Circular Letter No. 2.866

CIRCULAR LETTER No. 002866 ------------------------ Discloses instructions relating to the monitoring and control of exposure in gold and in assets and liabilities referenced in exchange rate variation, on a consolidated basis, as addressed in Circular No. 2.894, of 1999. For the monitoring and control of exposure in gold and in assets and liabilities referenced in exchange rate variation as addressed in Circular No. 2.894, of 27 May 1999, the following documents shall be used: I - Annex I - Daily Statement of Exposures in Gold and in Assets and Liabilities Referenced in Exchange Rate Variation, intended to ascertain the daily exposure in gold and in assets and liabilities referenced in exchange rate variation of institutions authorized to operate by the Central Bank of Brazil, including the consolidated data of their direct and indirect subsidiaries, CADOC model No. 35001-5; II - Annex II - Statement of Reconciliation of Positions in Gold and in Assets and Liabilities Referenced in Exchange Rate Variation, intended to reconcile the positions in gold and in assets and liabilities referenced in exchange rate variation of institutions authorized to operate by the Central Bank of Brazil, held by the institution on the last business day of each month, with the data contained in the trial balance of the respective month, CADOC model No. 35002-4. 2. The consolidated exposure in gold and in assets and liabilities referenced in exchange rate variation shall be ascertained daily, considering all transactions carried out until the close of the day, and compared, in the form of Annex I, with the adjusted net equity (PLA) defined by Resolution No. 2.543, of 26 August 1998, of the last trial balance validated in the Central Bank Information System - SISBACEN. 3. The position ascertained in Annex I, referring to the last business day of the month, shall be reconciled with the trial balance balances (document 4040, when a conglomerate; document 4020, when an institution with an agency abroad; and document 4010, when an independent institution), in the form of Annex II. 4. The consolidated positions in gold and in assets and liabilities referenced in exchange rate variation, purchased and sold (lines A1, B1 and B2 of Annex I), regardless of their value, shall be reported to the Central Bank of Brazil, on the day immediately following that of ascertainment, through the PESP500 transaction of SISBACEN. 5. The information contained in Annex I shall be provided to the Central Bank of Brazil whenever requested. Regardless of request, in cases where the consolidated exposure exceeds 20% of the PLA, the statement relating to the last day of the month shall be submitted by the second business day of the subsequent month. 6. The information contained in Annex II, relating to the financial companies of the conglomerate, shall be provided to the Central Bank of Brazil by the institutions or conglomerates whose consolidated exposure exceeds 20% of the PLA, by the date of
delivery of the trial balance. 7. The information contained in Annexes I and II shall be provided through a specific SISBACEN transaction to be disclosed in due course. 8. Institutions not permanently holding positions in gold and in assets and liabilities referenced in exchange rate variation are exempt from providing the information addressed in this Circular Letter, provided that said situation is reported to the Central Bank of Brazil/Department of Registration and Information (DECAD), by 31 August 1999, by electronic mail or letter, and remain so while they are in that condition. 9. The statements in Annexes I and II shall remain at the disposal of the Central Bank of Brazil for a period of five years at the responsible financial institution, as well as all supporting documentation, managerial or not, and the respective calculation memorandum. 10. The calculation memorandum relating to the daily preparation of the statement in Annex I must contain the detailed breakdown of all individual positions of the financial and non-financial institutions of the conglomerate. 11. The procedures relating to the ascertainment of exposures under the terms of this Circular Letter, as well as the respective controls and the timely provision of information to the Central Bank of Brazil, shall be under the responsibility of a director or managing partner, as the case may be, to be designated by the institution to the representation of this Autarchy that has jurisdiction over its headquarters, by 31 August 1999, by electronic mail. 12. The failure to provide or the provision with delay of the information required by this Circular Letter shall entail the application of the penalties provided for in Resolution No. 2.194, of 31 August 1995. To this end, institutions must keep updated at DECAD the data relating to the name, registration number in the Individual Taxpayer Registry (CPF) and contact telephone number of the person responsible for providing the information, as well as the name and registration number in the National Register of Legal Entities (CNPJ) of the financial institution in whose "Bank Reserves" account the fines eventually due will be debited. 13. Rectification of the information provided under the terms of this Circular Letter is permitted, until 30 November 1999, without the application of the penalties referred to in the previous item. 14. The request for authorization for the participation of foreign investments in the net equity of the institution or conglomerate to be considered as a sold position, under the terms of art. 7, caput and sole paragraph, of Circular No. 2,894, of 1999, must be filed with the representation of the Central Bank of Brazil that has jurisdiction over the institution's head office, accompanied by the following documentation: I - minutes of the meeting of the board of directors or of the executive board that deliberated on the matter; II - demonstration of the existence of a bought position in an equivalent amount
and in the same currency as the investment; and III - declaration by the director responsible for measuring the exposure in gold and in assets and liabilities referenced in exchange rate variation, attesting that the option for the prerogative referred to in this item will not be changed before the first semiannual balance sheet following its deliberation, as well as that the bought position in an equivalent amount and in the same currency as the investment will be maintained during the term of that option; IV - demonstration of the economic and financial capacity of the foreign investor to maintain the investments in the capital of the institution or conglomerate, on a percentage basis, during the term of the option. 15. This Circular Letter enters into force on the date of its publication, producing effects, with regard to the provisions of item 4, as of 1 September 1999. Brasilia, 13 August 1999. DEPARTMENT OF NORMS OF THE DEPARTMENT OF SUPERVISION FINANCIAL SYSTEM Carlos Eduardo Sampaio Lofrano Tereza Cristina Grossi Togni Head Head DEPARTMENT OF ORGANIZATION DEPARTMENT OF REGISTRATION OF THE FINANCIAL SYSTEM AND INFORMATION Luiz Edson Feltrim Sergio Almeida de Souza Lima Head Head Note: annexes I and II will be available at the representation of the Central Bank of Brazil that has jurisdiction over the institution's head office.