Client Alert - On October 30th of 2022 the Ministry of Finance and Public Credit (“SHCP”) sent to the National Commission for Regulatory Improvement (“CONAMER”) the Draft through which the “general provisions referred to in article 266 Bis are reformed, added, and repealed. of the Securities Market Law, applicable to investment advisors” (the “Draft”).

On October 30th of 2022 the Ministry of Finance and Public Credit (“SHCP”) sent to the National Commission for Regulatory Improvement (“CONAMER”) the Draft through which the “general provisions referred to in article 266 Bis are reformed, added, and repealed. of the Securities Market Law, applicable to investment advisors” (the “Preliminary Draft”).

On November 24th of 2022, the SHCP modified the Draft including modifications to the term that Investment Advisors must maintain client information from 5 to 10 years.

In general terms, the purpose of the Draft is to modify the current process of non-face to face operations for Investment Advisors.

The most relevant differences with the current provision are (i) the real-time videoconference is replaced by an audio and video recording; (ii) the authorization of the CNBV to carry out remote transactions is exempted in the case of transactions that do not exceed 30,000 Investment Units (“[1] (“UDI”) y (iii) the execution of contracts in a non-face to face with domestic legal entities is added and the possibility for foreign individuals and legal entities is eliminated.

In particular, the following points of the Draft are highlighted:

1. Investment Advisors must know the geolocation of their clients in order to carry out transactions. However, in the event that the characteristics of the device used make it impossible to obtain such geolocation, the Advisors must obtain the approximate geographic coordinates of latitude and longitude through the procedure established in the Draft.
2. The Advisors shall match and validate the identification documents they currently collect by means of technological mechanisms that allow it and keep the information at least for 10 years.
3. In addition to the identification and geolocation requirements, it will be necessary to require and obtain the Standardized Banking Code (“CLABE”) and the consent of the individuals, which may be obtained through Electronic Signature or Advanced Electronic Signature or through the established process.
4. (iv) If the clients agree to carry out transactions limited to a maximum of 30,000 UDIS, per client and per Advisor, during a calendar month, the Advisor may choose to send a notice to the Commission and not request authorization for the non-face transactions. However, it must carry out the process of collecting and verifying the biometric data, proof of life and video recording.
5. The terms for Unusual and Internal Transactions reports are amended and it is established that, as a first step, they will have a maximum period of 60 calendar days after the alert has been generated to make the opinion and they will have 3 business days to submit the report after the opinion has been issued by the Committee or Compliance Officer.
6. A report is added to submit quantitative information on their operations, clients, products and services, among others, within the last 10 business days of April of each year. This information shall be sent through electronic means and the official format issued by the Commission for such purpose.

Transitory Provisions:

1. The Provisions shall become effective the day after their publication in the Official Gazette of the Federation.
2. The Advisors that have obtained the approval of the Commission to carry out the non face to face identification of their clients according to the current regulation, will have a term of 12 months to request a new application for authorization according to the new requirements.
3. Four months to modify the compliance manual and submit it to the Commission.
4. Nine months to modify the risk based methodology.
5. Eighteen months to update the automated systems.

In all cases, in accordance with the same Provisions, the value applicable for the last day of the calendar month prior to the month in which the computation of the transaction level of which is being carried out must be taken as the reference value of the corresponding UDIs. in question, understanding this as "the sum of all the amounts for any operation".

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If you have any questions or comments on the matter, please contact us.
This document does not constitute legal advice.

Campa & Mendoza
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