In brief
Today, 5 September 2025, the deadline to send suggestions and comments to the draft External Circular Letter (EC) of the Financial Superintendence of Colombia (SFC) through which it intends to provide instructions on advisory activity, general aspects of investment, the activity of liquidity formers, short sales in the securities market, recurring securities lending and securities financing within the framework of the regulation issued in 2024 by the Financial Regulation Unit (Unidad de Regulación Financiera) through Decree 1239 ("Decree 1239").
In depth
Relevant aspects of the draft EC include the following:
- Securities issuers: eliminates requirements for certification of statutory auditors, investment bankers and alienators for the filing of prospectuses for securities issuance, maintaining only the certification of the legal representative of the respective issuer.
- General aspects of investment and activities of brokerage firms: (i) includes a chapter on liquidity formers in Title II of Part III of the Basic Legal Circular (CBJ) of the SFC; (ii) incorporates instructions on recurring securities lending on behalf of third parties through broker-dealer companies (SCBVs) as part of Chapter I of Title III of Part III of the CBJ; (iii) in the same Chapter, it defines the parameters under which general investment orders may be received and executed by the clients of the SCBVs for the management of their portfolios without requiring individual orders; (iv) it establishes guidelines to develop the activity of recurrent securities lending on behalf of third parties through the SCBVs; and, (v) it determines Integrated Risk Management System (SIAR) guidelines for the financing of securities.
- Securities market infrastructure providers: the draft EC adds Chapters I and III of Title IV of the CBJ, rules for the stock exchanges and administrators of trading and registration systems for securities transactions to define in their regulations the mechanism through which they will disclose information on short sales to the market, specifying the main elements of such information.
- It establishes a category of simple mass products under certain criteria, with respect to which differentiated policies and procedures for client profiling may be determined.
- It eliminates monitoring of the stages of the advisory activity, certain requirements for the content of the policies and procedures of the activity, and excludes real estate mutual funds from the classification of complex products.
- It makes the content of policies and procedures for the use of technological tools more flexible.
- The EC is undoubtedly a regulatory proposal aimed at strengthening the liquidity of the capital market, promoting better price formation, facilitating access to new issuers and investor access.
Current situation
- From Decree 1239 the National Government established modifications oriented to the development of activities for certain actors such as brokerage firms, for example, financing and securities, the flexibility of aspects related to the advisory activity, information to the market on short sales operations, new rules for liquidity formers, among other aspects, seeking on the one hand to strengthen the liquidity of the capital market and on the other hand to maintain standards of protection for investors but eliminating barriers to access, promoting their participation.
- Decree 1239 empowered the SFC to issue instructions to develop the general provisions within 12 months and that is why this draft EC has been published.
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