CVM Instruction No. 380 of December 23, 2002 (Revoked)

FULL TEXT OF CVM INSTRUCTION NO. 380, OF DECEMBER 23, 2002, WITH CHANGES INTRODUCED BY INSTRUCTION 545/14.
Establishes norms and procedures to be observed in operations carried out in stock exchanges and organized over-the-counter markets through the worldwide computer network and provides other measures.

THE PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION – CVM makes public that the Collegiate Board, in a meeting held on this date, in view of the provisions of arts. 8, item I and 18, item II, letters "a" and "c", of Law No. 6.385, of December 7, 1976, RESOLVED to issue the following Instruction:

SCOPE AND PURPOSE
Art. 1. The procedures to be observed when forwarding buy and sell orders and trading securities in a stock exchange, commodity and futures exchange, and organized over-the-counter market entity through the worldwide computer network are regulated by the provisions of this Instruction.

INITIAL DEFINITIONS
Art. 2. For the purposes of this Instruction, the following are considered:
I – self-regulatory entity: stock exchanges, commodity and futures exchanges, and organized over-the-counter market administrative entities that manage a trading system that receives buy and sell orders via the worldwide computer network page; II - electronic broker: securities brokerage company and commodity brokers authorized by the Securities and Exchange Commission - CVM to exercise the activity of intermediation or brokerage of operations with securities in a self-regulatory entity that manages a system for receiving buy and sell orders for securities through the worldwide computer network; III – worldwide computer network page or Internet: set of documents presented or made available on the worldwide computer network, which can be accessed via an electronic address; IV - shortcut: highlighted text or graphical component of the worldwide computer network page that allows access to other pages or other sections or components of the same page; and V - protocol address on the worldwide computer network: four-octet code that identifies all devices connected to the worldwide computer network.

INVESTOR INFORMATION AND EDUCATION
Art. 3. Electronic brokers must include on their worldwide computer network pages, clearly, accurately, and in language accessible to the investing public:
I - detailed instructions for using the securities trading system via the worldwide computer network; II - the policy on brokerage fees and any additional trading costs via the worldwide computer network, including emoluments charged by self-regulatory entities or by clearing and settlement chambers; III - the detailed procedures followed by the electronic broker in executing buy and sell orders received via the worldwide computer network, including the possibility that orders are not automatically executed by the system, and their priority over orders received through other communication channels, according to traded volume and other parameters; IV - the characteristics of the security system maintained by the broker, including the use of passwords and electronic signatures; V - the electronic forms used to communicate to the investor the receipt and faithful execution of their orders, as well as any other information the investor should receive; VI - information on securities, including the price of the last transaction and the 10 best prices in the buy and sell offer lists in the trading system with the total quantities at each price, identified by security, as well as the time of disclosure of this information on the broker's page on the worldwide computer network; VII - the electronic broker responsible for executing orders received via the worldwide computer network, in cases of order forwarding; VIII - the maximum time interval without performing operations in which the investor may remain connected to the trading system via the worldwide computer network without being automatically disconnected; and IX - shortcut to the CVM page on the worldwide computer network.

Art. 4. Electronic brokers must establish, on their worldwide computer network pages, a section or a shortcut for investor education, containing, among other information that its administration deems relevant:

I - description of the structure and functioning of self-regulatory entities and securities clearing and custody chambers; II - description of the securities available for purchase and sale via the worldwide computer network; III - the risks of price fluctuation and potential loss of principal value inherent to the securities market, particularly those resulting from positions in derivatives; IV - the operational risks of using the worldwide computer network and electronic trading systems for the purchase and sale of securities; V - the stages and corresponding deadlines included in the settlement cycle of securities transactions, as well as the procedures adopted by clearing and custody chambers in cases of failure in the settlement cycle; VI - special auction procedures observed CVM and self-regulatory entity norms, to which investor orders are subject; VII – information regarding the competence of self-regulatory entities, mainly with respect to powers to cancel previously concluded transactions in case of violations of legal and regulatory provisions; and VIII - information on simultaneous trading of securities in the live voice trading room and in the electronic trading system, and what the criteria are for interference of one market in another. Sole Paragraph. The electronic broker must place on its worldwide computer network page a highlighted notice with the following statement: "ALL COMMUNICATION VIA THE WORLDWIDE COMPUTER NETWORK IS SUBJECT TO INTERRUPTIONS OR DELAYS, WHICH MAY PREVENT OR HINDER THE SENDING OF ORDERS OR THE RECEIPT OF UPDATED INFORMATION."

CAPACITY TO SERVE INVESTORS VIA THE WORLDWIDE COMPUTER NETWORK Art. 5. Electronic brokers must continuously measure the capacity to serve their clients' respective systems, through capacity indicators.
§1. For the purposes of this article, the following are considered capacity indicators:

I – the time elapsed between the receipt of an order sent by the client to the electronic broker and the broker's response to its client acknowledging receipt, accepting or not, and, if affirmative, forwarding it for registration and offer at the self-regulatory entity; II – the time elapsed between the receipt of a message sent by the self-regulatory entity to the electronic broker informing whether the client's order was or was not registered in the offer system, and the electronic broker's confirmation to its client that it processed or did not process internally the registration of the offer; and III – the time elapsed between the receipt of a message sent by the self-regulatory entity to the electronic broker confirming the execution or informing the cancellation of a transaction involving an offer previously registered, and the electronic broker's updating of its bases, releasing the information to its client. §2. Electronic brokers must enable their systems to measure, for each order received via the Internet, the capacity indicators. §3. The history of the measurements mentioned in §2 must be preserved by the electronic broker for a minimum period of 1 (one) year. §4. Self-regulatory entities must define, within 30 (thirty) days from the publication of this Instruction, minimally acceptable limits for each of the indicators referred to in §1 of this article, communicating them immediately to the CVM.

Art. 6. Electronic brokers must establish contingency plans for their systems, with the objective of preserving service to investors in cases of service suspensions via the worldwide computer network, periods of high market volatility, or demand peaks.

SYSTEM SECURITY
Art. 7. It is the responsibility of electronic brokers to guarantee the security and confidentiality of all information about their clients, their buy or sell orders for securities, and their securities portfolio, as well as their communication with clients, using high technological standards of network security.

Art. 8. Electronic brokers are responsible for the operability of their systems, even if they are maintained by third parties.

REGISTRATION OF OPERATIONS VIA THE WORLDWIDE COMPUTER NETWORK Art. 9. Electronic brokers must maintain, for a period of 5 (five) years, records of all orders received via the worldwide computer network, executed or not, on magnetic media.

Sole Paragraph. The investor who sends a buy or sell order for securities via the worldwide computer network must be immediately notified by the respective electronic broker, via electronic message or email:
I - of the receipt of the order in the electronic broker's electronic system; II – of the registration of the order in the self-regulatory entity's electronic system; III - of the execution of the order; and IV - of the cancellation of the purchase or sale of securities, if any, including its motivation.

MESSAGE PUBLICATION SERVICES
Art. 10. Electronic brokers that offer their clients or users of their worldwide computer network page services of message publication under pseudonym must maintain on magnetic media for a period of 5 (five) years, available to the CVM, a file containing:
I - the complete content of all messages published on their page; II - the pseudonyms used by the authors of the messages; and III - the protocol addresses on the worldwide computer network of the microcomputers from which the messages originated.

Art. 11. Users of the electronic broker's page on the worldwide computer network who publish analyses of public companies or securities must have their full names clearly identified by the electronic broker in each published analysis. §1. It is the responsibility of the electronic broker to verify the veracity of any personal information provided by the users referred to in the caput of this article that are published along with their analyses. §2. Analyses sent by page users must be published in a section distinct from those produced by legal entities.

Art. 12. The brokers referred to in the caput of art. 10 must establish internal procedures to prevent the practice of price manipulation and dissemination of false or prejudicially incomplete information through their message publication services.

Sole Paragraph. Within 60 (sixty) days from the date of publication of this Instruction, brokers must inform the CVM of the procedures established to prevent the practice of price manipulation and dissemination of false or prejudicially incomplete information referred to in the caput of this article.

DISCLOSURE OF RELEVANT FACTS
Art. 13. Electronic brokers must include on the initial section of their worldwide computer network pages a list or shortcut with the following statement: "INQUIRY INTO RELEVANT FACTS DISCLOSED IN THE LAST 5 (FIVE) BUSINESS DAYS", with all relevant facts disclosed by companies that have securities admitted to trading in a self-regulatory entity in the last 5 (five) business days. Sole Paragraph. Relevant facts may be listed by title, if this contains a shortcut to the full text of the relevant fact, as disclosed by the company in a communication to the self-regulatory entity in which the securities issued by the company are traded.

PERIODIC AUDIT BY THE SELF-REGULATORY ENTITY
Art. 14. Self-regulatory entities that manage electronic trading systems with order reception via the worldwide computer network must conduct a periodic semi-annual audit of all electronic brokers, issuing a corresponding report on the systems used by electronic brokers, verifying if:
I – the information provided in art. 3 of this Instruction is being regularly provided to clients; and II – the capacity indicators reported by electronic brokers are compatible with the measurement history carried out by the same brokers during the period corresponding to the semi-annual audit and meet the limits referred to in § 4 of art. 5. §1. Self-regulatory entities must send to the CVM semi-annually a list of audited brokers for the purposes of this article. §2. If it is found that an electronic broker has not complied with the provisions of items I and II of this article, the self-regulatory entity must immediately request the said electronic broker to bring itself into compliance within a maximum period of 15 (fifteen) days. §3. In the event that the electronic broker does not meet the deadline for compliance referred to in the previous paragraph, the self-regulatory entity must inhibit the automatic routing of buy and sell orders for securities from that broker to the trading system, communicating the fact immediately to the CVM and the market, until the broker repairs its system.

ALTERNATIVE MEANS OF SERVING CLIENTS
Art. 15. Electronic brokers must have alternative means of serving their clients in the following cases:
I - special auction procedures that occur during trading; and II - operations in derivative markets, if any.
Sole Paragraph. The alternative means of service must be informed by the electronic broker to clients at the time of registration, as well as the situations in which such means may be used.

GENERAL AND TRANSITORY PROVISIONS
Art. 16. A serious offense, for the purposes of art. 11, § 3 of Law No. 6.385/76, is the violation of the norms contained in arts. 5, §1, items I to III, §2 to §4; 6; 7; 9, caput; 11, § 1, 12, caput and 14, items I to II, and §1 to §3.

Art. 17. Non-compliance with the provisions of arts. 3, items I to IX; 4, items I to VIII and sole paragraph; 9, sole paragraph; 10, items I to III; 11, § 2; 12, sole paragraph and 15, items I to II, and sole paragraph, constitutes a hypothesis of objective nature offense, subject to a summary administrative process procedure.

• Art. 17 revoked by CVM Instruction No. 545, of January 29, 2014.

Art. 18. It is the responsibility of self-regulatory entities to issue complementary norms necessary for the execution of the provisions of this Instruction.

Art 19. The norms contained in this Instruction apply, insofar as applicable, to other members of the securities distribution system when they exercise the activity of securities intermediation through an electronic broker.

Art. 20. The other norms issued by the CVM regulating the activity of securities and brokerage firms apply, insofar as applicable, to transactions carried out by electronic brokers.

Art. 21. CVM Deliberation No. 365, of October 25, 2000, is revoked.

Art. 22. CVM Instruction No. 376, of September 11, 2002, is revoked.

Art. 23. This Instruction enters into force on February 4, 2003.

Signed original by
LUIZ LEONARDO CANTIDIANO
President