Circular No. 2328 — Amends Accounting Procedures for Recording Operations in Forward, Futures, and Options Markets with Stocks, Other Financial Assets, and Commodities

CIRCULAR NO. 002328

AMENDS ACCOUNTING PROCEDURES FOR
RECORDING OPERATIONS CARRIED OUT IN FORWARD,
FUTURES, AND OPTIONS MARKETS WITH STOCKS, OTHER FINANCIAL ASSETS, AND COMMODITIES.

WE COMMUNICATE THAT THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BRAZIL, IN A SESSION HELD ON 07.07.93, BASED ON ART. 4, PARAGRAPH XII, OF LAW NO. 4.595, OF 31.12.64, BY COMPETENCE DELEGATED BY THE NATIONAL MONETARY COUNCIL, DECIDED:

ART. 1. THE VALUE OF CONTRACTS FOR BUY AND SELL OPERATIONS OF STOCKS, OTHER FINANCIAL ASSETS, AND COMMODITIES, CARRIED OUT FOR OWN ACCOUNT IN FUTURES AND OPTIONS MARKETS, MUST BE REGISTERED IN THE APPROPRIATE CLEARING ACCOUNTS.

ART. 2. THE VALUE OF CONTRACTS FOR FORWARD OPERATIONS WITH STOCKS, OTHER FINANCIAL ASSETS, AND COMMODITIES, CARRIED OUT FOR OWN ACCOUNT, MUST BE REGISTERED IN THE APPROPRIATE ACCOUNTS OF THE EQUITY SYSTEM, RESPECTING THE PROVISIONS OF ART. 3 OF THIS CIRCULAR.

PARAGRAPH 1. ON THE DATE OF THE OPERATION, THE DIFFERENTIAL BETWEEN THE SPOT PRICE OF THE GOOD OR RIGHT AND THE VALUE OF THE CONTRACT MUST BE CLASSIFIED AS REVENUE TO BE ACCRUED FROM OTHER RECEIVABLES OR EXPENSES TO BE ACCRUED FROM OTHER OBLIGATIONS.

PARAGRAPH 2. REVENUES AND EXPENSES MUST BE RECOGNIZED AS EFFECTIVE, DUE TO THE ELAPSED TIME OF THE CONTRACTS, AS OTHER OPERATIONAL REVENUES OR OTHER OPERATIONAL EXPENSES, AS THE CASE MAY BE.

PARAGRAPH 3. THE SPOT PRICE OF THE GOOD OR RIGHT, PROVIDED FOR IN PARAGRAPH 1 OF THIS ARTICLE, MUST BE UPDATED BETWEEN THE DATE OF THE OPERATION'S AGREEMENT AND ITS SETTLEMENT, WHEN APPLICABLE.

ART. 3. THE VALUE OF FORWARD CONTRACTS WHERE ONLY FINANCIAL SETTLEMENT IS FORESEEN, WITHOUT TRANSFER OF ASSETS, MUST BE ACCOUNTED FOR IN A MANNER ANALOGOUS TO THAT PRESCRIBED FOR THE REGISTRATION OF OPERATIONS CARRIED OUT IN THE FUTURES MARKET.

SINGLE PARAGRAPH. IN MONTHLY BALANCE SHEETS, GAINS OR LOSSES MUST BE ACCRUED AS EFFECTIVE REVENUE OR EXPENSE, INDIVIDUALIZED BY CONTRACT.

ART. 4. THE VALUE OF MARGINS GIVEN AS GUARANTEE FOR OPERATIONS CARRIED OUT, FOR OWN ACCOUNT, IN EXCHANGES, MUST BE REGISTERED IN THE APPROPRIATE EQUITY ACCOUNTS, WHEN IN CURRENT CURRENCY, SECURITIES, SECURITIES, AND OTHER ASSETS, WITH THEIR REMUNERATION BEING ACCRUED "PRO RATA" PER DAY, IN EFFECTIVE REVENUE ACCOUNTS.

SINGLE PARAGRAPH. THE VALUE OF GUARANTEES GIVEN IN BAIL, INSURANCE POLICIES, OR SIMILAR MUST BE REGISTERED IN THE APPROPRIATE CLEARING ACCOUNTS.

ART. 5. THE VALUE OF PREMIUMS RECEIVED IN THE CONDUCT OF OPERATIONS IN THE OPTIONS MARKET FOR STOCKS, OTHER FINANCIAL ASSETS, AND COMMODITIES MUST BE REGISTERED IN THE APPROPRIATE LIABILITY ACCOUNT, REMAINING THERE UNTIL THE EFFECTIVE EXERCISE OF THE OPTION, IF APPLICABLE, AT WHICH POINT IT MUST BE WRITTEN OFF AS A REDUCTION IN THE COST OF THE GOOD OR RIGHT, UPON EFFECTIVE EXERCISE, OR AS REVENUE, IN THE CASE OF NON-EXERCISE.

SINGLE PARAGRAPH. THE VALUE OF RECEIVED PREMIUMS MUST BE MONETARILY CORRECTED BASED ON THE SAME INDEXES APPLICABLE TO EQUITY MONETARY CORRECTION.

ART. 6. THE VALUE OF PREMIUMS PAID IN THE CONDUCT OF OPERATIONS IN THE OPTIONS MARKET FOR STOCKS, OTHER FINANCIAL ASSETS, AND COMMODITIES MUST BE REGISTERED IN THE APPROPRIATE ASSET ACCOUNT, REMAINING THERE UNTIL THE EFFECTIVE EXERCISE OF THE OPTION, IF APPLICABLE, AT WHICH POINT IT MUST BE WRITTEN OFF AS AN INCREASE IN THE COST OF THE GOOD OR RIGHT, IN THE EVENT OF EXERCISE, OR AS AN EXPENSE, IN THE CASE OF NON-EXERCISE.

SINGLE PARAGRAPH. THE VALUE OF PAID PREMIUMS MUST BE MONETARILY CORRECTED BASED ON THE SAME INDEXES APPLICABLE TO EQUITY MONETARY CORRECTION.

ART. 7. THE VALUE OF DAILY ADJUSTMENTS OF OPERATIONS CARRIED OUT IN THE STOCKS, OTHER FINANCIAL ASSETS, AND COMMODITIES FUTURES MARKET MUST BE REGISTERED, DAILY, IN THE APPROPRIATE RESULT ACCOUNTS, OR OPTIONALLY, BOTH POSITIVE AND NEGATIVE VALUES, IN DAILY ADJUSTMENTS - FUTURES MARKET, TO BE ACCRUED AS EFFECTIVE REVENUE OR EXPENSE IN MONTHLY BALANCE SHEETS.

SINGLE PARAGRAPH. THE VALUE OF ADJUSTMENTS MUST BE SEGREGATED INTO A SUB-TITLE FOR INTERNAL USE, AIMING AT THE INDIVIDUALIZED RECOGNITION OF GAINS AND LOSSES BY TYPE OF ASSET AND MATURITY.

ART. 8. IN MONTHLY BALANCE SHEETS, THE INSTITUTION MUST RECOGNIZE POTENTIAL LOSSES IN FORWARD, FUTURES, AND OPTIONS MARKETS WITH STOCKS, OTHER FINANCIAL ASSETS, AND COMMODITIES, THROUGH THE CONSTITUTION OF A PROVISION CALCULATED BASED ON MARKET VALUE, FOR BOTH THE HOLDER AND THE WRITER, OBSERVING THE FOLLOWING IN OPERATIONS CARRIED OUT IN THE OPTIONS MARKET:

I - THE HOLDER MUST CONSTITUTE A PROVISION WHEN THE AVERAGE PREMIUM PRICE, ON THE LAST BUSINESS DAY OF EACH MONTH, IS LESS THAN THE PAID PREMIUM, MONETARILY UPDATED;

II - THE OPEN WRITER MUST CONSTITUTE A PROVISION WHEN THE AVERAGE PREMIUM PRICE, ON THE LAST BUSINESS DAY OF EACH MONTH, IS HIGHER THAN THE RECEIVED PREMIUM MONETARILY UPDATED, PROVIDED THAT THE AVERAGE QUOTATION OF THE UNDERLYING GOOD IS HIGHER THAN THE EXERCISE PRICE, IN THE CASE OF A CALL OPTION, OR LOWER THAN THE EXERCISE PRICE, IN THE CASE OF A PUT OPTION.

ART. 9. INVESTMENT FUNDS MUST RECOGNIZE DAILY ADJUSTMENTS AND VARIATIONS IN OPTION PREMIUM QUOTATIONS DAILY.

SINGLE PARAGRAPH. IN "HEDGE" OPERATIONS AND THOSE THAT ALLOW FOR THE PREFIXATION OF REVENUES, THE ACCRUAL OF THEIR RESULTS, TAKING THE CONTRACTS AS A WHOLE, MAY BE CARRIED OUT "PRO RATA" PER BUSINESS DAY.

ART. 10. THE VALUE OF THE OPERATIONS DISCRIMINATED IN THE PREVIOUS ARTICLES OF THIS CIRCULAR MUST BE REGISTERED, OBSERVED THE SCHEME OF APPROPRIATE ACCOUNTING RECORDS.

ART. 11. THE VALUE OF OPERATIONS WITH STOCKS, OTHER FINANCIAL ASSETS, AND COMMODITIES, CARRIED OUT FOR THIRD PARTIES IN FORWARD, FUTURES, AND OPTIONS MARKETS, MUST BE ACCOUNTED FOR IN THE APPROPRIATE CLEARING ACCOUNT, ACCORDING TO THE PERTINENT SCHEME OF ACCOUNTING RECORDS.

SINGLE PARAGRAPH. THE VALUE OF DAILY ADJUSTMENTS, BOTH POSITIVE AND NEGATIVE, AND OPTION PREMIUMS MUST BE REGISTERED IN OPERATIONS WITH FINANCIAL ASSETS AND COMMODITIES TO BE SETTLED, IN CONTRAPARTION TO CREDITORS - PENDING SETTLEMENTS ACCOUNT.

ART. 12. FOR PUBLICATION PURPOSES, IN ACCORDANCE WITH COSIF 1.22.3.9, THE BALANCES RELATING TO THE OPERATIONS COVERED BY THIS CIRCULAR, ON THE BASE DATES OF 30.06.92 AND 31.12.92, MUST BE ADJUSTED AND RECLASSIFIED IN A MANNER TO ALLOW FOR THE COMPARABILITY OF ACCOUNTING STATEMENTS.

ART. 13. THIS CIRCULAR ENTERS INTO FORCE ON THE DATE OF ITS PUBLICATION.

BRASILIA (DF), JULY 7, 1993

CLAUDIO NESS MAUCH
DIRECTOR OF NORMS AND ORGANIZATION
OF THE FINANCIAL SYSTEM