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Colombia: FX self-regulation update

In furtherance of the Iosco principles, the Colombian Securities Market Self-Regulatory Organisation (SRO) has adopted a number of compliance-related certification requirements and is about to issue a comprehensive review of self-regulation guidelines for the foreign exchange (FX) market.

The Colombian SRO landscape is fairly robust, particularly as a result of the implementation of Law 964 of 2005 known as the Securities Market Statute (Law 964). Law 964 requires all broker dealers in the securities market to follow the rules and guidelines determined by the SRO. The Colombian Central Bank later issued Resolution 4 of 2009 which allowed FX intermediaries to participate in SROs on the basis of voluntary accession.

The Colombian SRO has oriented its regulations to the prevention and administration of conflicts of interest, confidentiality, customer advice and fiduciary duties, market manipulation and implementation of good practices. In respect of the FX market in particular, the SRO has established as a good market practice the signing of a voluntary self-regulation contract for FX broker dealers to the effect of adhering to all regulations of the SRO with a view to increasing transparency and information standards in the spot currency market and in over-the-counter FX derivatives. This includes certification rules and requirements for FX professionals, which since February 1 2018 now provide for a new section on compliance, anti-corruption, integrity and ethics. These requirements seek to ensure that the officers who negotiate and close FX transactions possess the professional knowledge and the framework necessary to participate in the market and conduct their activities in accordance with the higher standards applicable.

Finally, in an effort to compile the number of rules applicable to FX markets and transactions, the SRO has published for comments a draft of an external regulation that compiles and updates all the existing self-regulations applicable to FX in Colombia. This provides market participants with a unique opportunity to submit comments as to the existing rules and practices and share with the SRO their concerns, and their suggestions on what they believe would better align the rules with market standards.

Carlos Fradique-MéndezMargarita Suárez

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