The Financial Market Commission ("CMF") has updated the frequently asked questions document associated with General Standard No. 502 ("NCG No. 502") under Law No. 21.521, also known as the Fintech Law. This regulation aims to enhance financial inclusion, the development and depth of the Chilean capital market, and to ensure minimum conduct standards for participants in the financial industry.**
The update to the frequently asked questions document aims to complement and clarify the instructions and requirements for financial service providers. Among the key elements of the update are the guidelines under which the creation and dissemination of financial and/or investment content through media and social networks will be considered investment advice under the Fintech Law.
According to Article 3 of the Fintech Law, investment advice includes providing services of evaluations or recommendations to third parties regarding the advisability of making certain investments or operations in publicly offered securities, financial instruments, or investment projects. In this regard, the CMF has stated that individuals who create and disseminate financial and investment content through media and/or social networks will be subject to the Fintech Law's regulations if the following elements are cumulatively met:
- Influence Capability: The communication must have the capability and/or purpose of influencing the audience's behavior regarding the advisability of making specific investments or certain operations in financial instruments, publicly offered securities, or investment projects, either generally or directed at a specific group.
- Habitual Dissemination: The communication must be conducted professionally and consistently over time, such as managing and disseminating content on a social media profile, through a podcast, or any other audiovisual channel primarily, although not exclusively, dedicated to investment recommendations. This applies regardless of whether the content creator identifies as an investment advisor or declares to engage in this activity.
For example, investment advice is understood as:
- (i) Making recommendations or evaluations about the advisability of investing in publicly offered securities, financial instruments, or investment projects, as well as making investment recommendations or evaluations about a specific market (technology, natural resources, infrastructure, crypto assets, etc.) and the advisability of investing in these through the aforementioned instruments;
- (ii) Comparatively expressing personal and/or subjective opinions about the advantages and/or disadvantages of investing in certain publicly offered securities, financial instruments, or investment projects in relation to others;
- (iii) Disseminating information from oneself or third parties regarding the results of investment operations and/or portfolio compositions, as well as communicating specific investment operations to be carried out, all in relation to publicly offered securities, financial instruments, or investment projects;
- (iv) Making and disseminating general or specific profitability projections of certain publicly offered securities, financial instruments, or investment projects; and
- (v) Promoting the use of referral programs and/or offering discounts that constitute an invitation or incentive to make investment operations on publicly offered securities, financial instruments, or investment projects.
The document also clarifies that communication considered merely informational or educational, presenting objective and neutral information without intending to influence the audience's investment decisions, is not considered investment advice.
In summary, the parameters established by the CMF impose new limits on "financial influencers," aiming to ensure that those who create and disseminate financial and investment content operate within a defined regulatory framework, thus protecting investors and promoting transparency in the sector.
If additional information on this matter is required, you may contact Christian Schiessler (cshiesslerq@jdf.cl) and Diego Miranda (dmiranda@jdf.cl).
