On June 26, the Ministry of Finance, launched a public consultation through the Financial Regulation Unit (URF) on a draft decree and technical document modifying the investment regime of capitalization companies. The idea is to make the restricted assets regime more flexible by modifying the qualification requirements applicable to investments. These requirements are also modified regarding bond issues. Interested parties may submit their comments until July 10, 2020, to [email protected], [email protected], or by clicking here.
The regulatory proposal presented by the URF aims to migrate from an investment regime based on limits, quotas and restrictions, to a hybrid one governed by more cautious principles and standards. It sets up a regulatory framework to allow managers to improve their decision-making processes, by granting them greater autonomy when exercising strategic asset allocation and defining investment policies.
In this sense, the flexibility proposed in the documents seeks to tighten up the management of investments by insurance entities and capitalization companies, without necessarily changing the asset risk profile. It proposes that the Boards of Directors of each administrator be allowed to determine the percentage of debt securities required to comply with ratings requirements in order for the investment to be considered eligible.