Circular No. 1592 — Acquisition of Own-Issue Securities by Multiple Banks Authorized to Conduct Repurchase Transactions

CIRCULAR NO. 001592

TO
MULTIPLE BANKS

COMPLEMENTS REGULATION ON TRANSACTIONS WITH OWN-ISSUE SECURITIES BY MULTIPLE BANKS.

WE COMMUNICATE THAT THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BRAZIL, IN A SESSION HELD ON 08.03.90, BASED ON ARTICLE XI OF RESOLUTION NO. 1,524, OF 21.09.88, AND ARTICLE 4, PARAGRAPH XII, OF LAW NO. 4,595, OF 31.12.64, BY COMPETENCE DELEGATED BY THE NATIONAL MONETARY COUNCIL, DECIDED, HAVING REGARD TO ARTICLE 9, SOLE PARAGRAPH OF THE REGULATIONS ANNEXED TO SAID RESOLUTION:

ART. 1. ONLY TO MULTIPLE BANKS ENABLED TO CONDUCT REPURCHASE TRANSACTIONS IS IT PERMITTED TO TRANSACT IN PURCHASE, REPURCHASE, MAINTENANCE IN TREASURY, AND SUBSEQUENT SALE OR RESALE OF FIXED-INCOME SECURITIES OF OWN ISSUE.

SOLE PARAGRAPH - FIXED-INCOME SECURITIES OF OWN ISSUE SOLD WITH DEFINITIVE CLAUSE MAY ALSO BE ACQUIRED AND MAINTAINED IN TREASURY OR USED TO BACK REPURCHASE TRANSACTIONS.

ART. 2. REPURCHASE TRANSACTIONS BACKED BY FIXED-INCOME SECURITIES OF OWN ISSUE ARE INCLUDED IN THE LIMIT ESTABLISHED IN THE CURRENT REGULATION FOR TRANSACTIONS WITH PRIVATE TITLES.

ART. 3. THE PROVISIONS IN THE PREVIOUS ARTICLES ALSO APPLY TO PAPERS ISSUED BY THE FINANCIAL INSTITUTIONS THAT GAVE RISE TO THE MULTIPLE BANK.

ART. 4. REGARDING THE ACCOUNTING OF OPERATIONS OF THIS KIND, IT IS ESTABLISHED THAT:

I - THE PURCHASE OR REPURCHASE OF FIXED-INCOME SECURITIES OF OWN ISSUE MUST BE ACCOUNTED FOR, USING INTERNAL SUB-TITLES THAT IDENTIFY THE STATUS OF THE PAPERS, TO THE DEBIT OF THE ACCOUNT THAT RECORDS THE OBLIGATION, RECOGNIZING IMMEDIATELY THE REVENUE OR EXPENSE BETWEEN THE VALUE OF THE OPERATION AND THE CURRENT BALANCE OF THE CORRESPONDING LIABILITY;

II - FIXED-INCOME SECURITIES MAINTAINED IN TREASURY MUST BE UPDATED MONTHLY UNTIL THEIR MATURITY, OFFSETTING THE INCOME FROM THESE SECURITIES AGAINST THE CORRESPONDING EXPENSE;

III - FIXED-INCOME SECURITIES OF OWN ISSUE SOLD WITH A REPURCHASE COMMITMENT MUST BE REGISTERED IN THE REPURCHASES TO SETTLE - OWN PORTFOLIO OR REPURCHASES TO SETTLE - OWN PORTFOLIO - REMUNERATED ACCOUNTS, AS THE CASE MAY BE, IN DEDICATED SUB-TITLES, ACCORDING TO ARTICLE 5.

ART. 5. TO COMPLY WITH THE PROVISION IN ITEM III OF THE PREVIOUS ARTICLE, THE FOLLOWING SUB-TITLES ARE ESTABLISHED IN THE ACCOUNTING PLAN OF THE INSTITUTIONS OF THE NATIONAL FINANCIAL SYSTEM - COSIF: OWN-ISSUE SECURITIES OF THE REPURCHASES TO SETTLE - OWN PORTFOLIO AND REPURCHASES TO SETTLE - OWN PORTFOLIO - REMUNERATED ACCOUNTS, CODES 4.2.1.10.80-0 AND 4.2.1.30.80-4, RESPECTIVELY.

ART. 6. THIS CIRCULAR SHALL ENTER INTO FORCE ON THE DATE OF ITS PUBLICATION.

BRASILIA (DF), MARCH 9, 1990

WADICO WALDIR BUCCHI FRANCISCO AMADEU PIRES FELIX PRESIDENT DIRECTOR