Uruguay: Immobilisation of funds for investment : update

21.06.2013

Further information is now available with regard to Central Bank of Uruguay Resolution D-147-2013 implementing the immobilisation of non-residents’ funds for investment in government securities.

This is further to our Marketflash M13028, dated 13 June 2013.

Scope of the Resolution

The new measures adopted by the Central Bank of Uruguay impact:

  • All securities issued by the Central Bank of Uruguay and the State of Uruguay in Uruguayan Pesos (UYU) and Uruguayan Index Units;
  • All custody accounts of non-residents (including the account of Clearstream Banking1 with its local agent in Uruguay.)

Resolution D-147-2013 does not concern securities issued in USD but the Central Bank has not published an official list of affected securities. To ascertain whether a specific security is affected, customers should consult their local broker or trade counterparty.

Effective date

Resolution D-147-2013, issued on 7 June 2013, establishes that it will be effective as of 1 August 2013. Any purchase of the above-mentioned securities on/after 7 June 2013 will be subject to an extra funding requirement in Uruguayan Pesos (UYU) representing 50% of the face value of the security, to be placed on 1 August 2013.

Note: Positions held or acquired by non-resident investors before 7 June 2013 will not be subject to this cash reserve requirement.

According to Circular 2.120 issued in August 2012 (requiring 40% extra funding for Central Bank securities) and currently applicable, a similar settlement process will take place further to Resolution D-147-2013. A transaction will only settle on the local market when such extra funds have been received and frozen on a Central Bank account. The extra funds (which will yield no interest while frozen) will be unfrozen and made available again to the remitting party when the security is sold.

Impact

With immediate effect, Clearstream Banking will not accept any new securities or any additional balance for existing CBL-eligible securities that are within the scope of Resolution D-147-2013.

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

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1. Clearstream Banking refers to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Register of Commerce and Companies under number B-9248 (CBL).

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.