Superintendence of Securities Market

Superintendencia del Mercado de Valores (SMV)

Country

Location

Regulated area

Peru

Lima

Banking

Useful pages on the regulator website

Key regulation

  • Legal Decree No. 26126, Organic Law of the SMV
  • Supreme Decree No. 093-2002-EF, Unified Text of the Securities Market Law
  • Legislative Decree No. 832, Investment Funds and their Management Companies Act
  • SMV Resolution No. 034-2015-SMV-01, Intermediation Agents Regulations
  • SMV Resolution No. 005-2014-SMV-01, Significant Events Regulations
  • SMV Resolution No. 005-2012-SMV-01, Regulations against Market Abuse and Rules regarding Improper use of Privileged Information and Market Manipulation

Key individuals

  • José Manuel Peschiera Rebagliati, Superintendent of the Securities Market
  • Omar Gutiérrez Ochoa, Adjunct Superintendent of Prudential Supervision
  • Roberto Pereda Gálvez, Adjunct Superintendent of Market Behaviour Supervision

Regulatory oversight

The SMV is a regulatory agency ascribed to the Peruvian economic and financial sector. The SMV supervises and regulates the development of the national securities markets and the different entities that participate in it. The main aim of the SMV is to protect the adequate functioning of the investment market, and for such purposes, it is entrusted with:

  • protecting the transparency of the market by ensuring that entities comply with the relevant reporting obligations and respect investors’ rights;
  • preventing and sanctioning abusive practices and other behaviours that could cause the integrity of the market to deteriorate (eg, price manipulation, improper use of privileged information); and
  • authorising certain specialised entities that participate within the securities market (stockbroker agencies, securitisation entities, rating agencies, etc) as well as supervising, controlling and, where appropriate, sanctioning these entities. The SMV also has faculties to issue regulations in connection with the securities market, products markets and collective funds.

It is worth highlighting that the SMV administers the SMV Securities Public Registry, in which all securities issued by way of public offerings are registered. Thus, the SMV plays a key role in controlling issuers’ access to the securities market and ensuring that all programmes and securities subject to public offerings comply with the applicable regulations.

The organisation of the SMV and its powers are mainly regulated under the Creation Law (Law No. 17020), the Organic Law (Legislative Decree No. 18302), the SMV Organisation and Functions Regulations (Supreme Decree No.216-2011-EF) and the Unified Text of the Securities Market Law (Supreme Decree No. 093-2002-EF).

Reporting and disclosure obligations

The main reporting obligations of entities under the supervision of the SMV are related to:

  • information pertaining to significant events: significant events refer to any type of event, decision, negotiation or information related to an issuer, its securities or its business that has the ability to significantly influence the decision of a reasonable investor to buy, sell or maintain a security; or the liquidity, price or quotation of the securities. It also includes information relating to the economic group of the issuer that may have a material influence on the issuer or its securities. The Significant Events Regulations approved by SMV Resolution No. 005-2014-SMV-01 contain a non-exhaustive list of events that are considered significant events. A significant event must be reported to the SMV as soon as it occurs or as soon as the issuer becomes aware of the existence of the event, and in no case later than the day on which the significant event occurred or was known to the issuer;
  • financial information: entities supervised by the SMV will also be under the obligation to periodically submit before the SMV their financial statements and annual reports, which must comply with all requirements provided under the applicable regulations. The financial information to be communicated includes:
    • audited annual individual financial statements;
    • audited annual consolidated financial statements;
    • individual unaudited intermediate financial statements; and
    • consolidated unaudited intermediate financial statements; and
  • economic groups: entities supervised by the SMV will be required to report information regarding their economic groups. Such information includes relevant information on each of the companies that are part of an economic group.

Monetary sanctions and recent behaviour

Monetary sanctions that may be imposed by the SMV are limited to fines of between one tax unit (the tax unit for 2020 is set at 4,300 sol) and 700 tax units (currently, approximately 3,010,000 sol), depending on the seriousness of the infraction and other circumstances such as, among other things:

  • a history of prior sanctions imposed on the same entity;
  • the economic damage caused by the infraction;
  • any repercussions in the securities market; and
  • the illicit benefit obtained by the sanctioned entity.

Sanctions may also be mitigated by an entity’s recognition of its responsibility for an infraction, its collaboration with the investigation or its remedying the infraction prior to the beginning of a sanctioning proceeding.

The SMV has also approved certain Applicable Criteria for the Sanctioning Proceeding for the Breach of Provisions Related to the Submission of Periodic or Eventual Information, which provide certain parameters to grade the sanctions for infractions related to a breach of regulations regarding the submission of periodic information, and other information that does not have to be reported on a periodic basis, but only when certain events occur (including a failure to submit financial information or to report relevant events). Pursuant to these guidelines, the following criteria should be taken into consideration:

  • the severity of the damage caused to the public interest;
  • the damage caused and its repercussions in the market;
  • prior sanctions imposed on an entity;
  • recidivism;
  • the circumstances in which the infraction was committed;
  • the benefit that may have been illegally obtained; and
  • whether negligence or wilful misconduct exists.

In general, the most common infractions sanctioned with fines are related to breaches of reporting obligations (mainly, failing to submit financial information in a timely or complete manner, failing to comply with the technical specifications required by the SMV or failing to report relevant information). With respect to issuers of securities, other common infractions are related to a failure to make public, in due form and time, the notices, communications or any other information that they are obliged to announce and a failure to comply with the express requirements of the SMV.

Pursuant to public information, we understand that the SMV has initiated investigations (which are currently reserved and confidential) against certain companies for making contributions to political parties without disclosing such information to the SMV or the market.

Non-monetary sanctioning powers and behaviour

The SMV is allowed to impose the following non-monetary sanctions:

  • warnings;
  • suspension of operating licences for up to 45 days;
  • suspension of stockbroker agencies’ representatives for up to 30 days;
  • suspension of the placement or negotiation of one or more securities;
  • exclusion of securities from the SMV Securities Public Registry;
  • cancellation of registrations in the SMV Securities Public Registry;
  • cancellation of operating licences; and
  • suspension for up to 30 days, and the destitution or disqualification of members of investment committees, vigilance committees and ratings committees, and the directors, managers, representatives and auditors of those entities subject to the supervision of the SMV. Additional non-monetary sanctions may be applicable to administrators of collective fund systems, such as prohibitions on forming new groups or entering into new contracts.

Pursuant to public information on the SMV website, the most common non-monetary sanctioned imposed is a warning, and the most common infractions relate to a breach of reporting obligations. In this regard, it should be noted that pursuant to the above-mentioned Applicable Criteria to the Sanctioning Proceeding for the Breach of Provisions Related to the Submission of Periodic or Eventual Information approved by the SMV, the applicable sanction related to non-compliance with the reporting obligations regarding periodic information, and other information that does not have to be reported on a periodic basis, but only when certain events occur, shall be a warning when the following requirements are met:

  • the infraction has not caused quantifiable damage to investors;
  • there is no repercussion in the market;
  • the sanctioned entity does not have prior sanctions or does not have more than three warnings within the four years prior to the commission of the relevant infraction;
  • the information was submitted with only one day of delay;
  • the wrongdoer has not obtained a benefit from its illegal conduct; and
  • there is no evidence that the sanctioned entity acted with wilful misconduct.

Imposition of the most severe sanctions by the SMV is rare. We do not know of any sanctions consisting of the exclusion of securities from the SMV Securities Public Registry, the cancellation of registrations in the SMV Securities Public Registry or the cancellation of operating licences being imposed in the past two years.

Recent and upcoming developments

In the context of the job carried out by the Consejo Consultivo del Mercado de Capitales (CCMC) (Securities Market Council), a forum formed by public and private institutions seeking to promote dialogue between its participants and set an agenda for the development of the securities market, the SMV requested the support of the World Bank to prepare a roadmap for the development of the Peruvian securities market. The analysis and recommendations of the World Bank have been summarised in the Document for the Support for the Creation of a Roadmap to Strengthen the Role of the Peruvian Securities Market with regards to the Financing of the Corporate Sector. This document identifies a number of actions that could be taken by the SMV and other authorities to promote the development of the securities market, including measures such as:

  • implementing a programme to prepare, advise and support companies in order to create a pipeline of companies that may eventually access the Peruvian securities market as issuers;
  • implementation of a market-maker programme as a way to increase the liquidity of the Peruvian securities market;
  • revise and eliminate tax distortions that generate unjustified differences between types of securities; and
  • increase efforts in connection with providing financial education.

It is expected that in coming months, the SMV will issue new regulations aimed at applying some of these recommendations, and in fact, some of the recommendations included in the above-mentioned document have already begun to be implemented or are on the SMV’s regulatory agenda for 2020. For example:

  • by means of Urgent Decree No. 013-2020 (available at https://busquedas.elperuano.pe/normaslegales/decreto-de-urgencia-que-promueve-el-financiamiento-de-la-mip-decreto-de-urgencia-n-013-2020-1848441-1/), a new legal framework was approved to regulate and supervise crowdfunding and the companies authorised to administer crowdfunding platforms. In this context, the SMV has been entrusted with regulating, authorising and supervising crowdfunding activities and platforms. We expect that the SMV will need to issue new regulations in connection with crowdfunding activities to supplement the provisions included under Urgent Decree No. 013-2020;
  • the SMV also intends to modify the regulations regarding e-prospectuses to promote the use of electronic formats in order to reduce costs and simplify and standardise documentation; and
  • in addition, the SMV is working on new stockbroker agent (SAB) regulations aimed at strengthening SABs and making them more competitive. Pursuant to these regulations, SABs would be allowed to perform new activities that they are currently barred from undertaking (eg, administering mutual funds and investment funds, acting as trustees in securitisation trusts).

Earlier this year, the SMV also approved a new corporate sustainability report under which companies that issue securities by way of public offers will need to disclose information regarding the actions and standards they have implemented in connection to the impact that their activities may have on the environment and social development. This new corporate sustainability report will be applicable as of 2021.

The SMV is considering revising and updating regulations regarding significant events, economic groups and corporate governance. It is also considering whether certain regulations need to be issued in connection with the role of boards of directors.

Challenges

Peru, Chile and Colombia’s stock exchange markets have announced that they are investigating the possibility of integrating their services and infrastructure. Although it is still uncertain whether this integration will eventually take place, if it did, there will most probably be a need for the SMV to revise its regulations to allow for the successful and efficient integration of these stock exchanges. Through declarations to the media, the SMV has already shown its support in connection with such integration, but emphasises that respect for market transparency and the protection of investors will need to be maintained.

Interacting with the regulator

The SMV is generally quite open to responding to queries from investors and the entities under its supervision. In addition to a telephone number for consultations and general orientation (+51 1 610 6300) and the information provided on its website (www.smv.gob.pe), meetings with officers of the SMV may also be arranged to discuss specific matters. Formal consultations may also be filed with the SMV (eg, consultations regarding the interpretation of specific regulations, how to qualify an offering as a public offer), and they should be responded to within 10 to 30 business days. It is generally recommended that interactions with the SMV are made in Spanish.

The submission of information as part of the reporting obligations of the entities under the SMV’s supervision is made through MVNet, a digital platform available to these entities. Information submitted through MVNet is generally publicly available on the SMV website.

In connection with best practices for companies in the event of disclosing incidents of non-compliance, particular strategies should be analysed on a case-by-case basis with a company’s internal or external legal counsel, or both. It should be noted, however, that recognition of responsibility, collaboration with the investigation and remedying of an infraction prior to the beginning of a sanctioning proceeding are all mitigators that could be taken into consideration (and, in our experience, are taken into consideration) by the SMV when imposing sanctions. Hence, remedying and disclosing incidents of non-compliance prior to the SMV noticing such events could help to reduce a sanction.

Notes for foreign investors

To obtain licences or authorisations to act as stockbroker agencies, securitisation entities, rating agencies or investment fund administrators (among other types of regulated entities supervised by the SMV), a Peruvian company will need to be incorporated. Notwithstanding, there are generally no ownership restrictions or similar limitations that would bar foreign entities from owning shares in these companies.

Other regulators it works closely with

  • Superintendencia de Banca, Seguros y Administradoras de Fondos de Pensiones (SBS): Superintendence of Banking, Insurance and Pension Fund Management Companies.

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