AMV: Securities Self-Regulatory Organization of Colombia · • Procedure to include a new proposal...

14 de noviembre de 2014 www.amvcolombia.org.co

AMV: Securities Self-Regulatory Organization of

Colombia

AGENDA

14 de noviembre de 2014 www.amvcolombia.org.co 2

1. AMV general description

2. Regulation

3. Compliance / Supervision

4. Enforcement / Disciplinary actions

5. Certification

6. FX-Self Regulation

7. Education

GENERAL INFORMATION


Securities self regulation in Colombia appeared in 1929, when the Bogotá

Exchange established a Disciplinary Chamber to oversee market rules

compliance. Its structure, scope and legal support has evolved since then.

• In 2010 began voluntary self regulation for interbank FX trading.

• 2001. Merger of 3 local SXs…

• Incorporation of BVC

2001

• Self regulation remain inside the exchange but acquired an independent governance as well as budget and functional autonomy.

2004 • Law 964 recognized self

regulation as an independent activity, regulated by the SFC and mandatory for all securities intermediaries (broker/dealers, banks, pension funds, mutual funds administrators, firms with direct access to registered trading platforms).

2005

GENERAL INFORMATION


Since July 2006, AMV is the only independent SRO in the Colombian securities

market:

Ownership and structure: The securities market self-regulator - AMV is a

national private non-profit corporation, governed by the Constitution, civil

rules, Law 964 of 2005 and articles therein, by it statutes and regulations and

the principles that apply to SROs.

It is authorized overseen by the by the SFC to act as SRO in relation with:

suitable corporate governance structure, adequate conflicts of interest

management, member compliance of AMV rules and statutes.

MoU between the Commission (SFC) and AMV:

Designates AMV as the front line regulator for market conducts.

Establishes a joint work scheme (no duplication principle) that assures

opportunity. Both entities discuss inspections, evidence, queries, complaints,

etc.


ISSUANCE OF CONDUCT

RULES

For the capital market

CERTIFICATE

Market Professionals

RULEMAKING

Warning

Fine

(disgorgement)

Suspension

Expulsion

Member

Committees

SFC

Approval Board of

Directors

COMPLIANCE

Surveillance of SRO rules +

securities market regulation

OVERSIGHT

SANCTION

For those who do not

comply with the rules

DISCIPLINARY

ACTIONS

CERTIFICATION

+ + Real time

surveillance

Inspections

and

Examine.

Complaints

Post trade

surveillance

Personal

background Professional Examination

(4 types) +

Investigation stage

(AMV)

Prosecution

(Disciplinary Tribunal)

ROLE AND STRUCTURE

ROLE AND STRUCTURE: CORPORATE

GOVERNANCE


CHECKS AND BALANCE SYSTEM Large participation of the industry and independent members

ADMINISTRATION MEMBER COMMITTEES

BOARD OF DIRECTORS 10 members (5 from the industry, 5 independent)

DISCIPLINARY TRIBUNAL

12 members (4 from the

industry, 8 independent)

GENERAL MEETING

OF MEMBERS

Fixed Income market

Equity market

Compliance

Academic

FX

Education

12 Hearing panels

1 Decision council

ROLE AND STRUCTURE: SCOPE

1. Information up to November of 2014 www.amvcolombia.org.co 7

Markets

Fixed income

Equities

Futures

FX: Voluntary

Colombian self-regulation does

not include:

•Issuers

•Investors

108 members1

Systems Exchange (MEC,

X-stream)

Central bank (SEN)

ICAP Tradition GFI Deceval

Marketplaces

26

23

19

13

4

23

FIDUCIARIAS

SOCIEDADES

COMISIONISTAS DE

BOLSA

BANCOS

ASEGURADORAS

ADMINISTRADORA

FONDOS PENSIONES Y

CESANTIAS

OTROS

Others*

Pension Funds

Insurance

Banks

Brokers

Trust

Companies

*Others: public entities, special official institutions,

cooperatives, , capital companies, investment funds managers and securitization companies

AGENDA



2. Regulation



5. Certification


7. Education

REGULATION: SCOPE

• The regulatory process seeks to strengthen market integrity and transparency. It is

made up of four main steps:

• Definition of issues to be included in the regulatory agenda

• Study of each one of the issues of the regulatory agenda

• Drafting a normative proposal

• Procedure to include a new proposal within AMV's Set of Rules

• In order to modify AMVs Rule Book, AMV must meet the following:

• Publication of the proposal for comments of the industry

• Review of the proposal by the Board of Directors Regulatory Committee

• Approval of the Board of Directors in full.

• Submission to the Financial Superintendence for their approval.

• Participation of the industry is essential for the regulatory process. Members

opinion is taken in consideration for the definition of the regulatory agenda as

well as for the proposal or regulatory initiatives.


AMV DOCUMENTS


Rules

Investigation

Booklest and Handbooks

Public Consultation

Policy

Reports

Normativity aproved by the

Board and SFC

Guidelines or policies that

reflect AMV policy for its

members

Academic documents that

study market concepts

Documents that take into

account Industry opinions

Documents with relevant

information for the industry

Practical tools about

market concepts

AGENDA



2. Regulation



5. Certification


7. Education

AMV AS FRONT LINE REGULATOR

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Through the MoU, responsibilities have been divided between the statutory

regulator and AMV.

Through agreements with Platforms we coordinate monitoring functions.

SRO (AMV)

Trading Systems

administrators (exchange, central bank, clearing house and others)

Commission (SFC)

MoU (SFC-AMV): AMV as front line regulator Responsible for market conduct regulation (fixed income, equities, futures, FX) and member regulation (infringements with clients and compliance of institutional duties).

Regulator for prudential matters, listings, issuer disclosure and governance. Relies on AMV as front

line regulator, but inspects its activity and approves its rulebook (not a delegation of its responsibilities).

Legal duty: Adopt procedures to monitor trades, compliance of their rules and verify clearing and

settlement. Report suspicious matters to SFC or AMV and provide information when they conduct investigations.

AMV AS A FRONT LINE REGULATOR


Trading Systems (exchange, central bank,

clearing house and others)

Real time surveillance

(access trading

platforms)

Post trade surveillance

(analysis and data

mining)

Requirement of

additional information to members

Advice or warning letter

Referral to investigation

unit

Referral to enforcement unit

Referral to rule writing unit

Request further

information

Analyze phone, mail and chats records

Identify possible relationships

Statements from witness

Preventive supervision

(inspections using risk based methodology)

Reference Data (news, corporate info., interest rates and others)

Complaints and tips (whistleblower)

MARKET SURVEILLANCE


Concept

Verification of

compliance with the

applicable

regulations by the

subject of self-

regulation, by

conducting activities

deemed

appropriate to fulfill

the purpose.

Article 10. Rules of

AMV

Activities

Following the market behavior and trading activities

of the subjects of self-regulation.

Monitoring and surveillance of transactions in different trading systems.

Design and implementation of general, selective

and special visits.

Information requirements for self-regulated and third parties regarding intermediation operations.

Evaluate investor complaints.

Design and implement warning systems to identify irregular transactions.

Execute performance plans to raise conduct and operation standards.

Have a preventive role to avoid abuses inside the market.

AGENDA



2. Regulation



5. Certification


7. Education

ENFORCEMENT: SCOPE


AMV undertake the function of enforcement, consisting on investigating the

facts and behavior of financial intermediaries to determine their disciplinary

responsibility when there is a breach of the intermediary rules.

Enforcement area investigates the facts and behavior of financial

intermediaries to determine their disciplinary responsibility.

Activities and procedures are developed upon the initiation of disciplinary

proceedings.

Disciplinary proceedings may be referred to securities intermediaries and

those associates that are voluntarily self-regulated.

The Disciplinary process has two stages, the investigation stage and the

decision stage.

DISCIPLINARY ACTIONS: PROCESS


Investigation

(President of AMV)

Prosecution

(Disciplinary Tribunal)

It is a written investigation according to AMV´s enforcement manual.

During the investigation, the parties are able to negotiate a settlement agreement.

Not all the settlement agreement that are negotiate by the President must be approved by the Enforcement Counsel.

The Disciplinary Tribunal are

independent from the Investigation Department.

The case is presented to the

Disciplinary Tribunal by written. Hearings are exceptional upon request of either party.

The decision of the Disciplinary Tribunal may be appealed by any of the parties to the Second Chamber.

Hearing officials are not solely dedicated to this function (part time).


PENALTIES

Natural Person

1. Warning

2. Penalty

3. Suspension

4. Expulsion

Legal Entity

1. Warning

2. Penalty

3. Expulsion

The imposition of penalties in disciplinary proceedings, will take place when there is

a violation of the securities regulation.

SANCTIONS IMPOSED BY AMV


*Data as of November of 2014

Type of

sanction 2006 2007 2008 2009 2010 2011 2012 2013 2014* Total

Warning 0 28 0 1 0 9 0 0 1 39

Fine 1 16 20 9 22 11 3 2 1 85

Warning and

Fine 0 2 0 0 0 0 0 0 0 2

Suspension 0 0 6 10 5 5 4 2 7 39

Suspension and

Fine 0 1 2 2 6 8 3 17 10 49

Expulsion 0 0 1 3 1 1 8 6 1 21

Expulsion and

Fine 0 0 0 1 1 1 1 4 6 14

Administrative 0 0 0 2 0 0 0 0 0 2

Total of

Sanctions 1 47 29 28 35 35 19 31 17 251

AGENDA



2. Regulation



5. Certification


7. Education

CERTIFICATION


PROFESSIONAL CERTIFICATION OF

SECURITIES MARKET

NATIONAL REGISTRY OF SECURITIES

MARKET PROFESSIONALS (NRSMP)

Procedure by which individuals that

have to be registered in the National

Registry of Securities Market

Professionals, can prove their

technical and professional capacity

to a certifying organization.

Tool used for increase and control the

standards of professionals who have

the obligation to be registered. As well

as has the objective to facilitate and

expedite the market information

about these professionals

• AMV offers the following certifications:

• 3 modalities with validity of 3 years: operators, commercial advisors and

digitador (in charge of registering orders and operations)

• 1 modality with validity of 4 years: Directors

PERSONS THAT HAVE TO BE REGISTERED IN

THE NRSMP


People that structure directly brokerage transactions, whatever their relationship.

People who lead or brokerage transactions executed directly in the stock

market.

People who manage collective funds directly managed by fiduciaries.

People who manage mutual funds directly supervised by the SFC.

People who promote the realization of brokerage transactions in the stock

market.

CERTIFICATIONS


*Data as of October 31 of 2014

10.863

2.999

6.385

4.988

4.113

10.904

12.212

4.163

11.426

7.857

4.575

13.269

10.601

4.145

12.380

6.479

4.142

12.278

2.639

4.168

12.900

Number of Exams Number of Certified Professionals Number of Certifications

Number of Certified Professionals*

2008 2009 2010 2011 2012 2013 2014

AGENDA



2. Regulation



5. Certification


7. Education

FX VOLUNTARLY SELF-REGULATION SCHEME

BASES

• Industry initiative: it reflects their commitment to integrity, transparency and

enforce higher standards in the exchange market.

• Objectives:

Guarantee the correct price formation, avoiding fraud.

Strengthening standards to manage conflicts of interest.

• The achievements in the securities self-regulation scheme, allows AMV to offer a

voluntary scheme with the same level of demand and independency.

• AMV has set a framework of coordination and cooperation with FX market

authorities (Central Bank and the Financial Superintendence).


FX SELF-REGULATION MEMBERS


• As of November 05 of 2014,

the FX self-regulation

scheme had 36 members

and 510 professionals

certifieds.

• They account for more than

the 95% of market

operations.

AGENDA



2. Regulation



5. Certification


7. Education

EDUCATION: Scope


AMV offers a range of free educational resources to help investors build their

financial knowledge to better understand the markets and basic principles of

saving and investing.

The program “Financial Education for Everyone” is coordinated by AMV and

integrates by more than 70 financial entities. Its mission promote that the

consumers has knowledge and abilities to take informed and responsible decisions.


Free Investor Publications

• Electronic versions of AMV´s education

publications are available on the web

page. They are all available free of

charge. They cover the following

topics:

1. Investor ABC’s

2. Smart stock investing

3. Smart bond investign

4. Advantages of legal securities

intermediaries

5. All your rights as an investor

6. Investor Glossary and FAQ

7. Risks in the securities market

8. Securities market system information

La opinión expuesta en esta presentación no compromete a la entidad. Para uso restringido del Autorregulador del Mercado de Valores. Todos los derechos reservados.

Ninguna parte de esta presentación puede ser reproducida o utilizada en ninguna forma o por ningún medio sin permiso explicito del Autorregulador del Mercado de Valores.


AMV: Securities Self-Regulatory Organization of Colombia · • Procedure to include a new proposal...

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