2018/2019 Edition of the Global Regulatory Update

Treasury and Trade Solutions 62 This is a key law since the main vulnerability for Argentina facing global turmoil is the lack of a local capital market to replace foreign markets when an emerging market sell-off is triggered. The new law clarifies and simplifies the process for issuing new stock, which will help locally traded companies more efficiently execute their financing plans. The legislation also provides smaller companies (SMEs) innovative ways to improve their financing through a new type of digital invoice similar to commercial paper that can be traded in capital markets. Moreover, double taxation of closed-end fund income will be eliminated for asset managers, boosting investment in new asset classes such as index and exchange traded funds (ETFs). Overall, these policies helped the government achieve its goal of being upgraded to “emerging market” from “frontier market” status. 3) Chile -Prudential Regulatory Reform While Chile has a robust financial system, the government recognized the need to modernize the legal framework which had fallen behind as compared to international standards. A bill was introduced by the Ministry of Finance in June 2017 which seeks to improve the current General Banking Law (established in 1986 and updated in 1997) and align with Basel III standards. These include: • Raising capital requirements in quantity and quality (Tier 1 increase from 4.5% to 6%, anti-cyclical buffer of 2.5% of risk-based assets; • Allowing perpetual bond purchases by qualified investors including insurance and pension companies; • Transferring responsibilities from the Superintendence of Banks and Financial Institutions (SBIF) to the Financial Markets Commission (CMF). Currently the SBIF is the independent entity that supervises banking and financial institutions in Chile. It is associated with the executive branch through the Ministry of Finance and the current General Banking Law; • Incorporating the term “systemically important bank” (SIB) and the requirements established by the CMF to determine classification. The CMF will have the authority to impose additional requirements on SIBs such as additional capital requirement or limitations on interbank loans.