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Argentina approves private banking regulation, creating new rival offshore hub

Argentina approves private banking regulation, creating new rival offshore hub

Argentina’s market regulator has approved the creation of the global investment advisor role, marking the first step in the country’s plan to launch and regulate its own private banking industry.

The approval by the Comisión Nacional de Valores (CNV) of the Asesor Global de Inversiones (AGI) role has been in the works for a number of months, with the CNV having been in regular contact with local players and foreign regulators during its development.

In a statement, the regulator said its goal was to ‘improve the competition between local actors, classify the role of each market agent, increase transparency for investors and reduce potential conflicts of interest’.

The investment advisors will be able to advise clients who have money both on and offshore, will operate under brokerage and advisory rules and be able to sign agreements with local and international broker-dealers, it said.

Until this regulation, the role of investment advisor was not recognized by the Argentina regulator, forcing local advisors with clients investing offshore to conduct their business in neighboring hubs such as Montevideo and clients wanting to invest abroad using their offshore cash to use spots like Miami.

The advent of this new regulation is a continuation of president Mauricio Macri’s push to open up Argentina’s financial and wealth market and comes on the back of a successful tax amnesty program that saw $116 billion of offshore wealth declared to the regulator.

Rival hub

The news has been welcomed by local investors who have long been pushing for regulation to allow them to run their clients offshore from their own country. A number of groups, like BTG Pactual and LarrainVial, had also been anticipating the announcement by preparing to launch local brokerage firms.

‘The new role of AGI is the initial kick-off for the development of Argentina’s private banking market,’ Mariano Huidobro of Insigneo told Citywire Americas, following the announcement.

‘This will create tremendous competition between agents with a local presence and those who continue to advise their clients from foreign hubs such as Montevideo, Miami, New York, Switzerland, etc.’

The Buenos Aires-based advisor said that while the new reform would create new challenges for the local industry, optimism was high surrounding its growth potential.

‘We are betting on repeating the experience of other markets in Latin America as was the case in Chile where local agents, with deep knowledge of customer needs, had strong growth in assets under management.’

He added that local agents have until February 28 next year to submit the paperwork to be granted the AIG title.

‘Those who take advantage of this opportunity and work together with customers, their lawyers, accountants and tax agents would have a very important competitive advantage,' he said. 

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