Uruguay: Central Bank of Uruguay Circular No. 2.120 : update

This Marketflash is intended to provide customers with general information gathered from different sources that are generally believed to be reliable. Clearstream Banking S.A. does not guarantee the accuracy or completeness of the information and does not undertake to keep it up to date. Use of the information made available in this Marketflash is at the customer’s own risk and Clearstream Banking S.A., its subsidiaries and affiliates expressly disclaim any liability for any errors or omissions reflected herein. The information in this Marketflash does not constitute legal or tax advice.

Further to our Marketflash M12041, dated 20 August 2012, informing customers that the Central Bank of Uruguay had issued Circular No. 2.120 (the “Circular”), which may impact securities transactions in Uruguay, and having undertaken additional research with local contacts, we hereby provide the following information:

  • It is our understanding that the new measures adopted by the Central Bank of Uruguay are meant to discourage non-residents from short-term investment in Central Bank securities with a maturity of less than two years (the “Securities”).
  • To date, the Central Bank of Uruguay has published no official list of Securities. Pending publication of such a list, we recommend that customers seek confirmation from their local broker or trade counterparty as to whether a concerned security is subject to the Circular or not.
  • The Circular provides that each purchase of Securities by a non-resident investor effected on or after 16 August 2012 will be subject to an extra funding requirement in Uruguayan Pesos (UYU) representing 40% of the face value of the Securities acquired.

    A transaction will only settle on the local market when these extra funds have been received and frozen on a Central Bank account.

    The extra funds will be unfrozen and made available again to the remitting party when the Securities are sold. (For a partial sale, the extra funds will be unfrozen on a pro-rata basis.)

    The frozen funds will yield no interest.
  • Positions held or acquired by non-resident investors in Securities on or before 15 August 2012 are not subject to the Circular.

In light of these developments, we have decided, with immediate effect, not to accept any new securities subject to the Circular or any additional balance for existing securities eligible in Clearstream Banking that are in the scope of the Circular.

Note: Existing deposits remain eligible for internal settlement or external delivery settlement purposes.

We therefore request customers, until further notice, not to instruct any receipt (free of or against payment) in securities subject to the Circular.