Circular No. 1159 — Amendment of Limits for Repo Operations Backed by Private Securities

CIRCULAR NO. 001159

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, decided:

a) to amend the limits for carrying out repo operations, as referred to in the aforementioned Regulation, establishing:

a.1 - institutions authorized in the manner of Article 7 - up to 30 (thirty) times the calculation base, observing the following:

I - up to 2 (two) times, for operations with any securities;

II - above 2 (two) up to 15 (fifteen) times:

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

• for operations with private securities contracted 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 Treasury Notes, National Treasury Bonds, and Central Bank Notes;

a.2 - institutions authorized in the manner of Article 8 - up to 15 (fifteen) times the calculation base, observing the following:

I - up to 2 (two) times, for operations with any securities;

II - above 2 (two) up to 15 (fifteen) times, for operations with Treasury Notes, National Treasury Bonds, and Central Bank Notes;

b) to establish that institutions authorized in the manner of Articles 7 and 8 of the cited Regulation, when carrying out repo operations backed by private securities, must observe a maximum of 20% (twenty percent) of the limits for operations with these securities in the case of papers issued, accepted, or co-obligated by the same company, such limitation not applying to those issued, accepted, or co-obligated by company(ies) affiliated with the authorized institution itself;

c) for the purposes of the preceding clause, a company is considered affiliated:

I - in which the authorized institution participates with 10% (ten percent) or more of the capital, directly or indirectly;

II - in which administrators of the authorized institution and their relatives up to the second degree participate, jointly or individually, with 10% (ten percent) or more of the capital, directly or indirectly;

III - in which shareholder(s) with 10% (ten percent) or more of the capital of the authorized institution participate(s) with 10% (ten percent) or more of the capital, directly or indirectly;

IV - that participates with 10% (ten percent) or more of the capital of the authorized institution, directly or indirectly;

V - whose administrators and their respective relatives up to the second degree participate, jointly or individually, with 10% (ten percent) or more of the capital of the authorized institution, directly or indirectly;

VI - whose shareholder(s) with 10% (ten percent) or more of the capital participate(s) with 10% (ten percent) or more of the capital of the authorized institution, directly or indirectly;

VII - whose administrators, in whole or in part, are the same as those of the authorized institution, except for positions held in collegiate bodies, provided for in the statute or internal regulations of the authorized institution, provided that their holders do not exercise executive functions, after prior consultation with the Central Bank.

2. The new limits established must be observed from the effective date of this Circular, allowing for any excess found to be eliminated as a result of the maturity of the private securities backing the repo operations.

3. This Circular will enter into force on the date of its publication, Circular No. 1,106, of January 14, 1987, being revoked.

Brasília-DF, April 22, 1987

Luiz Carlos Mendonça de Barros
Director