The Financial System Stability Assessment update, conducted by the IMF in 2005, reported that the regulatory framework is being amended toward best international practices, placing a special emphasis on protecting investor's rights, promoting market efficiency, integrity and trustworthiness among parties, and preventing systemic risks. Among the short term recommendations were the following points: Strengthen the regulatory regime by implementing the new Capital Market Law .Take measures to harmonize responsibilities, avoiding the current regulatory and supervisory overlap. Ensure that Securities Superintendency (SVC) should have sufficient resources for supervision, enforcement, and securities settlement. Promote local and international cooperation to share information. The new Capital market law was enacted in July 2005 and is supposed to bring Colombia in line with the Principles of Effective Securities Regulation developed by the International Organization of Securities Commissions (IOSCO).

General Overview

The IMF noted in its update to the 2000 Financial Sector Stability Assessment in 2005 that private capital markets have developed somewhat but continue to be characterized by low liquidity and insufficient depth. This is probably attributable to the scarce supply of investment securities by local corporations, and deficiencies in clearance and settlement systems, in addition to investment restrictions, issuance costs, taxation and the lack of fixed income hedging instruments. Most resources are channeled through the banking sector, while capital markets have still not become an alternative financing source for the private sector. Meanwhile, the secondary market liquidity lags behind comparable countries, especially in equity. This limitation is attributable to structural factors and some lags in market infrastructure. The government debt market has developed substantially. (FSSA Update 2005)

The modernization of the regulatory framework for securities markets is key to increase liquidity, to stimulate investment and to promote economic growth. To create an efficient institutional framework, the securities regulatory regime is under review and there are many substantial changes underway regarding some essential factors such as suitable regulations, supervision capable of enforcing the regulations and the implementation of international standards. The regulatory framework is being amended toward best international practices, placing a special emphasis on protecting investor's rights, promoting market efficiency, integrity and trustworthiness among parties, and preventing systemic risks. (FSSA Update 2005)

Among the short term recommendations in the Financial System Stability Assessment (FSSA) update, conducted by the IMF in 2005, were the following points: Strengthen the regulatory regime by implementing the new Securities Market Law (The new law was enacted in July 2005).Take measures to harmonize responsibilities, avoiding the current regulatory and supervisory overlap. Ensure that Securities Superintendency (SVC) should have sufficient resources for supervision, enforcement, and securities settlement. Promote local and international cooperation to share information. (FSSA Update 2005)

The authorities are currently working on important reforms to reinforce their supervision and watchdog capabilities. The supervisory authorities are also making progress to eliminate all regulatory arbitrages in all activities of the securities market that creates a lack of clarity of roles and supervisor functions overlap. (FSSA Update 2005)

Securities issues are now part of the Financial Framework Law, which focuses mainly on prudential regulation for banks. The proposed securities bill (Capital Markets Bill) would repeal the law as it applies to securities and replace it with a bill based on the IOSCO Principles. It would help to clearly delineate the competencies of Supervalores and Superbancaria and provide an opportunity to set minimum corporate governance standards for issuers, broker/dealers, central depositories, trading systems, stock exchanges and rating agencies. The bill should focus on shareholder protections, more transparency and enhanced board responsibilities. (ROSC August 2003)

The Capital Markets Bill has been approved by the Congress and is expected to become law early in July 2005. The Bill substantially reforms the capital markets legal framework, including the development of self regulation. The Bill also defines the category of institutions that may act as self regulatory organizations (SROs). (First 2005a)

Colombia has a dual system of financial sector supervision. The Banking Superintendency (SB) is responsible for supervising and controlling the intermediated financial market and therefore has authority over banks, trust and insurance corporations and pension funds, amongst others. The Superintendency of Securities (SV) has similar functions in respect to securities markets. The government has decided to merge the two Superintendencies and the unification is currently in process. (First 2005a)

The Financial System Stability Assessment (FSSA) update, conducted by the IMF in 2005, noted that there is a need for better coordination of efforts and information among the SBC, the Securities Superintendency (SVC), and the Superintendency of Companies (SSC), Colombia already enjoys a concentration of the supervisory responsibility over banks, insurance and pension funds in the SBC. Rules for cooperation should entail specific requirements for exchange of information, consultation and assistance on policy, monitoring of markets and entities, and conflict resolution processes. The SVC and the SBC should harmonize regulation and supervisory practices for independent brokers and bank-related brokers to assure a level playing field. The agencies should define a "lead supervisor" with clear responsibility and accountability concerning market, credit and liquidity risks, and stress tests. (FSSA Update 2005)

The capital markets sector in Colombia is small but growing. Stock exchanges in Bogota, Cali and Medellin, were merged into one national stock exchange in 2001, the Bolsa de Valores de Colombia (BVC) located in Bogota. The BVC and all its affiliates are regulated by the Superintendence of Securities, a division of the Ministry of Finance and Public Credit. (First 2005b)

The Colombian securities market is small but has enjoyed high growth in recent years. Only the largest of Colombia's companies participate in the local stock or bond markets, with the majority meeting their financing needs through the banking system, by reinvesting their profits and through suppliers' credit. Problems on the demand side include Colombia's low savings rate and virtually non-existent share culture. Institutional investors, particularly the private pension funds that mobilize the largest share of national savings (accounting for 9% of GDP), concentrate their holdings in government paper and AAA-rated commercial paper, a rating given to only a handful of companies. The capital-markets law aims to strengthen investor protection, improve supervision and regulation of trading companies and develop the necessary market infrastructure. The government also envisages revising the regulation of private pension funds to allow them to participate more actively in the capital markets. (CCG 2005)

The Superintendence of Securities oversees the exchange, regulating market intermediaries, broker's fees, and the financial disclosure of listed companies. Over the last few years, the securities market has traded fewer stocks and more bonds and fixed income securities. In 2003, Colombia's Stock Exchange registered marked dynamism, mainly due to positive balances of companies, economic recovery and the appreciation of the Colombian peso. During 2004, the Stock Market Index (IGBC) increased 80 percent closing at 4,292.3 by December 27, 2004. Market capitalization increased 17 percent between January and August 2004, closing at $18.5 billion. (CCG 2005)

The Colombian Securities Commission is a member of International Organization of Securities Commissioners (IOSCO) and a member of the President's Committee, the Emerging Markets Committee and the Inter-American Regional Committee within IOSCO. (IOSCO Membership Lists)

The Principles

1. The responsibilities of the regulator should be clear and objectively stated.

EN

Colombia has a dual system of financial sector supervision. The Banking Superintendency (SB) is responsible for supervising and controlling the intermediated financial market and therefore has authority over banks, trust and insurance corporations and pension funds, amongst others. The Superintendency of Securities (SV) has similar functions in respect to securities markets. The government has decided to merge the two Superintendencies and the unification is currently in process. (First 2005a)

According to the Director for Financial Regulation of the Colombian Ministry of Finance and Public Credit IOSCO's principle 1, concerning the objectives of the regulator, are incorporated in their entirety in the new Capital Markets Law 964, Art.1,a, including the protection of investigators, assurance that the markets is fair, equitable and transparent and the reduction of systemic risk. (MoF 2005)

According to the Director for Financial Regulation of the Colombian Ministry of Finance and Public Credit, the new Capital Markets Law 964 is bringing Colombia closer to IOSCO's principles than the previous regulation in the Constitution. IOSCO establishes five principles regarding the regulator. Clear responsibilities (Principle 1), independence and accountability (Principle 2), adequate procedures and proper resources (Principle 3), clear and consistent regulatory processes (Principle 4)and highest professional standards for the staff of the regulator (Principle 5). The Capital Markets Law 964 does not contradict these principles and contributes to the elimination of regulatory arbitrages. (MoF 2005)

The Financial System Stability Assessment (FSSA) update, conducted by the IMF in 2005, noted that there is a need for better coordination of efforts and information among the SBC, the Securities Superintendency (SVC), and the Superintendency of Companies (SSC), Colombia already enjoys a concentration of the supervisory responsibility over banks, insurance and pension funds in the SBC. Rules for cooperation should entail specific requirements for exchange of information, consultation and assistance on policy, monitoring of markets and entities, and conflict resolution processes. The SVC and the SBC should harmonize regulation and supervisory practices for independent brokers and bank-related brokers to assure a level playing field. The agencies should define a "lead supervisor" with clear responsibility and accountability concerning market, credit and liquidity risks, and stress tests. (FSSA Update 2005)

Among the short term recommendations in the Financial System Stability Assessment (FSSA) update, conducted by the IMF in 2005, were the following points: Strengthen the regulatory regime by implementing the new Securities Market Law. (The new law was enacted in July 2005). Take measures to harmonize responsibilities, avoiding the current regulatory and supervisory overlap.

2. The regulator should be operationally independent and accountable in the exercise of its functions and powers.

EN

According to the Director for Financial Regulation of the Colombian Ministry of Finance and Public Credit, the new Capital Markets Law 964 is bringing Colombia closer to IOSCO's principles than the previous regulation in the Constitution. IOSCO establishes five principles regarding the regulator. Clear responsibilities (Principle 1), independence and accountability (Principle 2), adequate procedures and proper resources (Principle 3), clear and consistent regulatory processes (Principle 4)and highest professional standards for the staff of the regulator (Principle 5). The Capital Markets Law 964 does not contradict these principles and contributes to the elimination of regulatory arbitrages. (MoF 2005)

3. The regulator should have adequate powers, proper resources and the capacity to perform its functions and exercise its powers.

EN

According to the Director for Financial Regulation of the Colombian Ministry of Finance and Public Credit, the new Capital Markets Law 964 is bringing Colombia closer to IOSCO's principles than the previous regulation in the Constitution. IOSCO establishes five principles regarding the regulator. Clear responsibilities (Principle 1), independence and accountability (Principle 2), adequate procedures and proper resources (Principle 3), clear and consistent regulatory processes (Principle 4)and highest professional standards for the staff of the regulator (Principle 5). The Capital Markets Law 964 does not contradict these principles and contributes to the elimination of regulatory arbitrages. (MoF 2005)

Among the short term recommendations in the Financial System Stability Assessment (FSSA) update, conducted by the IMF in 2005, were the following points: Strengthen the regulatory regime by implementing the new Securities Market Law (The new law was enacted in July 2005).Take measures to harmonize responsibilities, avoiding the current regulatory and supervisory overlap. Ensure that Securities Superintendency (SVC) should have sufficient resources for supervision, enforcement, and securities settlement. (FSSA Update 2005)

4. The regulator should adopt clear and consistent regulatory processes.

EN

According to the Director for Financial Regulation of the Colombian Ministry of Finance and Public Credit, the new Capital Markets Law 964 is bringing Colombia closer to IOSCO's principles than the previous regulation in the Constitution. IOSCO establishes five principles regarding the regulator. Clear responsibilities (Principle 1), independence and accountability (Principle 2), adequate procedures and proper resources (Principle 3), clear and consistent regulatory processes (Principle 4)and highest professional standards for the staff of the regulator (Principle 5). The Capital Markets Law 964 does not contradict these principles and contributes to the elimination of regulatory arbitrages. (MoF 2005)

5. The staff of the regulator should observe the highest professional standards, including appropriate standards of confidentiality.

EN

According to the Director for Financial Regulation of the Colombian Ministry of Finance and Public Credit, the new Capital Markets Law 964 is bringing Colombia closer to IOSCO's principles than the previous regulation in the Constitution. IOSCO establishes five principles regarding the regulator. Clear responsibilities (Principle 1), independence and accountability (Principle 2), adequate procedures and proper resources (Principle 3), clear and consistent regulatory processes (Principle 4)and highest professional standards for the staff of the regulator (Principle 5). The Capital Markets Law 964 does not contradict these principles and contributes to the elimination of regulatory arbitrages. (MoF 2005)

6. The regulatory regime should make appropriate use of Self-Regulatory Organizations (SROs) that exercise some direct oversight responsibility for their respective areas of competence, to the extent appropriate to the size and complexity of the markets.

EN

According to the Director for Financial Regulation of the Colombian Ministry of Finance and Public Credit IOSCO's Objectives and Principles of Securities Regulation establish that any regulation of the securities market should contain regulation on the topics below. These topics are now adequately regulated in the new Capital Markets Law 964 or give the government the regulatory intervention power to issue regulation under Article 4. Self-regulation (Art.4 h), Norms for supervision and compliance with the law (Art.4 c); Issuers of securities (Art. 4 e, f, g, l); market intermediaries (Art.4 b, d, e, i, l); collective investment schemes (Art.4 a) and Secondary Markets (Art. 4b). (MoF 2005)

Stock exchanges in Bogota, Cali and Medellin, were merged into one national stock exchange in 2001, the Bolsa de Valores de Colombia (BVC) located in Bogota. The BVC and all its affiliates are regulated by the Superintendence of Securities, a division of the Ministry of Finance and Public Credit. (First 2005b)

7. SROs should be subject to the oversight of the regulator and should observe standards of fairness and confidentiality when exercising powers and delegated responsibilities.

II

There is no publicly available information that comprehensively addresses this principle.

Stock exchanges in Bogota, Cali and Medellin, were merged into one national stock exchange in 2001, the Bolsa de Valores de Colombia (BVC) located in Bogota. The BVC and all its affiliates are regulated by the Superintendence of Securities, a division of the Ministry of Finance and Public Credit. (First 2005b)

8. The regulator should have comprehensive inspection, investigation and surveillance powers.

EN

According to the Director for Financial Regulation of the Colombian Ministry of Finance and Public Credit IOSCO's Objectives and Principles of Securities Regulation establish that any regulation of the securities market should contain regulation on the topics below. These topics are now adequately regulated in the new Capital Markets Law 964 or give the government the regulatory intervention power to issue regulation under Article 4. Self-regulation (Art.4 h), Norms for supervision and compliance with the law (Art.4 c); Issuers of securities (Art. 4 e, f, g, l); market intermediaries (Art.4 b, d, e, i, l); collective investment schemes (Art.4 a) and Secondary Markets (Art. 4b). (MoF 2005)

Among the short term recommendations in the Financial System Stability Assessment (FSSA) update, conducted by the IMF in 2005, were the following points: Strengthen the regulatory regime by implementing the new Securities Market Law (The new law was enacted in July 2005).Take measures to harmonize responsibilities, avoiding the current regulatory and supervisory overlap. Ensure that Securities Superintendency (SVC) should have sufficient resources for supervision, enforcement, and securities settlement. (FSSA Update 2005)

9. The regulator should have comprehensive enforcement powers.

EN

According to the Director for Financial Regulation of the Colombian Ministry of Finance and Public Credit IOSCO's Objectives and Principles of Securities Regulation establish that any regulation of the securities market should contain regulation on the topics below. These topics are now adequately regulated in the new Capital Markets Law 964 or give the government the regulatory intervention power to issue regulation under Article 4. Self-regulation (Art.4 h), Norms for supervision and compliance with the law (Art.4 c); Issuers of securities (Art. 4 e, f, g, l); market intermediaries (Art.4 b, d, e, i, l); collective investment schemes (Art.4 a) and Secondary Markets (Art. 4b). (MoF 2005)

Among the short term recommendations in the Financial System Stability Assessment (FSSA) update, conducted by the IMF in 2005, were the following points: Strengthen the regulatory regime by implementing the new Securities Market Law (The new law was enacted in July 2005).Take measures to harmonize responsibilities, avoiding the current regulatory and supervisory overlap. Ensure that Securities Superintendency (SVC) should have sufficient resources for supervision, enforcement, and securities settlement. (FSSA Update 2005)

10. The regulatory system should ensure an effective and credible use of inspection, investigation, surveillance and enforcement powers and implementation of an effective compliance program.

EN

According to the Director for Financial Regulation of the Colombian Ministry of Finance and Public Credit IOSCO's Objectives and Principles of Securities Regulation establish that any regulation of the securities market should contain regulation on the topics below. These topics are now adequately regulated in the new Capital Markets Law 964 or give the government the regulatory intervention power to issue regulation under Article 4. Self-regulation (Art.4 h), Norms for supervision and compliance with the law (Art.4 c); Issuers of securities (Art. 4 e, f, g, l); market intermediaries (Art.4 b, d, e, i, l); collective investment schemes (Art.4 a) and Secondary Markets (Art. 4b). (MoF 2005)

Among the short term recommendations in the Financial System Stability Assessment (FSSA) update, conducted by the IMF in 2005, were the following points: Strengthen the regulatory regime by implementing the new Securities Market Law (The new law was enacted in July 2005).Take measures to harmonize responsibilities, avoiding the current regulatory and supervisory overlap. Ensure that Securities Superintendency (SVC) should have sufficient resources for supervision, enforcement, and securities settlement. (FSSA Update 2005)

11. The regulator should have authority to share both public and non-public information with domestic and foreign counterparts.

II

There is no publicly available information that comprehensively addresses this principle.

Among the short term recommendations in the Financial System Stability Assessment (FSSA) update, conducted by the IMF in 2005, were the following points: Strengthen the regulatory regime by implementing the new Securities Market Law (The new law was enacted in July 2005).Take measures to harmonize responsibilities, avoiding the current regulatory and supervisory overlap. Ensure that Securities Superintendency (SVC) should have sufficient resources for supervision, enforcement, and securities settlement. Promote local and international cooperation to share information. (FSSA Update 2005)

12. Regulators should establish information sharing mechanisms that set out when and how they will share both public and non-public information with their domestic and foreign counterparts.

II

There is no publicly available information that comprehensively addresses this principle.

Among the short term recommendations in the Financial System Stability Assessment (FSSA) update, conducted by the IMF in 2005, were the following points: Strengthen the regulatory regime by implementing the new Securities Market Law (The new law was enacted in July 2005).Take measures to harmonize responsibilities, avoiding the current regulatory and supervisory overlap. Ensure that Securities Superintendency (SVC) should have sufficient resources for supervision, enforcement, and securities settlement. Promote local and international cooperation to share information. (FSSA Update 2005)

13. The regulatory system should allow for assistance to be provided to foreign regulators who need to make inquiries in the discharge of their functions and exercise of their powers.

II

There is no publicly available information that comprehensively addresses this principle.

Among the short term recommendations in the Financial System Stability Assessment (FSSA) update, conducted by the IMF in 2005, were the following points: Strengthen the regulatory regime by implementing the new Securities Market Law (The new law was enacted in July 2005).Take measures to harmonize responsibilities, avoiding the current regulatory and supervisory overlap. Ensure that Securities Superintendency (SVC) should have sufficient resources for supervision, enforcement, and securities settlement. Promote local and international cooperation to share information. (FSSA Update 2005)

The Colombian Securities Commission is a member of the Council of Securities Regulators of the Americas (COSRA).

The Members of the Council of Securities Regulators of the Americas (COSRA) produced a Framework for Co-operation in the Americas following a meeting on June 23-24 1994. (COSRA Framework for Co-operation)

14. There should be full, timely and accurate disclosure of financial results and other information that is material to investors’ decisions.

EN

Listed companies have general obligations regarding dissemination of their financial statements and other corporate matters. Upon a merger or spin-off, the company must publish information that draws creditors' attention to their rights. In restructuring processes, notice must be sent to creditors so that they can attend the restructuring meeting and vote. (ROSC August 2003)

The Commercial Code as amended requires publication of an annual report and mandates its contents. Resolution 400 of 1995 stipulates the disclosure to SV and the Bolsa of periodic and material financial information for listed companies. The annual report includes a balance sheet, income statement, cash flow statement, statement of changes in equity and notes. It also includes the revisor fiscal's report and a management discussion and analysis, with limited discussion of company objectives. Information on risk management and material risk factors is mandatory, as is certification of internal control by the revisor fiscal. The names of board members and key executives are disclosed; there is little disclosure of remuneration and governance structures. Publication of material issues regarding employees or other stakeholders is not required. Accountability for financial statements rests with the legal representative and the revisor fiscal. According to market participants, the quality of financial information is poor. Between 1997 and 2002, the Superintendency brought 62 sanctions for disclosure violations against companies, their legal representatives and/or revisores fiscales. (ROSC August 2003)

15. Holders of securities in a company should be treated in a fair and equitable manner.

ID

In theory, shareholders have broad legal venues for redress. If a board or shareholder meeting decision violates the law or bylaws, it can be challenged before a civil judge within two months. In theory, shareholders have broad legal venues for redress. If a board or shareholder meeting decision violates the law or bylaws, it can be challenged before a civil judge within two months. Derivative suits against the firm's administradores can be initiated by an extraordinary general meetings (EGM) called by shareholders with 20 percent of capital. Derivative suits against the firm's administradores can be initiated by an EGM called by shareholders with 20 percent of capital. Law 472 of 1998 introduces class action suits when collective rights and interests are violated. (ROSC August 2003)

Conflict resolution is subject to arbitration or the courts. Specialized commercial courts do not exist. The greatest barriers to redress are the cost of litigation and length of court procedures. Shareholders can "put" their shares to the company, if they do not agree with certain fundamental decisions. The put price is "fair market value" as determined by an independent expert appointed by the chamber of commerce. The new securities bill proposes to expand decisions where withdrawal rights apply to include the sale of substantial assets. The bylaws contain information on the various share classes and the rights assigned to them, the annual report does not. Changes to the rights of a particular class must be approved by supermajority vote in a special meeting for shareholders of the affected class. Custodians vote according to registered shareholder instructions. Owners generally give custodians wide discretion on how to vote. In the case of ADRs, it is the local trust that is the record holder and exercises all shareholder rights. The ADR contract specifies if the trust must obtain voting instructions from ultimate beneficiaries. (ROSC August 2003)

In practice, shareholder redress is generally unavailable. Reducing minority rights thresholds (e.g. five percent) would improve the situation. The new capital markets law proposes the creation of "minority shareholder associations" that could seek redress on behalf of individuals. It remains to be seen how this will encourage minority activism. The legal framework should encourage foreign investors to vote. (ROSC August 2003)

16. Accounting and auditing standards should be of a high and internationally acceptable quality.

ID

Decree 2649 of 1993 defines Colombian GAAP, which differs materially from IAS. Accounting standards are issued by a number of superintendencies and other public bodies. Companies must prepare parallel information for different regulatory bodies, each based on a different standard and code. Policymakers agree that the quality of Colombian accounting standards is substandard. Colombian auditing standards do not comply with ISA. (ROSC August 2003)

The Colombian government, with the approval of Congress, has embarked on new strategies to advance structural economic reforms and macroeconomic stability, reform the regulatory institutions and systems of control, and improve law and order. One of the government's reform proposals involves a project to improve the corporate financial reporting regime. This project includes enacting a new law to reform and develop the accounting profession, fully adopting International Accounting Standards (IAS) and International Standards on Auditing (ISA), implementing international best practice on a professional accountants' code of ethics, and establishing an internationally comparable arrangement to license public accountants. (ROSC July 2003)

17. The regulatory system should set standards for the eligibility and the regulation of those who wish to market or operate a collective investment scheme.

EN

According to the Director for Financial Regulation of the Colombian Ministry of Finance and Public Credit IOSCO's Objectives and Principles of Securities Regulation establish that any regulation of the securities market should contain regulation on the topics below. These topics are now adequately regulated in the new Capital Markets Law 964 or give the government the regulatory intervention power to issue regulation under Article 4. Self-regulation (Art.4 h), Norms for supervision and compliance with the law (Art.4 c); Issuers of securities (Art. 4 e, f, g, l); market intermediaries (Art.4 b, d, e, i, l); collective investment schemes (Art.4 a) and Secondary Markets (Art. 4b). (MoF 2005)

18. The regulatory system should provide for rules governing the legal form and structure of collective investment schemes and the segregation and protection of client assets.

EN

According to the Director for Financial Regulation of the Colombian Ministry of Finance and Public Credit IOSCO's Objectives and Principles of Securities Regulation establish that any regulation of the securities market should contain regulation on the topics below. These topics are now adequately regulated in the new Capital Markets Law 964 or give the government the regulatory intervention power to issue regulation under Article 4. Self-regulation (Art.4 h), Norms for supervision and compliance with the law (Art.4 c); Issuers of securities (Art. 4 e, f, g, l); market intermediaries (Art.4 b, d, e, i, l); collective investment schemes (Art.4 a) and Secondary Markets (Art. 4b). (MoF 2005)

19. Regulation should require disclosure, as set forth under the principles for issuers, which is necessary to evaluate the suitability of a collective investment scheme for a particular investor and the value of the investor’s interest in the scheme.

EN

According to the Director for Financial Regulation of the Colombian Ministry of Finance and Public Credit IOSCO's Objectives and Principles of Securities Regulation establish that any regulation of the securities market should contain regulation on the topics below. These topics are now adequately regulated in the new Capital Markets Law 964 or give the government the regulatory intervention power to issue regulation under Article 4. Self-regulation (Art.4 h), Norms for supervision and compliance with the law (Art.4 c); Issuers of securities (Art. 4 e, f, g, l); market intermediaries (Art.4 b, d, e, i, l); collective investment schemes (Art.4 a) and Secondary Markets (Art. 4b). (MoF 2005)

20. Regulation should ensure that there is a proper and disclosed basis for asset valuation and the pricing and the redemption of units in a collective investment scheme.

EN

According to the Director for Financial Regulation of the Colombian Ministry of Finance and Public Credit IOSCO's Objectives and Principles of Securities Regulation establish that any regulation of the securities market should contain regulation on the topics below. These topics are now adequately regulated in the new Capital Markets Law 964 or give the government the regulatory intervention power to issue regulation under Article 4. Self-regulation (Art.4 h), Norms for supervision and compliance with the law (Art.4 c); Issuers of securities (Art. 4 e, f, g, l); market intermediaries (Art.4 b, d, e, i, l); collective investment schemes (Art.4 a) and Secondary Markets (Art. 4b). (MoF 2005)

21. Regulation should provide for minimum entry standards for market intermediaries.

EN

According to the Director for Financial Regulation of the Colombian Ministry of Finance and Public Credit IOSCO's Objectives and Principles of Securities Regulation establish that any regulation of the securities market should contain regulation on the topics below. These topics are now adequately regulated in the new Capital Markets Law 964 or give the government the regulatory intervention power to issue regulation under Article 4. Self-regulation (Art.4 h), Norms for supervision and compliance with the law (Art.4 c); Issuers of securities (Art. 4 e, f, g, l); market intermediaries (Art.4 b, d, e, i, l); collective investment schemes (Art.4 a) and Secondary Markets (Art. 4b). (MoF 2005)

22. There should be initial and ongoing capital and other prudential requirements for market intermediaries that reflect the risks that the intermediaries undertake.

EN

According to the Director for Financial Regulation of the Colombian Ministry of Finance and Public Credit IOSCO's Objectives and Principles of Securities Regulation establish that any regulation of the securities market should contain regulation on the topics below. These topics are now adequately regulated in the new Capital Markets Law 964 or give the government the regulatory intervention power to issue regulation under Article 4. Self-regulation (Art.4 h), Norms for supervision and compliance with the law (Art.4 c); Issuers of securities (Art. 4 e, f, g, l); market intermediaries (Art.4 b, d, e, i, l); collective investment schemes (Art.4 a) and Secondary Markets (Art. 4b). (MoF 2005)

23. Market intermediaries should be required to comply with standards for internal organization and operational conduct that aim to protect the interests of clients, ensure proper management of risk, and under which management of the intermediary accepts primary responsibility for these matters.

EN

According to the Director for Financial Regulation of the Colombian Ministry of Finance and Public Credit IOSCO's Objectives and Principles of Securities Regulation establish that any regulation of the securities market should contain regulation on the topics below. These topics are now adequately regulated in the new Capital Markets Law 964 or give the government the regulatory intervention power to issue regulation under Article 4. Self-regulation (Art.4 h), Norms for supervision and compliance with the law (Art.4 c); Issuers of securities (Art. 4 e, f, g, l); market intermediaries (Art.4 b, d, e, i, l); collective investment schemes (Art.4 a) and Secondary Markets (Art. 4b). (MoF 2005)

24. There should be procedures for dealing with the failure of a market intermediary in order to minimize damage and loss to investors and to contain systemic risk.

EN

According to the Director for Financial Regulation of the Colombian Ministry of Finance and Public Credit IOSCO's Objectives and Principles of Securities Regulation establish that any regulation of the securities market should contain regulation on the topics below. These topics are now adequately regulated in the new Capital Markets Law 964 or give the government the regulatory intervention power to issue regulation under Article 4. Self-regulation (Art.4 h), Norms for supervision and compliance with the law (Art.4 c); Issuers of securities (Art. 4 e, f, g, l); market intermediaries (Art.4 b, d, e, i, l); collective investment schemes (Art.4 a) and Secondary Markets (Art. 4b). (MoF 2005)

25. The establishment of trading systems including securities exchanges should be subject to regulatory authorization and oversight.

EN

According to the Director for Financial Regulation of the Colombian Ministry of Finance and Public Credit IOSCO's Objectives and Principles of Securities Regulation establish that any regulation of the securities market should contain regulation on the topics below. These topics are now adequately regulated in the new Capital Markets Law 964 or give the government the regulatory intervention power to issue regulation under Article 4. Self-regulation (Art.4 h), Norms for supervision and compliance with the law (Art.4 c); Issuers of securities (Art. 4 e, f, g, l); market intermediaries (Art.4 b, d, e, i, l); collective investment schemes (Art.4 a) and Secondary Markets (Art. 4b). (MoF 2005)

26. There should be ongoing regulatory supervision of exchanges and trading systems which should aim to ensure that the integrity of trading is maintained through fair and equitable rules that strike an appropriate balance between the demands of different market participants.

EN

According to the Director for Financial Regulation of the Colombian Ministry of Finance and Public Credit IOSCO's Objectives and Principles of Securities Regulation establish that any regulation of the securities market should contain regulation on the topics below. These topics are now adequately regulated in the new Capital Markets Law 964 or give the government the regulatory intervention power to issue regulation under Article 4. Self-regulation (Art.4 h), Norms for supervision and compliance with the law (Art.4 c); Issuers of securities (Art. 4 e, f, g, l); market intermediaries (Art.4 b, d, e, i, l); collective investment schemes (Art.4 a) and Secondary Markets (Art. 4b). (MoF 2005)

27. Regulation should promote transparency of trading.

II

There is no publicly available information that comprehensively addresses this principle.

28. Regulation should be designed to detect and deter manipulation and other unfair trading practices.

II

There is no publicly available information that comprehensively addresses this principle.

29. Regulation should aim to ensure the proper management of large exposures, default risk and market disruption.

II

There is no publicly available information that comprehensively addresses this principle.

30. Systems for clearing and settlement of securities transactions should be subject to regulatory oversight, and designed to ensure that they are fair, effective and efficient and that they reduce systemic risk.

EN

The draft of the securities markets law, currently in Congress, would provide a boost to local markets development. The draft addresses most of the weaknesses identified in the legal framework for the payment system and improves compliance with CPSS standards. It covers issues such as the legal validation of multilateral netting, the protection of the system against bankruptcy procedures, settlement finality, protection of collateral arrangements, pledge, segregation of accounts, the legal definition of repos, central counterparties, and novation. It also extends this legal basis for funds and foreign exchange settlement systems. However, it does not address the lack of legal basis for the BRC's oversight function. (FSSA Update 2005)

The new Securities/ Capital Markets Law was enacted in July 2005.