Circular Letter CVM/SIN 05/16

SECURITIES AND EXCHANGE COMMISSION OF BRAZIL
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Circular Letter No. 5/2016/SIN/CVM
Rio de Janeiro, July 12, 2016

To Administrators of Investment Funds in Regulated Market Indices governed by CVM Instruction No. 359/02 Subject: Investment funds in market indices that invest in international index funds

Dear Sirs/Madams,

1. As is known, due to requirements set forth in CVM Instruction No. 359/02, and specifically its Articles 58 and 59, Brazilian market investment funds are not permitted to invest in shares of other index funds established in other jurisdictions. Thus, to enable a fund with such a proposal, a specific waiver of compliance with these provisions would indeed be necessary.

2. In this context and in line with the provisions of Circular Letter CVM/SIN No. 5/2012, this Superintendence informed that, due to a market participant inquiry made at the time, the Collegiate Board deliberated, in a decision made on October 10, 2012, that it considered opportune and convenient to evaluate, on a case-by-case basis, the possibility of granting exemptions from the requirements of CVM Instruction No. 359/02, for the purpose of constitution, registration, issuance, distribution, and trading of shares of market index funds in Brazil based on indices from other jurisdictions, provided they were intended exclusively for individual or legal investor clients with financial investments exceeding R$ 1,000,000.00 (one million reais).

3. In this sense, and as a result of a new inquiry made to the CVM, in a decision made on July 5, 2016, the Collegiate Board deliberated that, given the new current regulatory context for investments abroad by investment funds, it would proceed to evaluate the possibility of granting exemptions from the requirements of CVM Instruction No. 359/02 for such funds, even if intended for the general public.

4. Also in that decision, the Collegiate Board further deliberated to admit that already constituted index funds may also adapt themselves to be offered to the general public, provided they manifest such intention in a request to be formulated to this Superintendence for this purpose.

Sincerely,

DANIEL WALTER MAEDA BERNARDO
Superintendent of Institutional Investor Relations