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Self-Regulation And The Financial Self-Regulation Committee

Author:Mr Pablo Iacobelli, Cristián Figueroa, Patricia Silberman and Jaime Coutts

As the Commission for the Financial Market (the "Commission") came into full force this January ( read previous news alert here), the regulation of the Chilean financial market took a step forward in terms of institutionalism and modernization. In this context, one of the changes introduced by Law No. 21,000 (the "Law"), that created the Commission, is the self-regulation of entities in the financial market.

The Law provides that public offer intermediaries, stock exchanges, products exchanges, general fund administrators and single portfolio administrators supervised by the Commission must mandatorily self-regulate in order to ensure the implementation of good practices in terms of corporate governance, business ethics, transparency and fair competition. In this respect, the entities forced to self-regulate have two options: (i) issue their own regulations and conduct codes, which must be filed before the Commission by June 14, 2018; or (ii) take part in the Committee of Financial Self-Regulation (the "Committee"). Entities that choose to participate in the Committee must report their decision to the Commission by March 16, 2018, through the Online Information Remittance System (SEIL).

The Law provides that the Committee's objectives will be: (i) to issue the regulations necessary to reach the aforementioned goals and ensure compliance; (ii) to establish and certify the compliance of standards of technical and ethical adequacy of the securities market players; (iii) to resolve the differences or claims that are presented between its members or between members and their clients; and (iv) to promote the protection of investors. The Committee shall be managed by a board comprised of five independent directors chosen by the members of the Committee through a designated sub-committee and shall be financially independent. As to its members, the Committee shall be composed of not only the entities that are required to self-regulate and choose to be part of it, but also, by any entity of the financial market that voluntarily chooses to participate in the Committee. Voluntary participants will also have until March 16, 2018, to file a request before the Commission to join. Finally, entities such as trade associations, securities deposit and custody companies and administrators of compensation and liquidation systems of financial instruments and others, may also join, in compliance with the terms and conditions provided by the Committee.


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