CMN Resolution No. 5,108 on Financial Institutions Acting as Counterparties in Third-Party Portfolio Management and Segregation of Activities

Resolution No. 5,108

CMN RESOLUTION
NO. 5,108, OF NOVEMBER 30, 2023

Provides for the operation of financial institutions and other institutions authorized to function by the Central Bank of Brazil as counterparties in operations of third-party portfolios administered by them, and on the segregation of the activity of administering third-party resources in these institutions.

The Central Bank of Brazil, in accordance with Art. 9 of Law No. 4,595, of December 31, 1964, makes it public that the National Monetary Council, in a session held on November 30, 2023, based on Art. 4, item VIII, of the aforementioned law, and considering the provisions of Art. 2, items III and IV, of Law No. 4,728, of July 14, 1965,

R E S O L V E D:

Art. 1. This Resolution provides for the operation of financial institutions and other institutions authorized to function by the Central Bank of Brazil as counterparties in operations of third-party portfolios administered by them, and on the segregation of the activity of administering third-party resources in these institutions.

Sole Paragraph. The provisions of the caput do not apply:

I - to securities brokerage firms;

II - to foreign exchange brokerage firms;

III - to securities distribution firms;

IV - to consortium administrators; and

V - to payment institutions.

Art. 2. For the purposes of this Resolution, the activity of administering third-party resources is the professional exercise, for third-party financial assets and securities, of at least one of the following categories of securities portfolio management services, as defined by the norms of the Securities and Exchange Commission (CVM):

I - fiduciary administration; and

II - resource management.

Art. 3. The institutions mentioned in Art. 1, in exercising the activity of administering third-party resources, may not act as counterparties, directly or indirectly, in portfolio operations with financial assets and securities administered by them, except in the following cases:

I - when it concerns individual portfolios and there is prior, written authorization from the respective holder; or

II - when they do not demonstrably hold discretionary power over the said portfolio and do not have prior knowledge of the operation.

Sole Paragraph. The provisions of this article also apply to operations carried out through and in the interest of natural persons, administrators, controllers, and affiliated companies of the aforementioned institutions.

Art. 4. The activities of fiduciary administration and resource management referred to in Art. 2 must be segregated from other activities carried out by the institutions mentioned in Art. 1.

Art. 5. The institutions mentioned in Art. 1, in exercising the activity of fiduciary administration and/or resource management, must designate, for each activity they exercise, a board member responsible for civil, criminal, and administrative liability for that activity, as well as for the provision of information related to it, subject to the provisions of § 1 of Art. 6.

§ 1. The board member referred to in the caput must be authorized to exercise the activity of securities portfolio administrator by the Securities and Exchange Commission (CVM).

§ 2. The board member referred to in the caput may not cumulatively be responsible for both the activity of fiduciary administration and resource management.

§ 3. The board member responsible for the resource management activity must not have any links with the other activities of the institution, subject to the provisions of § 2 of Art. 6.

Art. 6. The institutions mentioned in Art. 1 are permitted to segregate the resource management activity referred to in Art. 4 through the contracting of a company duly authorized to provide services in this category.

§ 1. In the event of contracting a financial institution or another institution authorized to function by the Central Bank of Brazil that is affiliated, the designation of a director or, if applicable, an administrator to be responsible for resource management is necessary only with respect to the contracted institution, and the designation must fall upon a director or administrator who has no links with the activities of the contracting institution.

§ 2. In the event of contracting an unaffiliated company, the contracting institution may designate a director responsible for resource management who may have links with other activities of the institution, except those related to fiduciary administration and the administration of the institution's own resources.

Art. 7. For the purposes of this Resolution, institutions and companies are considered affiliated 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 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 - 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; or

IV - they have a common administrator.

Art. 8. The Central Bank of Brazil will adopt, within the scope of its legal powers, the necessary measures for the execution of the provisions of this Resolution.

Art. 9. The following are repealed:

I - Resolution No. 2,451, of November 27, 1997;

II - Resolution No. 2,486, of April 30, 1998; and

III - Resolution No. 2,824, of March 29, 2001.

Art. 10. This Resolution enters into force on January 2, 2024.

ROBERTO DE OLIVEIRA CAMPOS NETO
President of the Central Bank of Brazil