Technical Standards for the Publication of Commissions of Entities Involved in the Securities Market

Approval: 09/26/2023
Validity: 10/11/2023

NCM-05
TECHNICAL STANDARDS FOR THE PUBLICATION OF COMMISSIONS OF ENTITIES INVOLVED IN THE SECURITIES MARKET

CENTRAL RESERVE BANK OF EL SALVADOR
GOVERNMENT OF EL SALVADOR

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

CONSIDERING:

I. That Article 1 of the Securities Market Law establishes that it regulates the public offering of securities and these, their transactions, their respective markets and intermediaries and the issuers, with the purpose of promoting the efficient development of said markets and safeguarding the interests of the investing public.

II. That Article 41 of the Securities Market Law establishes that stock exchanges must publish in two newspapers of national circulation, on the dates they publish their audited financial statements of June and December of each year, the commissions they charge for their services.

III. That Article 60-A of the Securities Market Law establishes that brokerage houses must inform monthly and in detail to each of the investors, about the result of bank deposits, investments, accrued commissions, securities acquired and sold during the corresponding period and the resulting balance.

IV. That Article 80 of the Securities Market Law establishes that Societies that receive securities in deposit and custody must publish in two newspapers of national circulation, on the dates they publish their audited financial statements of June and December of each year, the commissions they charge for their services.

V. That Article 96 of the Securities Market Law establishes that Societies that intervene in the securities market whose services cause commissions, must publish them monthly and each time they modify them.

VI. That Article 5 letter e) of the Law on Supervision and Regulation of the Financial System establishes that it is the responsibility of the Superintendence of the Financial System to supervise the public offers for the acquisition of securities registered in the Public Stock Exchange Registry and to require the offerors to reveal information that it considers necessary for them to be carried out with the due information and transparency, with the effect of safeguarding the interests of the investing public.

VII. That investors, in order to make decisions oriented to maximize their resources, require access to precise and uniform information about the commissions that will be applied to the operations they carry out in the securities market, and thus determine the intermediary they consider convenient according to their interests.

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 THE PUBLICATION OF COMMISSIONS OF ENTITIES INVOLVED IN THE SECURITIES MARKET

CHAPTER I
OBJECT, SUBJECTS AND TERMS

Object
Art. 1.- These Standards have as their object to establish the minimum guidelines that the obligated subjects of these Standards must comply with, for the publication of the commissions that they charge for their services.

Subjects
Art. 2.- The subjects obligated to comply with the provisions established in these Standards are the following:
a) Stock Exchange; b) Brokerage Houses; and c) Specialized Societies in the Deposit and Custody of Securities.

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) Exchanges: Stock Exchange; c) Houses: Brokerage Houses; d) Entity (ies): Subjects obligated to comply with the provisions of these Standards; e) Market: Securities Market; f) Deposit and Custody Societies: Specialized Societies in the Deposit and Custody of Securities; and g) Superintendence: Superintendence of the Financial System.

CHAPTER II
ON THE INFORMATION TO BE PUBLISHED

Setting of commissions
Art. 4.- The entities may freely set the commissions to be charged; however, they must define, for the services they offer to the market, the commissions to be charged and publish them according to the guidelines established in these Standards.

Quality of information
Art. 5.- The information related to the commissions charged for services provided by the entities, must be presented in a clear, concrete and easily understandable manner by the general public, avoiding the omission of relevant information for its interpretation and comparison.

The publications must be legible, visible and carried out in two printed media of national circulation or another digital publication platform with greater or equal coverage, or on the entity's website. In the case that it is physical, it must be published with a font size no smaller than 8 points.

Detail of commission information
Art. 6.- The commission information to be published by the entities must include as a minimum the following:
a) The detail of the financial products or services offered to the market in a specific manner, with clear denomination for each of them, including the necessary details to understand and identify the service for which the determined commission will be charged. The classification of services established may differentiate by type of clients to whom the service is directed; b) Commissions to be charged in the month of publication for each of the operations and services defined, indicating the amount or maximum rate to be charged, in compliance with what is established in articles 19 and 27 of the Consumer Protection Law.

The value of the amount or maximum rate to be published must serve as a reference for investors on the real cost of the service to be contracted, therefore, it must correspond to a value or percentage close to the maximum rate charged by the entity for each of the different services.

The commissions to be charged must be defined by an annualized rate (%), however in case of exceptions it must be detailed in a clarifying note, in the respective publication. The commissions published must not include taxes; and c) The base on which the percentage of commission will be applied, through which the client can be able to identify their operations. The value of the commission to be charged may vary among the criteria used by the entity to define the application base.

Specifications for the publication of commissions Art. 7.- The entities, for the publication of the information required in these Standards, must consider the following provisions:

a) The Houses must publish the commissions to be charged with the minimum required information and based on the format defined in Annex No. 1 of these Standards. The format presents, as an example, some of the products or services that the Houses are authorized to carry out, however, each of them may modify or expand the detail of them.

The exchanges and the deposit and custody societies will not be subject to adopting the format for the publication of the commissions that apply to their clients, according to a predefined format, since it is not required to standardize the information provided by these entities with others in the market; b) Without prejudice to what is indicated in the contracts agreed upon prior to the entry into force of these Standards, the commissions must be applied from the day following their publication in the printed media of national circulation or another digital publication platform with greater or equal coverage, or on the entity's website. During the period in which the referred monthly publication has not been made, the last published commissions will apply; c) The publications have the character of commercial offer and will bind the offeror in the terms of articles 970 and 971 of the Commercial Code; d) Without prejudice to the existing regulations for financial conglomerates, the Houses in the advertising, promotion and offering of their different services that they offer to the public, must not use expressions, comparisons or references of any type to business groups or related companies that could make the investor believe that there is or will be backing for their investments; and e) The size of the font for the publication of phrases and clarifying notes, cannot be less than 75% of the size of the font of the central text of the publication.

Dissemination to the public
Art. 8.- For the dissemination to the public of the information defined in these Standards, the entities must consider the following provisions:
a) The stock exchanges and the deposit and custody societies must publish semi-annually, at least in two printed media of national circulation or another digital publication platform with greater or equal coverage, or on the entity's website, and on the date they publish their financial statements of June and December of each year, the commissions they charge to their clients, with the information defined in these Standards; b) The Houses must publish monthly the commissions they charge to their clients, at least in two printed media of national circulation or another digital publication platform with greater or equal coverage, or on the entity's website, and within the first five business days of each month; c) Houses related to banks that have their offices in their facilities must maintain in a visible place information indicating to the public that they are totally different entities; d) In addition to the publications referred to in letters a) and b) of this article, the entities must maintain in their offices, the commissions in a visible manner, in the places of public attention, using for this purpose the means they deem convenient. It must also be delivered to clients when they request it, by physical or electronic means; e) Publish the information on the commissions charged for the services provided, according to the detail defined in these Standards, on the entity's Web page, if it has one; and f) Send the information to the exchange with the same periodicity as it is published, who must show it on its Web page.

Modification of commissions
Art. 9.- The commissions charged to clients by the entities that intervene in the securities market, may be modified. Such modification will be effective from its publication, which will be carried out in the terms established in these Standards and must refer exclusively to the change made.

CHAPTER III
OTHER PROVISIONS AND VALIDITY

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 "Guidelines for the Publication of Commissions and Yields of Supervised Entities" (RCTG-4/2005), approved by the Board of Directors of the Superintendence of Securities in Session No. CD-25/2005 of June 22, 2005, 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 Diary No. 23, Volume No. 390, of February 2, 2011.

Unforeseen Aspects
Art. 12.- The aspects not provided for in regulatory matters in these Standards, will be resolved by the Committee of Standards of the Central Bank.

Validity
Art. 13.- These Standards will enter into force from the eleventh of October two thousand twenty-three.

Annex No. 1

Format for publication of commissions of the Houses

The following table is a format for the publication of the commissions charged by the Houses for each operation or service provided. The detailed operations and the data with which it has been completed are illustrative, the Houses may modify them.

Commissions to be charged in __________ (month/year) Does not include VAT.

Product/Service provided. A	Commission to be charged (US$/%) B
1. Primary Market.
Placement of fixed income security issuance.	xx%¹
Placement of share issuance.	Maximum xx %¹
Purchase order of fixed income securities.	xx %²
2. Secondary Market.
Purchase and sale order of Fixed Income Securities by national issuers.	xx%²
Purchase and sale order of Foreign Securities.	xx%²
Purchase and sale order of Shares.	xx%²
3. Repos.
Repo Operations.	xx%²
4. Other Markets.
5. Other services.
Stock market advisory	xx%³
Issuance of extraordinary account statements.	US$ xx³
Payment of Patrimonial Rights	xx%² Max $xx
6. Individual Portfolio Administration
Individual Portfolio Administration	xx%⁴

References for the calculation base (the defined terms correspond to examples):
1) % on amount placed.
2) % on amount of the operation.
3) Fixed Amount
4) Specify the base for the calculation of the commission.

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Annex No. 1

Notes:
✓ The detailed commissions correspond to annualized rates.

TERMS USED IN THE FORMAT

The detail of the information to be provided in the defined columns is presented below:

Column A: Products and/or Services Provided. List in a specific manner the financial products or services that are offered by the brokerage house, with the necessary detail so that it is easily identifiable by readers.

The table must include all products or services provided by the house, since commissions cannot be charged that are not published.

The subdivisions established in the format must be respected, so that it is known that the product or service corresponds to a particular market:
1) Primary Market.
2) Secondary Market.
3) Repo.
4) Other Markets. (If the house offers any service or product that does not correspond to the markets defined in the other numbers.)
5) Other services. (Include additional services that the house offers, such as certificates, account statements, etc.)
6) Individual Portfolio Administration.

Column B: Commission to be charged.
For each of the financial products or services described specifically in column A, establish the commission that will be applied for its contracting. In cases where the rate does not correspond to a fixed amount or percentage per operation, a maximum commission must be published clearly stating in the publication that it refers to a maximum level.

Reference of Calculation Base.
For each of the commissions indicated, a footnote reference must be established that determines the base on which the defined commission will be calculated.

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