Compliance Report ISSA Recommendations 2000

ISSA - International Securtities Services Association

Compliance to the ISSA Recommendations 2000

Market: Chile

Status: September 21, 2001

Recommendation 1
Recommendation 2
Recommendation 3
Recommendation 4

Recommendation 5
Recommendation 6
Recommendation 7
Recommendation 8

Market selection

Recommendation 8

Local laws and regulations should ensure that there is segregation of client assets from the principal assets of their custodian; and no possible claim on client assets in the event of custodian bankruptcy or a similar event. Regulators and markets, to further improve investor protection, should work:

to ensure clarity on the applicable law on cross border transactions
to seek international agreement on a legally enforceable definition of finality in a securities transaction
to ensure that local law fully protects the rights of beneficial owners
to strengthen securities laws both to secure the rights of the pledgee and the protection accorded to client assets held in Securities Systems.

1. Under local rules and regulations, what are the segregation requirements for keeping client assets and custodian assets in the depository? Under local rules, DCV must maintain in absolutely different accounts their own securities, from their clients securities. The same rule applies to custodians that maintain customers' securities.

2. How are clients' assets protected in the event of insolvency of a custodian or depository? In the event of insolvency of DCV, this will not affect the client assets. There are legal regulations that protect them.

3. Does local law recognise the existence of beneficial owners who may differ from the legal owner of a security? Yes, the local law allows that the legal owner could be different from the beneficial owner.

4. Does local law clearly define the point of time when a settlement, both for the security and the cash involved, achieves finality and thus cannot be unwound? No, this matter is solved by the internal regulation of the exchanges and DCV.

5. Does a pledgee have an absolute right to realise their security at all times? Yes, they have always the right to realise their securities.

6. Does the depository have loss sharing provisions in its rules, and how would these be applied? No, DCV does not have loss sharing provisions in its rules.

1.	Under local rules and regulations, what are the segregation requirements for keeping client assets and custodian assets in the depository?	Under local rules, DCV must maintain in absolutely different accounts their own securities, from their clients securities. The same rule applies to custodians that maintain customers' securities.
2.	How are clients' assets protected in the event of insolvency of a custodian or depository?	In the event of insolvency of DCV, this will not affect the client assets. There are legal regulations that protect them.
3.	Does local law recognise the existence of beneficial owners who may differ from the legal owner of a security?	Yes, the local law allows that the legal owner could be different from the beneficial owner.
4.	Does local law clearly define the point of time when a settlement, both for the security and the cash involved, achieves finality and thus cannot be unwound?	No, this matter is solved by the internal regulation of the exchanges and DCV.
5.	Does a pledgee have an absolute right to realise their security at all times?	Yes, they have always the right to realise their securities.
6.	Does the depository have loss sharing provisions in its rules, and how would these be applied?	No, DCV does not have loss sharing provisions in its rules.