The horizon of the opening of the exchange rate seems to be moving each time a little further ahead, but the Government tries to convey to the market the certainty that the objective remains firm. “We have well mapped out what we have to do and “We are ready to do it,” He assured this Thursday Robert Silvathe president of the National Securities Commission (CNV), who avoided specifying the date and the modality in which progress will be made in dismantling capital control.
Silva spoke at the Argentine Economic Congress 2024 within the framework of the 11th Edition of the EFI Expo, in the panel “Capital Market. The role of institutions”, where he shared a panel with the general manager of Matba Rofex, Diego Fernández, and the director of Bolsas y Mercados Argentinos (ByMA), Alexander Zawadzki.
“Clearly the objective is to get out of the trap, there is no doubt about that. The issue is that it takes us more time than we would all like.”Silva said. The official explained that the CNV It does not decide on its own whether when or how and that will be defined within the framework of the economic team and with the Central Bank. “When is when and how is whether we come out all at once or in pieces,” she clarified.
President Javier Milei It emphasizes that before doing so it needs to clear the stock of remunerated liabilities of the BCRA and that of puts (liquidity insurance on public securities that the Central Bank sold to the banks) to reduce possible sources of pressure on the dollar. Although different voices in the market point out that the strategy used to reduce remunerated liabilities (the migration from repos to Treasury debt) does not completely pave the way for the lifting of the stocks since it increases the short-term maturities of the treasury, which transfers the risk towards the renewal of those commitments in the future.
Furthermore, the minister Luis Caputo recognized in their latest public presentations that they still do not have a sufficient level of reserves to face a smooth opening. According to calculations of Marina Dal Poggetto, net reserves are still negative by more than US$2.3 billion. And the Central Bank faces increasing difficulties in adding foreign currency. Thus, the Government once again positions expectations in the negotiation with the IMF to obtain more financing.
Stocks: restrictions to remove
However, the head of the capital market oversight body assured: “We have well mapped out what we have to do and we are ready to do it.” Thus, during his presentation ratified the list of restrictions on the operation of financial dollars that are planned to be removed and that was advanced by Ámbito.
“The stocks have at least two parts. The first is the one in the BCRA (official market), which is not my responsibility. The other is that of financial dollars, which is developed in the capital market,” Silva noted and focused on the latter, which is the one that depends on his area of competence.
Thus, he reviewed the roadmap of regulations to be eliminated. First of all, he referred to the daily cap of $200 million to operate or transfer securities used in the purchase and sale of financial dollars, which primarily weighs on foreign investors, as well as the obligation to report operations five days in advance.
He also pointed out the parking of one day (minimum holding period for the securities with which MEP and CCL are purchased), which is intended to be left at zero. In addition, he mentioned the CNV rule that prevents buying financial dollars if you have taken suretiesa measure that was implemented during one of the runs that the previous Government faced to prevent investors from taking advantage of this instrument and, with that money, from dollarizing themselves while waiting for an increase in the exchange rate.
Likewise, Silva pointed out that there is “a lot of obstacles in common investment funds (FCI), “We have everything ready to repeal them the day the time comes.” As this medium announced, one of them is the prohibition of offering bimonetary funds, that is, made up of both dollars and pesos. The same is studied for sovereign securities in foreign currency and for Cedear, which today cannot be considered as part of the 75% of local assets that the FCI are required to have. The prohibition of subscribing common funds in kind is also in the sights of officials.
On the other hand, Silva reviewed some regulations that are under the jurisdiction of the BCRA but that also impact the operations of the capital market. One is the cross restriction between financial and official dollars. Another, the Communication “A” 7340which establishes that every time a security is sold against dollars, those currencies must be transferred to a bank account and that transfers abroad can only be made to commercial banks (not to brokers or investment banks).
Capital market challenges
Outside of the issue of stocks, the head of the CNV listed some of the objectives that are on the entity’s agenda: align Argentina with international regulatory standards in line with the International Organization of Securities Commissions (IOSCO) and the Organization for Economic Cooperation and Development (OECD), which the Government aims to join; work on financial education; and the regulation of the crypto ecosystem, which had as a previous step the creation of the registry of virtual asset service providers.
For its part, Diego Fernandez considered that the market is before “a great opportunity” For their develpment. “Restrictions need to be released” to consummate it, he said. Furthermore, he stated that, while the exchange rate lasts, “it would be good to enable a future of CCL“, a hedging tool against the volatility of financial dollars that does not exist today but could also be taken as a signal contrary to the intention to remove controls.
Finally, Alexander Zawadzki He highlighted the volume of arranged operations and said that there are 1 million client accounts that operate every day. “With a firmer macro, we should have more trading in indices and other products. At BYMA we believe that the volume and number of operations will continue to grow in one way or another”he concluded.
Source: Ambito
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