Central Bank of Uruguay (CBU) issued Circular No.2.120 on August 15 2012 which mandated that each purchase of certain securities by a non-resident investor is subject to an extra funding requirement in Uruguayan Pesos (UYU) representing 40% of the face value of the securities acquired.

According to Clearstream, there remains no official list of impacted securities. Customers are therefore advised to get confirmation from their local broker or trade counterparty as to whether or not a concerned security is subject to the circular.

New custodians holding treasury bills in Uruguayan pesos and in Uruguayan index units on behalf of non-resident investors must also deposit a cash reserve of 30% of each face amount, says Santiago Ponce de León, relationship manager at Itaú Unibanco.

Also noteworthy for foreign investors is that the CBU is the regulator and has supervisory responsibilities. Since there is no CSD in the local market, CBU provides book-entry settlement and centralised safekeeping for dematerialised state debt issues.