system to which Firms have access.

Characteristics of the Computer System
Art. 16.- The computer system used for the Record must meet the following minimum characteristics:
a) Computer security controls, guaranteeing the availability, integrity, confidentiality, and security of the information and the system, including the use of unique and individual user codes and access; b) That the system automatically assigns a sequential number and exact time in chronological order, according to the reception of each of the clients' orders, considering that this information must be unalterable; c) That it controls the status of the orders and records the date and time of order execution or modification, as well as the corresponding stock exchange operation number for the order; (2) d) That it includes an audit log, allowing identification of registered orders and all their modifications; e) That it allows printing on legalized sheets according to what is established in Article 65 of the Securities Market Law and Article 17 of the Law Regulating the Practice of Accounting; (2) f) That the data of the date and time of entry, execution, or modifications in the order record must correspond to the central server time and local time; g) That it has backup and recovery mechanisms for information in case of fortuitous events or force majeure, as well as contingency plans that ensure the capacity and continuity of the systems; and h) That it allows printing reports and exporting information regarding the Order Record to files in Excel spreadsheet and PDF formats. Information that is not necessary for the broker to execute orders, and which does not correspond to the minimum information established in Article 6 of these Norms, may be left pending in the system; however, it must be completed once the trading session ends, in which the order was executed. (2) Art. 17.- The computer system serving for the recording of buy and sell orders must have its applications and processes duly documented, including records of changes therein, maintenance policies, licenses, and authorizations if required, mechanisms that guarantee the availability, integrity, and confidentiality of the information they collect, store, transmit, and process from their clients, based on what is established in the "Technical Standards for Information Security Management" (NRP -23) and "Technical Standards for Business Continuity Management System" (NRP -24), approved by the Central Bank through its Norms Committee. (2)

CHAPTER IV
EXECUTION AND ALLOCATION OF ORDERS

Entry of Orders for Trading

CNBCR-01/2014
NDMC-01
TECHNICAL STANDARDS FOR THE PROCESSING AND RECORDING OF BUY AND SELL ORDERS FOR SECURITIES BY STOCKBROKERAGE FIRMS Approval: 09/01/2014 Validity: 03/02/2014

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

Art. 18.- The House, at the moment it enters the order into the electronic trading systems of the corresponding stock exchange, will incorporate the securities account number assigned to the client by the central securities depository and custodian, for the Electronic Registry of Securities Accounts.

Client Receipt
Art. 19.- The House must deliver to clients the settlement sheet of the operations it carries out and record this fact in its records.

Order Assignment
Art. 20.- The assignment of orders will be made according to what is provided in articles 48 to 51 of the Regulations of the Securities Market Law.

CHAPTER V
INTERNAL CONTROL

Internal Control
Art. 21.- The House must define internal control procedures for the reception, recording, execution, modification, and cancellation of orders and the settlement of executed operations.
The procedures must consider the definition of participants, functions, and responsibilities inherent to the Order Registry.
Additionally, the House must have a manual containing the policies and guidelines for the reception, recording, and execution of orders, as well as for the assignment of operations. This manual must be authorized by its Board of Directors and include at a minimum the following:
a) Process for the reception, recording, execution, and assignment of orders; b) Internal control measures that must be implemented to safeguard order forms, which must be archived chronologically; c) The information that client orders must contain based on the type of order in question, as well as the procedures for their modification or cancellation; d) The schedule for receiving orders, the timeframe for their execution, and their validity; (2) e) The process for canceling unexecuted orders may be carried out from the same day they were instructed until the last business day of their validity, according to the timeframe established by the client, observing for this purpose, the schedule established by the House and the means agreed upon with the client, which the House has made available; (2) f) Mechanisms that ensure the integrity of client orders, avoiding their alteration, as well as guaranteeing their correct execution and assignment;

CNBCR-01/2014
NDMC-01
TECHNICAL STANDARDS FOR THE PROCESS AND REGISTRATION OF BUY AND SELL ORDERS FOR SECURITIES OF STOCKBROKERAGE HOUSES Approval: 09/01/2014 Validity: 03/02/2014

Alameda Juan Pablo II, between 15 and 17 North Avenue, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv g) The definition of persons authorized by the Houses to act on their behalf to receive, execute, and sign orders issued by clients; h) The description of mechanisms and procedures applied by the House to handle client complaints, specifying the means of receiving them and a reasonable response timeframe to their clients, for which it must have internal controls over attended queries and responses provided; i) Protection measures for the integrity of the computer systems used in the registration of buy and sell orders; j) Mechanisms that allow it to unequivocally verify the identity of the person issuing a trading order, corroborating the necessary documents and relevant legal powers; and k) Mechanisms to control the timeframe or validity established by the client for the execution of the order.

Art. 22.- The Board of Directors of the House and its administrators will be responsible for having the necessary information that allows them to evaluate the functioning and efficiency of the internal control system, and to examine the compliance with internal procedures and policies in the operations carried out, their documentation, and registration.

Due Diligence in Operations
Art. 23.- The Houses must act with responsibility, care, and diligence, faithfully executing their clients' instructions, or under the best conditions for their benefit. (2)

Art. 24.- Within the procedures defined by the House, necessary actions must be considered to prevent behaviors, such as:
a) Front-running client operations, those of their agents, related companies, financial conglomerates of which the House is a part, or the House itself when they precede those of other clients; b) Favoring a client or the House over others, when the orders received have the same characteristics and conditions to execute the order; c) Inappropriate use of securities entrusted to them by clients or information provided by them; d) Possible conflicts of interest due to personal or other relationships between clients and House staff; e) That employees accept compensation, goods, gifts, or donations whose amount could affect the objectivity of the operations they perform on behalf of third parties; f) Altering the integrity of records and documentation related to operations carried out by clients; and

CNBCR-01/2014
NDMC-01
TECHNICAL STANDARDS FOR THE PROCESS AND REGISTRATION OF BUY AND SELL ORDERS FOR SECURITIES OF STOCKBROKERAGE HOUSES Approval: 09/01/2014 Validity: 03/02/2014

Alameda Juan Pablo II, between 15 and 17 North Avenue, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv g) Splitting orders issued by clients with the object of artificially manipulating security prices.
In any case, the policies required by the Law on Supervision and Regulation of the Financial System, in its article 35, regarding ethical conduct standards, management of conflicts of interest, use of insider information, prevention of behaviors that could imply manipulation or abuse of the market, must include provisions applicable to House staff involved in the activities referred to in these Standards, which promotes fair treatment for clients, in addition to considering what is established in the "Technical Standards of Conduct of Entities of the Stock Markets" (NDMC-15), approved by the Central Bank through its Standards Committee. (2) Likewise, the policies and mechanisms for risk management, required for Houses, must include provisions that allow for adequate management of risks assumed in their intermediation role.

Art. 25.- The House is obliged, in the exercise of its functions, to inform the Superintendence within two business days following, when it has indications that lead to presume that clients engage in the following behaviors:
a) Effecting or inducing transactions to fix or artificially vary the prices of any security in the market; b) Distorting the correct functioning of the stock exchange trading system, through orders or instructions sent by the Client to a House; (2) c) Intervening in operations with a conflict of interest; and d) Improper use of insider information.

Information for the Client
Art. 26.- The House must establish contractually or in its procedures, the method of communication to the client regarding custody services for their securities, especially the inventory of their securities, as well as the detail of commissions or charges carried out for the provision of said custody service. (2)

Responsibility of its Board of Directors
Art. 27.- The procedures and manuals referred to in articles 21, 24, and 35 of these Standards, as well as their modifications, must be approved by the Board of Directors of the House and sent to the Superintendence, within a maximum of ten business days after their approval.

Information Retention Time
Art. 28.- The orders received and their respective records, as well as the documentation and controls generated from these provisions, must be preserved according to the timeframe established in the Special Law for the Prevention, Control, and Sanction of Money Laundering, Terrorism Financing, and Financing of the Proliferation of Weapons of Mass Destruction. (2) (3)

CHAPTER VI
OBLIGATIONS WITH CLIENTS AND CLIENT KNOWLEDGE

Transparency and Confidentiality of Information Art. 29.- The House must behave with diligence and carry out all operations, whether on its own behalf or on behalf of third parties, with transparency, in the interest of its clients, maintaining in strict confidentiality the identity of the person on whose behalf it contracts. (2) Art. 30.- The House must inform its clients so that they make consistent and reasoned decisions about their investments, regarding the characteristics of securities available in the market, informing them of their price, yield, guarantees, and risk categories. All information directed to clients, whether advertising or not, must be clear and not misleading. Art. 31.- The House will provide its clients with information regarding the characteristics of the financial instruments in which they express interest in investing, which must include at a minimum, the information defined by the issuer in its offering prospectus. Additionally, at the client's request, it must provide them with information regarding market quotations of the financial instrument, as well as the detail of commissions that would apply in the case of carrying out operations with them. The disclosure of this information must be carried out prior to the trading order with the securities.

Client Knowledge
Art. 32.- The House must ensure that it has sufficient information about its clients, especially regarding:
a) Client identification; b) Client's investment objective and preference; c) Client's knowledge and experience, regarding the specific type of service contracted; d) Behavior towards risk; and e) Client's financial situation and capacity, including identification of the source of funds. In client knowledge, the House must perform due diligence on its clients according to what is established in the laws, instructions, and current regulations related to the prevention, detection, and control of money laundering, terrorism financing, and financing of the proliferation of weapons of mass destruction. (2) (3)

CNBCR-01/2014
NDMC-01
TECHNICAL STANDARDS FOR THE PROCESS AND REGISTRATION OF BUY AND SELL ORDERS FOR SECURITIES OF STOCKBROKERAGE HOUSES Approval: 09/01/2014 Validity: 03/02/2014

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

Client Risk Profile
Art. 33.- Based on the information provided by the client, interviews conducted, and a systematic procedure applied by the House for client knowledge, a client profile must be determined regarding preferences in the securities they wish to invest in, taking into consideration the risk the client wishes to assume in them, as well as the knowledge they may have about the securities market, education level, occupation or professional activity, investment volume, and frequency of carrying out operations, leaving a record in the form that the House must complete for each of its clients, which must be signed by them. (2) It is the responsibility of the House to ensure that the investments offered to its clients, and the investment orders, are suitable for them, based on their profile, the risk they wish to assume, experience, and knowledge. (2)

Art. 34.- In the case that the House has clients considered as institutional investors, it will not be necessary what is required in article 33 of these Standards, regarding determining a category according to their risk profile. Nevertheless, it must comply with what is established in the regulation for the prevention, detection, and control of money laundering, terrorism financing, and financing of the proliferation of weapons of mass destruction. (2) (3) Institutional investors are understood to be entities such as banks, financial conglomerates, and member companies thereof according to the Banking Law, pension funds, securitization funds, insurance and reinsurance companies, Houses acting on their own behalf, privately managed collective funds duly authorized, the Development Bank of El Salvador, and the Central Reserve Bank of El Salvador.

Art. 35.- For the determination of the client profile, the House must have policies and procedures which must be approved by its Board of Directors, and must contain at a minimum the following:
a) Include within client profiles, at a minimum, the categories of: Conservative, moderate, and aggressive; b) Investment policies for each category of client profile that the entity defines; c) Policy for updating the profiles of active clients, which cannot be less than three years; d) Training policy for staff responsible for the elaboration and application of client profiles; and e) Form or questionnaire to establish the client profile. (2) The policies and procedures must be reviewed at least every three years in order to adapt them to the characteristics of the market.

CNBCR-01/2014
NDMC-01
TECHNICAL STANDARDS FOR THE PROCESS AND REGISTRATION OF BUY AND SELL ORDERS FOR SECURITIES OF STOCKBROKERAGE HOUSES Approval: 09/01/2014 Validity: 03/02/2014

Alameda Juan Pablo II, between 15 and 17 North Avenue, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv
The client risk profile categories are defined as follows: (2) a) Conservative or risk-averse (Income-oriented): This is one who has low tolerance for risk and seeks an investment in which the risk of loss of contributed capital is minimal. (2) b) Moderate: This is one who has moderate tolerance for risk and seeks to maintain the stability of their investment, willing to accept more modest returns for it. Seeks a balance between profitability and risk. (2) c) Aggressive or speculative: This is one who has knowledge of the market where they are investing, manages fundamental and technical analysis tools, assumes the risks of their investments, seeks to maximize profitability, and invests basically in variable and fixed income securities of high risk regardless of extreme market volatility and potential losses. (2)

Art. 36.- The client profile form will be part of each client's file, and must contain the information referred to in articles 32 and 33 of these Standards, as well as the documentation that served as the basis in the evaluation and determination of the client's profile, specifying in said form, its date of elaboration, as well as, the date of its update and the client's acceptance; for which the House must conduct a questionnaire that allows determining their level of knowledge in the securities market, preference in the investments traded in the market, investment horizon, and the risk they wish to assume. (1) (2) For clients who are legal entities, the client profile corresponds to that of the society, being the responsibility of the House to elaborate it according to its policies and mechanisms for risk management approved by its Board of Directors, a questionnaire to determine the knowledge of its clients in the securities market, in accordance with what is established in articles 32 and 33 of these Standards. (1) (2) Likewise, in case the client does not provide the information indicated in this article or the provided information is insufficient, the House will warn the client that they are not in a position to determine if the investment order is suitable for them. In any case, the House must have documentation that supports compliance with these provisions.

Exception to the Application of Investment Policies Art. 37.- The House, at the client's request, may execute an investment order that does not correspond to their profile and to the investment policy defined for them, provided that the client signs a document authorizing said operation, which will be required every time this type of order is issued.

CNBCR-01/2014
NDMC-01
TECHNICAL STANDARDS FOR THE PROCESS AND REGISTRATION OF BUY AND SELL ORDERS FOR SECURITIES OF STOCKBROKERAGE HOUSES Approval: 09/01/2014 Validity: 03/02/2014

Alameda Juan Pablo II, between 15 and 17 North Avenue, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv
This document will be signed prior to carrying out operations for its clients, which must be known to the General Manager of the House and will be part of the client's file and include at a minimum: (2) a) That they accept that the securities they are going to invest in do not correspond to the investment policy appropriate to their investor profile; b) That they understand and accept the characteristics and risks of the securities in which they will invest; c) That they do not accept the House's recommendation not to invest in said securities; and d) A warning by the House to the client regarding the main risks and characteristics of the securities in which they wish to invest, and that these titles do not correspond to the risk profile determined in their analysis (The category of client determined by the House must be specified). In the case that the client expressly requests that their profile not be applied or determined, the House must obtain a document signed by their client, in which prior to carrying out operations they indicate: (1) a) That they requested that the profile not be applied; (1) b) That they understand and accept the characteristics and risks of the securities in which they will invest, therefore, they do not require the advice or recommendations of the House or its officials to invest in that product; or (1) (2) c) Repealed; (1) (2) d) Repealed; (1) (2) e) That the operations correspond to the sale of securities and are not investments. (2) Repealed. (2) When a client habitually carries out investments that are not in function of their profile, the House may perform a new evaluation to determine the client's profile according to the profile update policy for clients referred to in article 35 of these Standards, leaving a record of the analysis performed. In any case, the Houses must inform the Superintendence within the third business day following the signing of the document referred to in this article, the names of the clients and the detail of the investments carried out.

CHAPTER VII
OTHER PROVISIONS AND VALIDITY

Sanctions
Art. 38.- 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.

CNBCR-01/2014
NDMC-01
TECHNICAL STANDARDS FOR THE PROCESS AND REGISTRATION OF BUY AND SELL ORDERS FOR SECURITIES OF STOCKBROKERAGE HOUSES Approval: 09/01/2014 Validity: 03/02/2014

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

Transitory Provisions
Art. 39.- From the validity of these Standards, Houses will have four months to adapt the minimum content disposed for the form and the Order Registry; and for the approval by their Board of Directors of the procedures and manuals detailed in chapters V and VI of these Standards. (1) Art. 39-A.- Houses must implement the computer system for the registration of buy and sell orders, according to chapter III of these Standards, within a maximum period of eighteen months from the validity of these Standards. This timeframe is composed of the following stages: (1) a) Three months for the presentation to the Superintendence of the implementation plan for the system, approved by the Board of Directors of the respective House, which must include: those responsible for implementing, executing, and verifying said plan, specific dates on which activities will be carried out, as well as the detail of the same; (1) b) Nine months for the design and elaboration of the computer system by the Houses and presentation of the request for its approval, before the Superintendence, including the documentation required in article 17 of these Standards; (1) c) Four months for the review and testing of the system, by the Superintendence; incorporating modifications to it, if required; and (1) d) Two months for the final authorization by the Superintendence. (1)

Art. 39-B.- Obligated subjects will have six months after the entry into force of these Standards, to elaborate the client profile for all those clients who require carrying out stock market operations. (1)

Unforeseen Aspects
Art. 40.- Aspects not provided for in regulatory matters in these Standards will be resolved by the Standards Committee of the Central Reserve Bank of El Salvador.

Repeal
Art. 41.- These Standards repeal Resolution RS.CB.22/2002 Registration of Buy and Sell Orders for Securities, approved on September 23, 2002, by the Superintendent of the Securities Superintendence, whose Organic Law was repealed by Legislative Decree number 592 containing the Law on Supervision and Regulation of the Financial System, published in the Official Diary number 23 Volume 390 of date February 2, 2011.

Validity
Art. 42.- These Standards will enter into force from February 3, two thousand fourteen.

MODIFICATIONS:

CNBCR-01/2014
NDMC-01
TECHNICAL STANDARDS FOR THE PROCESS AND REGISTRATION OF BUY AND SELL ORDERS FOR SECURITIES OF STOCKBROKERAGE HOUSES Approval: 09/01/2014 Validity: 03/02/2014

Alameda Juan Pablo II, between 15 and 17 North Avenue, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv
(1) Modifications approved by the Standards Committee of the Central Reserve Bank of El Salvador, in Session No. CN-05/2014 of date March 27, two thousand fourteen, with validity from April 10, two thousand fourteen.
(2) Modifications to articles 1, 5, 7, 8, 9, 10, 11, 12, 14, 15, 16, 17, 21, 23, 24, 25, 26, 28, 29, 32, 33, 34, 35, 36, 37 and repeal of Annexes No. 1 and No.2, approved by the Central Bank through its Standards Committee, in Session CN-03/2024, of February 29, two thousand twenty-four, with validity from March 15, two thousand twenty-four. (3) Modifications in Consideration V and in articles 28, 32, and 34, approved by the Central Bank through its Standards Committee, in Session No. CN-04/2026, of May 25, two thousand twenty-six, with validity from June 9, two thousand twenty-six.

CNBCR-01/2014
NDMC-01
TECHNICAL STANDARDS FOR THE PROCESSING AND RECORDING OF BUY AND SELL ORDERS FOR SECURITIES BY STOCKBROKERAGE HOUSES Approval: 09/01/2014 Validity: 03/02/2014

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

Annex No. 1
MODEL FORMAT FOR BUY AND SELL ORDERS
Repealed. (2)

CNBCR-01/2014
NDMC-01
TECHNICAL STANDARDS FOR THE PROCESSING AND RECORDING OF BUY AND SELL ORDERS FOR SECURITIES BY STOCKBROKERAGE HOUSES Approval: 09/01/2014 Validity: 03/02/2014

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv
Annex No. 2
MODEL QUESTIONNAIRE FOR DETERMINING THE RISK PROFILE OF CLIENTS Repealed. (2)