CNV brings in secondary market restrictions for foreign investors

Some market participants’ operations will now be limited to AR$100 million per day

The National Securities Commission (CNV, by its Spanish acronym) has brought in temporary restrictions on foreign investors operating in the secondary market in a bid to reduce market volatility and crack down on financial crime. 

By reducing the volumes that large foreign investors can trade, the commission is also tightening foreign exchange controls, known in Spanish as the cepo. However, the restrictions start at AR$100 million per day (US$285,714 at the official rate or US$108,968 at the MEP dollar rate) and therefore will not affect individuals and companies trading smaller amounts. 

The restrictions were published in the official bulletin on Wednesday morning, following two days of fireworks in the informal “blue” dollar rate. On Monday, presidential frontrunner Javier Milei advised Argentines not to keep their savings in pesos, after which the blue rate spiked, pushing past the AR$1,000 per dollar milestone on Tuesday.

It comes after Argentina’s Central Bank notified the CNV last week that it had detected growing volumes of trade by foreign investors and asked it to double down on checks to determine whether the growth in trade was linked to attempts to get around exchange restrictions and hide the identity of the final recipient. 

Under the new rules, foreign investors who are not agents will only be allowed to operate on their own behalf, with their own funds. Operations will be limited to AR$100 million per day (US$285,714 at the official rate or US$108,968 at the MEP dollar rate) and they must present an affidavit to the CNV five business days beforehand, via their local intermediaries.

Foreign stockbrokers who operate on behalf of Argentine clients can operate up to AR$100 million per client per day. They are likewise required to submit an affidavit five business days beforehand. 

Foreign stockbrokers operating on their own behalf and with their own funds can conduct operations worth more than AR$100 million per day, but they have to submit an affidavit to the CNV five days in advance.

Local investors operating for third parties are subject to the AR$100 million limit and the affidavit requirement, and they must also identify the third party for whom they are operating.

Local investors operating on their own behalf and with their own funds must give five business days of notice if they are planning to operate with funds in excess of AR$200 million.

Brokers can skip the 30-day parking period for operations with their own portfolios in which they sell bilaterally in dollars and then buy assets and sell them in pesos — meaning that the operation has started and ended in pesos.


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