Circular No. 1081 — Repurchase Transactions — Proposal to Raise the Limit for Operations with Central Bank Notes and Private Securities

CIRCULAR NO. 001081

We communicate that the Board of Directors of the Central Bank of Brazil, in view of the provisions of Article 30 of the Regulation annexed to Resolution No. 1,088, of January 30, 1986, has decided:

a) to alter the limits for carrying out repurchase transactions, as referred to in the aforementioned Regulation, establishing:

a.1 - institutions authorized in accordance with Article 7: up to 40 (forty) times the calculation base, observing the following:

I - up to 10 (ten) times, for operations with any securities;

II - above 10 (ten) up to 15 (fifteen) times:

• for operations with federal, state, and municipal public securities; and/or

• for operations with private securities agreed upon with financial institutions and other institutions authorized to operate by the Central Bank of Brazil;

III - above 15 (fifteen) up to 30 (thirty) times, for operations with National Treasury Notes and National Treasury Bonds;

IV - above 30 (thirty) up to 40 (forty) times, for operations with Central Bank Notes;

a.2 - institutions authorized in accordance with Article 8: up to 20 (twenty) times the calculation base, observing the following:

I - up to 10 (ten) times, for operations with any securities;

II - above 10 (ten) up to 15 (fifteen) times, for operations with National Treasury Notes and National Treasury Bonds;

III - above 15 (fifteen) up to 20 (twenty) times, for operations with Central Bank Notes;

b) to establish that institutions authorized in accordance with Articles 7 and 8 of the cited Regulation, when carrying out repurchase transactions backed by private securities, must observe a maximum of 20% (twenty percent) of the total investments in these securities in the case of papers issued, accepted, or co-obligated by the same company; this limitation does not apply to those issued, accepted, or co-obligated by company(ies) affiliated with the authorized institution itself;

c) to adopt as the concept of affiliated company, for the purposes of the preceding clause, that defined in Article 15 of the Regulation annexed to Resolution No. 1,022, of June 5, 1985.

2. This Circular shall enter into force on the date of its publication.

Brasília-DF, October 30, 1986

Luiz Carlos Mendonça de Barros
Director