Circular Letter CVM/SIN 03/2019

SECURITY AND EXCHANGE COMMISSION OF BRAZIL
Rua Sete de Setembro, 111/2-5th and 23-34th Floors – Center – Rio de Janeiro - RJ – ZIP Code: 20050-901 – Brazil Tel.: (21) 3554-8686 - www.cvm.gov.br

Circular Letter No. 03/2019/CVM/SIN
Rio de Janeiro, March 15, 2019

To
Responsible Directors of Credit Rating Agencies Subject: Submission of documents via the Credit Rating Agencies System, Requests for Registration Changes, and Submission of the Electronic Declaration of Conformity.

Dear Sirs,

1. This Circular Letter aims to guide Credit Rating Agencies (“Agencies”) on the submission of periodic and occasional information required by CVM Instruction No. 521/2012 (“ICVM 521”) through the Credit Rating Agencies System, available for access within the CVMWeb system, via the path CVMWeb -> Rating Agencies – Submission of Reports. Furthermore, it aims to guide Agencies on procedures regarding potential requests for registration changes, as well as procedures for submitting the Electronic Declaration of Conformity, as required by CVM Instruction No. 510/2011 (“ICVM 510”).

I) Credit Rating Agencies System

2. The Credit Rating Agencies System, in addition to facilitating the submission of periodic and occasional information by Agencies, also allows greater transparency of such information for the market and society as a whole, as the information posted there can be consulted by any citizen on the CVM website, via the path: CVM Systems Center -> Queries -> Queries to the Credit Rating Agencies System.

3. Article 13 of ICVM 521, which deals with periodic information to be submitted by Agencies, requires that the Reference Form, whose content is found in Annex 13 of ICVM 521, be submitted annually by March 31 of each year. Similarly, Article 14 of the regulation, which deals with occasional information, requires submission, within the deadlines specified therein, of: (i) relevant changes in the methodologies, procedures, and criteria used to prepare risk ratings, (ii) new methodologies used to prepare risk ratings, (iii) decision to discontinue monitoring of the risk rating, and (iv) preliminary opinions of the agency on credit risk ratings that are not used by the issuer at the time of the operation’s disclosure, even if the agency has not been contracted definitively.

4. Thus, we inform you that the Reference Forms relating to the fiscal year ended on December 31, 2018, to be submitted by Agencies by the end of this month, March 2019, must be sent exclusively via the Credit Rating Agencies System, and no longer through other channels (such as email to the management box or digital protocol), as was the case previously. The same applies to all annual Reference Forms from now on, as well as, if any, occasional changes to the content of these forms throughout each fiscal year.

5. Aiming to provide greater transparency to the history of this periodic information, allowing even comparability between Reference Forms from different years by citizens, we recommend that Agencies also submit, through the Credit Rating Agencies System, Reference Forms from previous years.

6. Regarding the occasional information mentioned above, we communicate that all such information occurring from the January 2019 period must also be sent exclusively through the Credit Rating Agencies System. In the specific case of methodologies currently employed by Agencies that may have a period prior to January 2019, only the most recent latest version of such file must be sent (in the “Rating Agency – New Methodologies” field), so that the system can present the methodology currently in force for each participant (this avoids an informational gap in the system regarding risk rating methodology).

7. Obviously, for agencies that have already been using the Credit Rating Agencies System to submit their periodic and occasional information, there is no need to resubmit past information, to avoid duplication of information in the system.

8. Finally, we emphasize that, currently, the option to submit preliminary opinions (“Rating Agency – Preliminary Opinions” in the system) does not provide a specific field for uploading a file containing the detail of such opinion, presenting only a text field where the agency inserts the link to its Internet page containing such file (field “Agency’s website address for disclosure of the Preliminary Opinion:”).

9. We also observe that, among the agencies that have already been submitting their preliminary opinions via the system, there are cases where the participant only inserts the link to the agency’s main page, or to a specific page that requires prior user registration to access the content of the file with the detail of the preliminary opinion.

10. In this regard, we inform that CVM intends to perform an improvement in the system in the future, inserting a specific field for uploading this file, which will be disclosed opportunistically when implemented. Thus, we request special attention from Agencies so that the link inserted in the Credit Rating Agencies System (i) refers directly to the file detailing the preliminary opinion, and (ii) the page to which it refers is not modified by the agency subsequently, resulting in a “break” of the filled link. Such requests aim to preserve the history of the detail of preliminary opinions and make it easily accessible for citizens who wish to consult it.

II) Requests for Registration Changes

11. We inform that the “Registration Update” functionality existing within the CVMWeb system for various participants in the securities market, unfortunately, is not currently available for Credit Rating Agencies. This functionality, which allows participants themselves to carry out potential updates of their registration data with CVM, will be the object of a future system improvement of CVMWeb, and its implementation will be disclosed opportunistically when it occurs.

12. Therefore, we clarify that, while this functionality is not implemented, Agencies must request any registration changes via the electronic address gies@cvm.gov.br, so that GIES – Structured Investments Management can carry out such changes manually in CVM’s internal registration system.

13. We emphasize that, regardless of how the registration change occurs, Agencies must observe Article 1, item I of ICVM 510, which establishes a maximum deadline of 7 (seven) business days, counted from the event that caused the change, to update the participant’s registration with CVM. Thus, this maximum deadline must be observed by Agencies to send the request to the GIES email described above.

III) Electronic Declaration of Conformity

14. Article 1, item II of ICVM 510, combined with item XXXIV of Annex 1 of the same regulation, establishes for Credit Rating Agencies the obligation to confirm, in the month of March of each year, the validity of their registration data with CVM, as occurs with other participants regulated by CVM. This confirmation is called the Electronic Declaration of Conformity (“DEC”), and is usually carried out by participants regulated by CVM through the CVMWeb system.

15. Given that the DEC functionality is part of the “Registration Update” functionality in CVMWeb, and this, in turn, is currently unavailable for Agencies, as described in section II above, we inform that Agencies must send their DEC, in the month of March of each year, via the electronic address gies@cvm.gov.br. If the agency identifies that it is necessary to make any registration change when sending the DEC, the procedure described in section II above applies.

16. Finally, we inform that any questions related to the subjects treated in this Circular Letter must also be sent to the electronic address gies@cvm.gov.br.

Sincerely,

Digitally signed by
DANIEL WALTER MAEDA BERNARDO
Superintendent of Institutional Investor Relations