CVM Instruction No. 124 of July 4, 1990

CVM INSTRUCTION NO. 124, OF JULY 4, 1990.

Provides for the physical compensation and settlement of inter-market transactions.

THE PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION makes public that the Collegiate Body, in a session held on this date, and based on Articles 4, item III, 18, item II, letter "a", and 24 of Law No. 6,385 of December 7, 1976,

HAS RESOLVED:

Article 1. The Stock Exchanges shall observe the procedures for physical compensation and settlement of inter-market transactions defined in this Instruction.

Sole Paragraph. The provisions of the caput of this article apply to transactions conducted in the spot, forward, futures, options, and similar markets.

Article 2. Requests for physical settlement of transactions shall be made directly to the Stock Exchanges where they are conducted, with the requesting exchange bearing total responsibility for the delivery of securities and financial instruments to the brokerage firms and investors.

Article 3. The Stock Exchanges shall maintain, permanently, a current account control system, which shall be updated with each request, allowing for the immediate calculation of the credit, debit, and balance of securities, money, and financial instruments that each Stock Exchange has with the others.

§1. On the first business day of each fortnight, the Stock Exchanges shall render accounts to each other, deliver what is owed, and receive what is due, extinguishing the debits and credits of the aforementioned current accounts.

§2. On the date of account rendering, the Stock Exchange that does not have the financial instruments to deliver to the creditor exchange shall bear the total cost of acquiring these instruments in the auction and shall effect payment of the amount due via a bank credit order, in favor of the creditor exchange, on the day following notification of the total acquisition cost.

§3. In the event of the distribution of rights of the financial instruments subject to the settlement of transactions, the Stock Exchanges shall settle the balance of their respective current accounts 5 (five) business days before the start of the receipt, by the company, of exercise rights requests.

Article 4. Each Stock Exchange may exercise, when requested, rights over the financial instruments of which it is indebted to the other Stock Exchange by virtue of the settlement of transactions.

Article 5. The Stock Exchanges are liable to each other for the legitimacy of the securities they deliver.

CVM INSTRUCTION NO. 124, OF JULY 4, 1990.
2

Article 6. The total expense with the shipment of securities, money, and financial instruments shall be borne by the Stock Exchange that sends them to the other.

Sole Paragraph. The Stock Exchanges may apportion this expense in the proportion they stipulate.

Article 7. The Stock Exchanges shall send to the institutions providing bookkeeping action services, in sufficient time to comply with the deadline for physical and financial settlement of transactions, the data necessary for the formalization of the transfer of the shares subject to negotiation.

Article 8. This Instruction enters into force on the date of its publication in the Official Gazette of the Union.

Signed by
ARY OSWALDO MATTOS FILHO
President