Normative Instruction BCB No. 624 of May 22, 2025: Procedures for Authorization Requests for Alternative Classification in the Trading Book, Reclassification of Specific Operations, and Establishment of Dedicated Trading Desks for Internal Risk Transfers

Resolution No. 222

NORMATIVE INSTRUCTION
BCB NO. 624, OF MAY 22, 2025

Provides for the procedures for authorization requests for alternative classification in the trading book upon initial accounting recognition, for the reclassification of a specific operation to the banking book or to the trading book, and for the establishment of a trading desk dedicated to recording internal risk transfers with effects on capital requirements, as addressed in CMN Resolution No. 4,557 of February 23, 2017, BCB Resolution No. 265 of November 25, 2022, and BCB Resolution No. 111 of July 6, 2021.

The Head of the Department of Supervision of Cooperatives and Non-Banking Institutions – Desuc, and the Acting Heads of the Department of Strategic Management and Specialized Supervision – Degef and of the Banking Supervision Department – Desup, in the exercise of the authority granted to them by Article 23, item I, letter “a” of the Internal Regulations of the Central Bank of Brazil, published through BCB Resolution No. 340 of September 21, 2023, and considering the provisions of CMN Resolution No. 4,557 of February 23, 2017, BCB Resolution No. 265 of November 25, 2022, and BCB Resolution No. 111 of July 6, 2021,

R E S O L V E:

Article 1. The criteria and procedures addressed in Articles 26-A and 27-A, § 3, of CMN Resolution No. 4,557 of February 23, 2017, published in the Official Gazette of the Union on March 1, 2017, and Articles 27 and 29, § 3, of BCB Resolution No. 265 of November 25, 2022, published in the Official Gazette of the Union on November 28, 2022, together with Articles 8, § 5, 9, § 8, and 23, § 7, of BCB Resolution No. 111 of July 6, 2021, published in the Official Gazette of the Union on July 8, 2021, are available in the Annex to this Normative Instruction.

Article 2. Normative Instruction BCB No. 223 of December 28, 2021, published in the Official Gazette of the Union on December 29, 2021, is hereby revoked.

Article 3. This Normative Instruction enters into force on the date of its publication.

ADALBERTO FELINTO DA CRUZ
JUNIOR
Head of Desuc

FRANCISCO JOSE BARBOSA DA
SILVEIRA
Acting Head of Degef

RICARDO SIVIERI ZENI
Acting Head of Desup

ANNEX

Article 1. The authorization requests addressed in Articles 26-A and 27-A, § 2, of CMN Resolution No. 4,557 of 2017, and Articles 27 and 29, § 2, of BCB Resolution No. 265 of 2022, together with Articles 8, 9, and 23, § 7, of BCB Resolution No. 111 of 2021, must be accompanied by the documents and information described in this Annex.

Article 2. The authorization request for classification of instruments different from that provided in Article 6 of BCB Resolution No. 111 of 2021, upon initial accounting recognition, as provided in Article 26-A of CMN Resolution No. 4,557 of 2017, Article 27 of BCB Resolution No. 265 of 2022, and Article 8 of BCB Resolution No. 111 of 2021, or “list deviation,” must be accompanied by the following documents and information:

I - a request signed by the Chief Risk Officer (CRO) addressed to the Department of Supervision of Cooperatives and Non-Banking Institutions (Desuc) or to the Banking Supervision Department (Desup), sent through the Central Bank of Brazil’s Digital Protocol system (Digital Protocol), available on the Central Bank of Brazil’s website on the internet;

II - a detailed justification of the extraordinary situation, as addressed in Article 8, caput, of BCB Resolution No. 111 of 2021;

III - a declaration that the operation will not be maintained for any of the purposes addressed in Article 5, item I, of BCB Resolution No. 111 of 2021;

IV - a description of the internal controls implemented to ensure that the operation will not, after eventual approval by the Central Bank of Brazil, be maintained for any purposes addressed in Article 5, item I, of BCB Resolution No. 111 of 2021;

V - a description of the area(s) responsible for the internal controls implemented to ensure that the operation will not, after eventual approval by the Central Bank of Brazil, be maintained for any purposes addressed in Article 5, item I, of BCB Resolution No. 111 of 2021, accompanied by the functional organizational chart;

VI - a conclusive opinion from internal audit stating that the request complies with the requirements established in the regulation and internal rules, signed by the head of internal audit;

VII - a conclusive opinion from the area responsible for validation as addressed in Article 4 of Circular No. 3,846 of September 13, 2017, stating that the request complies with the requirements established in the regulation and internal rules, in the case of institutions classified in segment S1 or S2, as provided in CMN Resolution No. 4,553 of January 30, 2017, or BCB Resolution No. 436 of November 28, 2024; and

VIII - e-mail and contact telephone number so that the Central Bank of Brazil may clarify any eventual doubts.

Article 3. The authorization request for reclassification of an operation to the banking book or to the trading book, as provided in Article 26-A of CMN Resolution No. 4,557 of 2017, Article 27 of BCB Resolution No. 265 of 2022, and Article 9 of BCB Resolution No. 111 of 2021, or “reclassification,” must be accompanied by the following documents and information:

I - a request signed by the CRO addressed to Desuc or Desup, sent through the Central Bank of Brazil’s Digital Protocol system (Digital Protocol), available on the Central Bank of Brazil’s website on the internet;

II - evidence of board approval of the reclassification proposal, as provided in Article 50, item II, of CMN Resolution No. 4,557 of 2017;

III - a detailed justification of the extraordinary circumstances regarding the reclassification, as addressed in Article 9, caput, of BCB Resolution No. 111 of 2021;

IV - evidence that the reclassification request is in compliance with internal policies, as addressed in Article 11 of BCB Resolution No. 111 of 2021;

V - a detailed quantitative impact assessment on the calculation of minimum capital requirements resulting from the reclassification, as provided in Article 10, § 1, item I, of BCB Resolution No. 111 of 2021;

VI - a description of the internal controls implemented to ensure that, as a result of eventual approval by the Central Bank of Brazil, there is no reduction in the amounts of minimum requirements addressed in CMN Resolution No. 4,958 of October 21, 2021, and BCB Resolution No. 200 of March 11, 2022, as provided in Article 10 of BCB Resolution No. 111 of 2021;

VII - a conclusive opinion from internal audit stating that the request complies with the requirements established in the regulation and internal rules, signed by the head of internal audit;

VIII - a conclusive opinion from the area responsible for validation as addressed in Article 4 of Circular No. 3,846 of 2017, stating that the request complies with the requirements established in the regulation and internal rules, in the case of institutions classified in S1 or S2; and

IX - e-mail and contact telephone number so that the Central Bank of Brazil may clarify any eventual doubts.

Article 4. The authorization request for a dedicated trading desk for recording Internal Risk Transfers (IRTs), as provided in Article 27-A, § 2, of CMN Resolution No. 4,557 of 2017, Article 29, § 2, of BCB Resolution No. 265 of 2022, and Article 23, § 7, of BCB Resolution No. 111 of 2021, or “IRT Desk,” must be accompanied by the following documents and information:

I - a request signed by the President and the CRO addressed to Desuc or Desup, sent through the Central Bank of Brazil’s Digital Protocol system (Digital Protocol), available on the Central Bank of Brazil’s website on the internet;

II - evidence of the board’s deliberation on the authorization request for the IRT Desk as addressed in Article 50, item III, of CMN Resolution No. 4,557 of 2017, and Article 58, item III, of BCB Resolution No. 265 of 2022;

III - evidence of the Board of Directors’ awareness, when applicable, of the authorization request for the IRT Desk, as addressed in Article 50, item III, of CMN Resolution No. 4,557 of 2017, and Article 58, item III, of BCB Resolution No. 265 of 2022;

IV - a description of the motivation related to the business model supporting the authorization request for the IRT Desk;

V - a description of the institution’s overall trading desk structure;

VI - a description of the market risk factors to be recorded in the IRT Desk;

VII - a description of the specification of professionals and organizational areas responsible for monitoring the IRT Desk, within the risk management structure, as per Article 16, item I, of BCB Resolution No. 111 of 2021;

VIII - a description of the limits imposed on the market risk factors to be recorded in the IRT Desk, as per Article 16, item III, of BCB Resolution No. 111 of 2021;

IX - a description of the processes and procedures regarding any potential breach of limits imposed on the IRT Desk;

X - a description of the management reports for monitoring the IRT Desk, accompanied by the respective frequency, as per Article 16, item IV, of BCB Resolution No. 111 of 2021;

XI - a description of the processes and procedures that enable the transfer of initial exposures to credit risk or equity risk of the banking book to externalhedge, transferred by IRTs, as per Article 21 of BCB Resolution No. 111 of 2021, highlighting the areas and systems involved in each of the listed processes;

XII - a description of the processes and procedures for managing initial exposures to interest rate risk of the banking book, transferred by IRTs and recorded in the IRT Desk, as per Article 22 of BCB Resolution No. 111 of 2021, highlighting the areas and systems involved in each of the listed processes;

XIII - a description of the processes and procedures for the exclusive recording of IRTs and external hedges, as per Articles 23, §§ 1, 2, 3, 4, 6, and 8, of BCB Resolution No. 111 of 2021, highlighting the areas and systems involved in each of the listed processes;

XIV - a description of the governance involved in identifying initial exposures to credit risk, equity risk, or interest rate risk to be transferred from the banking book, including levels of authority for initial recordings and approvals;

XV - a detailed description of the internal controls implemented to ensure compliance with the provisions described in items VIII to XIV of this article;

XVI - a detailed description of the area(s) responsible for the internal controls implemented to ensure compliance with the provisions described in items VIII to XIV of this article, including the functional organizational chart;

XVII - a conclusive opinion from internal audit stating that the request complies with the requirements established in the regulation and internal rules, signed by the head of internal audit;

XVIII - a conclusive opinion from the area responsible for validation as addressed in Article 4 of Circular No. 3,846 of 2017, stating that the request complies with the requirements established in the regulation and internal rules, in the case of institutions classified in S1 or S2;

XIX - in the case of institutions classified in S3, a declaration that they manage instruments subject to market risk in a trading desk structure, as provided in Articles 25-A and 25-B of CMN Resolution No. 4,557 of 2017, and Articles 24 and 25 of BCB Resolution No. 265 of 2022; and

XX - e-mail and contact telephone number so that the Central Bank of Brazil may clarify any eventual doubts.

NOTE

The regulation of this subject stems from the local adoption of the new market risk framework published by the Basel Committee on Banking Supervision (BCBS), known as the Fundamental Review of the Trading Book (FRTB), part of the set of measures known as Basel III.

2. In this sense, regulations were issued within the scope of the National Monetary Council and the Central Bank of Brazil to govern the application of this subject, in which certain options were granted to supervised entities conditioned upon prior approval by this Autarchy. In this vein, Normative Instruction BCB No. 223 of December 28, 2021, was published with the objective of clarifying to supervised entities the procedures to request the respective approvals. However, at the time it was drafted, this Normative Instruction BCB did not explicitly contemplate the regulation applicable to singular institutions authorized to operate by the Central Bank of Brazil and prudential conglomerates led by these institutions classified as Type 3, as per BCB Resolution No. 197 of March 11, 2022, and BCB Resolution No. 436 of November 28, 2024, which replaced it, which is intended to be done in this Normative Instruction BCB.

3. Decree No. 10,411 of June 30, 2020, regulates the conduct of regulatory impact analysis – AIR as a prerequisite for the issuance of normative acts of general interest to economic agents. However, in its Article 4, the aforementioned Decree establishes the hypotheses for exemption from conducting an AIR. This Normative Instruction BCB falls under the hypothesis provided in item II, namely, a normative act intended to regulate rights or obligations defined in a hierarchically superior norm that does not allow, technically or legally, different regulatory alternatives, considering that the provisions of this Normative Instruction BCB are intended only to clarify the procedures for executing a facility contained in CMN Resolution No. 4,557 of 2017, BCB Resolution No. 265 of 2022, and BCB Resolution No. 111 of 2021.

ADALBERTO FELINTO DA CRUZ
JUNIOR
Head of Desuc

FRANCISCO JOSE BARBOSA DA
SILVEIRA
Acting Head of Degef

RICARDO SIVIERI ZENI
Acting Head of Desup