BCB Resolution No. 358 on Broker-Dealer Counterparty Activity and Segregation of Third-Party Asset Management

Resolution No. 358

BCB RESOLUTION NO.
358, OF NOVEMBER 30, 2023

Provides for the performance of securities broker-dealers and securities distribution companies as counterparties in third-party portfolio operations administered by them and for the segregation of the third-party resource administration activity in these institutions.

The Collegiate Board of the Central Bank of Brazil, in a session held on November 14, 2023, based on art. 9º-A of Law No. 4,728, of July 14, 1965, and having in view the provisions of art. 2º, items III and IV, of the same law,

RESOLVES:

Art. 1º This Resolution provides for the performance of securities broker-dealers and securities distribution companies as counterparties in third-party portfolio operations administered by them and for the segregation of the third-party resource administration activity in these institutions.

Art. 2º For the purposes of this Resolution, the activity of administering third-party resources is the professional exercise, for third-party financial assets and securities, of at least one of the following categories of the securities portfolio administration service, defined in the norms of the Securities and Exchange Commission (Comissão de Valores Mobiliários):

I - fiduciary administration; and

II - resource management.

Art. 3º The institutions mentioned in art. 1º, in exercising the activity of administering third-party resources, shall not act as counterparties, directly or indirectly, in portfolio operations with financial assets and securities administered by them, except in the following cases:

I - when it concerns individual portfolios and there is prior and written authorization from the respective holder; or

II - when they do not demonstrably have discretionary power over the said portfolio and do not have prior knowledge of the operation.

Sole Paragraph. The provisions of this article also apply to operations carried out on behalf of and in the interest of natural persons, administrators, controllers, and companies linked to the aforementioned institutions.

Art. 4º The activities of fiduciary administration and resource management referred to in art. 2º must be segregated from the other activities carried out by the institutions mentioned in art. 1º.

Art. 5º The institutions mentioned in art. 1º, in exercising the activity of fiduciary administration and/or resource management, must designate, for each activity they exercise, a member of the board of directors or, if applicable, an administrator, responsible for civil, criminal, and administrative liability for that activity, as well as for the provision of information related to it, except as provided in § 1º of art. 6º.

§ 1º The member of the board of directors or administrator referred to in the caput must be authorized to exercise the activity of securities portfolio administrator by the Securities and Exchange Commission.

§ 2º The member of the board of directors or administrator referred to in the caput cannot respond cumulatively for the activity of fiduciary administration and resource management.

§ 3º The member of the board of directors or administrator responsible for the resource management activity must not have any link with the other activities of the institution, except as provided in § 2º of art. 6º.

Art. 6º It is permitted to the institutions mentioned in art. 1º to segregate the resource management activity referred to in art. 4º through the hiring of a company duly authorized to provide services in this category.

§ 1º In the event of hiring a financial institution or another institution authorized to operate by the Central Bank of Brazil that is linked, the designation of a director or administrator to respond for resource management is necessary only with respect to the contracted institution, and the designation must fall upon a director or administrator who does not have any link with the activities of the contracting institution.

§ 2º In the event of hiring a non-linked company, the contracting institution may designate a director or administrator responsible for resource management who has a link with other activities of the institution, except those related to fiduciary administration and the administration of the institution's own resources.

Art. 7º For the purposes of this Resolution, institutions and companies are considered linked when:

I - one participates with 10% (ten percent) or more of the capital of the other, directly or indirectly;

II - administrators or their respective spouses and relatives up to the second degree of one participate, jointly or individually, with 10% (ten percent) or more of the capital of the other, directly or indirectly;

III - shareholders with 10% (ten percent) or more of the capital of one participate with 10% (ten percent) or more of the capital of the other, directly or indirectly; or

IV - they have a common administrator.

Art. 8º The Central Bank of Brazil will adopt, within the scope of its legal attributions, the necessary measures for the execution of the provisions of this Resolution.

Art. 9º This Resolution enters into force on January 2, 2024.

OTÁVIO RIBEIRO DAMASO
Director of Regulation