New Open Circulation System Enables MSMEs to Issue Electronic Credit Invoices

By issuance of Communique “A” 7219, the Argentine Central Bank (BCRA, for its Spanish acronym) announced how this new system for over-the-counter trading of invoices will be implemented. This alternative completes the invoice trading regime; because, to date, invoices could only be traded in the public offering environment via deposit in a Depository Agent as established by Argentine Securities and Exchange Commission Resolution No. 780 and amended by Resolution No. 850.

Upon issuing their invoice, Micro, Small, and Medium Enterprises (MSMEs) may choose between transmission to the stock exchange trading system or the Open Circulation System. The debtor company's express choice, whether buyer, lessee or borrower, must be registered at the time of issuing the invoice, by express or tacit acceptance that the invoice be transmitted either to the Open Circulation System or to a Depository Agent.

Thus, the Communique incorporates, under point 3.5., the BCRA’s operating rules on “National Payment System - Checks and other clearing instruments” for the implementation of the system. The Open Circulation System’s features as outlined in the regulation are as follows:

• • It will make expressly or tacitly accepted and not fully paid invoices available  whose issuer had opted in to the “MSME Electronic Credit Invoices Registry” administrated by the Argentine Tax Authority to transfer them to any of these systems.
  • Its function will be to record invoice entry, transmission to third parties, assignment, endorsement, payment, and other updates.
  • It will be administrated and operated by Compensadora Electrónica S.A. Its administration and operation may be exclusive or shared.
  • The administrators, as well as those responsible for its clearing and settlement system, must be Financial Market Infrastructures. Therefore, the BCRA rules on “Principles for Financial Market Infrastructures” will apply. Additionally, for their operation, they must be expressly authorized by the BCRA for such purposes.
  • Their use, and successive transmissions performed through them, shall be free of charge, and entities providing the service may not charge any commission or fee, except as otherwise expressly authorized by the regulations.

On the other hand, the Communique establishes two well-defined roles for the operation of the Open Circulation System:

• • Collection: It will be an exclusive and mandatory role of the financial entities, which must participate in the process of clearing the invoices.
     
• • Management: Entities rendering Management Service for Electronic Checks (ECHEQs) must also render the invoice management service.

Finally, if the invoices entered into the Open Circulation System are not paid when due, at the request of the beneficiary or legitimate holder of the invoice, financial entities will have to issue a voucher that allows the holder to file legal actions.