The Superintendence of the Securities Market (SIMV) and the Superintendence of Banks (SB) left for public consultation two regulations that would allow investors in the securities market to have access to bank loans, using their mutual or open investment fund shares as collateral.
The rules under review modify the Instructions on Formalization, Registration and Control of Guarantees, issued by the Superintendency of Banks, and the Instructions for the Constitution, Registration and Execution of Guarantees to Participation Quotas of Mutual or Open Mutual Funds, issued by the SIMV.
As of November 30, 2023, the securities market has 24 mutual or open investment funds, with the participation of 34,019 investors. These funds have assets under management exceeding DR 51,990 million.
So far, mutual fund shares cannot be pledged, that is, used as collateral with banks, contrary to what happens with certificates of deposit and other negotiable instruments in the stock market.
The Superintendencies of the Securities Market and Banks have prepared the proposals in coordination with the Dominican Association of Investment Funds (Adosafi) and the guilds that bring together the financial intermediation entities.
This provision, in addition to providing greater liquidity to mutual fund shares, would facilitate access to these assets as investment options.
“What has been achieved, working together, listening to the private sector, has been important. The existing regulations were excluding mutual fund investors from using their quotas to obtain loans with banks. This was not good because it put them at a disadvantage and limited their access to credit,” said Ernesto Bournigal Read, Superintendent of the Securities Market.
Bournigal Read emphasized: “We have a duty to protect the rights of all investors in the securities market. We do not have ‘second-class’ investors. That is why we ensure that everyone has equal rights and equal opportunities. Mutual fund investors were at a disadvantage and we have paved the way for them to be on an equal footing”.
Meanwhile, the Superintendent of Banks, Alejandro Fernández W., said that the measures are part of the SB’s institutional axes of protection of financial users and financial inclusion. “Protecting financial users and guaranteeing their rights, as well as their access to credit, also stimulates the growth of private credit”, he added.
The officials maintained that this initiative is in line with guidelines issued by President Luis Abinader, to listen to the people, identify opportunities for improvement and work in a coordinated manner.
Bournigal Read and Fernández W. announced the news during an event attended by the main banking and securities market associations.
The supervisory bodies concluded by urging interested parties to consult the regulations published in their respective web pages and to actively participate in their review.
Present at the event were the Superintendents of the Securities Market and Banking Superintendency, Enmanuel Cedeño Brea and Julio Caminero, as well as Mrs. Rosanna Ruiz, executive president of the Asociación de Bancos Múltiples; Mr. Santiago Sicard, executive vice-president of Adosafi, representatives of SAFI BHD, SAFI Reservas, AFI Interval, SAFI Excel, SAFI Altio, officials of the SIMV and the Banking Superintendency.