RESOLUTION BCB

No. 219, OF 30 MARCH 2022

Revoked normative document, effective 1/1/2024, by Resolution BCB No. 352, of 23/11/2023.

Provides the concepts and accounting criteria applicable to financial instruments, as well as the designation and recognition of protection relationships (hedge accounting) by consortium administrators and payment institutions authorized to operate by the Central Bank of Brazil.

The Collegiate Board of the Central Bank of Brazil, in session held on 30 March 2022, based on arts. 6 and 7, paragraph III, of Law No. 11,795 of 8 October 2008, art. 9, paragraph II, and art. 15 of Law No. 12,865 of 9 October 2013, and considering the provisions of art. 61 of Law No. 11,941 of 27 May 2009,

RESOLVES:

CHAPTER I – OBJECT AND SCOPE

Art. 1. This Resolution establishes the concepts and accounting criteria to be observed by consortium administrators and payment institutions authorized to operate by the Central Bank of Brazil in:

I – classification, measurement, recognition and derecognition of financial instruments;

II – constitution of provision for expected losses associated with credit risk of the following financial instruments:

a) financial assets;

b) financial guarantees provided; and

c) credit commitments and credits to be released that meet at least one of the following characteristics:

1. the commitment is not unconditionally and unilaterally cancellable by the consortium administrator or the payment institution;

2. the consortium administrator or the payment institution does not have the capacity to cancel, block or suspend the contract or the disbursement of resources, or does not execute the cancellation, block or suspension in the normal daily management of the financial instrument; or

3. the consortium administrator or the payment institution does not have the capacity to monitor individually the financial instrument or the counter‑party’s financial situation, so that it could effect immediate cancellation, block or suspension of the commitment or the disbursement of resources in case of a reduction in the counter‑party’s financial capacity;

III – designation and accounting recognition of protection relationships (hedge accounting);

IV – disclosure of information about financial instruments.

§ 1º The provisions of this Resolution do not apply to the following instruments, for which the criteria set out in the specific regulation must be observed:

I – investments in associates, subsidiaries and jointly‑controlled entities that, under current regulation, must be evaluated by the equity method, except for investments held for sale referred to in art. 24;

II – employee benefits;

III – share‑based payments; and

IV – liabilities arising from contracts of the consortium administrator or the payment institution with customers.

§ 2º The accounting criteria and the disclosure criteria mentioned in items I and IV of the caput do not apply to the following instruments, which must observe the specific regulation:

I – receivables arising from lease contracts; and

II – assets arising from contracts of the consortium administrator or the payment institution with customers, as defined in the current regulation.

§ 3º The accounting criteria mentioned in item II of the caput do not apply to the following financial instruments:

I – equity instruments of another entity;

II – financial assets classified in the fair‑value‑through‑profit‑or‑loss category measured at Level 1 of the fair‑value hierarchy, according to current regulation, except private securities, credit operations and other operations with credit‑granting characteristics; and

III – derivative financial instruments.

CHAPTER II – DEFINITIONS

Art. 2. For the purpose of accounting regulation of financial instruments, the following are considered:

I – financial asset:

a) cash;

b) equity instrument of another entity;

c) contractual right to:

1. receive cash or another financial asset from another entity; or

2. exchange financial assets or financial liabilities with another entity under conditions potentially favourable to the consortium administrator or the payment institution holding that right; or

d) contract to be or that may be settled with an equity instrument of the consortium administrator or the payment institution that is:

1. a non‑derivative financial instrument for which the consortium administrator or the payment institution is or may be obliged to receive a variable number of equity instruments of the consortium administrator or the payment institution; or

2. a derivative financial instrument that is not settled by the exchange of a fixed amount of cash, or another financial asset, for a fixed number of equity instruments of the consortium administrator or the payment institution;

II – credit commitment: commitment to grant credit under pre‑established terms and conditions;

III – firm commitment: a closed purchase or sale contract for the exchange of a determined quantity of resources, at a determined price, on a future date or dates;

IV – hedge accounting: the representation, in the financial statements, of the use of financial instruments to manage exposures resulting from specific risks that may affect profit or loss or other comprehensive income of consortium administrators or payment institutions;

V – counter‑party: the resource taker, the guarantee beneficiary or the issuer of a security or securities acquired;

VI – hybrid contract: a contract that has a main non‑derivative component and at least one embedded derivative;

VII – credit to be released: commitment to release credit already contracted;

VIII – amortised cost of a financial asset: the amount at which the financial asset was initially recognised, in accordance with arts. 12 and 13, plus the amount of income generated and less the amount of expenses incurred, of the installments received and of the provision for expected credit losses;

IX – amortised cost of a financial liability: the amount at which the financial liability was initially recognised, in accordance with arts. 12 and 13, plus the amount of charges incurred and less the amount of income generated and of the installments paid;

X – transaction costs: costs that, cumulatively, are:

a) directly attributable to the acquisition, origination or issuance of the specific financial instrument; and

b) incremental, i.e., costs that the consortium administrator or the payment institution would not incur had it not acquired, originated or issued the financial instrument;

XI – derivative: a financial instrument:

a) whose value varies as a result of changes in a specified interest rate, price of another financial instrument, commodity price, exchange rate, stock‑index, price index, credit rating or any other similar variable, provided that, for a non‑financial variable, the variable is not specific to one of the contracting parties;

b) that does not require an initial net investment or for which the initial net investment is small relative to the contract value; and

c) whose settlement will occur at a future date;

XII – embedded derivative: component of a hybrid contract whose effect consists in causing part of the cash flows of the combined instrument to vary in a manner similar to an individual derivative financial instrument;

XIII – financial guarantee provided: operation that requires the guarantor to make contractually defined payments in order to reimburse the holder of a debt instrument, or another similar instrument, for loss arising from the debtor’s default on the scheduled date, such as a guarantee, surety, co‑obligation, or any other operation that represents a guarantee of a third‑party financial obligation;

XIV – financial instrument: a title or contract that gives rise to a financial asset for one party and a financial liability or equity instrument for the other party;

XV – equity instrument: a title or contract that evidences residual interest in the assets of an entity or investment fund after deduction of all its liabilities;

XVI – interest: consideration for the value of money over time, for the credit risk associated with the outstanding principal balance during a specific period and for other basic risks and costs of the instrument, as well as for profit margin;

XVII – effective interest method: application of the effective interest rate to the gross carrying amount of the instrument;

XVIII – financial liability:

a) obligation to:

1. deliver cash or another financial asset to another entity; or

2. exchange financial assets or financial liabilities with another entity under conditions potentially unfavourable to the consortium administrator or the payment institution; or

b) contract to be or that may be settled with an equity instrument of the consortium administrator or the payment institution that is:

1. a non‑derivative financial instrument for which the consortium administrator or the payment institution is or may be obliged to deliver a variable number of equity instruments of the consortium administrator or the payment institution; or

2. a derivative financial instrument that is not settled by the exchange of a fixed amount of cash, or another financial asset, for a fixed number of equity instruments of the consortium administrator or the payment institution;

XIX – principal: the amount of the financial instrument at the date of its acquisition, origination or issuance, determined as provided in art. 12;

XX – renegotiation: an agreement that entails alteration of the originally agreed conditions of the instrument or the replacement of the original financial instrument by another, with partial or total settlement or refinancing of the respective original obligation;

XXI – restructuring: renegotiation that entails significant concessions to the counter‑party due to a relevant deterioration of its credit quality, which would not be granted absent such deterioration;

XXII – effective interest rate: rate that equalises the present value of all receipts and payments over the contractual term of the asset or financial liability to its gross carrying amount;

XXIII – anticipated transaction: a future transaction that is not the object of a firm commitment;

XXIV – transfer of control: act that makes the buyer or assignee of the financial asset the holder, in practice, of the right to sell or transfer the financial asset in its entirety, autonomously and without additional restrictions arising from the original sale or transfer operation; and

XXV – gross carrying amount of a financial instrument: amortised cost of the financial instrument before adjustment for provision for expected credit losses, if applicable.

Art. 3. An asset is characterised as a financial asset with credit‑recovery problem (problematic asset) when:

I – principal or charges are more than ninety days overdue; or

II – there is an indication that the respective obligation will not be fully honoured under the agreed conditions, without the need to resort to guarantees or collaterals.

§ 1º Consortium administrators and payment institutions must consider a period shorter than that established in item I of the caput when there is evidence that, within that period, there is a significant reduction in the counter‑party’s financial capacity to meet its obligations under the agreed conditions.

§ 2º The indication referred to in item II of the caput includes:

I – finding that the counter‑party no longer has the financial capacity to honour the obligation under the agreed conditions;

II – restructuring of the financial asset associated with the obligation;

III – declared bankruptcy, judicial or extrajudicial recovery, or similar proceedings concerning the counter‑party;

IV – judicial measure that limits, delays or prevents fulfilment of the obligations under the agreed conditions;

V – significant decrease in the liquidity of the financial asset associated with the obligation, due to the reduction in the counter‑party’s financial capacity to meet its obligations;

VI – breach of material contractual clauses by the counter‑party; or

VII – negotiation of the counter‑party’s issued financial instruments at a significant discount that reflects losses incurred associated with credit risk.

§ 3º It is admitted not to characterise as a credit‑recovery‑problem asset the credits issued or originated after the filing of the judicial recovery process, or the homologation of extrajudicial recovery, provided that, documented, it is demonstrated that, besides the circumstance set out in item III of § 2º, there is no other indication that the respective obligation will not be fully honoured under the agreed conditions without the need to resort to guarantees or collaterals.

§ 4º The asset may cease to be characterised as a financial asset with credit‑recovery problem only when:

I – there are no overdue installments, including charges;

II – timely payment of principal and charges is maintained for a sufficient period to demonstrate a significant improvement in the counter‑party’s financial capacity to meet its obligations;

III – compliance with the remaining contractual obligations for a sufficient period to demonstrate a significant improvement in the counter‑party’s financial capacity to meet its obligations; and

IV – evidence that the obligation will be fully honoured under the originally agreed or renegotiated conditions, without the need to resort to guarantees or collaterals.

§ 5º Consortium administrators and payment institutions must establish consistent, verifiable and properly documented criteria for derecognising the instrument as an asset with credit‑recovery problem.

CHAPTER III – CLASSIFICATION, MEASUREMENT, RECOGNITION AND DERECOGNITION

Section I – Classification and Reclassification

Subsection I – Classification of Financial Assets

Art. 4. Consortium administrators and payment institutions must classify financial assets based on their business model for managing financial assets and the contractual cash‑flow characteristics of those assets into the following categories:

I – amortised‑cost category, for financial assets that cumulatively meet the following conditions:

a) the asset is managed within a business model whose objective is to hold financial assets in order to receive the respective contractual cash flows; and

b) the future contractual cash flows consist solely of principal repayments and interest on the principal amount, on specified dates;

II – fair‑value‑through‑other‑comprehensive‑income category, for financial assets that cumulatively meet the following conditions:

a) the financial asset is managed within a business model whose objective is to generate return both from receiving the contractual cash flows and from selling the financial asset with substantial transfer of risks and benefits; and

b) the future contractual cash flows consist solely of principal repayments and interest on the principal amount, on specified dates; and

III – fair‑value‑through‑profit‑or‑loss category, for all other financial assets.

§ 1º Credit operations and other operations with credit‑granting characteristics must be classified in the amortised‑cost category, except the following, which must be classified in the fair‑value‑through‑profit‑or‑loss category:

I – operations managed within a business model whose objective is to generate return solely by selling the financial asset;

II – operations whose future contractual cash flows are not exclusively principal and interest repayments on specified dates; and

III – operations for which the consortium administrator or the payment institution exercises the option provided for in art. 7.

§ 2º Classification in the amortised‑cost category, as provided in § 1º, also applies to financial assets acquired or originated for total or partial settlement with the objective of restructuring or renegotiating credit operations or other operations with credit‑granting characteristics.

Art. 5. The business models for managing financial assets mentioned in art. 4 must:

I – be approved by the board of directors or, in its absence, by the executive board;

II – establish how particular groups of financial assets are managed together to achieve a specific objective, considering all relevant information, such as:

a) how the results of the business model and the financial assets belonging to that model are evaluated and presented to the board and to the board of directors, if any;

b) the risks that may affect the performance of the business model and how those risks are managed; and

c) the remuneration basis for the business managers;

III – be defined considering the management of asset groups for cash‑flow generation; and

IV – reflect the planned and actually performed activities to achieve its objective.

Art. 6. Consortium administrators and payment institutions may, at initial recognition, irrevocably designate equity instruments of another entity to be classified in the fair‑value‑through‑other‑comprehensive‑income category.

§ 1º Consortium administrators and payment institutions must clearly document the policy and strategy that justify the designation provided in the caput.

§ 2º It is prohibited to designate, as provided in the caput, an asset whose primary objective is to generate return by selling the instrument.

Art. 7. Consortium administrators and payment institutions may, at initial recognition, irrevocably elect to classify in the fair‑value‑through‑profit‑or‑loss category financial assets that would otherwise be classified in the other categories, provided that such classification aims to eliminate or significantly reduce measurement or accounting inconsistencies that could arise due to measuring assets or liabilities on different bases as part of an existing initial‑recognition strategy, or the recognition of gains and losses on those assets.

Subsection II – Reclassification of Financial Assets

Art. 8. In case of change of business models, financial assets must be reclassified prospectively on the first day of the subsequent accounting period.

§ 1º On the reclassification date, the following adjustments must be made:

I – when transferring a financial asset from the amortised‑cost category to the other categories, the difference between the amortised cost of the instrument and its fair value on the transfer date must be recognised as:

a) income or expense in the period’s result, if transferred to the fair‑value‑through‑profit‑or‑loss category; or

b) a component highlighted in equity, for the net tax effects, if transferred to the fair‑value‑through‑other‑comprehensive‑income category;

II – when transferring a financial asset from the fair‑value‑through‑other‑comprehensive‑income category, unrealised gains and losses recognised as a component highlighted in equity must be:

a) recognised in the period’s result, in case of transfer to the fair‑value‑through‑profit‑or‑loss category; or

b) eliminated from equity, offset against the asset’s value, so that the asset is measured as if it had been classified in that category since initial recognition, in case of transfer to the amortised‑cost category; and

III – when transferring a financial asset from the fair‑value‑through‑profit‑or‑loss category to the other categories, the fair value of the instrument on the reclassification date must become the new gross carrying amount, from which income and charges, including provision for expected credit losses, will be calculated, and reversal of amounts already recognised in result from unrealised gains or losses is not permitted.

§ 2º Financial assets acquired or originated after the date of the business‑model change shall be classified according to the new models.

Subsection III – Classification of Financial Liabilities

Art. 9. Financial liabilities must be classified in the amortised‑cost category, except:

I – derivatives that are liabilities, which must be classified in the fair‑value‑through‑profit‑or‑loss category;

II – financial liabilities arising from operations that involve borrowing or leasing of financial assets, which must be classified in the fair‑value‑through‑profit‑or‑loss category;

III – financial liabilities generated by the transfer of a financial asset, which must be measured and recognised in accordance with Section III of this Chapter;

IV – credit commitments and credits to be released, which must be recognised and measured pursuant to Chapter IV; and

V – financial guarantees provided, which, after initial recognition, must be measured at the greater of:

a) the provision for expected credit losses, as set out in Chapter IV; or

b) the fair value at initial recognition less the accumulated revenue recognised in accordance with the specific regulation.

Art. 10. Reclassification of financial liabilities is prohibited.

Subsection IV – Classification of Hybrid Contracts

Art. 11. Hybrid contracts must be classified:

I – jointly, in accordance with art. 4, as if they constituted a single financial instrument, when the main component is a financial asset; and

II – separately, when the main component is a financial liability or a non‑financial instrument, observing that:

a) the non‑financial component must be recognised, measured and disclosed in accordance with the specific regulation; and

b) the financial liability and the embedded derivative must be classified, recognised and measured pursuant to the provisions of this Resolution.

Section I – Recognition and Measurement

Subsection I – Initial Recognition and Measurement

Art. 12. Financial instruments must be initially recognised on the date of their acquisition, origination or issuance:

Translation of Resolution BCB No. 219

I – at transaction price, determined in accordance with current regulations, in the case of receivables from contracts with customers without a significant financing component; or

II – at fair value, determined in accordance with current regulations, in other cases.

§ 1º If the fair value of the instrument measured according to item II of the caput differs from the consideration paid or received in the acquisition, origination or issuance of the financial instrument, the consortium administrator and the payment institution must:

1. recognize the difference in the period's result, for financial instruments measured at Level 1 of the fair‑value hierarchy, in accordance with current regulations; or
2. defer the difference according to the realization of the gain or loss, in other cases.

§ 2º The provision in § 1º, item II, does not apply to instruments classified in the amortized‑cost category measured at Level 3 of the fair‑value hierarchy, which must be recognized at the consideration paid or received in the acquisition, origination or issuance.

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Art. 13. In the initial recognition of financial instruments classified in the amortized‑cost or fair‑value‑through‑other‑comprehensive‑income categories, the amount determined pursuant to Art. 12 must be adjusted as follows:

1. for financial assets, transaction costs attributable individually to the operation must be added and any amounts received in the acquisition or origination of the instrument must be deducted; and
2. for financial liabilities, transaction costs attributable individually to the operation must be deducted and any amounts received in the issuance of the instrument must be added.

Sole paragraph. Expenses incurred in the acquisition, origination or issuance of the instrument that cannot be identified and controlled individually, without allocation, throughout the instrument's term, must be recognized as expense in the period in which they occur.

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Art. 14. The recognition of financial assets and liabilities or groups of financial assets and liabilities on a net basis is prohibited, including when managed jointly.

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Subsection IID – Appropriation of Revenues and Charges

Art. 15. Revenues and charges of financial instruments must be recognized in the result, at a minimum, at the time of interim and annual statements, on a pro‑rata temporis basis, using the effective interest method.

Sole paragraph. For financial instruments classified in the fair‑value‑through‑profit‑or‑loss category, revenues and charges, if any, must be appropriated to the result in accordance with the interest rates and other forms of remuneration and charges defined in the contract.

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Art. 16. Dividends and other similar forms of remuneration of equity instruments must be recognized by the consortium administrator and the investing payment institution only when they obtain the right to receive them, measured according to the value declared by the investee entity.

Sole paragraph. For equity instruments for which the consortium administrator or the payment institution has exercised the option provided for in Art. 6º, the dividends and remunerations referred to in the caput must be:

1. deducted from the instrument's carrying amount at the moment the consortium administrator or payment institution obtains the right to receive them, if they relate to the acquisition year of the instrument and represent recovery of the initial investment; or
2. recognized in the period's result, in other cases.

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Art. 17. The recognition, in the period's result, of any revenue of any nature that has not yet been received relating to a financial asset with a credit‑recovery problem is prohibited.

Sole paragraph. The revenue referred to in the caput may be appropriated to the result only upon its actual receipt.

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Art. 18. Consortium administrators and payment institutions must resume recognizing the revenues related to the asset referred to in Art. 17, as provided for in Art. 15, prospectively, from the period in which the instrument ceases to be characterized as a financial asset with a credit‑recovery problem.

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Art. 19. The provision for expected losses associated with the credit risk of financial assets must be recognized, if applicable, after the recognition of the revenues referred to in Art. 15.

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Subsection III – Subsequent Measurements

Art. 20. Financial instruments classified in the fair‑value‑through‑profit‑or‑loss or fair‑value‑through‑other‑comprehensive‑income categories must be measured at fair value, as defined in current regulations, at a minimum, at the time of interim and annual statements, with appreciation or depreciation recorded in the appropriate counterpart account:

1. revenue or expense, in the period's result, if relating to instruments classified in the fair‑value‑through‑profit‑or‑loss category; or
2. other comprehensive income, net of tax effects, if relating to financial assets classified in the fair‑value‑through‑other‑comprehensive‑income category.

§ 1º Consortium administrators and payment institutions must recognize gains or losses from the appreciation or depreciation mentioned in the caput separately from the expense of the provision for credit‑risk losses, if applicable.

§ 2º Gains or losses not realized recorded in other comprehensive income, pursuant to item II of the caput, must be transferred, upon full or partial derecognition, proportionally to:

1. the retained earnings account, without effect on the period's result, if the option provided for in Art. 6º is used; and
2. the period's result, in other cases.

§ 3º The portion of the fair‑value variation of a derivative financial liability measured at Level 2 or 3 of the fair‑value hierarchy arising from changes in the consortium administrator’s or payment institution’s own credit risk must be recognized as a component highlighted in other comprehensive income, net of tax effects.

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Art. 21. Gains or losses from foreign‑exchange variation of financial instruments must be recognized in the period's result.

Sole paragraph. For equity instruments for which the consortium administrator or payment institution has exercised the option provided for in Art. 6º, foreign‑exchange gains or losses must be recognized in other comprehensive income.

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Subsection IV – Measurement of Re‑negotiated or Restructured Instruments

Art. 22. In the case of restructuring financial assets, the gross carrying amount of the instrument must be re‑evaluated to represent the present value of the restructured contractual cash flows, discounted at the originally contracted effective interest rate.

§ 1º To the gross carrying amount of the restructured financial asset, transaction costs must be added and any amounts received in the restructuring must be deducted.

§ 2º The difference resulting from the re‑evaluation mentioned in the caput must be recognized in the period's result in which the restructuring occurs.

§ 3º In calculating the difference referred to in § 2º, any new credit concessions granted by the consortium administrator or payment institution in the restructuring of the financial asset must not be considered.

§ 4º If there is no contractual provision for future cash flows, the consortium administrator and payment institution must consider, in determining the gross carrying amount of the restructured instrument, the present value of the best estimate of the amounts to be received during the expected term of the instrument.

§ 5º If the restructuring involves more than one instrument, the consortium administrator and payment institution must determine the present value of the restructured contractual cash flows discounted at the average of the originally contracted effective interest rates, weighted by the value of the instruments involved.

§ 6º The provisions of this article also apply to financial assets acquired or originated for total or partial settlement with the purpose of restructuring financial instruments.

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Art. 23. In the case of renegotiation not characterized as restructuring of financial instruments, consortium administrators and payment institutions must:

1. derecognize the original financial instrument; and
2. recognize the new instrument pursuant to the provisions of Subsection I of this Section.

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Subsection V – Measurement of Investments Held for Sale

Art. 24. Investments in associates, subsidiaries and jointly‑controlled subsidiaries measured by the equity‑method that the consortium administrator or payment institution decides to sell, which are available for immediate sale and whose disposal is highly probable, must be measured, from the date the consortium administrator or payment institution decides to sell them, at the lower of:

1. the net carrying amount of the asset, after deducting provisions for impairment to recoverable amount; and
2. the fair value of the asset, assessed in accordance with the specific regulations, net of selling expenses.

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Section III – Derecognition and Transfer

Subsection I – Financial Assets

Art. 25. Consortium administrators and payment institutions must derecognize a financial asset when:

1. the contractual rights to the asset's cash flows expire; or
2. the financial asset is transferred and the transfer qualifies for derecognition under the terms of this Resolution.

Sole paragraph. For the purposes of item II of the caput, a financial asset is transferred when:

1. the contractual rights to the cash flows are transferred; or
2. the contractual rights to the cash flows are retained, but the consortium administrator or payment institution assumes the contractual obligation to pay the cash flows to one or more recipients, provided the following conditions are met:
   • a) no obligation to pay amounts to potential recipients, except to collect amounts equivalent to those of the original asset;
   • b) prohibition, by the terms of the transfer contract, for the consortium administrator or payment institution to sell or pledge the original asset, except as collateral to potential recipients for the obligation to pay them cash flows; and
   • c) the consortium administrator or payment institution must remit any cash flows it collects on behalf of potential recipients without material delay and without the right to reinvest those cash flows, except for cash or cash‑equivalents investments during the short settlement period, provided any accrued interest is passed on to the recipients.

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Art. 26. Consortium administrators and payment institutions must classify the transfer of financial assets, for accounting registration purposes, into the following categories:

1. operations with substantial transfer of risks and benefits;
2. operations with substantial retention of risks and benefits; and
3. operations without substantial transfer nor retention of risks and benefits.

§ 1º In the category “operations with substantial transfer of risks and benefits”, the following operations must be classified where the seller or transferor substantially transfers all risks and benefits of ownership of the financial asset involved:

1. unconditional sale of a financial asset;
2. sale of a financial asset together with an option to repurchase the asset at its fair value at the time of repurchase; and
3. sale of a financial asset together with a purchase or sale option whose exercise is unlikely to occur.

§ 2º In the category “operations with substantial retention of risks and benefits”, the following operations must be classified where the seller or transferor substantially retains all risks and benefits of ownership of the financial asset involved:

1. sale of a financial asset together with a commitment to repurchase the same asset at a fixed price or at the sale price plus any earnings;
2. securities‑lending contracts;
3. sale of a financial asset together with a total‑return swap that transfers market‑risk exposure back to the seller or transferor;
4. sale of a financial asset together with a purchase or sale option whose exercise is likely to occur; and
5. sale of receivables for which the seller or transferor guarantees the buyer or assignee against any credit losses that may occur, or where the sale is accompanied by the acquisition of subordinated shares of the purchasing investment fund, as provided in Art. 27.

§ 3º In the category “operations without substantial transfer nor retention of risks and benefits”, the operations must be classified where the seller or transferor neither transfers nor substantially retains all risks and benefits of ownership of the financial asset involved.

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Art. 27. The assessment of whether risks and benefits of ownership of financial assets are transferred or retained is the responsibility of the consortium administrator or payment institution and must be performed based on consistent and verifiable criteria, preferably using a methodology that compares the entity’s exposure before and after the sale or transfer, relative to the variation in the present value of the expected future cash flow associated with the financial asset discounted at an appropriate market interest rate, observing that:

1. the selling or transferring consortium administrator or payment institution transfers substantially all risks and benefits when its exposure to the variation in the present value of the expected future cash flow is significantly reduced; and
2. the selling or transferring consortium administrator or payment institution retains substantially all risks and benefits when its exposure to the variation in the present value of the expected future cash flow is not significantly altered.

§ 1º The assessment defined in the caput is not required in cases where the transfer or retention of risks and benefits of ownership of the financial asset is evident.

§ 2º It is presumed that the risks and benefits of the financial asset have been retained by the seller or transferor when the value of the guarantee provided, by any means, for compensation of credit losses, exceeds the expected loss, or when the value of the subordinated investment‑fund shares acquired exceeds the expected loss.

§ 3º The assessment defined in the caput cannot be divergent among entities that are counterparties in the same operation.

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Art. 28. For the accounting registration of the sale or transfer of financial assets classified in the “operations with substantial transfer of risks and benefits” category, the following procedures must be observed:

1. by the selling or transferring consortium administrator or payment institution:
   • a) the financial asset subject to sale or transfer must be derecognized; and
   • b) the positive or negative result arising from the transaction must be appropriated to the period's result in a segregated manner;
2. by the buying or acquiring consortium administrator or payment institution, the acquired financial asset must be recorded in accordance with Arts. 12 and 13, consistent with the nature of the original operation, maintaining extrinsic analytical controls over the originally contracted value of the operation.

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Art. 29. For the accounting registration of the sale or transfer of financial assets classified in the “operations with substantial retention of risks and benefits” category, the following procedures must be observed:

1. by the selling or transferring consortium administrator or payment institution:
   • a) the financial asset subject to sale or transfer must remain, in its entirety, recorded as an asset;
   • b) the amounts received in the operation must be recorded as an asset with a corresponding liability for the assumed obligation; and
   • c) revenues and expenses must be appropriated in a segregated manner to the period's result for the remaining term of the operation, at least monthly;
2. by the buying or acquiring consortium administrator or payment institution:
   • a) the amounts paid in the operation must be recorded as an asset representing a receivable from the selling consortium administrator or payment institution; and
   • b) revenues must be appropriated to the period's result for the remaining term of the operation, at least monthly.

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Art. 30. For the accounting registration of the sale or transfer of financial assets classified in the “operations without substantial transfer nor retention of risks and benefits” category, with transfer of control of the financial asset involved in the transaction, the following must be:

1. the procedures defined in Art. 28 observed; and
2. any new rights or obligations arising from the sale or transfer recognized separately as an asset or liability.

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Art. 31. For the accounting registration of the sale or transfer of financial assets classified in the “operations without substantial transfer nor retention of risks and benefits” category, with retention of control of the financial asset involved in the transaction, the following procedures must be observed:

1. by the selling or transferring consortium administrator or payment institution:
   • a) the asset remains recorded in proportion to its continued involvement, which is the amount by which the administrator or payment institution remains exposed to variations in the value of the transferred asset;
   • b) the liability for the obligation assumed in the operation must be recognized;
   • c) the positive or negative result arising from the transaction, relating to the portion whose risks and benefits were transferred, must be appropriated proportionally to the period's result in a segregated manner; and
   • d) revenues and expenses must be appropriated in a segregated manner to the period's result for the remaining term of the operation, at least monthly;
2. by the buying or acquiring consortium administrator or payment institution:
   • a) the amounts paid in the operation must be recorded as an asset:
     1. in accordance with the nature of the original operation, proportionally to the financial asset for which the buyer or assignee acquires the risks and benefits; and
     2. as a receivable from the selling consortium administrator or payment institution, proportionally to the financial asset for which the buyer or assignee does not acquire the risks and benefits;
   • b) revenues must be appropriated to the period's result for the remaining term of the operation, at least monthly.

Sole paragraph. For the purpose of item I, sub‑item “a”, of the caput, when the continued involvement acquires the form of a guarantee of any nature, that amount shall be the lesser of the financial asset’s own value and the guaranteed value.

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Art. 32. The sold or transferred financial asset and the respective liability generated by the operation, when present, as well as the resulting revenue and expense, must be recorded separately, prohibiting the offsetting of assets with liabilities, as well as revenues with expenses.

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Art. 33. The sale or transfer operation of financial assets whose collection remains the responsibility of the seller or transferor must be recorded as a simple collection on behalf of third parties.

Sole paragraph. Any benefits and obligations arising from the collection contract must be recorded as assets and liabilities at fair value.

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Art. 34. For the accounting registration of financial assets offered as collateral in sale or transfer operations, the following procedures must be observed:

1. by the selling or transferring consortium administrator or payment institution:
   • a) reclassify the asset separately from other financial assets of the same nature; and
   • b) derecognize the financial asset if it becomes non‑performing in the operation for which it was offered as collateral and the administrator or institution no longer has the right to demand its return;
2. by the buying or acquiring consortium administrator or payment institution:
   • a) recognize the liability, at fair value, for the obligation to return the financial asset received as collateral to the selling consortium administrator or payment institution, if it has been sold; and
   • b) recognize the financial asset at fair value or derecognize the liability referred to in sub‑item “a”, as appropriate, if the selling consortium administrator or payment institution becomes non‑performing in the operation for which it offered the asset as collateral and no longer has the right to demand its return.

Sole paragraph. Except for the situation described in item I, sub‑item “b”, of the caput, the selling consortium administrator or payment institution must continue recognizing the financial asset offered as collateral, and the buying consortium administrator or payment institution must not recognize it as its own asset.

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Art. 35. The provisions of this Subsection:

1. also apply to the sale or transfer of portions of a financial asset or groups of similar financial assets;
2. must be applied only to the portion of a financial asset if the object of the sale or transfer is a specifically identified part of the asset’s cash flow or a proportion of the asset’s cash flow; and
3. must be applied to the financial asset in its entirety in other cases.

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Subsection II – Financial Liabilities

Art. 36. Consortium administrators and payment institutions must derecognize a financial liability when the obligation specified in the contract expires, is settled, cancelled or extinguished.

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CHAPTER IV – PROVISION FOR EXPECTED LOSSES ASSOCIATED WITH CREDIT RISK

Section ID – Determination of the Provision for Expected Losses Associated with Credit Risk

Art. 37. Consortium administrators and payment institutions mentioned in Art. 1º must establish a provision in an amount corresponding to the expected losses associated with the credit risk of financial instruments.

Art. 38. For the purpose of measuring the provision, the following shall be considered as the calculation basis:

1. the gross carrying amount of financial assets, except for lease contracts;
2. the present value of the total amounts to be received in lease contracts;
3. the present value of the future disbursements estimated to be the responsibility of the consortium administrator or payment institution linked to financial guarantee contracts provided;
4. the present value of the estimate of resource utilization from credit commitments; and

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V – the present value of the credit to be released.

Sole paragraph. In the calculation of the present value referred to in item II of the caput, an equivalent rate to the financial charges provided for in the contract must be used, or, if such provision does not exist, the rate that equalises the value of the leased asset on the contracting date with the present value of all receipts and payments foreseen over the contractual term, including:

I – the guaranteed residual value; or

II – the probable realisation value of the leased asset at the end of the contract, net of selling costs, in the absence of a guaranteed residual value.

Art. 39. The provision for expected losses associated with credit risk must be constituted, at the initial recognition of the financial instrument, as an expense of the period, offset against an appropriate account:

I – of the asset, in the case of losses related to financial assets; or

II – of the liability, in the case of losses related to:

a) financial guarantees provided;

b) credit commitments and credits to be released referred to in sub‑item "c" of item II of Art. 1º; and

c) future consideration related to operational lease transactions.

Art. 40. The provision for expected losses associated with credit risk must be reviewed at least monthly, or whenever there is a change in the estimated expected loss or in the stage in which the instrument is allocated, offset against the period result.

Art. 41. The financial asset must be written off due to expected losses associated with credit risk if it is not probable that the consortium administrator or the payment institution will recover its value.

§ 1 The consortium administrators and the payment institutions must maintain controls to identify the financial assets written off under this article while all collection procedures have not been exhausted, observing a minimum period of five years.

§ 2 The instruments written off under this article that are renegotiated must be allocated, on the renegotiation date, to the third stage, with a provision for expected losses associated with credit risk equal to 100 % (one hundred percent) of the instrument’s value.

§ 3 The provision in § 2 also applies to financial instruments used for settlement or refinancing of instruments written off in the manner of this article.

§ 4 It is optional to constitute a provision lower than that provided in § 2 when there is significant amortisation of the operation or when newly relevant facts, duly proven, indicate a significant improvement in the counter‑party’s ability to honour the obligation under the agreed conditions.

Section IID – Methodology for Determining the Provision for Expected Losses Associated with Credit Risk

Art. 42. The consortium administrators and the payment institutions mentioned in Art. 1 must use a simplified methodology for determining the provision for expected losses associated with credit risk.

§ 1 The provision in the caput does not apply to:

I – payment institutions that are leaders of a Type 3 conglomerate classified in Segments 2 (S2) and 3 (S3); and

II – consortium administrators and payment institutions that are members of a Type 1 prudential conglomerate classified:

a) in Segments 1 (S1), 2 (S2) and 3 (S3), according to current regulation; or

b) in Segment 4 (S4) that has received authorisation from the Central Bank of Brazil, as provided for in Resolution CMN No. 4,966, of 25 November 2021.

§ 2 The consortium administrators and the payment institutions mentioned in items I and II of § 1 must observe the rules defined in Arts. 37 to 49 and Art. 72 of Resolution CMN No. 4,966, 2021.

Art. 43. The simplified methodology referred to in the caput of Art. 42 must consider:

I – with respect to the legal‑entity counter‑party:

a) economic‑financial situation;

b) degree of indebtedness;

c) payment history;

d) credit limits at the consortium administrator or payment institution and in the financial system; and

e) adequacy between the debtor’s cash flows and its obligations to financial institutions;

II – with respect to the natural‑person counter‑party:

a) income;

b) income commitment to obligations contracted with the consortium administrator or payment institution and with financial institutions and other institutions authorised to operate by the Central Bank of Brazil;

c) timeliness of payment of obligations contracted with the consortium administrator or payment institution and with financial institutions and other authorised institutions; and

d) net worth;

III – with respect to the financial instrument:

a) nature and purpose of the operation;

b) characteristics of guarantees or collaterals, when existing, such as type, liquidity and probable present value of realisation; and

c) accounting value.

§ 1 The determination of the provision for expected losses associated with credit risk of financial instruments is the responsibility of the consortium administrator or the payment institution holding the instrument, or that retains risks and benefits of financial instruments transferred under this Resolution, and must be carried out based on consistent and verifiable criteria, supported by internal and external information.

§ 2 In addition to the aspects mentioned in the caput, other registration, performance and non‑performance information relating to the counter‑party that the consortium administrator or payment institution has access to must be considered.

§ 3 When estimating the probable present value of realisation mentioned in sub‑item "b" of item III of the caput, the consortium administrator and the payment institution must use:

I – the fair sale value of the guarantees or collaterals;

II – the estimated costs and timeframes for execution, sale and receipt of the guarantees or collaterals; and

III – the effective interest rate of the financial instrument at initial recognition.

§ 4 The provision for expected losses associated with credit risk relating to financial instruments of the same counter‑party must be defined by considering the one that presents the highest expected loss, allowing, exceptionally, a lower provision for a particular instrument that, by virtue of its nature or purpose, presents a significantly lower credit risk.

Art. 44. It is optional, with prior authorisation from the Central Bank of Brazil, to use the rules defined in Arts. 37 to 49 and Art. 72 of Resolution CMN No. 4,966, 2021, for prudential conglomerate‑leader payment institutions:

I – Type 2 with total assets exceeding 0.1 % (one tenth of one percent) of Brazil’s Gross Domestic Product (GDP); and

II – Type 3 classified in Segment 4 (S4), according to current regulation.

§ 1 The authorisation referred to in the caput is conditioned on the payment institution demonstrating that it maintains internal models and systems for measuring and classifying credit risk, internal controls and risk management compatible with the nature of its operations, product complexity and credit‑risk exposure.

§ 2 The authorisation may be cancelled, at the discretion of the Central Bank of Brazil, if the requirements of § 1 are no longer met or if the provision amounts do not adequately reflect the expected loss associated with the payment institution’s credit risk.

§ 3 Once the authorisation is granted, the use of the simplified methodology depends on approval by the Central Bank of Brazil.

CHAPTER V – HEDGE ACCOUNTING

Section I – Hedge Instruments

Art. 45. The following may be designated as hedge instruments:

I – derivative financial instrument, except a derivative embedded in a hybrid contract whose main component is a financial asset;

II – non‑derivative financial asset classified in the fair‑value‑through‑profit‑or‑loss category; and

III – foreign‑exchange variation component of a non‑derivative financial liability or non‑derivative financial asset, except when that asset is another entity’s equity instrument classified in the fair‑value‑through‑other‑comprehensive‑income category, exclusively for foreign‑exchange risk protection.

§ 1 Subject to the caput, consortium administrators and payment institutions may designate as a hedge instrument:

I – the instrument in its entirety; or

II – a proportion of the instrument’s total value.

§ 2 The designation of a combination of the hedge instruments listed in the caput is permitted, including cases where the risks arising from some hedge instruments offset those arising from others.

§ 3 The designation of the hedge instrument must be made considering the fair‑value variations over its entire contractual term.

§ 4 For hedge accounting purposes, only contracts with a counter‑party external to the consortium administrator or the reporting payment institution are eligible for designation as hedge instruments.

§ 5 Options that are written do not qualify as hedge instruments unless they are designated as compensation for purchased options, including those embedded in another financial instrument.

Section II – Items Subject to Hedge

Art. 46. The following may be designated as items subject to hedge:

I – asset;

II – liability;

III – firm commitment not yet recognised as an asset or liability;

IV – a highly probable forecast transaction carried out with a counter‑party external to the consortium administrator or payment institution; and

V – net investment in a foreign operation, exclusively for foreign‑exchange risk protection.

§ 1 Consortium administrators and payment institutions may designate as an item subject to hedge:

I – an item in its entirety;

II – a component of the item;

III – a group of items managed together, or a component of that group, including a group of items that constitute a net position; and

IV – an aggregated exposure of the items mentioned in the caput and one or more derivative financial instruments.

§ 2 In the case of designating a component of the item, as per sub‑item II of § 1, the following may be designated as an item subject to hedge:

I – a variation in cash flows or fair value of the item attributable to a specific risk or risks, provided that the risk component is separately identifiable and reliably measurable;

II – one or more selected contractual cash flows; or

III – a proportion or a specific part of the nominal value of the item or the group of items.

§ 3 For hedge accounting purposes, a net position is considered to be the result of a group of items whose risk positions offset each other.

§ 4 In the case of cash‑flow hedge, as defined in sub‑item II of Art. 48, a net position is eligible as an item subject to hedge only if the protected risk is of a foreign‑exchange nature and the designation specifies the nature, amount and specific periods in which those exposures affect the result.

§ 5 For hedge accounting purposes, only contracts with a counter‑party external to the consortium administrator or reporting payment institution are eligible for designation as an item subject to hedge, with the exception of transactions that must not be eliminated in the consolidated financial statements of an investment‑entity, according to specific regulation.

Section III – Qualification Criteria for Hedge Accounting

Art. 47. The following protection relationships qualify for hedge accounting:

I – are constituted solely by hedge instruments and items subject to hedge provided for in Arts. 45 and 46;

II – are designated and formally documented from the beginning of the protection relationship; and

III – are effective.

§ 1 The following requirements must be cumulatively met for a protection relationship to be considered effective:

I – the economic relationship between the item subject to hedge and the hedge instrument is demonstrable;

II – the effect of credit risk is not predominant in the value variations resulting from this economic relationship; and

III – the hedge ratio, measured by the relationship between the quantity of the hedge instrument and the quantity of the protected item in terms of their relative weighting, meets the protection level defined in the risk‑management strategy of the consortium administrator or payment institution.

§ 2 For the analysis of effectiveness requirements, a qualitative assessment is permitted when the critical terms of the hedge instrument and the item subject to hedge, the nominal value, maturity and underlying risk are identical or closely aligned.

§ 3 The documentation required in sub‑item II of the caput must contain:

I – the objective and risk‑management strategy of the consortium administrator or payment institution for hedge accounting;

II – the identification of the hedge instrument, the item subject to hedge and the nature of the risk being protected;

III – a prospective analysis of compliance with hedge effectiveness requirements and of sources of hedge ineffectiveness; and

IV – the hedge ratio value and the method used for its determination.

§ 4 Consortium administrators and payment institutions must rebalance the protection relationship, adjusting the designated quantities of the item subject to hedge or the hedge instrument, in order to maintain a hedge ratio that meets effectiveness requirements if, and only if, the protection relationship ceases to meet the hedge‑ratio effectiveness requirement while the risk‑management objective of the relationship remains the same.

§ 5 Consortium administrators and payment institutions must reassess hedge effectiveness at least monthly and whenever there are indications of circumstances that affect its effectiveness.

§ 6 The replacement or renewal of the hedge instrument, if consistent with the previously documented risk‑management objective, does not result in disqualification of the protection relationship.

Section IV – Classification of Hedge Operations

Art. 48. Hedge operations must be classified into one of the following categories:

I – fair‑value hedge: a relationship that aims to protect the consortium administrator or payment institution from the effects of changes in the fair value of an asset, liability, firm commitment not yet recognised as an asset or liability, or a component of any of those items, which is attributable to a specific risk and may affect profit or loss or other comprehensive income;

II – cash‑flow hedge: a relationship that aims to protect the consortium administrator or payment institution from the variability in cash flows that is attributable to a specific risk associated with the entirety or a component of an asset or liability or a highly probable forecast transaction that may affect profit or loss; or

III – net‑investment‑in‑foreign‑operations hedge: a relationship that aims to protect the consortium administrator or payment institution, in whole or in part, from risks arising from exposure to foreign‑exchange variation of a net investment in a foreign operation whose functional currency, as defined in the specific regulation, differs from the national currency.

Sole paragraph. It is optional for consortium administrators and payment institutions to classify a firm commitment not yet recognised as an asset or liability in the cash‑flow‑hedge category when the protected risk is foreign‑exchange.

Section V – Hedge Accounting

Art. 49. When the qualification criteria are met, a fair‑value hedge must be recognised, from the designation date, as follows:

I – the gain or loss on the hedge instrument must be recognised in profit or loss; and

II – the gain or loss on the item subject to hedge must adjust its accounting value, offsetting profit or loss.

§ 1 If the item subject to hedge is a firm commitment not yet recognised as an asset or liability, the gain or loss on that item must be recorded in equity accounts, offsetting profit or loss.

§ 2 When the firm commitment subject to protection is recognised as an asset or liability, the gain or loss mentioned in § 1 must be included in its acquisition, issuance or origination cost.

§ 3 If the item subject to hedge is an equity instrument of another entity initially recognised in the fair‑value‑through‑other‑comprehensive‑income category, the gain or loss on both the hedge instrument and the item subject to hedge must be recorded in other comprehensive income, a record that must be maintained even in the event of discontinuation of the protection relationship.

§ 4 In case of discontinuation of a fair‑value hedge relationship where the protected item is a financial instrument measured at amortised cost, the gain or loss referred to in item II of the caput must be amortised in profit or loss as follows:

I – proportionally, according to the remaining term of the item subject to hedge, using the effective interest rate, which must be recalculated on the date amortisation begins; or

II – in full, upon write‑off of the item subject to hedge.

Art. 50. When the qualification criteria are met, cash‑flow hedge operations must be recognised, from the designation date, as follows:

I – the portion of gain or loss on the hedge instrument corresponding to the effective protection must be recognised against the equity account highlighted for the net tax effects; and

II – any remaining gain or loss on the hedge instrument, corresponding to the ineffectiveness of the protection, must be recognised against an appropriate revenue or expense account, in the period’s profit or loss.

§ 1 The accounting value of the item subject to hedge must not be altered as a result of hedge accounting.

§ 2 The effective protection portion is considered to be the lower absolute value between:

I – the cumulative gain or loss on the hedge instrument since the designation of the protection relationship; and

II – the cumulative change in the fair value of the item subject to hedge, determined by the present value of the cumulative change in the expected future cash flows protected, since the designation of the protection relationship.

Art. 51. The amount accumulated in the equity account highlighted for cash‑flow hedge operations must:

I – be reclassified to profit or loss in the same periods in which the expected future cash flows of the item subject to hedge affect the result;

II – adjust the initial accounting recognition of a non‑financial asset or non‑financial liability resulting from a highly probable forecast transaction; and

III – be recorded in equity accounts if a highly probable forecast transaction becomes a firm commitment not yet recognised as an asset or liability, to which the fair‑value‑hedge accounting criteria of Art. 49 apply.

§ 1 The amount mentioned in the caput must be recognised immediately in the period’s profit or loss if it represents a loss whose total or partial recovery is not expected.

§ 2 In case of discontinuation of a cash‑flow hedge, the amount accumulated in the highlighted equity account must:

I – remain recorded in equity if the protected future cash flows are still expected, being reclassified to profit or loss upon their actual occurrence, except when total or partial recovery of the loss mentioned in § 1 is not expected; and

II – be immediately reclassified to profit or loss if the protected future cash flows are no longer expected.

Art. 52. When the qualification criteria are met, hedge operations of net investment in a foreign operation must be recognised, from the designation date, as follows:

I – the portion of gain or loss on the hedge instrument corresponding to the effective protection must be recognised against the equity account highlighted for the net tax effects; and

II – any remaining gain or loss on the hedge instrument, corresponding to the ineffectiveness of the protection, must be recognised against an appropriate revenue or expense account, in the period’s profit or loss.

§ 1 The amount accumulated and recognised in the highlighted equity account, as per item I of the caput, must be reclassified to profit or loss, proportionally, when the foreign operation is wholly or partially disposed of.

§ 2 For the purposes of item I of the caput, the concept of effective protection portion set out in § 2 of Art. 50 applies.

Art. 53. Consortium administrators and payment institutions must discontinue hedge accounting prospectively only when the protection relationship no longer meets the qualification criteria set out in Art. 47, and voluntary discontinuation is prohibited.

Sole paragraph. Discontinuation of hedge accounting may be total or partial.

Section VI – Fair‑Value Hedge of Exposure to Portfolio Interest Rate of Financial Assets or Liabilities

Art. 54. It is optional for consortium administrators and payment institutions to recognise a fair‑value hedge of exposure to the portfolio interest rate of financial assets or liabilities.

§ 1 For the purposes of the caput, it is permitted to designate as the item subject to hedge a portion of the portfolio of financial assets or liabilities that shares the risk being protected.

§ 2 The designation of the item subject to hedge referred to in § 1 may be made in monetary terms, instead of individual assets or liabilities.

§ 3 The portfolio referred to in the caput may consist solely of financial assets, solely of financial liabilities, or of both financial assets and financial liabilities.

Art. 55. Only derivative financial instruments, in their entirety or a proportion of their value, may be designated as fair‑value hedge instruments of exposure to the interest‑rate risk addressed in this Section, except for derivatives embedded in hybrid contracts whose main component is a financial asset, as provided in §§ 4 and 5 of Art. 45.

§ 1 The hedge instrument mentioned in the caput may be a single derivative or a portfolio of derivatives that contain exposure to interest‑rate risk.

§ 2 The designation of the hedge instrument must be made for its entire contractual term.

Article 56

If the qualification criteria set out in Section III of this Chapter are met, fair‑value hedge transactions of interest‑rate exposure on a portfolio of assets or financial liabilities must be recognized from the designation date, in accordance with Article 49, provided that the gain or loss on the hedged item is recorded in a separate line item of the asset or liability, as appropriate.

Single paragraph. The balance of the line items mentioned in the caput must be written off in proportion to the derecognition of the financial assets or liabilities and must be presented, for disclosure purposes, together with the corresponding financial assets or liabilities.

Article 57

Consortium administrators and payment institutions must discontinue hedge accounting prospectively when the protection relationship no longer meets the qualification criteria set out in Section III of this Chapter.

Single paragraph. Exclusively for the fair‑value hedge of interest‑rate exposure on a portfolio of assets or financial liabilities covered by this Section, voluntary revocation of the protection relationship is permitted.

CHAPTER VI – DISCLOSURE OF INFORMATION ON FINANCIAL INSTRUMENTS

Article 58

Consortium administrators and payment institutions must disclose in the explanatory notes to the financial statements the information necessary for users to assess:

I – the relevance of financial instruments to their equity and financial position and to their performance; and

II – the nature and relevance of the risks arising from financial instruments to which the consortium administrator or payment institution is exposed during and at the end of the reporting period.

Article 59

For the purposes of Article 58, consortium administrators and payment institutions must disclose, at a minimum:

I – the business models defined for each relevant class of financial instruments and their effects on the entity’s equity and financial position and on its performance;

II – the carrying amount of financial assets and financial liabilities classified in each of the following categories:

  a) amortized cost;

  b) fair value through profit or loss, segregating those designated at initial recognition for this category; and

  c) fair value through other comprehensive income, highlighting equity‑instrument investments designated at initial recognition for this category;

III – the effects of any reclassifications of financial instruments between the categories mentioned in item II on the entity’s equity and financial position and on its performance;

IV – the risks associated with financial instruments to which the consortium administrators or payment institutions are exposed;

V – the carrying amount and the corresponding provision for losses associated with credit risk constituted for the financial instruments;

VI – the policy and strategy for using hedge accounting to manage exposures arising from the specific risks to which the consortium administrators or payment institutions are exposed; and

VII –, by financial‑asset category, a description of the nature of the risks and the benefits to which the consortium administrators or payment institutions may continue to be exposed through the transfer of financial assets.

Single paragraph. In disclosures by financial‑instrument class, consortium administrators and payment institutions must provide sufficient information to allow reconciliation with the items presented in the balance sheet.

CHAPTER VII – GENERAL AND TRANSITIONAL PROVISIONS

Section I – General Provisions

Article 60

Consortium administrators and payment institutions must keep available to the Central Bank of Brazil:

I –, for a minimum period of five years, or longer if required by law or regulation, the documents that clearly and objectively evidence the criteria for:

  a) defining business models, classification, possible reclassification, measurement and accounting recognition of financial instruments; and

  b) classification and accounting registration of the sale or transfer of financial assets;

II – the information and other documents indicating:

  a) the carrying amount of financial assets, broken down into:

    1. amortized cost;

    2. provision for expected credit losses, when applicable; and

    3. fair‑value adjustments, if any;

  b) the criteria adopted for derecognizing financial assets referred to in Article 41;

  c) the criteria adopted for defining renegotiation and restructuring of financial instruments; and

  d) the methodology and results of internal assessments and compliance tests of the parameters of the models used to calculate expected loss;

III – the historical data produced from the entry into force of this Resolution, covering at least the last five years, regarding:

  a) the provision for expected credit losses, including the initial provision and its changes, the methodology and the main data used in its calculation; and

  b) recoveries by type of financial asset and guarantee, when applicable.

Single paragraph. In addition to the information set out in the caput, payment institutions that opt for the option mentioned in Article 44 must keep available to the Central Bank of Brazil:

I – the information and other documents indicating:

  a) the criteria used for allocating financial instruments into stages; and

  b) the definition of homogeneous risk groups and their respective compositions;

II – the historical data produced from the entry into force of this Resolution, covering at least the last five years, concerning the credit‑risk assessment of the financial instrument, including the initial risk assessment, the date of each reassessment, the methodology and the main data used.

Article 61

The Central Bank of Brazil may determine:

I – if it considers the classification made by the consortium administrator or payment institution inadequate, the characterization of financial instruments as financial assets with credit‑recovery problems;

II – if it finds impropriety or inconsistency in the processes of classification and accounting registration of sale or transfer operations of assets, the reclassification, registration or derecognition of those operations and the consequent recognition of effects in the financial statements;

III – if it identifies inadequacy or insufficiency in the measurement of expected loss or in the recognition of the provision for expected credit losses:

  a) the reallocation of the financial instrument into stages;

  b) the alteration of the criteria for constituting and registering the provision for expected credit losses;

  c) the constitution of a complementary provision, considering the level of provisioning determined by the Central Bank of Brazil in its monitoring and supervisory activities; and

  d) the redefinition of homogeneous risk groups and their respective compositions;

IV – if it identifies inadequacy in the designation or accounting recognition, the reclassification or discontinuation of accounting recognition of hedge operations.

Section II – Transitional Provisions

Article 62

The accounting criteria established by this Resolution must be applied prospectively from its entry‑into‑force date.

Single paragraph. The effects of adjustments arising from the application of the accounting criteria established by this Resolution must be recorded against the retained earnings account for the net tax effects.

Article 63

Consortium administrators and payment institutions may, in January 2025, for the financial instruments that compose their portfolio on that date:

I – make the designation referred to in Article 6; and

II – make the election referred to in Article 7.

Article 64

It is prohibited to record in assets instruments written down to a loss, in accordance with the regulation in force before the entry‑into‑force date of this Resolution, except when the instrument is renegotiated, observing the provisions of §§ 2 to 4 of Article 41.

Article 65

Hedge operations recognized in the accounting by consortium administrators and payment institutions must be reclassified, on 1 January 2025, into the new categories.

Single paragraph. Consortium administrators and payment institutions must discontinue the accounting recognition of hedge operations that do not meet the criteria established in this Resolution.

Article 66

It is optional, on 1 January 2025, to redefine hedge operations recognized in the accounting by consortium administrators and payment institutions, including:

I – the designation of the hedge instrument and the hedged item, as per Sections I and II of Chapter V, observing the provisions of Section III of Chapter V; and

II – the classification of hedge operations, as per Section IV of Chapter V.

Article 67

Consortium administrators and payment institutions must, by 31 December 2022, prepare an implementation plan for the accounting regulation established in this Resolution.

Single paragraph. The plan mentioned in the caput must:

I – be approved by the board of directors or, in its absence, by the executive board;

II – be disclosed, in summarized form, in the explanatory notes to the financial statements for the 2022 fiscal year; and

III – be made available to the Central Bank of Brazil.

Article 68

Consortium administrators and payment institutions may, until the 2024 fiscal year, prepare and disclose consolidated financial statements in accordance with the Accounting Standard for Regulated Institutions of the Central Bank of Brazil (Cosif), in addition to the statements prepared under the International Financial Reporting Standards, as provided for in Resolution BCB No. 2, dated 12 August 2020.

Single paragraph. The provision in the caput also applies to statements covering a period of less than one year.

Article 69

Consortium administrators and payment institutions must disclose in the explanatory notes to the 2024 financial statements the estimated impacts of implementing the accounting regulation established by this Resolution on their result and financial position.

Article 70

Consortium administrators and payment institutions are exempted from presenting comparative figures in the financial statements for the 2025 fiscal year relative to prior periods.

CHAPTER VIII – FINAL PROVISIONS

Article 71

Circular No. 3 833, dated 17 May 2017, is revoked.

Article 72

This Resolution enters into force:

I – on 1 May 2022, with respect to the following provisions:

  a) Article 24; and

  b) Articles 67 to 69; and

II – on 1 January 2025, with respect to the remaining provisions.

Otávio Ribeiro Damaso
Director of Regulation