Normative Instruction BCB No. 140 — Discloses operational procedures to be observed in foreign currency auctions in the interbank foreign exchange market

INSTRUÇÃO NORMATIVA BCB Nº 140, OF AUGUST 12, 2021

Discloses operational procedures to be observed in foreign currency auctions in the interbank foreign exchange market.

The Acting Head of the Department of International Reserves, in exercise of the powers conferred by Art. 23, item I, letter “a”, of the Internal Regulations of the Central Bank of Brazil, annexed to Ordinance No. 108.150, of August 27, 2020, and based on the provisions of Resolution BCB 76, of February 23, 2021,

RESOLVES:

Art. 1º Foreign currency auctions in the interbank foreign exchange market shall be conducted through the Leilão System, which is available via messaging and at the address http://leilao.bcb.gov.br/leilao on the internet.

Art. 2º The auctions shall be conducted exclusively with the participation of institutions accredited as dealers in foreign exchange by the Central Bank of Brazil and may be conducted in the following modalities:

I - definitive purchase or sale of foreign currency in the spot market;

II - definitive purchase or sale of foreign currency in the market with settlement on a future date;

III - definitive purchase or sale of foreign currency in the forward market;

IV - purchase of foreign currency with a commitment to resell, conjugated with a commitment to repurchase, assumed by the counterparty, for settlement on a predetermined date, within a period of up to 360 (three hundred and sixty) days;

V - sale of foreign currency with a commitment to repurchase, conjugated with a commitment to resell, assumed by the counterparty, for settlement on a predetermined date, within a period of up to 360 (three hundred and sixty) days.

Art. 3º The auctions referring to the operations listed in items I to III of Art. 2º shall be conducted as follows:

I - auction announcement: at the start of the auction, a notice will be published in BC Correio and a LEI0001 message will be sent to all institutions authorized to operate in foreign exchange containing the characteristics of the auction: operation modality; currency; nature (purchase or sale); the day and time for submitting proposals; settlement date of the operations; maximum quantity of proposals; minimum lot; and whether participation in the auction is mandatory or not;

II - inclusion of proposals: from the start of the auction and during the period for receiving proposals, dealers must send their proposals via message LEI0002. Alternatively, dealers may use the platform available on the internet at the address http://leilao.bcb.gov.br/leilao to include their proposals, observing the period for receiving proposals;

III - changes to proposals: only permitted during the period for receiving proposals;

IV - cut-off rate: proposals whose exchange rate or differential is more favorable to the Central Bank of Brazil or equal to that published in the auction result will be accepted, and partial acceptance of the proposed volume may occur;

V - accepted proposals: LEI0003 messages will be sent identifying which proposals, among those presented by the dealer, were accepted; or informing that none of the presented proposals were accepted;

VI - auction result: the result will be published via Notice in BC Correio and via message LEI0004 to all institutions authorized to operate in foreign exchange;

VII - in the case of an auction with mandatory participation, the failure to submit a proposal by the dealer institution will result in the assignment of a mandatory proposal to the institution in the amount of the minimum lot and at the exchange rate or differential most favorable to the Central Bank of Brazil among all proposals presented in the auction;

VIII - proposals submitted with material errors, if not corrected by the dealers during the period for receiving proposals, may be disregarded at the discretion of the Central Bank of Brazil.

Art. 4º The auctions referring to the operations listed in items IV and V of Art. 2º shall be conducted as follows:

I - auction announcement: a notice will be published in advance in BC Correio with the characteristics of the auction: date and time of the auction; settlement date of the operations; starting rate; maximum volume of the offer, if any; and minimum lot;

II - start of the auction: at the moment of the start of the auction, a notice will be published in BC Correio and a message LEI0006 will be sent to all institutions authorized to operate in foreign exchange containing all the characteristics of the auction: operation modality; currency; nature (sale with repurchase or purchase with resale); the day and time for submitting proposals; settlement date of the operations; maximum quantity of proposals; and minimum lot;

III - inclusion of proposals: from the start of the auction and during the period for receiving proposals, dealers may send their proposals via message LEI0002. Alternatively, dealers may use the platform available on the internet at the address http://leilao.bcb.gov.br/leilao to include their proposals, observing the period for receiving proposals;

IV - changes to proposals: only permitted during the period for receiving proposals;

V - cut-off rate: proposals whose rate is more favorable to the Central Bank of Brazil or equal to that published in the auction result will be accepted, and partial acceptance of the proposed volume may occur;

VI - accepted proposals: LEI0003 messages will be sent identifying which proposals, among those presented by the dealer, were accepted; or informing that none of the presented proposals were accepted;

VII - auction result: the result will be published via Notice in BC Correio and via message LEI0004 to all institutions authorized to operate in foreign exchange;

VIII - proposals submitted with material errors, if not corrected by the dealers during the period for receiving proposals, may be disregarded at the discretion of the Central Bank of Brazil.

Art. 5º The Central Bank of Brazil will register the operations resulting from the auctions in the Câmbio System.

Art. 6º In the event of unavailability of the Leilão System, the Central Bank of Brazil may conduct telephone auctions on an exceptional basis. In these cases, communication of proposals by the dealers will be by telephone, with confirmation by e-mail, with the start of the auctions and results published only via Notices, and all other provisions of this Normative Instruction BCB remaining unchanged.

Art. 7º This Normative Instruction BCB enters into force on the date of its publication, with Circular Letter 3,574, of November 21, 2012, and Circular Letter 3,709, of June 3, 2015, being revoked.

Luis Guilherme
Siciliano Pontes