1 INDEX 2. SECURITIES MARKET INFRASTRUCTURE IN COLOMBIA......................................................................188 INTRODUCTION...........................................................¡ERRO 2.1. SECURITIES MARKET INFRASTRUCTURE IN R! MARCADOR NO DEFINIDO. COLOMBIA SUMMARY………………………………………………………188 1. REGULATORY FRAMEWORK..................................6 2.2. MARKET INFRASTRUCTURE 1.1. OUTLINE OF COLOMBIAN SECURITIES MARKET ENTITIES…………………199 REGULATIONS……………………………………………………………………6 2.2.1. COLOMBIAN STOCK EXCHANGE- 1.1.1. SUMMARY – COLOMBIAN SECURITIES MARKET AND BVC………………………199 REGULATIONS FOR FOREIGN 2.2.2. PRICE VENDORS INVESTMENT………………………………………………………………………6 INFOVALMER…………………………………222 1.1.2. RULES ON FOREIGN INVESTMENT IN 2.2.3. SET-ICAP FX COLOMBIA………………………………………………………………….10 S.A………………………………………………………….244 1.1.2.1. Decree 2080 of 2000 - FOREIGN 2.2.4. INVESTMENT REGIME…………………………………………….10 DERIVEX……………………………………………………………………..25 1.1.2.2. GUIDE TO INTERNATIONAL EXCHANGE - 5 External Regulatory BULLETIN DCIN – 2.2.5. 83………………..122 DECEVAL……………………………………………………………………..26 6 1.2. COLOMBIAN MARKET SUPERVISION AND 2.2.6. COLOMBIAN CENTRAL BANK (BANCO DE LA REGULATIONS…………………………………………………………………….13 REPÚBLICA) – BRC…………………………………………………………………….288 3 2.2.7. COLOMBIAN CENTRAL CONTERPARTY CLEARING 1.2.1. MINISTRY OF FINANCE AND PUBLIC HOUSE S.A. – CCP……………………………………………………………………….31 CREDIT................................................................... 133 2.2.8. FOREIGN EXCHANGE CLEARING HOUSE – 1.2.2. BANCO DE LA REPÚBLICA DE COLOMBIA – BRC – CCD…………………………………………………………………………………………..322 COLOMBIAN CENTRAL BANK ………………………………………………..144 1.2.3. FINANCIAL SUPERINTENDENCE OF COLOMBIA – 3. SECURITIES MARKET IN COLOMBIA AND SFC……………………………………………………………………………………………….15 INVESTMENT VEHICLES........................................33 5 1.2.4. SECURITIES MARKET SELF-REGULATOR – 3.1. EQUITY MARKET……………………………………………………33 AMV……………………………………………………………………………………………..16 3.1.1. LOCAL EQUITY MARKET……………………………………..33 6 3.1.2. GLOBAL COLOMBIAN MARKET – MGC…………..42 3.2. FIXED INCOME MARKET……………………………………….45 2 3.3. DERIVATIVES MARKET………………………………….………55 5.2. ACCESS MECHANISMS TO THE COLOMBIAN 3.3.1. FINANCIAL DERIVATIVES MARKET……………………55 MARKET………………………………………………………………………………95 3.3.2. ENERGY COMMODITIES DERIVATIVES 5.2.1. ACCESS SCHEME TO BVC – DMA……………………………..95 MARKET………………………………………………………………………….69 5.2.2. MARKET DATA…………………………………………………………..97 3.4. FX MARKET…………………………………………………………….72 LOCAL BROKERAGE FIRMS - CONTACT 3.5. LATIN AMERICAN INTEGRATED MARKET – INFORMATION................................................................. 97 MILA……………………………………………………………………………………74 3.6. INVESTMENT VEHICLES IN THE COLOMBIAN MARKET………………………………………………………………………………75 3.6.1. COLLECTIVE INVESTMENT SCHEMES………………..76 4. CORPORATE EVENTS AND POLICIES REGARDING RELEVENT INFORMATION............................................78 4.1. SECURITIES MARKET INVESTOR RIGHTS AND MECHANISMS TO EXERCISE THEM…………………………………..78 4.2. GENERAL SHAREHOLDERS´ MEETINGS………………..81 4.3. CORPORATE EVENTS PRACTICES………………………….83 4.4. APPLICABLE POLICIES FOR INFORMATION AND FINANCIAL STATEMENTS – ISSUERS…………………………………¡Error! Marcador no definido. 5. PROCESS FOR FOREIGN INVESTMENT IN COLOMBIA..................................................................878 5.1. MARKET ACCESS – OPERATIONAL PROCEDURE….877 5.1.1. GLOBAL CUSTODIAN MODEL…………………………………877 5.1.2. ACCESS MODEL WITH THE LOCAL BROKER ACTING AS CUSTODIAN……………………………………………………………………….933 3 I NTRODUCTION Amid one of the most severe crisis in international markets, the The second section presents the infrastructure of the securities Colombian securities market has been growing as the Country market. In particular, it describes the various entities involved in the reaches macroeconomic stability and its prospects for growth value chain and the products and services that each one offers in become evident. As a result, an ever-greater number of the different markets. international investors are being attracted by the opportunities that the Colombian market offers. The third section contains an in-depth depiction of the characteristics of each of the markets that make up the Colombian At the same time, there have been deep and meaningful changes in securities market: Equity, Fixed Income, Derivatives - Financial and the Colombian regulatory system in order to integrate international Energy – and Latin American Integrated Market - MILA. best practices. Additionally, the Country has enhanced the local market infrastructure. Therefore, it is now able to offer local and For each of the aforementioned markets, it explains the products international investors’ agility and safety in the course of trading. traded, the operations available, auction mechanisms in the primary markets and the main characteristics of the secondary Being aware of the need to support the creation of new channels to markets (transactional and / or registration). That is to say, it refers promote international investment the Colombian Stock Exchange - to scenarios, rules and schedules negotiation, benchmarking, BVC has developed the "Colombian Market Profile and Foreign participating entities, schemas of liquidity, etc. In it the investor will Investor’s Guide". This document is addressed to investors and find a description of the processes of clearing and settlement market participants of international securities, and describes the operations and risk management models that are applied Colombian securities market and the processes that investors must throughout the entire process (counterparty risk, liquidity risk and follow to trade in the market. market risks, mainly). The document is divided into five parts. The first section contains an This section also describes the two main investment vehicles overview of the regulatory framework for the securities markets existing in the Colombian market, i.e. collective portfolios, and the regulations pertaining to the processes that foreign nowadays called Collective Investment Funds, and stock funds investors must follow to operate in Colombia. It also describes the COLCAP iShares ® - the latter benchmarks the Colombian stock structure of regulation and market surveillance. market -COLCAP. 4 The fourth section explains the legal rights of shareholders in listed The Colombian Stock Exchange hopes that this booklet will be of use as a companies under Colombian law; the mechanisms to call general tool for both foreign investors and their local counterparties, and that assemblies and the procedures for exercising the right to vote. this initiative will add to the plans being developed by both the public Additionally, it outlines the types of corporate events, the and private sectors to bring about a liquid securities market, integrated mechanisms for disclosure to the market and policies for the into international financial markets and that will help the development payment of dividends and interest to investors through the of Colombia. intermediaries who hold custody of their titles. In the end, it explains what relevant information and the facts companies are For any questions or comments about this booklet please contact our required to report. Office of Research and Analysis of e-BVC [email protected] The fifth section of this document specifies the process to be Sincerely, carried out by international investors to begin operations in the Colombian market and enumerates the institutions, both local and The Colombian Stock Exchange foreign, involved in this process. Finally, the document presents the mechanisms Direct Market Access – DMA- that are available to facilitate direct entry by international investors to the markets administered by BVC, and the means by which investors can access online information in the Colombian market. At the end of this document, a list of the brokerage firms and local custodians is provided with contact information. This document intends to offer readers a deeply description about the Colombian capital markets and the operational process to invest in Colombia. However, if the reader is interested in a broad description we recommend a quick review of sections 3 and 4, and go directly to section 5 of this document. 5 1. REGULATORY FRAMEWORK 1.1. OUTLINE OF COLOMBIAN SECURITIES MARKET REGULATIONS 1.1.1. SUMMARY – COLOMBIAN SECURITIES MARKET AND REGULATIONS FOR FOREIGN INVESTMENT 1. Colombian Constitution Article 189 of the Constitution provides the framework of the attributions with which the of 1991 President of the Republic exercises the right to inspect, supervise and control persons engaged in financial, securities, insurance, and any other activity related to management, capitalization or investment of resources collected from the public. Article 371 states that the Colombian Central Bank shall act as Central Bank and contains the basic attributions of the Central Bank. These include regulating currency, foreign exchange and credit. Article 372 states that the Board of Directors of the Central Bank shall act as the monetary, exchange and credit authority. More Information: http://wsp.presidencia.gov.co/Normativa/Documents/ConstitucionPoliticaColombia_201008 10.pdf 2. Securities Market Act – This law states general rules for the Securities Market and identifies the objectives and Law 964 of 2005 criteria that the National Government must follow to regulate the management, capitalization and investment of public funds collected through the securities market. More Information: http://www.secretariasenado.gov.co/