CMN Resolution No. 1133 - Capital Markets - Margin Operations - Financing for Purchase of Securities

RESOLUTION NO. 001133

THE CENTRAL BANK OF BRAZIL, in accordance with Article 9 of Law No. 4,595, of December 31, 1964, makes public that the MONETARY COUNCIL, in a session held on this date, having regard to the provisions of Article 10, item V, of the aforementioned Law, and Articles 3, item II, and 4, item VIII, of Law No. 6,385, of December 7, 1976,

RESOLVES:

I - Brokerage and distribution companies may grant financing for the purchase of securities and lend securities for sale, in cash market operations on Stock Exchanges, provided that:

a) in the case of financing for the purchase of securities, the acquired securities remain pledged with the brokerage or distribution company, whose value, plus other guarantees, represents, at minimum, 140% (one hundred and forty percent) of the value of the financing;

b) in the case of lending securities for sale, the proceeds of the sale remain pledged with the brokerage or distribution company, whose value, plus other guarantees, represents, at minimum, 140% (one hundred and forty percent) of the value of the lent securities.

II - The total volume of the operations covered by this Resolution may not exceed five (5) times the net worth of the brokerage or distribution company, calculated based on the data from the balance sheet/interim balance sheet for the month immediately preceding.

III - Financing for the purchase of securities may be made with the company's own resources or obtained by it from commercial banks, investment banks, or credit, financing, and investment companies.

IV - The lending of securities for sale may only involve securities:

a) owned by the brokerage or distribution company;

b) custodied with the brokerage or distribution company or with other institutions authorized to provide custody services, whose owners have authorized, in writing, their use in operations of this nature.

V - The Central Bank and the Securities and Exchange Commission may, by joint decision, alter the collateral amounts and the operational limits stipulated in items I and II of this Resolution.

VI - The Securities and Exchange Commission, having previously consulted the Central Bank, shall regulate the operations covered by this Resolution.

VII - This Resolution enters into force on the date of its publication.

Brasília-DF, May 15, 1986

Fernão Carlos Botelho Bracher
President