Registering of Offshore Sellers Is Opposed
September 13, 1999
BUENOS AIRES - Fernando Sanchez Alcazar, senior vice-president for Latin America of Fidelity Investments, said in a recent interview that his company strongly opposes a proposal by the Argentine SEC to register the sellers of some offshore funds.
"We are absolutely opposed to a system of registering select entities that can sell offshore funds with competitive advantages over the rest of the Argentine industry," said Sanchez Alcazar.
The Argentine SEC is currently considering the proposal.
"Our idea has always been to wait for the market to be deregulated to create a local fund management company, and to enjoy our principal expertise, which lies in asset selection," Sanchez Alcazar said. He also disclosed that, pending approval of a separate bill that would permit the purchase of foreign instruments of up to 100 percent of fund portfolios (MFMN 5/17/99), Fidelity will compete on equal footing with the rest of the local mutual fund companies. Sanchez Alcazar implied that he fully expects the initiative to pass.
"We met with the sub-secretary of Banks and Insurance, Alejandro Quiroga Lpez (the functionary of the Economy Ministry that outlined the new regulation) and we expressed our agreement with the initiative and we are convinced that it will help give momentum to the industry," he said.
Another area of business that Fidelity closely follows is that of the private pension fund companies (AFJPs), to which, because of regulatory concerns, it has not been able to offer its funds. The biggest difficulty has to do with the lack of a self-regulated market from which a transparent net asset value could be determined.
To solve this problem, executives at Fidelity say they have already proposed to the AFJP Superintendent of Pension Funds and to the Argentine SEC, a pricing system that would allow a daily value to be determined that could replace the market quotation. They expect it to be approved after the close of the year.
The office that Sanchez Alcazar heads in Buenos Aires was reorganized in July, 1998 and his responsibilities have been extended from Chile and Brazil to all of Latin America. The company has a strong lead position in Chile, but for the moment it is limited to the institutional investment sector.
It does not surprise Fidelity that no Argentine mutual fund company has incorporated offshore funds into its portfolio, even after the clarification from the CNV permitting this mechanism.
"They are products that will arrive through successive approximations when the market is more mature," said Sanchez Alcazar.
Currently, in Argentina, the offshore funds of Fidelity are being sold without public offering to individual investors by means of private banking distributors such as the large foreign investment banks. This business is directly managed by the home office located in the United States.