On January 12, 2024, the Financial Market Commission (the "CMF" or the "Commission") issued General Rule No. 502 (the "NCG 502" or the "Regulation"), providing instructions for the registration and authorization of technology-based financial service providers under Law No. 21,521 (the "Fintech Law").

Through the issuance of NCG 502, the aim is to regulate the conditions for registration in the Financial Service Providers Registry (the "Registry"), authorization procedures for providing financial services, and additional responsibilities applicable to entities offering technology-based financial services ("Entities").

• Content of the Regulation.

The Regulation establishes requirements and procedures for applying for registration in the Registry, in accordance with the Fintech Law, including the following:

1. To provide services regulated by the Fintech Law in Chile, Entities operating physically or electronically in Chile or targeting service offerings to residents of the country must apply for registration in the Registry. The legal representative of the Entities must submit the application through the Commission's website, including information about the entity, legal representative, and other specific details, along with documents such as the constitution deed, certificates, non-disqualification statements, among others.

There are certain exceptions to the requirements: (i) natural persons providing investment advice to fewer than 100,000 specified individuals in the last 12 months do not need to establish themselves as legal entities; (ii) those exclusively offering investment advice, credit advice, an alternative trading system, or a crowdfunding platform to qualified investors do not require exclusive business focus or specific authorization; and (iii) foreign Entities can register without a domicile in Chile if they only offer investment advice, credit advice, an alternative trading system, or a crowdfunding platform to qualified investors in Chile.

2. In addition to submitting registration in the Registry, Entities must submit an authorization request to the CMF, providing specific documents that vary according to the service provided.
3. Disclosure and information delivery obligations are established for financial service providers. Providers must implement policies and procedures to meet the information obligations of the Regulation, using tools to facilitate understanding. Information obligations must comply with NCG 502 standards and depend on the Fintech Law service provided.
4. Compliance with corporate governance standards is required, including the obligation of the board (or the equivalent body) to implement risk management and internal control policies, meeting the characteristics specified by the Regulation. Compliance standards vary according to the number and type of clients, whether legal or natural persons, and the handling of personal data.
5. The Regulation establishes capital and collateral requirements for Entities offering brokerage, instrument custody, and order routing services. Likewise, NCG 502 defines three blocks of Entities according to their business volume, with the aim of establishing minimum equity and proportional collateral requirements for each block.
6. The Regulation includes a list of inherent business activities, enumerating activities that can be carried out without requiring additional authorization from the Commission.
7. La Normativa contiene una lista de las actividades inherentes al giro, que enumera las actividades que se podrán ejercer sin necesidad de que exista una autorización como actividad complementaria por parte de la Comisión.

• Effectiveness of the Regulation:

The Regulation stipulates that its provisions will come into effect on February 3, 2024, at which point General Rules No. 493 and No. 494 will lose validity. Entities must submit registration and authorization requests before February 3, 2025. Those who do not submit requests or have requests declared abandoned or rejected must refrain from entering into new operations.

Investment advisors already registered in the corresponding registry must comply with NCG 502 and submit information for registration and authorization of investment advice before August 3, 2024; failure to comply may result in the CMF revoking authorizations and canceling registrations.

Pending applications at the time of Regulation issuance are nullified; Entities must submit new applications before February 3, 2024, to continue providing services.

For additional information on this matter, please contact Christian Schiessler (cshiesslerq@jdf.cl) and Álvaro Caviedes (acaviedes@jdf.cl).