CVM Instruction No. 387 of April 28, 2003 (Revoked)

FULL TEXT OF CVM INSTRUCTION NO. 387, OF APRIL 28, 2003, WITH THE CHANGES INTRODUCED BY CVM INSTRUCTIONS NOS. 395/03, 419/05, 437/06, 450/07 AND 454/07.

Establishes norms and procedures to be observed in operations carried out with securities, on the trading floor and in electronic trading and registration systems at stock exchanges and commodity and futures exchanges, and provides other measures.

THE PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION - CVM, makes public that the Collegiate Body, in a meeting held on April 25, 2003, based on the provisions of items "a" and "c" of item II of art. 18 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 to be observed in operations carried out with securities, on the trading floor and in electronic trading and registration systems at stock exchanges or at commodity and futures exchanges.

DEFINITIONS
Art. 2
For the purposes of this Instruction, the following are considered:
I – Exchange(s): stock exchanges and commodity and futures exchanges, indistinctly; II - Securities Broker: the company authorized to negotiate or register operations with securities on its own account or on behalf of third parties at an exchange and organized over-the-counter entities; III - Commodities Broker: the company authorized to negotiate or register operations with securities traded at a commodity and futures exchange; IV – Broker(s): indistinctly, covers securities brokers and commodities brokers; V – Special Operator: an individual or sole proprietorship holder of a commodity and futures exchange title, authorized to act on the trading floor and in electronic trading and registration systems, executing operations on its own account and on behalf of brokers, provided authorized by the exchange; VI - Organized Over-the-Counter Entity: a legal entity that administers an electronic trading and registration system for operations with securities; VII - Principal or Client: the person, natural or legal, and the entity, on whose behalf operations with securities are carried out; VIII - Clearing and Settlement Chamber: a chamber or service provider of registration, clearing and settlement of operations with securities, part of the Brazilian Payments System – SPB;

IX - Clearing Member or Clearing Agent: the legal entity, financial institution or equivalent, responsible to those to whom it provides services and to the clearing and settlement chamber for the clearing and settlement of operations with securities under its responsibility; X – Order: the act by which the client determines to a broker to buy or sell securities, or register an operation, in their name and under the conditions specified; XI - Offer: the act by which the broker or special operator announces or registers the intention to buy or sell securities; XII - Participant with Direct Settlement: a financial institution holding a clearing member title that carries out and settles operations for its own portfolio or for funds under its administration.

CONDUCT RULES
Art. 3
Exchanges must establish conduct rules to be observed by brokers in their relationship with their clients and other market participants, complying with the following principles:
I - probity in the conduct of activities;
II - care for the integrity of the market, including regarding client selection and the requirement of deposit of guarantees; III - diligence in the fulfillment of orders and in the specification of principals; IV - diligence in the control of client positions in custody, with periodic reconciliation between:
a) executed orders; b) positions stated in statements and reports of movement provided by the custody service provider entity; and c) positions provided by clearing and settlement chambers; V - qualification to perform activities; VI - obligation to obtain and present to their clients information necessary for the fulfillment of orders, including regarding risks involved in market operations; VII - adoption of measures to avoid the carrying out of operations in situations of conflict of interest and to ensure equitable treatment to their clients; and VIII - to supply their clients, in a timely manner, with the documentation of the transactions carried out.

§1o
The conduct rules referred to in this article must be made available to clients before the start of their operations, and must be delivered when requested.

§2o
The conduct rules referred to in this article must be sent to the CVM at least 30 (thirty) days before their implementation for approval.

§3o
Exchanges will be responsible for monitoring brokers regarding compliance with the principles referred to in items I to VIII of this article.

RESPONSIBLE DIRECTOR
Art. 4
Brokers must indicate to the exchange they are associated with and to the CVM a statutory director, who will be responsible for compliance with the provisions contained in this Instruction.

Sole Paragraph. The director referred to in the caput must, in the exercise of their inspection activities regarding the procedures established in this Instruction, exercise the care and diligence that every active and upright man usually employs in the administration of his own business.

Sole Paragraph. Brokers and the director referred to in the caput must, in the exercise of their activities, employ the care and diligence that every active and upright man usually dispenses to the administration of his own business, acting with loyalty regarding the interests of their clients, avoiding practices that may harm the fiduciary relationship maintained with them, and being liable for any infractions or irregularities committed under their management.

• Wording given by CVM Instruction No. 450, of March 30, 2007.

Art. 5
Brokers must keep records of all financial movements of their clients in checking accounts that cannot be operated by checks.

OPERATION RULES
Art. 6
Subject to the provisions of this Instruction, as well as the norms issued by the exchanges, brokers and other market participants who act directly in their premises or trading and registration systems must establish and submit for prior approval by the exchanges, the rules and parameters of operation relating, at minimum:
I - to the type of orders, time for their receipt, form of issuance, validity period, refusal procedures, registration, fulfillment, distribution and cancellation; and II - to the form and criteria for attending to received orders and distribution of transactions carried out.

§ 1o
The rules referred to in the caput of this article must be made available to clients before the start of their operations, and delivered when requested.

§ 2o
The registration of orders at the broker must contain the time of their receipt and the identification of the client who issued them, and must be equipped with a unified sequential numbering control, in chronological order.

§3o
The registration system referred to in the previous paragraph may be replaced by a system recording all dialogues between clients, the broker and its trading floor operators, accompanied by the record of all executed orders, in accordance with regulations to be issued by the exchanges, and subject to prior CVM approval.

Art. 7
The participant with direct settlement must transmit orders for its own portfolio segregated from the orders of the funds it administers.

Sole Paragraph. The participant with direct settlement must maintain, at the commodity and futures exchange, identification codes to register, separately, the operations carried out by its own portfolio and by the funds it administers.

Art. 8
Brokers may fulfill orders for their own portfolio or for their clients' portfolios, being entitled, through a specific contract, to hire other brokers for its fulfillment, observed the provisions of arts. 9 and 12.

§1o
Commodities brokers may hire special operators, through a specific contract, to fulfill orders for their own portfolio or for their clients' portfolios.

§2o
In case of competition of orders, the priority for fulfillment must be determined by a chronological criterion, and orders from clients who are not persons affiliated with the broker must always have priority over those issued by persons who are.

§3o
Only orders that are capable of being fulfilled at the time a transaction is made, that is, those whose price specified by the client is compatible with the market price, will compete in their distribution.

REGISTRATION AND IDENTIFICATION DOCUMENTATION OF CLIENTS AND SPECIAL OPERATORS Art. 9 Brokers must register their clients, keeping them updated.

§1o
Brokers must also provide exchanges and clearing and settlement chambers, according to a standard defined by them, the basic registration data of each client, in order to allow its perfect identification and qualification.

§2o
It is incumbent upon the participant with direct settlement to maintain the registration of the funds it administers, in the manner provided in arts. 10, 11 and 12 of this Instruction.

Art. 10. The registration referred to in the caput of the previous article must contain, at minimum, the information provided in §1o of art. 3o of CVM Instruction No. 301, of April 16, 1999.

Art. 10. The registration referred to in the caput of the previous article must contain, at minimum, the information provided in § 1o of art. 3o of CVM Instruction No. 301, of April 16, 1999, except for the case referred to in art. 12-A.

• Caput with wording given by CVM Instruction No. 419, of May 02, 2005.

§1o
In the case of quota holders of one or more investment clubs whose consolidated balances of applications, in the same administrator, are less than R$ 10,000.00 (ten thousand reais), the maintenance of simplified registration is permitted, according to the terms defined by the exchange where the club is registered, and it is still incumbent upon the self-regulatory entity to create control mechanisms that guarantee compliance with the provisions of this paragraph.

§2o
The preparation and maintenance of registrations of institutional clients and financial institutions may, with CVM approval, be carried out in a centralized manner by exchanges, over-the-counter market entities and clearing and settlement chambers.

§3o
In the case of non-resident investors, and institutional investors, resident or not, the registration must additionally contain the names of persons authorized to issue orders, and, as the case may be, of the administrators of the institution or those responsible for the administration of the portfolio, as well as the legal representative or person responsible for the custody of their securities.

§4o
Brokers may only alter the address stated in the registration upon express and written order from the client, accompanied by the corresponding proof of address.

§5o
Brokers are permitted to maintain the registration of their clients through an informatized system, provided that the provisions contained in this Instruction are observed.

§6o
If the institution is part of a financial conglomerate, the maintenance of a single client registration is admitted, allowing the maintenance of complementary client information at the broker's own premises, observed the provisions contained in this Instruction and ensuring remote access to registration data through electronic means or instant access system, including when requested by the CVM.

§7o
Single client registration is understood as the storage of all and any registration information or documentation for shared use among the members of the financial conglomerate.

§8o
With prior CVM approval, in the case of special operations at the exchange, considered those preceded by the collection of dispersed orders of small value through bank agencies or in their premises in the Country, the registration data of the principals will be archived at the broker society or distributor, dispensing, in this case, registration in the exchanges' systems.

§9o
It will be a condition for CVM examination of the request regarding the special operations referred to in the previous paragraph, the provision regarding responsibility and the form of reimbursement to clients in the event of damage resulting from the operations.

§10. The operations referred to in paragraphs 8o and 9o will be registered, at the exchange where they take place, in a special account in the name of the intermediary institution.

• §§ 8º, 9º and 10 revoked by CVM Instruction No. 454, of April 30, 2007.

§11. Brokers must attach to their clients' registrations:
I - If natural persons, copies of the identity card, CPF and proof of residence or domicile; II - If legal entities, copies of the CNPJ and the bylaws or social statute registered with the competent body.

• Paragraph added by CVM Instruction No. 395, of September 23, 2003.

Art. 11. From the registration referred to in the caput of art. 9o, or from the document attached to it, a declaration must appear, dated and signed by the client or, if applicable, by a duly constituted proxy, stating that:
I – the information provided for filling out the registration is true; II – it commits to inform, within 10 (ten) days, any changes that may occur in its registration data;

III – it operates on its own account, and authorizes or not the transmission of orders by a representative or proxy, duly identified; IV - it operates on behalf of third parties, in the case of investment fund administrators and managed portfolios; V - it is, or is not, a person affiliated with the broker, in accordance with art. 15 of this Instruction; VI - it is not barred from operating in the securities market; VII – by express option, if applicable, its orders will be transmitted exclusively in writing; VIII - it is aware of the provisions of this Instruction, and of the broker's rules and parameters of operation; IX – it is aware of the norms regarding the guarantee fund, and of the operational norms issued by the exchanges and by the clearing and settlement chamber, which must be available on the respective institutions' pages on the worldwide web; and X - it authorizes brokers, if there are pending debts in its name, to settle, at the exchange or at a clearing and settlement chamber, the contracts, rights and assets, acquired on its behalf and order, as well as to execute assets and rights given as guarantee for its operations, or that are in the possession of the broker, applying the proceeds of the sale to the payment of pending debts, regardless of judicial or extrajudicial notification.

Sole Paragraph. In trading on the secondary market of investment fund quotas, it will also be mandatory that the registration contains prior authorization, through a specific instrument, including a declaration of awareness of the risks involved, and of the possibility of the fund having negative net equity, with the consequent responsibility for additional resource contributions.

• Paragraph added by CVM Instruction No. 450, of March 30, 2007.

Art. 12. Brokers must institute adequate control procedures to prove compliance with the provisions of arts. 9o and 10.

§1o
Brokers must keep all documents related to operations with securities, as well as, if applicable, the entirety of the recordings referred to in § 3o of art. 6o of this Instruction, at their headquarters or at the headquarters of the financial conglomerate they are part of and available to the CVM, exchanges and clients, for a period of 5 (five) years, from the date of the operations, allowing the presentation, in substitution for original documents, of their images through a digitization system.

§2o
The CVM may determine an increase in the period provided in the previous paragraph, for the documents and recordings it specifies.

Art. 12-A. Brokers may carry out simplified registration of non-resident investors, in accordance with the provisions of norms issued by exchanges and entities administering over-the-counter markets, provided that:
I – the non-resident investor is a client of a foreign intermediary institution, with which it is duly registered in accordance with the legislation applicable in the country of origin of this;

II – the intermediary institution referred to in item I assumes, towards the broker, the obligation to present, whenever requested, all information required by CVM Instructions that deal with the registration of investors within the scope of the securities market, duly updated, as well as other information required by Brazilian public bodies with inspection powers; III – the broker:
a) establishes criteria that allow it to evaluate the degree of reliability of the foreign intermediary institution; b) adopts necessary measures to ensure that the client's registration information will be promptly presented by the foreign institution, whenever requested; and c) ensures that the foreign institution adopts adequate practices for identification and registration of clients, consistent with the legislation applicable in its country of origin. IV – the country where the foreign intermediary institution is located is not considered as a high-risk country regarding money laundering and terrorism financing, and is not classified as a non-cooperative country by international organizations, regarding the combat of illicit activities of this nature; and V – the capital market regulatory body of the country of origin of the foreign intermediary institution has entered into a mutual cooperation agreement with the CVM that allows the exchange of financial information of investors.

V – the capital market regulatory body of the country of origin of the foreign intermediary institution has entered into a mutual cooperation agreement with the CVM that allows the exchange of financial information of investors, or is a signatory to the multilateral memorandum of understanding of the International Organization of Securities Commissions – IOSCO.

• Item V with wording given by CVM Instruction No. 437, of July 5, 2006.

§1o
The norms mentioned in the caput must contemplate, at minimum, the following requirements:
I – mandatory signing of a written contract between brokers and foreign intermediaries, which must contemplate the following minimum content:
a) declaration by the foreign intermediary that it possesses the registration information required by CVM Instructions that deal with the registration of investors within the scope of the securities market, and that it obligates itself to keep them permanently updated; b) obligation for the foreign intermediary to present to the broker or directly to the CVM, within the deadlines established by the exchange, over-the-counter market administering entities, or by the CVM, the complementary registration information of non-resident investors, duly updated; c) clauses that establish the subjection of the contract to Brazilian laws, and the competence of the Brazilian Judiciary to hear any lawsuits filed due to controversies derived from the contract, admitting the existence of an arbitration commitment, in which it is stipulated that the arbitration must take place in Brazil; and

d) clause that imposes termination, in case of non-compliance with the obligation to provide registration information of non-resident investors upon request by the broker, the exchange, an over-the-counter market administering entity, or a Brazilian public body with inspection powers.

II – prohibition for the use of simplified registration towards any brokers for clients who act through foreign intermediaries that have failed to comply with the obligation to provide information on non-resident investors;

III – deadlines and form of communication, by the broker, to the exchange or over-the-counter market of which it is a member, regarding the signing, termination or alteration of the contract, as well as the non-compliance with any stipulations contained therein;

IV – rules for keeping the contracts referred to in item I by the broker; and

V – inclusion of the verification of contract compliance and the fulfillment, by brokers, of pertinent norms, in the periodic audits carried out by the exchange or by the over-the-counter market administering entity at the brokers.

§ 2o
Exchanges and entities administering over-the-counter markets must submit the norms mentioned in the caput for approval by the CVM Collegiate Body prior to their entry into force.

§3o
Exchanges and entities administering over-the-counter markets must keep available to the CVM an updated list of contracts signed between foreign intermediaries and brokers subject to their self-regulation.

§4o
The provisions of this article apply, insofar as applicable, to central depositories, clearing and settlement chambers, and their respective participants, in their relationship with global custodians that exercise the activity of custody of securities of non-resident investors.

• Article added by CVM Instruction No. 419, of May 02, 2005.

PROHIBITIONS
Art. 13. It is prohibited:
I – to brokers:
a) to use collective checking accounts, except for cases of joint accounts with up to 2 (two) holders; b) to accept or fulfill orders from clients who are not previously registered; and c) to use, in the activities of members of the securities distribution system, persons not part of this system, or to allow the exercise of mediation or brokerage activities by persons not authorized by the CVM for this purpose;

II - to special operators, to fulfill orders emanating directly from clients of brokers.

Sole Paragraph. In the case of institutional clients or financial institutions, the lack of signature on the registration form is admitted for up to 20 (twenty) days, from the first operation ordered by these clients.

Art. 14. Brokerages and other members of the securities distribution system may only accept buy and sell orders or effect transfers of securities transmitted by proxy if the proxies are identified in the registration documentation as duly constituted proxies.

Sole paragraph. It is the responsibility of clients to inform of any eventual revocation of the mandate.

OPERATIONS BY AFFILIATED PERSONS AND SPECIAL OPERATORS

Art. 15. Affiliated persons of a specific brokerage may only trade securities for their own account, directly or indirectly, through the company to which they are affiliated.

§1o The following shall be considered affiliated persons:
I - administrators, employees, operators, and agents of the brokerage; II - autonomous agents; III - other professionals who maintain, with the brokerage, a service provision contract directly related to the intermediation activity; IV - partners or shareholders of the brokerage, natural persons; V - partners, shareholders, and companies controlled directly or indirectly by the brokerage, legal entities, except for financial institutions and institutions equated to them; VI - spouse or partner and minor children of the persons mentioned in items I to IV.

§2o For the purposes of this Instruction, operations and orders related to the brokerage's own portfolio are equated to operations and orders carried out by affiliated persons of the brokerage.

§3o Persons who, in accordance with items II, III, IV, and VI of § 1o, are affiliated with more than one brokerage, must trade securities exclusively through one of the brokerages with which they maintain an affiliation.

§4o Investment clubs and funds whose majority of quotas belong to affiliated persons who have influence power over the administrator's trading decisions shall also be considered affiliated persons.

Art. 16. Special operators may trade directly on the exchange floor and in electronic trading and registration systems, and may only register their operations through the clearing member to whom they are linked by contract.

TRANSFER OF OPERATIONS

Art. 17. It is the responsibility of the exchanges to establish rules and procedures for the transfer of operations carried out in any of their systems.

§1o The rules referred to in the caput of this article must provide, among other things, for the procedures for constituting the transfer link, and the method of identification and registration of operations resulting from them.

§2o The rules referred to in the caput of this article must be submitted to the CVM for approval, at least 30 (thirty) days prior to their implementation.

§3o In the event that the CVM does not express its opinion within 30 (thirty) days of receiving the rules referred to in the caput of this article, they shall be presumed approved.

§4o In any case, the transfer is only permitted when there is a specific contract between the brokerages and, if applicable, the special operators involved.

TYPES OF ORDERS

Art. 18. Exchanges must regulate the types of orders and offers accepted in their premises or trading systems, in a specific norm submitted for prior CVM approval, observing the provisions of arts. 6o and 8o.

Sole paragraph. In the event that the CVM does not express its opinion within 30 (thirty) days of receiving the rules referred to in the caput of this article, they shall be presumed approved.

PAYMENTS AND RECEIPT OF VALUES BY THE BROKERAGE

Art. 19. Whenever brokerages make payments to their clients regarding operations carried out, they must include the following information in the respective documents:
I - the client's checking account number with the brokerage or intermediary; and II - when by check, the bank checking account number and the check number, its value, the name(s) of the beneficiary(ies), the drawer, and the drawee bank, with indication of the agency and strips stating: "exclusively for credit to the original beneficiary's account", nullifying the clause "to your order".

Sole paragraph. The provisions of the caput of this article apply, where applicable, to cases of receipt by the brokerage of any values from its clients.

SELF-REGULATION PROCEDURES

Art. 20. It is the responsibility of exchanges, as auxiliary bodies of the CVM, to supervise the activities of their members and issue complementary norms necessary for the execution of the provisions of this Instruction.

§1o Exchanges shall keep available to the CVM the data and information obtained with the supervision activities developed by them.

§2o Whenever any of the entities mentioned in the caput of this article, in the exercise of self-regulation, identifies the practice, by any persons or entities, subject to its jurisdiction, of unlawful acts, as well as the existence of irregularities, the CVM must be immediately informed, including regarding the measures that have been adopted.

§3o Whenever any of the entities mentioned in the caput of this article suspects the practice of unlawful acts or the existence of irregularities involving a person or entity not subject to its jurisdiction, it must immediately communicate its suspicions to the CVM.

APPLICATION TO OTHER ENTITIES

Art. 21. The provisions contained in this Instruction apply, where applicable, to organized over-the-counter entities, members of commodity and futures exchanges, as well as other members of the securities distribution system, and to institutions authorized to provide services of registration, clearing, settlement, or custody of securities.

FINAL PROVISIONS

Art. 22. Exchanges, organized over-the-counter entities, member companies of exchanges, as well as other members of the securities distribution system, must adapt to the principles of this Instruction, within the following deadlines:
I – exchanges will have 60 (sixty) days, counted from the entry into force of this Instruction, to submit to the CVM rules provided for in arts. 3o; § 3o of art. 6o; and arts. 17 and 18, to adapt to the provision of art. 20, § 1o, as well as to issue complementary norms to this Instruction; II - organized over-the-counter entities will have 120 (one hundred and twenty) days, counted from the entry into force of this Instruction, to submit to the CVM rules provided for in arts. 3o, 17, 18 and adapt to the provision of §1o of art. 20, as well as to issue complementary norms to this Instruction; and III - brokerages, special operators, other participants who act directly in the premises or trading and registration systems of exchanges, and other members of the securities distribution system will have 60 (sixty) days, counted from the date of CVM approval of the operating rules, to elaborate the rules provided for in art. 6o, and adapt to the provisions of arts. 7o, 8o, 9o and 10 of this Instruction.

Sole paragraph. While the rules referred to in items I, II, and III are not approved by the exchanges, brokerages, and the CVM, the provisions contained in CVM Instruction no. 220, of September 15, 1994, must be observed.

Art. 23. For the purposes of the provision of § 3o of art. 11 of Law no. 6.385/76, a serious infraction is considered to be the violation of the norms contained in arts. 3o; 4o; 5o; 6o; 7o; 8o; 13; 14; 15; 17; 19; 20 and 22.

Art. 24. Non-compliance with the provisions of arts. 9o, 10, 11 and 12 constitutes a hypothesis of objective nature infraction, subject to a summary administrative process.

Art. 25. CVM Instruction no. 382, of January 28, 2003, CVM Instruction no. 383, of February 3, 2003, and CVM Instruction no. 385, of March 25, 2003, are hereby revoked.

Art. 26. This Instruction shall enter into force on the date of its publication in the Official Gazette of the Union.

Signed original by
LUIZ LEONARDO CANTIDIANO
President