Circular No. 2905 — Establishes minimum terms and remuneration for active and passive operations in the financial market

CIRCULAR NO. 002905

Dispenses with minimum terms and remuneration for active and passive operations carried out in the financial market.

The Collegiate Board of the Central Bank of Brazil, in a session held on June 30, 1999, based on Articles 10, 11, and 31, paragraph 2, of Law No. 8,177, of March 1, 1991, Articles 8 and 9 of Law No. 8,660, of May 28, 1993, Item IV of Resolution No. 1,143, of June 26, 1986, Item II of Resolution No. 1,647, of October 18, 1989, Article 8 of Resolution No. 2,437, of October 30, 1997, and Articles 3 and 4 of Resolution No. 2,613, of June 30, 1999,

D E C I D E D:

Article 1. It is established that active and passive operations carried out within the scope of the financial market with remuneration contracted based on fixed rates are not subject to minimum terms.

Article 2. The following minimum terms are established for active and passive operations carried out within the scope of the financial market with remuneration contracted based on:

I - Reference Rate - TR or Long-Term Interest Rate - TJLP: one month;

II - Basic Financial Rate - TBF: two months.

Paragraph 1. The minimum term and remuneration interval for time deposits with automatic reinvestment, as provided for in Resolution No. 2,172, of June 30, 1995, must comply with the provisions of item II of this article.

Paragraph 2. In operations contracted based on the TBF, remuneration higher or lower than this rate, when provided for, cannot be capitalized, and must be added to or subtracted from the TBF.

Article 3. The minimum term for active and passive operations carried out within the scope of the financial market with remuneration contracted based on floating rates is waived, in the manner admitted by Resolution No. 1,143, of June 26, 1986.

Sole Paragraph. The floating rate referred to in this article must:

I - be regularly calculated and of public knowledge;

II - be based on operations contracted at fixed market rates, with a term not less than the period of contractual readjustment stipulated.

Article 4. The carrying out, in the financial market, of active and passive operations with a clause for value adjustment by a price index is admitted, provided they have minimum terms and periodicity of adjustment of one year.

Sole Paragraph. The price index referred to in this article must have a regularly calculated series and be of public knowledge.

Article 5. The following are prohibited, with respect to active and passive operations carried out in the financial market:

I - contractual provision of more than one remuneration base or price index, except in the case of extinction of the agreed base or index;

II - placement, by the issuer or by a company linked to it, of securities with a remaining term shorter than the respective minimum terms established in this Circular.

Sole Paragraph. For the purposes of the provision in item II, the issuer and company are considered linked when:

I - one participates with 10% (ten percent) or more of the capital of the other, directly or indirectly;

II - administrators or their respective spouses or partners and relatives up to the second degree of one participate, jointly or individually, with 10% (ten percent) or more of the capital of the other, directly or indirectly;

III - partners or shareholders with 10% (ten percent) or more of the capital of one participate with 10% (ten percent) or more of the capital of the other, directly or indirectly;

IV - they have a common administrator.

Article 6. Periodic payment of earnings in passive operations and of charges and principal amortizations in active operations carried out in the financial market is permitted.

Sole Paragraph. In the case of financial leasing operations, it must be observed that the ratio between the sum of the payments made and the total value of the payments cannot be greater than the ratio between the time elapsed and the total term of the operation.

Article 7. The provisions of this Circular:

I - are not applicable to operations subject to specific legislation or regulation;

II - are applicable to interbank deposits as provided for in Circular No. 2,190, of June 26, 1992, to mortgage letters and to other securities issued or co-obligated by financial institutions, respecting the minimum terms and remuneration conditions fixed in specific regulation, as well as to promissory notes issued by joint-stock companies, intended for public offering.

Article 8. In credit grant contracts, it is mandatory to include a clause that informs the effective monthly and annual interest rate equivalent to all charges and other expenses incurred during the normal course of the operation.

Article 9. This Circular enters into force on the date of its publication, producing effects from August 2, 1999.

Article 10. The following are revoked, from August 2, 1999: Circulars No. 169, of December 17, 1971; No. 946, of July 16, 1985; No. 2,436, of June 30, 1994; No. 2,463, of August 12, 1994; and No. 2,732, of December 18, 1996; item "e" of Article 1 of Circular No. 1,944, of April 18, 1991; and Articles 5 of Circular No. 2,190, of June 26, 1992, and 1 and 7 of Circular No. 2,588, of July 5, 1995.

Brasília, June 30, 1999

Sérgio Darcy da Silva Alves Luiz Fernando Figueiredo Director Director