BCB Resolution No. 75 — Governs the Bank of Brazil's operations in the secondary market for federal public bonds for monetary policy purposes

BCB RESOLUTION NO. 75, OF FEBRUARY 23, 2021

Governs the forms of action of the Central Bank of Brazil in the secondary market for federal public bonds for monetary policy purposes.

The Collegiate Board of the Central Bank of Brazil, in a session held on February 23, 2021, based on art. 164, § 2º, of the Federal Constitution, and art. 10, item XII, of Law No. 4.595, of December 31, 1964,

RESOLVES:

Art. 1. This Resolution governs the forms of action of the Central Bank of Brazil in the secondary market for federal public bonds for monetary policy purposes.

Art. 2. For the operations covered by this Resolution, eligible are federal public bonds registered in the Special Settlement and Custody System (Selic), free and clear of any liens or encumbrances.

Art. 3. The Central Bank of Brazil may carry out purchase and sale operations in the secondary market for federal public bonds in the following modalities:

I - purchase of bonds with a commitment to resell, jointly with a commitment to repurchase assumed by the selling institution, for settlement on a predetermined date, within a period of up to 360 (three hundred and sixty) days;

II - sale of bonds with a commitment to repurchase, jointly with a commitment to resell assumed by the buying institution, for settlement on a predetermined date, within a period of up to 360 (three hundred and sixty) days;

III - definitive purchase of bonds with a maturity of up to 3 (three) years; and

IV - definitive sale of bonds with a maturity of up to 3 (three) years.

§ 1º. The operations referred to in items I and II of the main text may be contracted:

I - with fixed or Selic rate-linked remuneration; and

II - with or without a free movement agreement for the bond.

§ 2º. The terms of the committed operations referred to in items I and II of the main text correspond to the period between the settlement date of the purchase or sale operation, inclusive, and the respective settlement date of the resale or repurchase commitment, exclusive, while the terms of the bonds referred to in items III and IV of the main text correspond to the period between the settlement date of the purchase or sale operation, inclusive, and the maturity date of the corresponding bond, exclusive.

§ 3º. The Central Bank of Brazil may carry out the operations indicated in the main text individually or in combination.

Art. 4. The Central Bank of Brazil will act in the secondary market for federal public bonds with institutions accredited to operate as dealers with the Open Market Operations Department (Demab) or through a public offering, in which all financial institutions registered in the Selic electronic Public Offering system (Ofpub) may participate.

§1º. In actions restricted to dealers with Demab, the Central Bank of Brazil will use the Selic electronic Offer to Dealers system (Ofdealers).

§2º. The financial institutions referred to in the main text may, in their operations with the Central Bank of Brazil, meet demands forwarded by other financial institutions, as well as by non-financial legal entities and by individuals.

§ 3º. In the impossibility of acting through an electronic system, at the discretion of the Central Bank of Brazil, other means may be used, such as the collection of proposals via recorded telephone call or via electronic mail (e-mail), digitally signed by the proposer, through a digital certificate issued by a certification authority of the Brazilian Public Key Infrastructure (ICP-Brasil).

Art. 5. Demab will disclose the specific conditions of each action covered by art. 4, including:

I - the type of operation;

II - the term of the operation;

III - the financial volume offered, when applicable;

IV - the type of remuneration, when applicable;

V - the characteristics of the bonds and quantities offered, when applicable;

VI - the deadline date and time for submission of proposals;

VII - the settlement date of the operation;

VIII - the form of submission of proposals;

IX - the price criterion for settlement of accepted proposals;

X - the limit on the number of proposals per institution; and

XI - the calculation methodology for the price of the repurchase or resale, when applicable.

Sole paragraph. The criteria and specific conditions of each action will be disclosed by Demab directly to dealer institutions or by public notice.

Art. 6. The rates for operations with public bonds covered by this Resolution will be defined through the holding of a competitive auction or will be previously established by the Central Bank of Brazil.

Art. 7. For the selection of winning proposals, among those received within the scope of the actions covered by art. 4, the conditions of market functioning will be considered, including the formation of the Selic rate, the supply and demand conditions for each bond, the trading prices, and the reference prices recognized by the financial market.

Sole paragraph. The Central Bank of Brazil may reject proposals made within the scope of the actions covered by art. 4, in whole or in part.

Art. 8. The settlement of the operations covered by this Resolution will be carried out exclusively in Selic, observing the delivery of the bond against payment in the Reserve Transfer System (STR).

§ 1º. For settlement purposes, the bond purchase operations by the Central Bank of Brazil with a repurchase commitment by the selling institution referred to in item I of the main text of art. 3º, carried out with a dealer institution, may be split by the dealer to third parties, provided that these are financial institutions participating in Selic.

§ 2º. The purchase or sale prices accepted by the Central Bank of Brazil in the settlement of the committed operations referred to, respectively, in items I and II of the main text of art. 3º may present a premium or discount relative to market prices, understood as the indicative prices that have broad acceptance as a reference in the national financial market, which will be disclosed daily on the Central Bank of Brazil's internet page or on the Selic portal.

Art. 9. In the event of default on the purchase and sale operations covered by art. 3º, attributable to the counterparty due to deficiency in payment or delivery of the bond, the operation will be cancelled by the Central Bank of Brazil.

Sole paragraph. In the event of cancellation of the operation, the counterparty will pay the Central Bank of Brazil a compensatory value corresponding to the application, on the financial value of the operation, for a period of 1 (one) business day, of the Selic rate, defined according to current regulation, calculated for the day established for the settlement of the said operation.

Art. 10. In the event of delay in the settlement of the repurchase commitment of the committed operation referred to in item I of the main text of art. 3º, attributable to the counterparty due to deficiency in payment, the counterparty will pay the Central Bank of Brazil a compensatory value corresponding to the application, on the financial value of the repurchase commitment, for the period between the day established for the settlement of the repurchase commitment and the day of payment of the compensatory value, of the Selic rate, defined according to current regulation, calculated for each business day of the period.

Sole paragraph. The compensation referred to in the main text does not exempt the counterparty from settling the repurchase commitment until the next business day after the initially established date for its settlement, with its financial value updated, for a period of 1 (one) business day, by the Selic rate, defined according to current regulation, calculated for the day established for the settlement of the said commitment.

Art. 11. In the event of delay in the settlement of the resale commitment of the committed operation referred to in item II of the main text of art. 3º, attributable to the counterparty due to deficiency in delivery of the bond, the counterparty will pay the Central Bank of Brazil a compensatory value corresponding to the application, on the financial value of the resale commitment, for the period between the day established for the settlement of the resale commitment and the day of payment of the compensatory value, of the Selic rate, defined according to current regulation, calculated for each business day of the period.

Sole paragraph. The compensation referred to in the main text does not exempt the counterparty from settling the resale commitment until the next business day after the initially established date for its settlement, with its financial value updated, for a period of 1 (one) business day, by the Selic rate, defined according to current regulation, calculated for the day established for the settlement of the said commitment.

Art. 12. In the event of deficiency in the settlement of the repurchase commitment in the manner and within the time limits provided for in the sole paragraph of art. 10, the Central Bank of Brazil will consider the operation in default and the bonds will be incorporated into its portfolio and sold at auction, with the counterparty subject to reimbursing any negative result for the Central Bank of Brazil in the sale of the bonds.

Art. 13. In the event of deficiency in the settlement of the resale commitment in the manner and within the time limits provided for in the sole paragraph of art. 11, the Central Bank of Brazil will consider the operation in default, with the counterparty subject to transferring to the Central Bank of Brazil the financial value corresponding to the difference, if positive, between the market price of the bond, understood as the indicative price that has broad acceptance as a reference in the national financial market on the day established for the settlement of the said resale commitment, and the resale price of the bond, multiplied by the quantity of bonds traded in the operation.

Sole paragraph. The financial value to be transferred to the Central Bank of Brazil, calculated according to the main text, will be corrected, for the period between the day established for the settlement of the resale commitment and the day of its effective payment, by the Selic rate, defined according to current regulation, calculated for each business day of the period.

Art. 14. The early settlement of the repurchase or resale commitment referred to, respectively, in items I and II of the main text of art. 3º, in operations contracted with a maturity period greater than 1 (one) business day, may be admitted at the request of the financial institution, and at the discretion of the Central Bank of Brazil, through a reasoned manifestation demonstrating the need for the return, respectively, of the bonds or the resources at a time prior to that provided for the maturity of the operation.

§ 1º. In the cases covered by the main text, the repurchase or resale of an operation with fixed remuneration will be carried out according to one of the following alternatives, prevailing the most favorable to the Central Bank of Brazil:

I - at market price, considering the remaining period between the date of the early repurchase or resale and the original maturity date of the operation, with the market interest rate, understood as the indicative rate that has broad acceptance as a reference in the national financial market, used to discount the expected cash flow, reduced or increased by 5% (five percent), respectively, in the case of early repurchase or resale; or

II - at updated price, up to the date of the early repurchase or resale, at a rate of 105% (one hundred and five percent) or 95% (ninety-five percent) of the rate contracted at the beginning of the operation subject to repurchase or resale, respectively.

§ 2º. In the cases covered by the main text, the repurchase or resale of an operation with remuneration linked to the Selic rate will be carried out at an updated price, up to the date of the early repurchase or resale, at a rate of 105% (one hundred and five percent) or 95% (ninety-five percent) of the percentage applied on the daily interest factor of the Selic rate, minus one unit, contracted at the beginning of the operation subject to repurchase or resale, respectively.

Art. 15. The Central Bank of Brazil will act as a calculation agent for the determination of the financial values covered by arts. 9º to 14.

Art. 16. In the event of occurrence of a coupon payment event by the issuer during the validity period of the resale or repurchase commitment of the Central Bank of Brazil referred to, respectively, in items I and II of the main text of art. 3º, there will be no transfer of the financial value to the party that sold the bonds, with the adjustment being made in the repurchase or resale price, according to the calculation methodology referred to in item XI of art. 5º.

Art. 17. In the event of an economic-financial scenario that leads to the need to adopt an exceptional monetary policy guideline, it will be up to the Collegiate Board of the Central Bank of Brazil to decide on the carrying out of operations with conditions and terms distinct from those indicated in arts. 3º and 4º.

Art. 18. Demab is authorized to issue a communication detailing the conditions applicable to the operations covered by this Resolution, notably those provided for in art. 5º, to act as the calculation agent cited in art. 15 and to adopt the necessary measures for the execution of the provisions of this normative.

Art. 19. The submission, to the Central Bank of Brazil, of a proposal for sale or purchase within the scope of the operations covered by art. 3º implies the acceptance and agreement of the proposer with all the provisions contained in this Resolution and its regulation, including the criteria and conditions fixed in the disclosure means referred to in the sole paragraph of art. 5º, and will be considered unconditional and irrevocable.

Art. 20. Any disputes relating to the operations entered into based on this Resolution, arising between the Central Bank of Brazil and the contracting institutions, will be resolved by the Judicial Section of the Federal District, which will be defined as the forum of election.

Art. 21. The following are revoked:

I - Circular No. 2,960, of January 19, 2000; and

II - Circular No. 3,132, of July 5, 2002.

Art. 22. This Resolution enters into force on the date of its publication.

Bruno Serra Fernandes
Monetary Policy Director