Explanatory Note to CVM Instruction 160

EXPLANATORY NOTE TO CVM INSTRUCTION NO. 160, OF AUGUST 21, 1991.
Ref.: CVM Instruction No. 160, of August 21, 1991, which provides for the registration, with the Securities and Exchange Commission (CVM), of foreign financial institutions and institutional investors that may form portfolios of securities and financial instruments in the country, as provided in Resolution No. 1,832, of May 31, 1991, and gives other provisions. The issuance of CMN Resolution No. 1,832, of May 31, 1991, aroused great interest among foreign investors. However, some doubts arose during the registration process with the CVM to form portfolios in the country. To clarify these doubts and, in parallel, improve the CVM's control and oversight mechanisms, ensuring the maintenance of broad transparency of transactions carried out in the Brazilian securities market, were the objectives of the CVM in issuing the present Instruction. For this purpose, at a time when the conditions for the participation of foreign capital in the Brazilian capital market are being consolidated, efforts were made to clarify the rules regarding registration with the CVM, while also listing the different groups of institutional investors and the requirements made for registration, aiming to guarantee full knowledge of the qualifications of these new market participants. It is worth highlighting that, in addition to the own portfolios of foreign Financial Institutions, Pension Funds, Insurers, Mutual Investment Funds, and "Trust Companies", this instruction provides specific treatment for Collective Accounts of Institutional Investors ("omnibus account"). Finally, considering that the dynamism and evolution of markets require the constant improvement of the CVM's control and oversight mechanisms, and that one of its main duties consists of ensuring the proper conduct and broad transparency of transactions carried out in the securities market, Articles 2, 3, 4, 5, and 6 of the instruction list the documents that the CVM will require for the aforementioned registration to be granted. Signed original by JOSÉ ARTHUR ESCODRO Acting President D.O. 27/08/1991 – pg 17708/17709