BCB Resolution No. 175 — Regulates Central Bank of Brazil rediscount in intraday and one-business-day repurchase agreement mode with STR and SPI institutions

RESOLUTION
BCB NO. 175, OF DECEMBER 15, 2021

Regulates the Central Bank of Brazil's rediscount in the intraday and one-business-day repurchase agreement mode, with financial institutions holding Reserve Bank Accounts and Clearing Accounts, within the scope of the Reserve Transfer System (STR), and the rediscount line for financial institutions holding Instant Payment Accounts (PI Account), within the scope of the Instant Payment System (SPI).

The Collegiate Board of the Central Bank of Brazil, in a session held on December 14, 2021, based on art. 10, item V, of Law No. 4.595, of December 31, 1964, art. 28, § 2, of Complementary Law No. 101, of May 4, 2000, and Law No. 10.214, of March 27, 2001,

R E S O L V E S:

Art. 1º This Resolution regulates the Central Bank of Brazil's rediscount in the intraday and one-business-day repurchase agreement mode of federal public securities registered in the Special Settlement and Custody System (Selic), with financial institutions holding Reserve Bank Accounts and Clearing Accounts, within the scope of the Reserve Transfer System (STR), and the rediscount line for financial institutions holding Instant Payment Accounts (PI Account), within the scope of the Instant Payment System (SPI), in accordance with the terms and conditions of the attached Regulation.

Art. 2º The Department of Banking Operations and Payment Systems (Deban) and the Open Market Operations Department (Demab) are authorized to jointly disclose the characteristics of the federal public securities that will be accepted in the operations referred to in art. 1º, to establish a calculation methodology for determining the resale price and the financial value of the operations, as well as to issue norms and adopt measures necessary for the execution of the provisions of this Resolution, including establishing hours for the execution and payment of the operations.

Art. 3º Circular No. 3.105, of April 5, 2002, shall enter into force with the following alteration:

“Art.
1º ...........…………………………………………………………………………………………….

Sole
Paragraph. The regulation referred to in the main text does not apply to the Central Bank's Rediscount in the intraday and one-business-day repurchase agreement mode of federal public securities registered in the Special Settlement and Custody System (Selic), with financial institutions holding Reserve Bank Accounts and Clearing Accounts, within the scope of the Reserve Transfer System (STR), and the rediscount line for financial institutions holding Instant Payment Accounts (PI Account), within the scope of the Instant Payment System (SPI).” (NR)

Art. 4º The Regulation attached to Circular No. 3.105, of 2002, shall enter into force with the following alterations:

“Art. 1º Access to the Central Bank's Rediscount referred to in this regulation is available to commercial banks, savings banks, and investment and multiple banks holding Reserve Bank Accounts.” (NR)

“Art. 2º Central Bank Rediscount operations are granted, at the exclusive discretion of the Central Bank of Brazil, upon request by the interested financial institution.” (NR)

“Art.
6º ............................................................................................................

.........................................................................................................................

II - resale price: purchase price added by a value corresponding to the application, on the purchase price and for the duration of the operation, of the rate obtained by the composition of the Selic Rate, defined according to current regulation, calculated for each business day of the operation period, with a rate fixed by the Collegiate Board of the Central Bank of Brazil and valid on the date of the operation's execution.

................................................................................................................”
(NR)

Art.
5º Circular No. 3.631, of February 21, 2013, shall enter into force with the following alteration:

“Art.
1º The following percentages of increase to the Selic Rate are fixed for the Central Bank Rediscount operations referred to in items III and IV of art. 4º of the Regulation attached to Circular No. 3.105, of April 5, 2002:

................................................................................................................”
(NR)

Art. 6º The following are revoked:

I - arts. 1º, 2º, 3º, 4º, 5º and 6º of Resolution No. 4.002, of August 25, 2011;

II - the following provisions of Resolution No. 4.191, of February 28, 2013:

a) arts. 1º, 2º, 3º and 4º; and

b) arts. 6º and 7º;

III - Resolution No. 4.241, of June 28, 2013;

IV - Resolution No. 4.781, of February 20, 2020;

V - the following provisions of the Regulation attached to Circular No. 3.105, of 2002:

a) art. 1º, sole paragraph;

b) art. 4º, items I and II;

c) art. 4º, § 1º;

d) art. 5º, sole paragraph;

e) art. 6º, item II, sub-items “a” and “b”; and

f) arts. 11 and 11-A;

VI - art. 1º, item I, of Circular No. 3.631, of 2013; and

VII - BCB Resolution No. 20, of October 1, 2020.

Art. 7º This Resolution enters into force on January 3, 2022.

Bruno Serra Fernandes

Director of Monetary Policy

REGULATION ATTACHED TO BCB RESOLUTION NO. 175, OF DECEMBER 15, 2021

CHAPTER I

DEFINITIONS

Art. 1º For the purposes of this Regulation, the following expressions and terms are defined as follows:

I - rediscount operation: purchase and sale of federal public securities registered in the Special Settlement and Custody System (Selic), in which the Central Bank of Brazil appears as buyer, and the financial institution as seller, with the assumption, respectively, of the commitments to resell and repurchase;

II - rediscount within the scope of the Reserve Transfer System (STR): rediscount operation settled in the STR;

III - rediscount within the scope of the Instant Payment System (SPI): rediscount operation settled in the SPI;

IV - intraday operation: repurchase agreement in which the purchase and the corresponding resale occur on the same day they were contracted; and

V - one-business-day operation: repurchase agreement in which the purchase and the corresponding resale occur with a difference of one business day from the day they were contracted.

CHAPTER II

ACCESS AND MODALITIES

Art. 2º Access to rediscount within the scope of the STR in the intraday and one-business-day repurchase agreement mode is available to financial institutions holding Reserve Bank Accounts or Clearing Accounts.

Art. 3º Access to rediscount within the scope of the SPI is available to financial institutions holding Instant Payment Accounts (PI Account), in the repurchase agreement mode.

Art. 4º Repurchase agreement, for the purposes of the provisions of this Regulation, is the purchase of a security by the Central Bank of Brazil, with a commitment to resell, conjugated with the sale of a security by the financial institution, with a commitment to repurchase.

Art. 5º The rediscount operations referred to in this Regulation shall be carried out through repurchase agreement operations of federal public securities registered in Selic.

Art. 6º The rediscount operations referred to in this Regulation have the following objectives:

I - to meet liquidity needs during the day or resulting from very short-term mismatches in the cash flow of the institution participating in the STR; or

II - to provide liquidity, outside the regular operating hours of the STR, to be used for the course of transfers between clients within the scope of the SPI.

Art. 7º The operations referred to in this Regulation are granted, at the exclusive discretion of the Central Bank of Brazil, upon request by the interested financial institution, except for the automatic grant associated with the settlement of an intraday rediscount operation within the scope of the STR, not settled by the end of the STR's operating hours.

CHAPTER III

FEDERAL PUBLIC SECURITIES

Art. 8º Federal public securities registered in Selic that are part of the institution's own custody position and are not subject to trading restrictions may be the object of the rediscount operations referred to in this Regulation.

§ 1º The Central Bank of Brazil will disclose the federal public securities that will be accepted in the operations referred to in this Regulation.

§ 2º Securities with a redemption payment date coinciding with the maturity of the rediscount operation within the scope of the STR will not be accepted.

§ 3º Securities with redemption, interest, or amortization payments coinciding with the maturity of the rediscount operation within the scope of the SPI will not be accepted.

Art. 9º It is admissible, in rediscount operations within the scope of the STR, in accordance with the Selic Regulation, to carry out operations with the same federal public security, in the following association scenarios:

I - purchase operation by the Central Bank of Brazil, with intraday resale commitment, associated with:

a) definitive purchase or with resale commitment;

b) release, by a clearinghouse or compensation and settlement service provider, of a security previously delivered as collateral by a financial institution, conditioned on the settlement, through the STR, of an indirect transfer order of equal value, issued by the same financial institution in favor of the clearinghouse or compensation and settlement service provider; or

c) multilateral creditor result in securities, arising from negotiations occurring in a clearinghouse or compensation and settlement service provider;

II - payment of the operation, to the Central Bank of Brazil, associated with:

a) definitive sale or with repurchase commitment;

b) multilateral financial creditor result, arising from security negotiations occurring in a clearinghouse or compensation and settlement service provider;

III - Central Bank of Brazil rediscount operation, except intraday, with the payment of a Central Bank of Brazil rediscount operation of the same modality.

Sole Paragraph. The association provided for in item III is not permitted when the security subject to the operation has redemption on the following business day.

CHAPTER IV

TRADING PARAMETERS

Art. 10. In the operations referred to in this Regulation, the following trading parameters shall be observed:

I - purchase price: corresponding to the unit price (PU) of the security for the date of contracting, disclosed daily by the Central Bank of Brazil;

II - resale price:

a) in the intraday operation within the scope of the STR: equal to the respective purchase price;

b) in the one-business-day operation within the scope of the STR: corresponding to the purchase price added by a value corresponding to the application, on the purchase price, of the rate obtained by the composition of the Selic Rate, defined according to current regulation, calculated for the day of the operation's contracting, with an increase of 0.35% a.a. (thirty-five hundredths of a percent per year); and

c) in the rediscount operation within the scope of the SPI: corresponding to the purchase price added by a value corresponding to the application, on the purchase price, of a percentage equivalent to 90% (ninety percent) of the Selic Rate, defined according to current regulation, calculated for the day of the operation's contracting, and valid on the date of the operation's execution.

CHAPTER V

OPERATIONAL PROCEDURES

Section I

Rediscount operations within the scope of the STR

Art. 11. Intraday and one-business-day operations shall be carried out through specific messages contained in the SFN Services Catalog.

Art. 12. The operations referred to in this Section whose repurchase commitment is not settled by the financial institution by the end of the STR's operating hours on the maturity date of the commitment shall be considered in default.

§ 1º The securities subject to the defaulted operations, in accordance with this article, shall be incorporated into the Central Bank of Brazil's own portfolio and sold at auction.

§ 2º Any negative result for the Central Bank of Brazil in the sale of these securities, determined at auction, shall be reimbursed by the counterparty institution of the defaulted operation.

Art. 13. The intraday repurchase agreement operation not settled by the end of the STR's operating hours shall be automatically settled by the Central Bank of Brazil, on the same day, associated with the simultaneous grant of a new operation of the same nature and with a one-business-day term.

§ 1º In the event of impediment to the effective execution of the automatic settlement referred to in the main text, the provisions of art. 12 of this Regulation shall apply.

§ 2º The provisions of the main text do not apply to intraday operations contracted on the business day immediately preceding the redemption payment of the security subject to the operation, in which case the intraday operation not settled by the end of the STR's operating hours shall be considered in default, in accordance with art. 12 of this Regulation.

Section II

Rediscount operations within the scope of the SPI

Art. 14. The registration of the request for the operations referred to in this Section must be carried out through a specific message from the SFN Services Catalog sent by the financial institution to Selic during the regular operating hours of the STR for the settlement of fund transfer orders or during the additional window for deposits in the PI Account, in accordance with the STR Regulation.

§ 1º The regular operating hours of the STR, referred to in the main text, are ordinarily, on days considered business days for operations practiced in the financial market, from 6:30 a.m. to 6:30 p.m. (Brasília time), and on December 24, if a business day for operations carried out in the financial market, and on the last business day of the year, from 6:30 a.m. to 1:00 p.m.

§ 2º The additional window for deposits in the PI Account begins after the closing of the regular operating hours of the STR, referred to in § 1º of this article, and ends, ordinarily, at 7:00 p.m., and on December 24, if a business day for operations carried out in the financial market, and on the last business day of the year, at 1:30 p.m.

§ 3º When extraordinary facts so justify, observed the provisions of the STR Regulation, the Central Bank of Brazil may, with effect for a specific business day, alter the opening and closing hours of the regular operating hours of the STR, referred to in § 1º, with the respective extension of the additional window, referred to in § 2º of this article.

§ 4º The registration of the request for the committed operation sent during the regular operating hours of the STR, meeting the business rules, shall be retained in Selic, without verification or transfer of custody of the securities and financial resources, and shall be settled exclusively during the additional window for deposits in the PI Account, after the closing of the regular operating hours of the STR.

§ 5º While retained, the registration of the request for the committed operation may be canceled by the financial institution, by sending a message from the SFN Services Catalog to Selic, during the regular operating hours of the STR.

§ 6º The operation whose request registration is sent during the additional window for deposits in the PI Account shall be immediately settled.

Art. 15. The contracting of the operation occurs at the moment of its settlement, during the additional window for deposits in the PI Account, at which time the existence of securities in the institution's custody is verified and the financial movement and the respective transfer of the securities to the custody of the Central Bank of Brazil are effected.

Sole Paragraph. If the financial institution does not have sufficient securities to settle the committed operation, there will be no contracting and Selic will reject the operation, with no possibility of pending due to insufficient securities.

Art. 16. The repurchase operation by the financial institution must occur on the business day following the contracting of the operation, during the regular operating hours of the STR for the settlement of fund transfer orders, referred to in art. 14, § 1º, of this Regulation, by sending a specific message from the SFN Services Catalog, by the financial institution to Selic.

§ 1º The repurchase operation must occur at the resale price referred to in art. 10, item II, sub-item “c”, of this Regulation.

§ 2º It is admitted to honor the repurchase commitment in installments, observed the term established in the main text.

§ 3º Selic will process the repurchase operation when received and will forward it to the STR so that it commands the financial movement to the SPI.

§ 4º If the financial institution does not have sufficient financial resources in its PI Account to support the debit of the repurchase operation, the command will be immediately rejected, with no possibility of pending due to insufficient funds.

Art. 17. The rediscount operation referred to in this Section whose repurchase commitment is not settled by the financial institution within the term and conditions established in art. 16 shall be considered in default.

§ 1º The securities subject to the defaulted operations, in accordance with this article, shall be incorporated into the Central Bank of Brazil's own portfolio and sold at auction.

§ 2º Any negative result for the Central Bank of Brazil in the sale of these securities, determined at auction, shall be reimbursed by the counterparty institution of the defaulted operation.

Art. 18. The rediscount operation referred to in this Section is not subject to any association with other operations registered in Selic, which includes the impossibility of repurchase associated with the simultaneous contracting of a new operation.

CHAPTER VI

FINANCIAL SETTLEMENT AND ACCOUNT MOVEMENT

Art. 19. The financial settlement and the movement in custody accounts of the assets subject to the operations referred to in this Regulation are subject to the rules and operational procedures provided for in the regulations of the respective settlement systems.

Art. 20. The financial movement related to the operations referred to in this Regulation is carried out:

I - in the Reserve Bank Account or in the Clearing Account maintained by the financial institution at the Central Bank of Brazil in rediscount operations within the scope of the STR;

II - in the PI Account maintained by the financial institution at the Central Bank of Brazil in rediscount operations within the scope of the SPI.

Art. 21. The financial movement in the Reserve Bank Account, the Clearing Account, or the PI Account of the institution characterizes the definitive settlement of the purchase, sale, repurchase, and resale obligations of the operations referred to in this Regulation.

Art. 22. The movement in custody accounts of the securities subject to the operation and the corresponding financial movement are mutually conditioned.