The National Securities Commision

The primordial objective of the National Securities Commission is to promote the development of the securities market, thus strengthening the capital market and contributing to advance the country's social and economic development. Furthermore, it is the institution in charge of regulating, supervising, and providing oversight of due compliance with legal and regulatory dispositions. Said Commission, in addition to promoting the securities market, also brings to bear the following powers:

Power of authorization:

This situation has to carry out diverse authorization functions with regards to specific acts on the part of participants within the securities market. Said acts, of necessity, must receive the consent of the foregoing entity, among which are included the following:


1. Authorized and oversee the operation of the financial intermediaries within the securities market, without prejudice to the concomitant powers of the securities exchange with regard to the exchange seats and the exchange brokers.
2. Authorized and oversee the public offering of securities or other similar documents.
3. Approve the creation of the securities exchanges, their statutes, their by-laws, as well as any modifications thereto.
4. Authorized and oversee the operation of risk classification organizations, and to this end it will establish, the general provision of the requirements for constitution and operation.
5. Authorize, inspect, and oversee the operation of the central securities depositories, as well as authorize and oversee the compensation, centralized information, and other systems that would tend to facilitate operations or perfect the securities market.
6. Authorize the establishment and operation of investment corporations, as well as the type of securities that they may transact.
7. Authorize the operation of open capital corporations.

Regulatory Powers:

With the promulgation of the Law Regulating the Securities Market, the National Securities Commission received the power to approve the regulations issued by the respective securities exchanges and their modifications, as well as the power to issue norms of a more general character but of strict compliance for securities exchanges, exchange intermediaries, and for other market participants. In addition, the Commission is empowered to directly modify the regulations adopted by the securities exchanges and that have been previously approved by them. Similarly, the National Securities Commission is empowered to establish the regulations for its own operation and organization.

Oversight Powers:

The National Securities Commission is responsible for overseeing compliance and observance of the legal ordinances by the exchange market participants, and of suspending or canceling their authorization, when it ascertains that said ordinances have been breached. In consequence, it is the Commission's responsibility to oversee that all the exchange market participants comply with all established requirements, general provisions, regulations, and norms. The following clarification should be made, that in spite of these general attributes born by this entity, direct oversight of exchange operations, the Exchanges Seats, and the Exchange Brokers, should be carried out primarily by the respective Securities Exchange.

In spite of the foregoing, the Commission reserves its faculties and may even intervene ex officio, or request that the respective exchange proceed to investigate a specific case when it considers that there has been some irregularity. In a similar manner, the Commission has the duty of acting as statutory auditor for the securities exchanges and of overseeing that the latter comply with the legal ordinances, and that furthermore, they respect their own internal regulations, as well as carry out their own oversight duties as statutory auditors in an efficient manner with regard to those holding Exchange Seat concessions and with regard to their exchange brokers.

Disciplinary Powers:

The Commission's disciplinary powers are a derivative of its role as statutory auditor, which consists of the power delegate to the it, after carrying out the administrative investigation process, to apply penalties to the intermediaries of the rest of the participants of the securities exchange, in those cases where it can be proven that in effect, there was a breach of the standing legal or regulatory norms.The following are among the sanctions that the Commission may apply: With regard to the securities exchange:


1. Monetary fines
2. Destitution of the directors or administrators
3. Cancellation of the authorization for operation
With regard to the intermediaries on the securities market:

4. Suspend or eliminate their permit to operate. With regard to those entities effecting a public offering of their securities or other similar instruments:
   
   
   • Suspend or eliminate their authorization to effect a public offering of their securities or other similar instruments.
   • Order the immediate suspension of the advertising or publicity of the physical or corporate persons effecting a public offering of securities or intermediation services, when these may be contrary to the regulations dictated by the Commissions or when the latter were to consider them to be misleading, or they were to affirm or provide data that were not true.

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