Circular No. 3.696

The Board of Directors of the Central Bank of Brazil, in a session held on 2 January 2014, based on the provisions of Articles 9, 10, item IX, and 11, item VII, of Law No. 4,595 of 31 December 1964, and 3, § 2, and 15 of Resolution No. 4,193 of 1 March 2013,

R E S O L V E S :

Article 1. Articles 21, 24-A, 35, 37, 38 and 39 of Circular No. 3,644 of 4 March 2013 shall be in force with the following wording:

“Article 21. ....................................................... ..................................................................

• VII - credit operations maturing within three months, carried out with clearing houses or settlement service providers established abroad and subject to regulation consistent with the principles established by the Committee on Payments and Market Infrastructures (CPSS) and the International Organization of Securities Commissions (IOSCO), and contracted in:

  • a) national currency; or

  • b) local currency, in each of the countries referred to in item IX;

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• XI - securities issued by the institutions mentioned in item X, maturing within three months.

............................................................” (NR)

“Article 24-A. An FPR of 85% (eighty-five percent) shall be applied to exposures arising from operations in which:

• I - the counterparty is a legal entity whose total balance of operations registered in the Central Bank of Brazil Credit Information System (SCR) exceeds R$100,000,000.00 (one hundred million reais); and

• II - the balance of credit operations contracted by the financial institution with the legal entity referred to in item I corresponds to an amount less than 10% (ten percent) of the institution's Reference Equity (PR), as defined in Resolution No. 4,192 of 2013.” (NR)

“Article 35. ....................................................... ..................................................................

§ 1 ............................................................ ..................................................................

• III - credit swaps in which the institution is the risk-receiving counterparty, subject to the provisions of Article 14, item I.

............................................................” (NR)

“Article 37. ....................................................... ..................................................................

§ 7 ............................................................ ..................................................................

• II - financial institutions and other institutions authorized to operate by the Central Bank of Brazil, as well as financial institutions established in the countries referred to in item IX of Article 21;

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§ 8 The provisions of § 5 shall not apply to National Treasury securities deposited as collateral for credit operations renegotiated under Resolution No. 2,471 of 26 February 1998.” (NR)

“Article 38. ....................................................... ..................................................................

• III - collateral provided by public companies with the following characteristics, cumulatively:

  • a) they are directly controlled by the Union;

  • b) their main purpose is the granting of guarantees against risks and the administration and management of funds with the characteristics listed in item V of Article 39;

  • c) they limit the amount of risk-adjusted collateral provided to, at most, five times their net equity, in order to safeguard their assets, even in situations of high default; and

  • d) they do not provide for a limitation on the coverage of default borne by their assets (stop-loss).” (NR)

“Article 39. ....................................................... ..................................................................

• V - collateral provided by funds with the following characteristics, cumulatively:

  • a) their purpose, alternatively or cumulatively, is to guarantee risk in credit operations, directly or indirectly;

  • b) they are constituted, administered, managed and represented in and out of court by a public company, directly controlled by the Union, whose main purpose is the granting of guarantees against risks and the administration and management of guarantee funds;

  • c) they limit the amount of risk-adjusted collateral provided to, at most, five times their net equity, in order to safeguard their assets, even in situations of high default; and

  • d) they do not provide for a limitation on the coverage of default borne by the fund (stop-loss).

............................................................” (NR)

Article 2. This Circular shall enter into force on the date of its publication, taking effect from the reference date of 31 December 2013.

Luiz Edson Feltrim, Acting Director of Regulation