CHILE Law and Practice Contributed by: Felipe Díaz Toro, Victor Riadi and Ignacio Ruiz Rodríguez, EDN Abogados
In recent developments, regarding Investment Funds, on 23 December 2024, the Financial Mar - ket Commission (CMF) published General Rule No 526 (NCG 526), replacing NCG No 157 of 2003. This new regulation establishes updated minimum equity and guarantee requirements for fund managers. It introduces differentiated crite - ria based on the type and volume of operations conducted by administrators, dividing them into two categories: • Block 1: Managers with fewer than 50 non- institutional clients and without the charac - teristics of Block 2 are exempt from minimum equity requirements. • Block 2: Managers with more than 50 cli - ents, at least one institutional client, or those exceeding specific thresholds for assets under management or income are required to maintain a minimum equity of 5,000 UF or 3% of their risk-weighted assets, in addition to adjustable guarantees for the benefit of the funds they manage. The regulation introduces a more advanced methodology for calculating risk-weighted assets, accounting for operational, credit, and market risks, including specific classifications for crypto-assets. The implementation of NCG 526 will be mandatory as of 1 January 2026, while provisions related to risk management will come into effect on 1 July 2027. Managers must assess their classification and adapt their opera - tions to meet these new regulatory standards. On the same date, the CMF issued General Rule No 527 (NCG 527), introducing significant chang - es to NCG No 507 on corporate governance and risk management, as well as NCG No 468, which governs the authorisation of fund managers’ func - tions. This regulation includes a new section on the risk management quality assessment, allow -
ing the CMF to evaluate the effectiveness of fund managers’ controls, policies, and procedures. The assessment considers risks such as credit, market, liquidity, operational, money laundering, and conduct. Fund managers will be rated on a global scale based on their compliance, identify - ing areas for improvement in governance and risk management. Additionally, NCG 527 mandates an annual risk management self-assessment, which must be approved by the board of directors and submit - ted to the CMF within 30 days after the end of each financial year. This self-assessment must address compliance with regulations related to organisation, internal controls, and risk mitiga - tion. NCG 527 applies immediately, except for the self-assessment provisions, which will become mandatory as of 1 July 2027. On a broader level, an important development affecting the fund industry will be the reform to the Pension Fund System approved by Chile’s congress in late January 2025. This is expected to introduce significant changes to the regulatory framework governing pension fund investments, including an important increase to the system’s assets under management, fewer regulatory and capital restraints for pension fund managers and a reward and punishment system for performance against a benchmark, both which should open the market for new players, governmental enti - ties in supporting roles to private fund managers, among others. Additionally, the reform includes stricter governance requirements and enhanced transparency measures to ensure the prudent management of pension fund resources.
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