Circular No. 3.587

The Collegiate Board of the Central Bank of Brazil, in a session held on 22 March 2012, having regard to the provisions of art. 11, item VII, of Law No. 4.595, of 31 December 1964, and of art. 10 of Law No. 10.214, of 27 March 2001,

R E S O L V E S :

Art. 1 The attached Regulation is approved, which governs the operation of the Special Settlement and Custody System (Selic).

Art. 2 This Circular enters into force on the date of its publication.

Art. 3 Circular No. 3.511, of 5 November 2010, is revoked.

Aldo Luiz Mendes Director of Monetary Policy

REGULATION ATTACHED TO CIRCULAR NO. 3.587, OF 26 MARCH 2012

It governs the operation of the Special Settlement and Custody System (Selic). CHAPTER I PRELIMINARY PROVISIONS

Art. 1 The Special Settlement and Custody System (Selic) is a computerized system intended for the custody of book-entry securities issued by the National Treasury, as well as for the registration and settlement of transactions involving said securities.

Sole paragraph. Transactions conducted in Selic are settled for their gross amounts in real time.

Art. 2 Securities held in custody at Selic may not be subject to trading unless the respective transactions are registered therein or in a system for the clearing and settlement of transactions involving the aforementioned securities administered by a clearinghouse participating in Selic.

Sole paragraph. Subject to the legal and regulatory provisions, the administrator of Selic may not interfere in the conditions established by the contracting parties to the transactions registered in the system.

Art. 3 The following complementary modules are part of Selic:

• I - Public Offering (Ofpub);

• II - Offering to Dealers (Ofdealers);

• III - Collateral for Repurchase Transactions (Lastro); and

• IV - Electronic Trading of Securities (Negociação).

Art. 4 The administration of Selic and its complementary modules is the exclusive competence of the Open Market Operations Department (Demab) of the Central Bank of Brazil.

Art. 5 For the purposes of this Regulation, the following are designated as:

• I - business day: the day thus considered, by the National Monetary Council, for purposes of transactions carried out in the financial market;

• II - definitive transaction: the purchase and sale of securities without assumption of the commitments mentioned in item III;

• III - repurchase transaction: the purchase and sale of securities with a resale commitment assumed by the buyer and/or a repurchase commitment assumed by the seller;

• IV - repurchase/resale: the purchase and sale transaction of securities arising from the commitment(s) provided for in item III;

• V - fund: the mutual fund, investment fund or similar regulated by the Securities and Exchange Commission; and

• VI - clearinghouse: the clearinghouse or the provider of clearing and settlement services referred to in Law No. 10.214, of 27 March 2001, whose participation in Selic is regulated in Chapter IX of this Regulation.

CHAPTER II PARTICIPANTS

Art. 6 In addition to the Central Bank of Brazil and the National Treasury, the following may be participants in Selic, subject to the rules of this Regulation:

• I - banks, savings banks, securities brokerage firms and securities distribution firms;

• II - other institutions authorized to operate by the Central Bank of Brazil; and

• III - other entities, at the discretion of the administrator of Selic.

Art. 7 For purposes of financial settlement of transactions, the participant is classified as:

• I - settling participant: if it holds, in the Reserve Transfer System (STR) of the Central Bank of Brazil, a Bank Reserve account or a Settlement Account, provided that, in the latter case, it has opted for the status of settling participant in Selic; and

• II - non-settling participant: in the other cases.

Art. 8 The financial settlement of a transaction, whether own or on behalf of a client, of the participant shall observe the following:

• I - if a settling participant, it must always be carried out in its own account in the STR; and

• II - if a non-settling participant, it may be carried out in the Bank Reserve account of any settling participant, except as provided in art. 9.

Art. 9 Every non-settling participant must elect a single default settling participant, holder of a Bank Reserve account, through which transactions relating to the following are settled:

• I - payment of interest, amortization and redemption of securities held in custody in its accounts; and

• II - repurchases/resales, own or on behalf of clients, on the day on which the securities subject to these transactions are redeemed.

§ 1 The default settling participant may be responsible for transmitting the commands of the transactions, own and on behalf of clients, of the non-settling participant.

§ 2 The election of the default settling participant by the non-settling participant must occur at the time of opening the account referred to in art. 22.

Art. 10 The decision of the participant to no longer serve as default settling participant of the non-settling participant must be communicated, with a minimum advance notice of 10 (ten) business days, to the administrator of Selic, by means of correspondence model 30006 of the Catalog of Documents of the Central Bank of Brazil (Cadoc), accompanied by a copy of the letter in which it has informed such decision to the respective non-settling participant, with the latter's acknowledgment.

Art. 11 The non-settling participant, upon becoming aware of the decision referred to in art. 10, must inform the administrator of Selic, in a timely manner, by means of correspondence model 30007 of Cadoc, of its new default settling participant.

Art. 12 The change of default settling participant, on the initiative of the non-settling participant, must be communicated by the latter, formally and with a minimum advance notice of one business day, to the administrator of Selic, by means of correspondence model 30007 of Cadoc, and to the default settling participant to be replaced.

Sole paragraph. In exceptional cases, at the discretion of the administrator of Selic and in the manner established by the latter, the replacement of the default settling participant on the very day the request is made is permitted.

CHAPTER III ACCESS TO SELIC AND ITS COMPLEMENTARY MODULES

Art. 13. The settling participants connect to Selic through any of their access networks, including the National Financial System Network (RSFN), and the non-settling participants, through any access network other than the RSFN.

Sole paragraph. The opening and closing times of Selic are established by the Central Bank of Brazil and disclosed in a Demab normative act.

Art. 14. All participants access the complementary modules through any network for accessing Selic, with the exception of the RSFN.

Art. 15. The Selic administrator may, at its sole discretion, block the access of a participant that is putting at risk the functioning of the system or its complementary modules.

Art. 16. The procedures for connection to the RSFN, the messages that can travel through it, and its security requirements are set forth in the following documents, respectively:

• I - RSFN Technical Manual;

• II - RSFN Message and File Catalog; and

• III - RSFN Security Manual.

Art. 17. Access to Selic, through a network other than the RSFN, and to its complementary modules is controlled by the Access Control System (Logon).

§ 1º The initial password that enables the Selic participant to use Logon must be requested through the "Institution Administrator Registration Form", model 30005 of Cadoc.

§ 2º With the submission of the form referred to in § 1º, the participant assumes full responsibility for the commands transmitted to Selic and its complementary modules by any of its Logon users.

Art. 18. Logon users are classified into three categories: administrator, supervisor, and operator.

§ 1º The administrator, who shall be registered in the manner of § 1º of Art. 17, may enable, through Logon itself, a second administrator with the same level of authority.

§ 2º Administrators may enable supervisors and operators, defining the scope of access to the system and the complementary modules.

§ 3º Operators may also be registered by supervisors.

Art. 19. The de-registration of a user and the blocking/unblocking of their access to Logon may be carried out by whoever has the authority to register them.

CHAPTER IV ON ACCOUNTS

Art. 20. Accounts have the following purposes:

• I - normal custody, own or third-party: for recording operations, evidencing, through balance, the position of securities; and

• II - brokerage: for recording the intermediation of its holder in securities purchase and sale operations.

§ 1º The normal custody accounts of third parties, whether clients or not, and brokerage accounts are exclusive to the institutions mentioned in item I of Art. 6º.

§ 2º Selic also has the following types of account:

• I - special custody: managed by the system administrator, by a regulatory body, or by an intervening party in fiduciary assignment; and

• II - issuance and redemption of securities: managed by the system administrator.

Art. 21. The normal third-party custody account:

• I - must identify, in its name, the owner of the securities when they are required, by a rule of their regulatory body or by determination of the Central Bank of Brazil, to have their securities held in an individualized account at Selic; and

• II - may be individualized, at the participant's discretion, in other cases.

§ 1º The securities of financial institutions and other institutions authorized to operate by the Central Bank of Brazil may not be held in client custody accounts.

§ 2º The bookkeeping of a non-individualized third-party custody account is done without indicating the names of the beneficiaries of the securities held therein, and the analytical records, by beneficiary, are the responsibility of the account holder.

§ 3º The analytical records referred to in § 2º must be promptly presented to the Selic administrator whenever requested.

Art. 22. To open the main own normal custody account, called the standard account, the participant must send, together with the signature card, model 30001 of Cadoc, one of the following correspondence models:

• I - settling participant: Cadoc 30002; or

• II - non-settling participant: Cadoc 30003.

§ 1º The non-settling participant's choice between transmitting or not transmitting its own commands must be informed through Cadoc model 30003, and any change to this choice through Cadoc model 30004.

§ 2º The closure of the standard account may occur:

• I - at the request of its holder, through correspondence model 30009 of Cadoc, after resolving any pending issues pointed out by the Selic administrator;

• II - by decision of the Central Bank of Brazil, in the event the holder violates market or banking technique rules or legal and regulatory provisions to which it is subject;

• III - in the event of ordinary liquidation, extrajudicial liquidation, civil insolvency, bankruptcy, or, whenever applicable, a change in the corporate purpose of its holder;

• IV - by decision of the Selic administrator, when the holder violates a rule of this Regulation; or

• V - at the discretion of the Selic administrator, when inactive for more than 30 (thirty) days.

§ 3º The opening and closing of the other accounts provided for in Art. 20 are governed by the Selic User Manual.

Art. 23. Any Selic account, at the discretion of its administrator, may be blocked during the daily data transmission period or for an indefinite period.

Sole paragraph. Blocked accounts do not allow the recording of any operation.

Art. 24. The Selic participant has access, for consultation and statement purposes, to the accounts it holds and, if a standard settling participant, also to the accounts of the non-settling participant that has given it the task of transmitting the commands of its operations.

CHAPTER V ON THE TYPES AND CHARACTERISTICS OF OPERATIONS

Art. 25. The following operations may take place in Selic:

• I - issuance and redemption of securities;

• II - payment of interest, amortization, and redemption of securities;

• III - purchase and sale of securities in definitive operation;

• IV - purchase and sale of securities with a repurchase commitment assumed by the buyer combined with a resale commitment assumed by the seller for settlement on a pre-established date;

• V - purchase and sale of securities with a repurchase commitment assumed by the buyer combined with a resale commitment assumed by the seller for settlement at any time during a certain period, at the discretion of either party, as previously agreed between them;

• VI - purchase and sale of securities with a repurchase commitment assumed by the seller, settleable at the sole discretion of the buyer on a determined date or within an established period;

• VII - purchase and sale of securities with a resale commitment assumed by the buyer, settleable at the sole discretion of the seller on a determined date or within an established period;

• VIII - forward purchase and sale of securities;

• IX - purchase and sale of securities with registration in the system on a later date;

• X - repurchase and resale of securities;

• XI - transfer of financial value related to taxes, interest or amortizations;

• XII - transfer of securities without change of ownership;

• XIII - transfer of securities as a result of merger, consolidation, spin-off or extinction;

• XIV - transfer of securities as a result of their use in the payment and redemption of fund shares related to a shareholder with an individualized account in Selic;

• XV - pledging and release of securities;

• XVI - transfer of securities related to fiduciary assignment;

• XVII - splitting and recombination of interest coupons; and

• XVIII - payment of the monthly amount owed by the participant to Selic.

§ 1º Also eligible for registration in Selic, on a date to be set by Demab, is the promise of purchase or sale of securities made by the participant to a promisee, whether a client or not.

§ 2º The administrator of Selic reserves the right to carry out transfers of securities related to operations not provided for in this article.

Art. 26. Every purchase and sale operation requires the participation of a bank, savings bank, securities brokerage firm or securities distribution firm:

• I - as a contracting party, buyer or seller, in the repurchase operation; or

• II - as an intermediary or contracting party in the definitive operation.

Sole paragraph. The definitive or repurchase operation contracted by a credit, financing and investment company and the definitive operation contracted by a credit cooperative do not require the participation of any other institution mentioned in the caput.

Interest, amortizations and redemptions

Art. 27. For the purposes of payment of interest, amortization and redemption, the securities position of each account corresponds to the closing balance of the immediately preceding business day, except for securities to be redeemed on the day of the event, in which case to this balance are added the securities related to repurchases and deducted those related to resales.

Sole paragraph. For the purposes of the provisions of this article, the following are also considered as:

• I - security: the interest coupon split from the principal; and

• II - redemption: the amortization of the last installment of the security.

Art. 28. No movement of securities is permitted on the day of their redemption, except for repurchases/resales previously assumed for that day and other operations authorized by the administrator of Selic.

Repurchase/resale commitments

Art. 29. The date of the repurchase/resale commitment:

• I - cannot be later than the maturity date of the securities subject to the operation, except if this falls on a day not considered a business day, in which case the commitment may be assumed for the subsequent business day, coinciding with that of the redemption of the securities; and

• II - of a term equal to or greater than 2 (two) business days, must be, at the latest, the business day immediately preceding that of the redemption of the securities subject to the negotiation.

§ 1º Only the commitment provided for in item IV of art. 25 may be agreed for:

• I - the very day on which the respective repurchase operation is settled; or

• II - the business day subsequent to that of the settlement of the respective repurchase operation.

§ 2º Early settlement, total or partial, of the repurchase/resale arising from a repurchase operation without intermediation is permitted.

Art. 30. The unit price of the repurchase/resale is mandatorily:

• I - equal to that of the respective repurchase operation, if the repurchase/resale commitment is assumed for the same day; and

• II - the one established by Demab, if the date of the commitment, of one business day, coincides with that of the redemption of the securities subject to the repurchase operation.

Sole paragraph. For the purposes of the provisions of item II, Selic shall disclose, until its opening on the business day immediately preceding that of the redemption of the securities, the unit prices of the repurchases/resales to be observed in the registration of the respective repurchase operations.

Art. 31. Repurchase/resale commitments assumed for the same date may be consolidated, if of interest to the parties, provided that:

• I - they are of the type referred to in item IV of art. 25;

• II - they have as object securities with the same code, maturity and unit repurchase/resale price; and

• III - they arise from repurchase operations without intermediation, settled on the same date and with the same unit sale/purchase price.

Art. 32. The security under resale commitment may, according to prior agreement of the parties, have free movement or not, and in the latter case, it cannot be sold or otherwise negotiated, except in a repurchase operation without free movement agreement and with a repurchase date equal to or earlier than that of the committed resale.

§ 1º The restriction on negotiation applies to any security under resale commitment, in Selic itself, on the day before the redemption.

§ 2º Except as provided in § 1º, Selic does not prevent the registration and settlement of operations with securities under resale commitment, and the buyer/committed reseller is solely responsible for complying with the "no free movement" clause agreed by the parties in the respective repurchase operation.

Forward operations

Art. 33. Forward transactions may have as their object securities:

• I - already issued and in circulation, in which case the settlement date must be prior to the redemption date of the securities; or

• II - originating from a public offering already disclosed but not yet settled, in which case the settlement date must coincide with the settlement date of the public offering.

§ 1º Forward transactions are restricted to definitive purchases and sales and to those with a repurchase/resale commitment provided for in item IV of art. 25.

§ 2º In the case of item II, the settlement of the forward transaction is conditioned upon the sale, in the public offering, of at least 51% (fifty-one percent) of the offered quantity of securities.

Intermediated transactions

Art. 34. Purchase and sale transactions with intermediation have the following characteristics:

• I - existence of one or, at most, two intermediary institutions, in which case one is linked to the selling party and the other to the buying party of the securities; and

• II - performance of the intermediary institutions with brokerage accounts and of the buying and selling parties with regular custody accounts, their own or their clients'.

Sole paragraph. Intermediation is restricted:

• I - in spot transactions: to definitive purchases and sales and to those with a repurchase/resale commitment provided for in item IV of art. 25; and

• II - in forward transactions: to definitive purchases and sales.

Art. 35. The financial result of the intermediation corresponds to the difference, which cannot be negative, between the financial amounts:

• I - in the definitive transaction, of the purchase and of the sale; and

• II - in the committed transaction, of the purchase and of the sale and/or of the repurchase and of the resale.

Sole paragraph. The provisions of item II of the caput of this article do not apply when the maturity of the commitment coincides with the redemption date of the respective securities, in which case:

• I - the financial result of the intermediation corresponds to the difference between the financial amounts of the purchase and of the sale; and

• II - the financial amount of the repurchase is equal to that of the resale.

Art. 36. In the case of a definitive transaction with only one intermediary, intermediation between a single seller and up to five buyers or between a single buyer and up to five sellers is permitted.

Sole paragraph. To exercise the option provided for in the caput of this article, the intermediary must pre-register its transactions in accordance with the instructions contained in the Selic User Manual.

Art. 37. In intermediated transactions, the buyer does not have access, through Selic, to the name of the seller, and the latter does not have access to the name of the former.

Transactions registered on a later date

Art. 38. The registration of a transaction on a date later than the one on which it was carried out is permitted only for purchase and sale transactions, definitive or with a repurchase/resale commitment provided for in item IV of art. 25, contracted by:

• I - fund client with its administrator;

• II - fund client with a settling participant; and

• III - fund administrator, if a non-settling participant, with a settling participant to remedy any imbalance arising from the execution of a transaction referred to in item I.

Sole paragraph. Registrations on a later date are prohibited for transactions involving already redeemed securities, transactions with financial settlement through STR, repurchase/resale transactions for the same day, intermediated transactions, and combined or associated transactions provided for in arts. 74 to 78.

Art. 39. With respect to the commands referred to in Chapter VI, for the registration of a transaction on a later date:

• I - committed or definitive: they must be transmitted on the business day following the one on which the transaction was carried out; and

• II - committed, when transmitted on the very day of maturity of the commitment: they authorize the registration and settlement of the committed transaction and of the respective repurchase/resale.

Transfers of financial amounts

Art. 40. Selic has transaction codes that enable transfers of financial amounts among its participants, related to:

• I - taxes on transactions registered and settled in the system; and

• II - interest and amortizations owed to whoever has sold the respective securities with the commitment to repurchase them.

Sole paragraph. The calculation, withholding, and payment of taxes on transactions settled in Selic are the sole responsibility of the participants involved therein, directly or indirectly.

Special transfers of securities

Art. 41. The transfer of securities provided for in items XII, XIII, or XIV of art. 25 is the sole responsibility of the participants who authorized the transmission of the respective commands, and they must maintain documentation proving the admissibility of the transaction.

Sole paragraph. The participant responsible for delivering the securities is also required to provide the participant to whom the securities are transferred with the elements that enable the calculation of any taxes on transactions subsequent to the transfer.

Linking and unlinking of securities

Art. 42. To comply with legal or regulatory provisions, a Selic participant may link securities by transferring them from a regular free-movement custody account to a special custody account or to another type of regular custody account.

§ 1º The linkages referred to in this article and the unlinkings by means of reverse transfers are the sole responsibility of the participants who authorized the transmission of the respective commands.

§ 2º The Selic administrator bears no responsibility for verifying the actual purpose of the linking of securities.

Fiduciary assignment of securities

Art. 43. Fiduciary assignment is effected by transferring the securities from the regular free-movement custody account in which the guarantor's securities are held to a regular fiduciary assignment custody account, individualized or not, in the name of the guaranteed party.

Art. 44. The fiduciary assignment may also be carried out with the intervention of a third party, in which case the securities are registered in a special custody account for fiduciary assignment owned by the intervening party, individualized, or not, in the name of the secured party.

Separation and recombination of interest coupons

Art. 45. Securities in normal free-movement custody accounts may have their interest coupons separated from the principal, when such option is provided for in the issuance of these securities.

§ 1º The recombination of all interest coupons maturing to the principal of the security is permitted, provided that both, coupons and principal, are in a normal free-movement custody account.

§ 2º Separations of interest coupons are not permitted on the business day immediately preceding the interest payment date or the redemption date of the security.

CHAPTER VI

OF THE COMMANDS FOR REGISTRATION AND SETTLEMENT OF OPERATIONS

Art. 46. The commands for registration and settlement of operations are instructed, observing the provisions of this Regulation, with the data provided in the Selic User Manual for filling out the form "Order for Registration and Settlement of Operation", contained in Cadoc, model 30008.

§ 1º Even if there is no financial settlement through STR, the commands must be instructed with the unit purchase and sale prices or repurchase and resale prices effectively contracted by the parties.

§ 2º The commands, when transmitted through the RSFN, in a message defined in the RSFN Message and File Catalog, are subject to specific rules contained in the Selic User Manual.

Art. 47. The process of registration and settlement of operations comprises the following stages:

• I - transmission of the commands instructed with the data referred to in art. 46;

• II - review of the transmitted data;

• III - verification of the required commands;

• IV - blocking of the securities to be transferred, if applicable;

• V - confirmation of the financial settlement, provided for in art. 64, when necessary; and

• VI - debit and credit entries in the custody accounts, if applicable.

Types of commands

Art. 48. The commands to be transmitted are:

• I - type 1: authorizes the debit entry of the quantity of securities and/or the credit entry of the financial amount; and

• II - type 2: authorizes the credit entry of the quantity of securities and/or the debit entry of the financial amount.

Sole paragraph. The commands transmitted by the holder of a brokerage account authorize only the financial settlement for the purpose of receiving the brokerage due for the intermediation of the purchase and sale of securities.

Transmission of commands

Art. 49. The commands may be transmitted:

• I - by the participant itself, for registration and settlement of its operations and those of its clients;

• II - by the standard settling participant, for registration and settlement of its own operations, those of clients and those of a non-settling participant that has given it this task;

• III - by Demab, for registration and settlement of the operations of the Central Bank of Brazil and the operations of the National Treasury; and

• IV - by the Selic administrator.

Sole paragraph. The non-settling participant referred to in item II must authorize the transmission of the commands of its operations by the respective standard settling participant at the time established by the latter.

Art. 50. Except as provided in item I of art. 51, participants are responsible for the initiative to transmit or to authorize the transmission of the commands relating to their repurchases/resales, and neither the Selic administrator nor, where applicable, the standard settling participant shall bear any responsibility for the omission of this initiative.

Sole paragraph. In the case of repurchases/resales of an institution under a regime of temporary special administration, intervention or judicial or extrajudicial liquidation, decreed after the assumption of the commitment, the initiative to authorize the transmission of the commands of the repurchases/resales is the responsibility of the administrator, the intervener or the liquidator.

Art. 51. The following are transmitted automatically by Selic:

• I - in the system opening procedures, the repurchase and resale commands of all securities under repurchase agreement that will be redeemed on the day;

• II - at the time established in a normative act issued by Demab, the purchase and sale commands on the settlement date of the corresponding forward transaction, in the ascending order in which the operations were numbered at the time of registration of the forward transactions;

• III - at the moment when all commands of the contracting parties in an operation are accepted:

  • a) provided for in art. 36, the corresponding commands of the intermediary; and

  • b) of repurchase/resale with intermediation, the corresponding command(s) of the intermediary(ies).

Art. 52. For the registration and settlement, without passing through the STR, of the operations of a participant with its clients, the commands of the same type of operation with a given security may be transmitted by their respective totals, observing the weighted average price of the operations.

Art. 53. If errors or omissions are found in the transmitted data, Selic will reject the command and inform the participant of the occurrence so that it may arrange a new transmission, if applicable.

Double command

Art. 54. The registration and settlement of each operation require the transmission of two commands, except in operations:

• I - of rediscount, understood as the repurchase operations contracted in the Rediscount system of the Central Bank of Brazil, which require a single command, to be transmitted by that system;

• II - with intermediation of third parties, which require two or three double commands; and

• III - combined or associated, referred to in arts. 74 to 78, in which all commands of the operations to be settled by the netted results are required.

Art. 55. The two commands must be instructed with the same data, except those relating to the indication of intermediation, combination or association of operations, identification of the settling institutions and preference level for financial settlement in the STR.

Art. 56. Once a command is transmitted, all other commands required for the registration and settlement of the operation or of the associated or combined operations must be transmitted within the period of time provided for in regulations issued by Demab.

Cancellation of commands

Art. 57. The following are cancelled by Selic:

• I - commands instructed with divergent data, observing the provisions of art. 55, except for the command transmitted by the rightful party in the resale/repurchase resulting from the commitment provided for in art. 25, items V, VI or VII;

• II - commands accepted for processing purposes, but dependent on other commands, necessary for the registration and settlement of the operations, that were not transmitted:

  • a) within the period referred to in art. 56; or

  • b) until the closing of Selic;

• III - the commands of operations not settled due to insufficient securities, observing the provisions of art. 70; and

• IV - the commands of operations not settled due to lack of confirmation of financial settlement.

Sole paragraph. The provisions of subitem "a" of item II do not apply to the command transmitted:

• I - by Demab, as a participant or as administrator of Selic;

• II - by the rightful party in the resale/repurchase resulting from a commitment provided for in art. 25, items IV, VI or VII.

Art. 58. At the initiative of the participants, the following may be cancelled:

• I - the command forming part of a double command not yet accepted by Selic;

• II - the double command, or the single command, of an operation whose settlement depends on a command not yet transmitted; or

• III - the double command, or the single command, of an operation pending settlement due to insufficient securities, provided that it is not an operation with intermediation or an associated or combined operation.

§ 1º The Rediscount System of the Central Bank of Brazil may determine the cancellation of the commands of operations, pending settlement due to insufficient securities, combined with or associated to a given rediscount operation, as well as of the single command of the rediscount operation itself.

§ 2º The cancellation of the double commands referred to in the caput of this article must be ordered by both parties to Selic.

Commands of operations contracted in public offering or in offering to dealers

Art. 59. Except in exceptional situations, the commands of Demab relating to the settlement of the following are transmitted by 9 o'clock:

• I - operation, of purchase or sale of securities, contracted in public offering or in offering to dealers, in the event that the result has been disclosed on a previous day; and

• II - repurchase or resale resulting from a commitment assumed on a previous day.

§ 1º The command of the other party is transmitted at the time established in regulations issued by Demab.

§ 2º The commands of Demab concerning events and situations not provided for in this article are transmitted at a time to be communicated by Demab itself to the interested parties.

CHAPTER VII OF THE SETTLEMENT OF OPERATIONS

Art. 60. The operation without transfer of securities and financial resources is settled with the acceptance and consequent entry by Selic of the command(s) transmitted by the rightful party.

Art. 61. In the operation with transfer only of securities, settlement occurs with the debit and credit entries in the custody accounts of the contracting parties.

Art. 62. Involving transfer of securities and financial resources, Selic, in the settlement of the operation:

• I - shall segregate the securities, object of the operation, from the account of the transferring/selling participant;

• II - shall certify the financial settlement; and

• III - shall effect the debit and credit entries in the custody accounts of the contracting parties.

Art. 63. Requiring only financial settlement, the confirmation of this implies the settlement of the operation in Selic.

Art. 64. For the purposes of the provisions of arts. 62 and 63, Selic shall certify that the financial settlement was:

• I - authorized by the settling participant, by granting an operational limit provided for in arts. 66 to 68, in relation to the operations of a non-settling participant; and/or

• II - performed by STR.

Art. 65. Events that fall on a day not considered a business day are settled on the subsequent business day.

Operational limit for non-settling participant

Art. 66. Only the settling participant holding a Banking Reserves account may establish an operational limit for the financial settlement of operations of a non-settling participant.

Art. 67. The operational limit is given, at each moment, by the value that is initially defined, with the increase or reduction referred to in the sole paragraph of art. 68, minus the amounts corresponding to the financial debits computed on the day relating to the operations of the non-settling participant already settled by the settling participant.

§ 1º The financial debits are computed operation by operation, except when settled in the manner provided for in arts. 72 and 73, in which case the debit considered is that relating to the netted result.

§ 2º The financial settlement of an operation of a non-settling participant that exceeds the operational limit is considered as not certified.

Art. 68. The initial operational limit, as well as its alterations, must be informed by the settling participant to Selic by means of a message defined in the Catalog of Messages and Files of the RSFN, which shall only take effect from the business day following the day on which it is accepted by Selic.

Sole paragraph. At any moment, however, the settling participant may increase or reduce the operational limit, with effects only for the day and from the moment in which the message provided for in the Catalog of Messages and Files of the RSFN is accepted by Selic.

Operations pending settlement due to insufficient securities

Art. 69. Operations pending settlement due to insufficient securities in the account from which the securities will be transferred are admitted.

Art. 70. The double commands of operations pending settlement due to insufficient securities are cancelled:

• I - after the expiration of the pending period or at the respective time limit, whichever occurs first, both defined in regulations issued by Demab; or

• II - immediately, if transmitted after the aforementioned cut-off time.

Sole paragraph. The pending period provided for in item I of the caput is counted from the moment when:

• I - all commands required by the operation and, if applicable, by the other operations settled with it through offsetting results have been accepted; or

• II - the commands are transmitted, through Selic, for the settlement of the forward operation.

Art. 71. For settlement purposes, given the balance of securities in the account, operations that can be settled with that balance have priority and, among them, the one that has been pending for the longest time.

Settlement through offsetting results

Art. 72. In settlement through offsetting results, Selic:

• I - shall determine the net seller positions and separate those quantities from the respective accounts;

• II - shall verify financial settlement, operation by operation, but considering the offsetting financial result of each participant; and

• III - shall effect the debit and credit entries, jointly and for the gross quantities of securities, in the participants' accounts.

Art. 73. The following are settled through offsetting results:

• I - combined operations, under the terms of art. 74;

• II - associated operations, under the terms of arts. 75 to 78; and

• III - the repurchases/resales of securities to be redeemed on the day and the issuer events of that same day, as provided for in art. 79.

Combined operations

Art. 74. The following are settled through offsetting results:

• I - the repurchase agreement operation for the sale of securities combined with the repurchase agreement operation for the purchase of other securities, both contracted by the same institution with the Central Bank of Brazil;

• II - the repurchase and resale related to the repurchase agreement operations referred to in item I; and

• III - the repurchase/resale of securities combined with a repurchase agreement operation for the sale/purchase of securities, both contracted by the same parties.

• § 1º The repurchase agreement operations may not have intermediaries, and the term of the commitments arising from them must be equal to or greater than one business day.

• § 2º The repurchase/resale referred to in item III may not arise from a commitment provided for in item IV of art. 25.

Associated operations

Art. 75. For purposes of settlement through offsetting results, the following may be associated:

• I - the financing obtained for the purchase of securities and the respective purchase operation; and

• II - the operation of sale of securities for the payment of the financing obtained and the respective payment of that financing.

Sole paragraph. The purchase or sale operation may be:

• I - definitive or repurchase agreement, the latter with a term of at least one business day; and

• II - contracted with or without the intermediation of third parties.

Art. 76. For the purposes of the provisions of this Regulation, financing is defined as:

• I - the repurchase agreement operation, with repurchase/resale for the same day, contracted between a settling participant holding a Banking Reserves account and a settling participant holding a Settlement Account or a non-settling participant, observing the applicable legal and regulatory rules;

• II - the rediscount granted by the Central Bank of Brazil to a settling participant holding a Banking Reserves account, with payment on the same day; or

• III - the repurchase agreement operation and the rediscount, referred to in items I and II, associated.

Art. 77. With respect to the rediscount operation of the Central Bank of Brazil, with payment on a date subsequent to the date on which it was obtained, it is possible to associate:

• I - its obtainment with the payment of a rediscount already granted; or

• II - its payment with the sale, definitive or repurchase agreement, to a third party.

Art. 78. The following may also be associated:

• I - the definitive operation, of purchase or sale, contracted with the Central Bank of Brazil or with the National Treasury and the definitive operation, of sale or purchase, contracted with a third party;

• II - the repurchase agreement operation, of purchase or sale, contracted with the Central Bank of Brazil and the repurchase agreement operation, of sale or purchase, contracted with a third party; and

• III - the resale/repurchase contracted with the Central Bank of Brazil and the repurchase/resale contracted with a third party.

• Sole paragraph. The repurchase agreement operations dealt with in this article are restricted to those referred to in item IV of art. 25.

Repurchases/resales and issuer events

Art. 79. All repurchases and resales of securities to be redeemed on the day and the payment of interest coupons, amortizations and redemptions scheduled for that same day are settled, in the Selic opening procedures, through offsetting results.

• Sole paragraph. The repurchases/resales of a non-settling participant referred to in this article are mandatorily settled by the respective standard settling agent.

CHAPTER VIII OF THE COMPLEMENTARY MODULES OF SELIC

Art. 80. There are four complementary modules of Selic:

• I - Public Offering (Ofpub);

• II - Offering to Dealers (Ofdealers);

• III - Collateral of Repurchase Agreement Operations (Lastro); and

• IV - Electronic Trading of Securities (Negociação).

Art. 81. The Ofpub and Ofdealers modules have the purpose of receiving proposals and determining the results of offers:

• I - for purchase or sale of securities, in a definitive or repurchase agreement operation; and

• II - for other operations, at the discretion of the Selic administrator.

Sole paragraph. The recipients of the offers are:

• I - in Ofpub: financial institutions and other institutions authorized to operate by the Central Bank of Brazil; and

• II - in Ofdealers: only institutions accredited to operate with Demab and with the General Coordination of Public Debt Operations (Codip) of the National Treasury Secretariat.

Art. 82. The Lastro de Operações Compromissadas module is intended to assist in the specification of the securities – codes, maturities and quantity – subject to the repurchase agreements mentioned in art. 81, item I.

Art. 83. The Negociação module consists of an electronic platform for trading federal public securities accessible to Selic participants, in the manner and on the date to be disclosed by Demab.

CHAPTER IX ON THE CHAMBERS

Art. 84. The chambers, as Selic participants, and the operations to be registered and settled in Selic in which they participate, directly or indirectly, are governed by the provisions of this chapter and, insofar as they do not conflict with it, by the provisions of the other chapters of this Regulation.

Accounts in Selic

Art. 85. Any chamber may hold normal custody accounts and the following special custody accounts:

• I - special patrimony, provided for in Law No. 10.214, of 27 March 2001;

• II - mutualized fund; and

• III - collateral: intended for the custody of securities offered as collateral by a third party to the system it administers.

Art. 86. Every chamber responsible for a system for the clearing and settlement of operations with securities held in custody at Selic additionally has accounts for:

• I - deposit: intended for the custody of securities made available by a third party interested in conducting business in the chamber's environment; and

• II - settlement: intended for the physical settlement of operations conducted in the chamber's environment.

Art. 87. The opening of the principal own normal custody account, called the standard account, is processed by sending Cadoc models 30001 and 30010.

• Sole paragraph. The opening of the other accounts, as well as the closing of accounts held by the chambers, must observe the instructions contained in the Selic User Manual.

Art. 88. For purposes of consultation and statement, in addition to the chamber itself, the following also have access to the accounts of:

• I - deposit: the participant responsible for the deposit and its standard liquidator, when the latter is responsible for transmitting its commands;

• II - collateral: the participant responsible for providing the collateral and its standard liquidator, when the latter is responsible for transmitting its commands; and

• III - special patrimony: the Department of Banking Operations and Payment System (Deban) of the Central Bank of Brazil.

Operations in Selic

Art. 89. In addition to the operations provided for in art. 25, those that entail transfers of securities are admitted:

• I - arising from the constitution, release, substitution or enforcement of collateral provided to a chamber;

• II - related to deposit in the account of a chamber responsible for a system for the clearing and settlement of operations with securities held in custody at Selic;

• III - related to loans and exchanges of securities authorized by a resolution of the National Monetary Council;

• IV - arising from associated or combined operations, dealt with in subsequent articles of this chapter; and

• V - resulting from the physical settlement of operations conducted in the environment of a chamber responsible for a system for the clearing and settlement of operations with securities held in custody at Selic.

Art. 90. The commands for the chamber's operations are transmitted by it through the RSFN.

• Sole paragraph. In the linking or unlinking of securities from the special patrimony account, one of the commands will be transmitted by Deban.

Conditioned release and constitution of collateral

Art. 91. At the chamber's discretion, the collateral offered in securities may be released, in whole or in part, in an operation by means of which the chamber transfers the securities to the custody account of the party responsible for providing the collateral and the latter makes a deposit in favor of the chamber, in the amount established by it.

• Sole paragraph. At the chamber's discretion, the reverse operation to that described in the caput is admitted, by means of which the interested party transfers securities from its custody account to the chamber's corresponding collateral account and the latter arranges for the deposit of financial resources in favor of the interested party, in the amount established by it.

Art. 92. For purposes of settlement by net results, the following may be associated:

• I - the release of collateral in securities mentioned in the caput of art. 91 with the obtaining of financing provided for in art. 76; and

• II - the constitution of collateral in securities cited in the sole paragraph of art. 91 and the payment of the aforementioned financing.

Payment of rediscount associated with results in the chamber

Art. 93. The payment of rediscount with financial resources arising from the interested party's credit result in the chamber's environment requires the association of the following three operations:

• I - payment of the rediscount with transfer of the securities from the Rediscount account of the Central Bank of Brazil to the interested party's custody account;

• II - deposit of the securities by means of transfer from the interested party's custody account to the chamber's corresponding deposit account; and

• III - settlement of the delivery obligation in the chamber's environment by means of transfer of the securities from the deposit account to the chamber's settlement account.

Art. 94. Whenever necessary, the operations referred to in art. 93 may be associated with the set or only with the first two of the following operations:

• I - appropriation of securities by means of transfer from the settlement account to the chamber's custody account;

• II - sale with repurchase or, where applicable, resale by the chamber and consequent transfer of the securities from the chamber's custody account to the custody account of the purchasing institution; and

• III - granting of rediscount with transfer of the securities from the financial institution's custody account to the Rediscount account of the Central Bank of Brazil.

Obtaining rediscount associated with results in the chamber

Art. 95. The obtaining of rediscount of securities to be acquired by the interested party in the chamber's environment implies the association of the following three operations:

• I - settlement of the right to receive in the chamber's environment by means of transfer of the securities from the chamber's settlement account to its respective deposit account;

• II - withdrawal of the deposit by transferring the securities from the chamber's deposit account to the interested party's custody account; and

• III - obtaining a rediscount with transfer of the securities from the interested party's custody account to the Rediscount account of the Central Bank of Brazil.

Art. 96. Whenever necessary, the operations referred to in Art. 95 may be associated with the set or only with the first two of the following operations:

• I - transfer of the securities acquired by the chamber from its custody account to its settlement account;

• II - outright purchase, repurchase agreement or, where applicable, repurchase by the chamber and consequent transfer of the securities from the selling institution's custody account to the chamber's custody account; and

• III - payment of a rediscount eventually granted to the selling institution with transfer of the securities from the Rediscount account of the Central Bank of Brazil to the selling institution's custody account.

Purchase in an offering, public or to dealers, associated with results at the chamber

Art. 97. The acquisition of securities through Ofpub or Ofdealer with financial resources originating from the interested party's credit result in the chamber environment requires the association of the following three operations:

• I - purchase in the Selic environment with transfer of the securities from the National Treasury's or the Central Bank of Brazil's account to the interested party's custody account;

• II - deposit of the securities by transferring from the interested party's custody account to the corresponding deposit account of the chamber; and

• III - settlement of the delivery obligation in the chamber environment by transferring the securities from the deposit account to the chamber's settlement account.

Art. 98. Whenever necessary, the operations mentioned in Art. 97 may be associated with the set or only with the first two of the following operations:

• I - appropriation of securities by transferring from the settlement account to the chamber's custody account;

• II - repurchase agreement sale or, where applicable, resale by the chamber and consequent transfer of the securities from the chamber's custody account to the buying institution's custody account; and

• III - granting of a rediscount with transfer of the securities from the institution's custody account to the Rediscount account of the Central Bank of Brazil.

Provisions common to operations associated with results at the chamber

Art. 99. Regarding the operation mentioned in item II of Arts. 93, 95 or 97, the chamber's command will only be accepted by Selic once the corresponding command from the institution has been accepted, provided that the transmission of the latter command must be preceded by the registration of the operation provided for in item I of Art. 93, in item III of Art. 95 or in item I of Art. 97, respectively.

Art. 100. The registration of any operation cited in the items of Arts. 93 to 98 requires the transmission of commands instructed with a financial value, which value must be identical for the operations mentioned in the items of Arts. 93, 95 or 97.

Art. 101. The resale or repurchase commitments of the rediscount operations mentioned in Arts. 93 to 98 must always be assumed for the same day.

Settlement of repurchase/resale in a different system

Art. 102. The repurchase agreement operation – provided for in item IV of Art. 25, with a free movement agreement, not combined and without intermediation – and the respective repurchase/resale for the same day or a later day may be settled in different systems, one of which being Selic, provided that it is agreed by the parties and has the prior consent of the chamber.

Art. 103. In the event of a resale/repurchase to be settled at the chamber:

• I - the commands of the repurchase agreement operation are accepted by Selic only after the chamber has sent a message expressing its agreement to settle the respective commitment; and

• II - the provisions of item II of Arts. 29 and 30 do not apply to the respective repurchase agreement operation to be registered in Selic.

• § 1º The chamber's agreement, regarding the repurchase agreement operation not yet settled in Selic:

  • I - may be revoked, by sending a message to Selic, provided that it has not yet accepted any command of the respective repurchase agreement operation; and

  • II - is considered revoked by Selic upon expiration of the time established in a normative act issued by Demab.

• § 2º The revocation in the manner mentioned in § 1º implies the cancellation of the command(s) of the respective repurchase agreement operation in Selic.

• § 3º Once the repurchase agreement operation is settled in Selic, it sends a message to the chamber informing all data of the commitment to be honored in its clearing and settlement system.

Art. 104. Regarding the purchase/sale at the chamber with resale/repurchase in Selic:

• I - the commitment date cannot coincide with that of the redemption of the corresponding security; and

• II - the chamber must inform Selic, on the very day the repurchase agreement operation is settled, of all data relating to the commitment arising therefrom.

Special patrimony of the chamber

Art. 105. The securities that constitute the special patrimony of the chamber may be replaced, in whole or in part, until the business day prior to the redemption, by means of two combined securities transfer operations associated with two other purchase and sale operations, as follows:

• I - purchase of the substitute securities and consequent transfer from the seller's normal free movement custody account to the chamber's normal free movement custody account;

• II - transfer of the substitute securities from the chamber's normal free movement custody account to its special patrimony account;

• III - transfer of the replaced securities from the special patrimony account to the chamber's normal free movement custody account; and

• IV - sale of the replaced securities and consequent transfer from the chamber's normal free movement custody account to the buyer's normal free movement custody account.

• Sole paragraph. For the purposes of settlement through offsetting results, the operations referred to in items I and II are associated, in items II and III, combined, and in items III and IV, associated.

Movement of securities

Art. 106. With respect to the same chamber, transfers of securities are permitted in the following cases:

• I – between deposit, guarantee, settlement and normal custody accounts with free movement of the participant and the chamber; or

• II – between the special patrimony account and the normal custody account with free movement of the chamber.

Art. 107. Between accounts of two chambers of the same entity, securities may be transferred:

• I - from a deposit, guarantee or settlement account of the chamber responsible for the system of clearing and settlement of operations with securities held in Selic to a guarantee account of another chamber;

• II - from a guarantee account of any chamber to a deposit, guarantee or settlement account of the chamber responsible for the system mentioned in item I; and

• III - from a guarantee account to a guarantee account of any two chambers.

Art. 108. The transfers of securities referred to in arts. 106 and 107 in which the transferor and transferee accounts are deposit, guarantee or normal custody accounts with free movement are restricted to those relating to the same depositor/guarantee provider.

Commands for registration and settlement of operations

Art. 109. Transfers of securities between accounts of the same chamber require the transmission of a single command, except for the following, which require a double command:

• I - liens and releases of securities in the special patrimony account; and

• II - transfers arising from associated or combined operations.

Art. 110. The commands transmitted by the chamber that do not imply transfers of financial resources and the commands relating to operations associated with results in the chamber dealt with in arts. 93, 95 and 97 and item I of arts. 94, 96 and 98 are not subject to the provisions of item II, subitem “a”, of art. 57.

Art. 111. The commands of operations associated with results in the chamber not settled by the closing of the time provided in art. 112 are cancelled by Selic.

Settlement of operations

Art. 112. The physical settlement of operations traded in the environment of a chamber responsible for the system of clearing and settlement of operations with securities held in Selic occurs at the time provided in its own regulation and its possible annexes, previously approved by the Central Bank of Brazil.

Art. 113. The operations of a chamber traded in the Selic environment have financial settlement in one of the following accounts, according to the type of account or the nature of the operation:

• I - Settlement Account held by the chamber in the STR:

  • a) payment of interest, amortization and redemption of securities held in the deposit and guarantee accounts;

  • b) operations directly related to the mechanisms and safeguards adopted in the system administered by the chamber; and

  • c) operations associated with results in the chamber;

• II - account administered by Deban: payments of interest, amortizations and redemptions of securities held in the special patrimony account of the chamber; and

• III - Banking Reserve account of the standard settler: other operations of the chamber.

Provision of information to Demab

Art. 114. The data relating to operations traded in the system of clearing and settlement of operations with securities held in Selic must be informed to Demab by the respective chamber, in accordance with the standards and deadlines established by it.

CHAPTER X GENERAL PROVISIONS

Art. 115. Every settling participant and, where applicable, non-settling participant must keep at its workplaces a person qualified to transmit operation commands:

• I - preferably, throughout the entire operating period of Selic; and

• II - mandatorily, in the 60 (sixty) minutes preceding the closing of Selic.

Art. 116. The following must be the subject of an agreement between the parties:

• I - the transmission of commands of a non-settling participant by its respective standard settler;

• II - the definition, by the settling participant, of the operational limit open to the non-settling participant; and

• III - the extinction of the obligation arising from the settlement of operations of a non-settling participant by a settling participant.

Art. 117. The participants of Selic are subject to the collection of a monthly amount aimed at reimbursing the costs and investment expenses of the Brazilian Association of Financial and Capital Market Entities (Anbima) and the Central Bank of Brazil relating to the operation of Selic and its complementary modules, as well as the expenses incurred by Anbima in its activities to promote the market for federal public securities.

• Sole paragraph. The Central Bank of Brazil, administrator of Selic, the National Treasury, issuer of federal public securities, and the regulatory bodies are exempt from the reimbursement referred to in the caput.

Art. 118. The amount to be reimbursed by the participant is:

• I - calculated according to the calculation methodology disclosed by a normative act issued by Demab;

• II - due on the tenth business day of the month following the month of use of Selic; and

• III - increased by late payment interest of 1% (one percent) per month or fraction thereof and a fine of 2% (two percent), calculated on the amount of the overdue debt, when paid after the date referred to in item II.

Art. 119. The omitted cases will be resolved by Demab.