The Colombian Financial Regulation Unit (URF, for its acronym in Spanish) has launched a series of public consultations on a draft decree and a technical document on the custody of securities lasting until December 20. Securities custody involves the surveillance of securities and monetary resources for treasury bill operations, and participations in investment funds, among others. In Colombia there are four companies providing custody securities, including Citi. The regulatory proposal obligates all entities handling securities investment portfolios to hold them, and also expands the complementary services that they may offer, to include the complete outsourcing of risk assessment and analysis tools, reports, treasury activities and portfolio accounting, for instance. Stakeholders may send their comments by e-mail to [email protected] and [email protected].  

The main proposals in the documents published by the URF are:

Expansion of securities custodians. All entities that manage third-party resources must contract securities custodians:

• Brokerage firms for the custody of securities making up the portfolio of third party securities. The Colombian Finance Superintendency (SFC, for its acronym in Spanish) must define the threshold value of the portfolio required for it to be obligatory to contract securities custody.
• Fiduciary Companies for the custody of the securities that make up the portfolios managed under the modality of investment trusts. The SFC must define the threshold value of the portfolio required security custodian contracting to be mandatory.
• Pension and Severance Fund Administration Companies for the custody of securities making up the portfolios of the different types of mandatory pension funds in the individual benefit plans covered by pooled (public and private) contributions as well as for securities making up part of the short and long-term portfolios of severance funds.
• Pension and Severance Fund Management Companies, Insurance Companies and Trust Companies for the custody of securities making up the portfolios of retirement and disability pension funds.
• Insurance and Capitalization Companies for the custody of the securities making up the portfolios of the technical reserves of said entities.

Complementary services. The custodians may provide the following services:

• Accounting of the securities portfolio under custody. The custodian performs the accounting for the custodied securities portfolio. The custodian shall provide the custodian with the information necessary for the provision of this service in a timely fashion.
• Information reports. The custodian may prepare technical reports on the provision of custody services. These reports may include the reports that the custodian must submit to the SFC.
• Risk measurement and analysis. The custodian may provide risk analysis and measurement services, reviewing valuation methodologies with respect to the securities portfolio under custody in the terms established by the custodian.
• Compliance. It may verify compliance with legal limits, restrictions and prohibitions applicable to operations related to the securities in custody.
• Treasury activities. With the authorization of the financial institution, the custodian may perform treasury activities, such as closing and accounting records and final authorization of operations.