CMN Resolution No. 3197 on Swap and Loan Operations of Securities by Financial Institutions

RESOLUTION NO. 003197

Dispenses on the carrying out of swap and loan operations of securities by financial institutions and other institutions authorized to operate by the Central Bank of Brazil.

THE CENTRAL BANK OF BRAZIL, in accordance with Article 9 of Law 4,595 of December 31, 1964, makes public that the MONETARY COUNCIL, in a session held on May 27, 2004, considering the provisions of Articles 4, items VI and XVII, of the aforementioned law, Article 2, items V and VI, and Article 10 of Law 4,728 of July 14, 1965, in Law 6,099 of September 12, 1974, and in Article 10 of Law 10,214 of March 27, 2001,

RESOLVED:

Article 1. To permit financial institutions and other institutions authorized to operate by the Central Bank of Brazil to borrow securities, as well as to swap and lend securities that are part of their respective portfolios, when these are operations financially settled within clearinghouses or settlement service providers authorized by said Autarchy.

§ 1. For the purposes of this resolution, the following definitions must be taken into consideration:

I - swap: an operation in which one party acts as a donor of one or more assets and a borrower of another asset or set of assets, and the other party as a borrower and donor, respectively, of these same assets, for an identical term, with payment of a premium by one of the contracting parties and return of the papers to the originally held positions at the end of the contract;

II - loan: an operation in which the parties carry out a loan of assets, for a determined time and with payment of a premium by the borrowing contracting party.

§ 2. The operations referred to in the caput may be carried out with individuals and legal entities, whether or not part of the National Financial System.

Article 2. The swap and loan operations mentioned in this resolution must be computed for the purposes of the limits established in Resolution 2,950 of April 17, 2002, and subsequent amendments.

Article 3. The institutions referred to in Article 1 must indicate a director responsible for carrying out the loan and swap operations of securities.

Article 4. This resolution enters into force on the date of its publication.

São Paulo (SP), May 27, 2004.

Henrique de Campos Meirelles
President