03 Sep 19 Modifications to the Argentine exchange market’s regulations
On September 1, 2019, the Necessity and Executive Decree No. 609/2019 was published in the Argentine Official Gazette, introducing certain measures to regulate the operation of the Argentine exchange market related to exports of goods and services, as well as transfers of funds abroad of natural and legal persons, among others.
In that context, on the same date, the Argentine Central Bank (BCRA) issued Communication “A” 6770, through which it sets out a series of measures to regulate the access to the Argentine exchange market.
In that sense, the Communication establishes the following:
(i) Settlement and collection of exports
Regarding the collection of export receivables, the Communication sets forth that the funds received from exports of goods and services must be settled in the Argentine exchange market within the following deadlines:
- Receivables corresponding to new exports made as from September 2, 2019 – that is, all exports that are not formalized until the issuance of the Communication – must be entered and settled no later than 5 business days after collection, or 180 days after the shipment authorization (15 days for commodities).
- The payment of exports formalized before September 2, 2019 that are still pending, as well as new advance payments and exports pre-financing, must be entered and settled in the Argentine exchange market within 5 business days of the date of collection or disbursement abroad or in the country.
(ii) Application of collection of exports to the cancellation of advanced payments and loans of pre-financing of exports
In certain cases, the Communication allows to apply export receivables to the repayment of advanced payments and export pre-financing loans, such as: (a) exports pre-financing and financing granted or guaranteed by local financial entities, (b) exports pre-financing, advanced payments and financing entered and settled in the Argentine exchange market and reported in the foreign indebtedness registry, and (c) financial loans agreements in force as of August 31, 2019, in which was agreed the application of the flow of exports to the repayment of the services rendered. The rest of the applications will require BCRA authorization.
(iii) Exports of services
In same line, the Communication establishes that the payments related to exports of services must be entered and settled in the Argentine exchange market within a period not exceeding 5 business days from the date it was received abroad or in the country.
(iv)Access to the Argentine Exchange market
The Communication also sets forth the need of prior BCRA authorization in order to access the Argentine exchange market in the following cases:
- Legal persons, local governments, mutual funds, trusts and other universalities established in the country, for the constitution of foreign assets and for the constitution of all types of guarantees linked to derivative transactions.
- Resident natural persons for the constitution of foreign assets, family assistance, and for the constitution of all types of guarantees related to the negotiation of derivative transactions when it exceeds the monthly amount of US$ 10,000.
- Non-residents, in the case of amounts greater than the monthly amount of US$ 1,000.
(v) Obligation to settle external financial debt
The Communication establishes the obligation of entering and settling in the Argentine exchange market new foreign financial debt disbursed as of the date of the Communication. Likewise, the Communication sets forth the obligation to prove compliance with this requirement in order to access the Argentine exchange market for the repayment of capital and interest services thereof.
(vi) Prohibition of access to the Argentine exchange market for the payment of debts among residents
A relevant aspect of the Communication is the prohibition of access to the Argentine exchange market for the payment of foreign currency debts among Argentine residents. The Argentine residents can only access to the Argentine exchange market in those cases where the debt has been settled through public records or deeds before August 30, 2019.
(vii) Payments of profits and dividends
In connection with the Communication “A” 6768, issued on August 30, 2019, the Communication establishes the need of prior BCRA authorization in order to access the Argentine exchange market when the purpose is the payment of profits and dividends.
(viii) Prior BCRA authorization
The Communication establishes that prior BCRA authorization is needed in the following cases:
- To prepay – within more than 3 business days before expiration – capital services and interest on foreign financial debts.
- To access the Argentine exchange market for the pre-payment of debts for imports of goods and services.
- To access the Argentine exchange market for the payment of matured debts or demand debts for imports of goods with foreign related parties when it exceeds the monthly amount of US$ 2,000,000 per month per resident client.
- To access the Argentine exchange market for the payment of services with foreign related parties, except for card issuers for tourism and travel transfers.
(ix) Purchase of securities with settlement in foreign currency
Likewise, the Communication states that entities authorized to operate on the Argentine exchange market shall not purchase foreign-currency-denominated securities in the secondary market with settlement in foreign currency.
(x) Provisions related to exchange houses and agencies
- The exchange houses and agencies shall not increase, without prior BCRA authorization, their holdings in foreign currency by up to the maximum amount resulting from any of the following variables: (a) to the average of their holdings of August 2019 or, (b) to the stock at the close of the day prior to the entry into force of the Communication, taking into consideration the biggest amount.
- Each exchange transaction will require the issuance of its applicable sales contract. The latter must disclose the nature of the transaction and its compliance with the limits set forth in the Communication.
- The Communication establishes the suspension of the “Registry of Exchange Operators” for legal persons requiring authorization as of the date of the Communication.
(xi) Payment of external financial or commercial debts
In order to access the Argentine exchange market for the payment of foreign financial or commercial debts, it must be proved that the operation was previously informed in the last filing of external assets and liabilities. On the other hand, in the case of advanced payments of imports, the supporting documentation must be submitted, the goods must be filed as imported within 180 calendar days from its access to the Argentine exchange market, and the recipient of the funds must be the foreign supplier.
(xii) Crimina Exchange Regime
It should be noted that the Communication provides that all operations that do not fully comply with the provisions of the current foreign exchange regulations, will be subject to the Criminal Exchange Regime.
Regarding the relevance and complexity of the measures adopted by the Executive Branch and the BCRA, we believe that new explanatory and/or amending measures will be issued in the coming days. In that sense, we will keep you updated.