CVM Instruction 402 (Revoked)

Establishes norms and procedures for the organization and operation of commodity brokers.

The PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION - CVM, makes public that the Collegiate Board, in a session held on this date, in accordance with the provisions of Articles 8, item I, 15, item VI, and 16, of Law No. 6,385, of December 7, 1976, RESOLVED to issue the following Instruction:

SCOPE AND PURPOSE

Art. 1. This Instruction establishes norms and procedures for the organization and operation of commodity brokers that negotiate or register operations with securities on commodity and futures exchanges.

Sole Paragraph. For the purposes of this Instruction, a commodity broker is considered to be the entity authorized to negotiate or register operations with securities on commodity and futures exchanges.

ON THE ACTIVITY

Art. 2. The commodity broker, to operate, depends on prior registration with the CVM, in accordance with Article 11 of this Instruction.

Sole Paragraph. To obtain the registration referred to in this article, the broker must:
I - be constituted as a corporation or a limited liability company; II - be admitted as a member of a commodity and futures exchange; III - indicate to the CVM a statutory director or managing partner technically qualified, in accordance with the provisions of Article 8, who will be responsible for compliance with the provisions of this Instruction; and IV - adopt, in its name, the expression "commodity broker".

ON THE EQUITY TITLE OR SHARES

Art. 3. The equity title or shares issued by the commodity and futures exchange held by the commodity broker guarantee, preferentially, through real pledge, opposable to third parties, in accordance with the Brazilian Civil Code, the debts of the commodity broker to the exchange to which it belongs, in accordance with the regulations and procedures defined by it.

Sole Paragraph. The commodity broker must effectuate the real pledge in favor of the commodity and futures exchange upon its admission as an associate.

ON OPERATIONAL NORMS

Art. 4. The commodity broker is responsible, in operations carried out on commodity and futures exchanges, towards its clients, towards other intermediaries for whom it has operated or is operating, and towards the exchange itself:
I - for its good and effective settlement;
II - for the legitimacy of the securities delivered for any reason, as well as for their regular receipt and delivery, endorsement or transfer; III - for the implementation of records, in the names of the clients linked to it and in compliance with orders issued by them; IV - for the legitimacy of the power of attorney and other documents necessary for the transfer of securities; and V - for compliance and adoption of high standards of integrity and ethics.

Art. 5. The commodity broker is obliged to maintain confidentiality of the operations and services provided, including the names of its clients, revealing them only with authorization given by them or in accordance with the legislation and regulations in force.

§1. In the event of default or infringement of legal or regulatory norms by a client, and regardless of the judicial or extrajudicial measures applicable, the commodity broker must communicate the facts to the commodity and futures exchange, requesting, if appropriate, the adoption of the corresponding procedures for the execution of the defaulting client's guarantees and, including, disclosure to the market.

§2. If the guarantees that are to be executed in accordance with the preceding paragraph belong to third parties or have been provided by third parties, for any reason, it is mandatory for the commodity and futures exchange to carry out the corresponding disclosure to the market.

§3. In the event of a client's default, the commodity broker must, in any case, identify for the commodity and futures exchange the operations that led to the default, proving their regularity, as well as the diligence carried out to collect from the client.

Art. 6. The commodity broker must present equity and financial requirements, according to criteria established by the commodity and futures exchange.

Art. 7. It is prohibited for the commodity broker, in the exercise of its specific functions:
I - to carry out operations that characterize, in any form, the granting of financing, loans or advances to its clients; II - to acquire assets not intended for own use, except those received in settlement of debts of difficult or doubtful solution, in which case it must sell them within a period of one year, counted from receipt, extendable up to 2 (two) times, at the discretion of the CVM; III - to obtain loans or financing from financial institutions, except those linked to the acquisition of assets for own use and to the execution of activities provided for in its corporate purpose, in accordance with the legislation in force; and IV - to carry out operations involving a final client who does not have registration identification on the commodity and futures exchange, in accordance with the legislation in force.

ON ADMINISTRATION

Art. 8. Only natural persons, residents in Brazil, who present the documents contained in Annex I of this Instruction, may be administrators of a commodity broker:

Sole Paragraph. The CVM may, at its discretion, require additional documents and information deemed necessary for the authorization to exercise the position of administrator of a commodity broker and for proof of its integrity and technical capacity.

ON FINANCIAL STATEMENTS

Art. 9. The commodity broker must prepare monthly balance sheets and, on the last day of the months of June and December of each year, financial statements that must be audited by an independent auditor registered with the CVM.

Art. 10. The commodity broker is subject to the norms on the preparation and disclosure of financial statements applicable to securities broker corporations.

§1. The following documents related to the activity of the commodity broker must be available to the CVM and sent to the commodity and futures exchange:
a) monthly balance sheets, within 15 (fifteen) days after the closing of each month; and b) financial statements, as well as opinions and reports of independent auditors referred to in Article 9 of this Instruction, within 90 (ninety) days of the closing of each period.

§2. The commodity broker must disclose the balance sheets, financial statements and respective audit opinions within the same deadlines referred to in the preceding paragraph on its website on the worldwide computer network, if any, and on the website of the commodity and futures exchange to which it is linked.

ON THE REGISTRATION OF THE COMMODITY BROKER

Art. 11. The registration of the commodity broker will be issued by the Superintendence of Market and Intermediary Relations within 30 (thirty) days, counted from the date of receipt at the CVM of the registration request for its operation.

§1. The request must be accompanied by the information contained in Annex II to this Instruction.

§2. If the period provided for in this article expires, in the absence of contrary manifestation by the CVM, and provided that all formalities provided for in this Instruction have been complied with, the registration request is presumed approved.

§3. The 30 (thirty) day period may be interrupted, only once, if the CVM requests additional information from the interested party, with a new 30 (thirty) day period starting from the date of compliance with the requirements.

§4. To meet the requirements, a period not exceeding 60 (sixty) days will be granted, counted from the receipt of the respective correspondence, under penalty of denial of the request.

§5. If the registration for operation, referred to in this article, is not requested within 180 (one hundred and eighty) days of the admission of the commodity broker as a member of the commodity and futures exchange, the exchange will proceed to the sale at auction of its equity title or shares, as the case may be.

ON DENIAL OF THE REQUEST

Art. 12. The denial of the commodity broker's registration request with the CVM must be communicated in writing to the interested party and to the commodity and futures exchange, with all documents that supported the request being available to the applicant for a period of 90 (ninety) days.

ON CANCELLATION

Art. 13. The CVM may cancel the registration for operation of the commodity broker, if:
I - the commodity broker does not start its activities within 180 (one hundred and eighty) days counted from the date of registration; II - the commodity broker requests cancellation; III - the falsity of any of the information or documents presented to obtain the registration is found; IV - due to a supervening fact duly proven, it is evident that the registered commodity broker no longer meets any of the requirements or conditions, provided for in this Instruction, established for the granting of the registration; or V - the commodity broker, in the exercise of its activities, fails to comply with any of the obligations provided for in this Instruction.

§1. In the case provided for in item III of this article, the CVM will notify the Public Ministry to file the appropriate criminal action, without prejudice to the application of the applicable administrative sanctions.

§2. The registration for operation of the commodity broker will also be cancelled in the event of alienation of the equity title or shares issued by the commodity and futures exchange.

§3. In any case, the cancellation of the registration for operation of the commodity broker will be effected without prejudice to the enforceability of all obligations of the broker.

ON APPEAL

Art. 14. Against the decisions of the Superintendent of Market and Intermediary Relations of the CVM, an appeal may be filed to the Collegiate Board, in accordance with the regulations in force.

ON GENERAL AND TRANSITORY PROVISIONS

Art. 15. The following acts related to the commodity broker depend on prior approval by the CVM, which will express its opinion within a period of up to 30 (thirty) days from the date of the request:
I - transformation, merger, incorporation and spin-off; II - appointment of administrators; III - appointment of fiscal council members and members of other statutory bodies; IV - alienation of corporate control; and V - liquidation of the company by resolution of the partners.

§1. Commodity brokers must, when making the request referred to in the main text of this article, simultaneously notify the commodity and futures exchange.

§2. The CVM will consult the commodity and futures exchange, which will have a maximum period of 15 (fifteen) days to express its opinion.

§3. If the period provided for in the main text of this article expires, in the absence of contrary manifestation by the CVM, the request to carry out the act in question is presumed approved.

Art. 16. The following acts related to the commodity broker must be communicated, within 5 (five) business days, counted from the date of their resolution, to the CVM and to the commodity and futures exchange:
I - transfer of headquarters;
II - creation and closure of offices or branches; III - alteration of the amount of social capital; IV - alienation of the equity title or shares issued by the commodity and futures exchange; and V - any alteration of the bylaws or partnership agreement.

Art. 17. A serious offense, for the purposes of Article 11, § 3, of Law No. 6,385/76, is considered to be the infringement of the norms contained in Articles 2, 4, 5, 6, 7, 9, 15, and 16.

Art. 18. The provisions of Articles 2, 8, 9, 10, 11, 12, 13 and 15 do not apply to commodity brokers constituted as securities broker or distributor corporations, investment banks and multiple banks with investment portfolios.

Art. 19. Commodity brokers in operation on the date of publication of this Instruction must adapt to the provisions of this Instruction within 90 (ninety) days, counted from the date of its entry into force, observing the provisions of the preceding article.

Art. 20. This Instruction will enter into force within 30 (thirty) days counted from the date of its publication.

Signed original by
LUIZ LEONARDO CANTIDIANO
President

ANNEX I
DOCUMENTS TO BE PRESENTED FOR THE REGISTRATION OF PARTNER-ADMINISTRATORS OR STATUTORY DIRECTORS OF THE COMMODITY BROKER

1. Request from the broker containing the indication of the partner-administrator or statutory director referred to in item III of the sole paragraph of Article 2 of this Instruction;
2. Brief curriculum, containing personal information (full name, nationality, residential address, electronic and mailing address, contact phone numbers, CPF and identity numbers), academic background and professional data that demonstrate their experience in the securities, commodities and futures market;
3. Declarations informing under the penalties of the Law:
   a) that they are not disqualified from holding a position in financial institutions and other entities whose operation depends on authorization from the CVM or the Central Bank of Brazil, Superintendence of Private Insurance and Secretariat of Complementary Pension; b) that they have not been criminally convicted, by a final and unappealable decision, except in the case of rehabilitation; c) that they are not included in the Registry of Issuers of Bounced Checks of the Central Bank of Brazil; d) that they have not, in the last 5 (five) years, been an administrator of an entity subject to the control and supervision of the CVM, the Central Bank of Brazil, the Superintendence of Private Insurance or the Secretariat of Complementary Pension, which has had, during this period, its authorization revoked or has been subjected to a regime of bankruptcy, judicial reorganization, intervention, extrajudicial liquidation or submitted to a regime of temporary special administration; e) if they were convicted, in the last 5 (five) years, for infringement of the legislation of the CVM, Central Bank of Brazil, Secretariat of Complementary Pension and Superintendence of Private Insurance, specifying the respective nature; and f) that they commit to notify the CVM in the event of alteration of their registration data.
4. Copy of the individual taxpayer registry card and identity document.

ANNEX II
DOCUMENTS TO BE PRESENTED FOR THE REGISTRATION OF COMMODITY BROKERS

1. Presentation of the broker, containing, at a minimum, the following information:
   a) Corporate name of the commodity broker; b) Trade name; c) CNPJ registration number; d) Complete address of the headquarters and branches; e) Phone and fax numbers for contact, which will be public domain; and f) Electronic address for contact; and g) Address of the broker's website on the worldwide computer network or of the commodity and futures exchange to which it is linked.
2. Certified copy of the constitutive acts of the commodity broker, duly consolidated, as well as proof of registration and current registration status of the company, issued by the Federal Revenue Secretariat;
3. Presentation of the controllers: if natural persons, personal information (full name, nationality, residential address, electronic and mailing address, contact phone numbers, CPF and identity numbers), academic background and professional data; in the case of a corporate controller, provide the information requested in item 1;
4. Updated document issued by the commodity and futures exchange to which the commodity broker is linked, attesting to its acceptance as an admitted member for intermediation of contracts negotiated there;
5. Declaration by the statutory director or managing partner responsible that they commit to notify the CVM in the event of alteration of any information related to the registration of the commodity broker with the agency; and
6. Audited financial statements, by an auditor registered with the CVM, of the commodity broker, referring to the immediately preceding fiscal year, as well as the balance sheets raised up to the date.