Explanatory Note to CVM Instruction No. 80

EXPLANATORY NOTE TO CVM INSTRUCTION NO. 80, OF JUNE 22, 1988.
Ref.: CVM Instruction No. 80, of June 22, 1988, which regulates the capitalization, in shares, of quotas of Mutual Stock Funds.
The protection of small investors is one of the main objectives pursued by the CVM since its creation.
The CVM has observed a growing resistance on the part of intermediaries in attending to small buy and sell orders, insofar as they incur practically the same costs for attending to small or large orders, yet receiving very reduced commissions in the case of the former.
The CVM considers it important, however, that small savings can continue to be invested in the securities market, both because, in aggregate, they represent a considerable volume of resources, and also because this is a way to promote the greater democratization of capital and profits. For this reason, it has been studying a series of measures intended to facilitate the participation of the small investor in the securities market, of which the first to be issued is CVM Instruction No. 80, which is now published. This Instruction is intended to serve those persons who, over time, have formed small stock portfolios and now find difficulties in moving them, as intermediaries willing to accept small sell orders are very rare. It happens that many of these people may continue to be interested in participating in the securities market, through collective investment forms that allow for more efficient administration. For this reason, the Instruction permits the exchange of position, from investor to quota holder, which was already permitted regarding Investment Clubs, a possibility now extended to Stock Funds. A period of 90 (ninety) days has been established for the execution of the operation, which is estimated to be sufficient for all small investors who wish to do so. The maximum limit of 75 OTNs (seventy-five National Treasury Obligations), established for the value of lots eligible to be submitted to the procedure, arises from the fact that intermediaries generally accept orders above this value. It should be noted that the objective of the Instruction is to solve a problem existing today, and not to create a permanent and comprehensive system for the exchange of securities. Note, moreover, that only stocks registered for trading on the Stock Exchange will be accepted by Mutual Funds, since only these can integrate the portfolios of those institutional investors. The CVM believes that through Instruction No. 80 it is offering an alternative to small investors in the securities market, an initiative that should be followed by others that complement it. Original signed by ARNOLD WALD President