Resolution CMN No. 2950 — Amends and Consolidates Regulations on Fixed-Income Securities Operations and Commitments

RESOLUTION NO. 002950

Amends and consolidates the regulations governing operations and commitments involving fixed-income securities.

THE CENTRAL BANK OF BRAZIL, in accordance with Article 9 of Law No. 4,595 of December 31, 1964, makes public that the NATIONAL MONETARY COUNCIL, in an extraordinary session held on April 17, 2002, based on Article 4, items VI, VIII, IX, and XXI, of the aforementioned law, and on Articles 9, 10, 14, and 29 of Law No. 4,728 of July 14, 1965,

HAS RESOLVED:

Article 1. To amend and consolidate, in accordance with the attached regulation, the regulations governing operations and commitments involving fixed-income securities.

Article 2. The Central Bank of Brazil is authorized to adopt measures and issue regulations deemed necessary for the execution of the provisions of this resolution.

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

Article 4. Resolutions No. 2,675 of December 21, 1999, and No. 2,912 of December 19, 2001, and Circular No. 3,066 of October 18, 2001, are revoked, and regulatory bases and citations to Resolution No. 2,675 of 1999 contained in norms issued by the Central Bank of Brazil shall refer to this resolution.

Brasília, April 17, 2002

Luiz Fernando Figueiredo
Interim President

Regulation attached to Resolution No. 2,950 of April 17, 2002, which Governs Operations and Commitments Involving Fixed-Income Securities.

CHAPTER I

On Operations and Securities

Article 1. The following types of operations and commitments involving fixed-income securities are subject to the regulations of this regulation:

I - operations with a repurchase commitment maturing on a future date, prior to or equal to the maturity of the securities involved in the operation:

a) sale of securities with a repurchase commitment assumed by the seller, jointly with a resale commitment assumed by the buyer, for settlement on a predetermined date;

b) sale of securities with a repurchase commitment assumed by the seller, jointly with a resale commitment assumed by the buyer, for settlement at any time during a specified period, at the discretion of either party, as previously agreed between them;

c) sale of securities with a repurchase commitment assumed by the seller, settleable at the exclusive discretion of the buyer, on a determined date or within a specified period;

II - operations with a resale commitment maturing on a future date, prior to or equal to the maturity of the securities involved in the operation:

a) purchase of securities with a resale commitment assumed by the buyer, jointly with a repurchase commitment assumed by the seller, for settlement on a predetermined date;

b) purchase of securities with a resale commitment assumed by the buyer, jointly with a repurchase commitment assumed by the seller, for settlement at any time during a specified period, at the discretion of either party, as previously agreed between them;

c) purchase of securities with a resale commitment assumed by the buyer, settleable at the exclusive discretion of the seller, on a determined date or within a specified period;

III - operations for the sale of securities with a repurchase commitment assumed by the seller, jointly with a resale commitment assumed by the buyer, for settlement on the same day;

IV - operations for the purchase of securities with a resale commitment assumed by the buyer, jointly with a repurchase commitment assumed by the seller, for settlement on the same day;

V - commitment to purchase or sell forward, jointly with a commitment to sell or purchase by the other party in the operation, having the committing seller, upon assuming the commitment, ownership of the negotiated security or certainty of such ownership until the settlement date of the forward sale committed, in this case based on effective repurchase or forward purchase commitment(s) that have a settlement date equal to or prior to the forward sale committed;

VI - commitment to purchase or sell forward, jointly with a commitment to sell or purchase by the other party in the operation, without the committing seller having, upon assuming the commitment, ownership of the negotiated security or certainty of such ownership until the settlement date of the forward sale committed.

§ 1. For the purposes of this regulation, operations and commitments defined in this article are designated as committed operations.

§ 2. Committed operations must be registered in the Special Settlement and Custody System (Selic) or in a system for the registration and financial settlement of assets authorized by the Central Bank of Brazil.

§ 3. The committed operations referred to in the caput, items I and II, must be carried out with defined profitability or with a remuneration parameter established.

§ 4. The committed operations referred to in the caput, items II and IV, when carried out with clients who are not financial institutions nor other institutions authorized to operate by the Central Bank of Brazil, may only involve securities of definitive ownership by the seller.

§ 5. The commitments to purchase and sell forward provided for in the caput, item VI, may only be assumed with financial institutions and other institutions authorized to operate by the Central Bank of Brazil.

Article 2. Committed operations may involve exclusively the following securities, duly registered in Selic or in a system for the registration and financial settlement of assets authorized by the Central Bank of Brazil:

I - securities issued by the National Treasury and/or the Central Bank of Brazil;

II - securitized credits by the National Treasury;

III - Rural Land Debt Securities issued by the National Institute of Colonization and Agrarian Reform (Incra);

IV - state and municipal securities;

V - bank deposit certificates;

VI - bank credit notes;

VII - certificates of bank credit notes;

VIII - exchange letters accepted by financial institutions;

IX - mortgage letters;

X - real estate credit letters;

XI - real estate credit notes;

XII - debentures;

XIII - debenture notes;

XIV - promissory notes issued by joint-stock companies, intended for public offering;

XV - real estate receivables certificates;

XVI - other securities that may be authorized by the Central Bank of Brazil.

§ 1. The committed operations referred to in Article 1, items II and IV, when carried out with clients who are not financial institutions nor other institutions authorized to operate by the Central Bank of Brazil, as well as the commitments to purchase and sell forward provided for in item VI of that article, may only involve securities issued by the National Treasury and/or the Central Bank of Brazil.

§ 2. Free movement of securities issued by the National Treasury and/or the Central Bank of Brazil involved in the committed operations referred to in Article 1, items II and IV, is admitted, provided that this possibility is expressly agreed upon between the parties.

§ 3. The requirement for a free movement agreement referred to in § 2 does not apply to the case of carrying out new committed operations involving the same securities, provided that they have a settlement date equal to or prior to the committed resale and the conditions originally agreed upon regarding the movement of these securities are respected.

Article 3. The commitments to purchase and sell forward provided for in Article 1, item VI, may involve securities issued by the National Treasury and/or the Central Bank of Brazil linked to public offerings, regardless of the existence of securities of the same kind (type, issuer, and maturity) in the market, provided that the following conditions are cumulatively met:

I - the public offering of the securities has been previously disclosed by act of the Secretariat of the National Treasury of the Ministry of Finance or the Central Bank of Brazil, as applicable, respectively, for securities issued by the National Treasury or the Central Bank of Brazil;

II - the settlement of the commitments is conditioned on the sale, in the public offering, of 51% (fifty-one percent), at minimum, of the total volume of securities previously announced in the manner provided for in item I;

III - the settlement date of the commitments is equal to the settlement date of the public offering.

§ 1. The commitments referred to in the caput must be registered in Selic or in a system for the registration and financial settlement of assets authorized by the Central Bank of Brazil.

§ 2. The Central Bank of Brazil, at its discretion, may interrupt the registration of the commitments referred to in the caput when the total registered volume reaches an amount incompatible with the total volume of securities previously announced in the manner provided for in item I.

Article 4. Securities involved in resale commitments may only serve as collateral in operations with repurchase commitments that have a settlement date equal to or prior to the committed resale.

CHAPTER II

On Qualification

Article 5. Committed operations may only be carried out with the participation of a multiple bank, commercial bank, investment bank, development bank, credit, financing and investment company, securities brokerage company, securities distribution company, and Caixa Econômica Federal, duly qualified for this purpose.

§ 1. An institution is considered qualified if, having met the conditions established in the current regulation, it submits a written communication to the component of the Central Bank of Brazil/Department of Organization of the Financial System (Deorf) to which it is subject, at least five days prior to the start of its activity in the modality, informing such intention, the start date of the operations, and the name of the administrator responsible for them.

§ 2. In the event of substitution of the administrator responsible for the operations, the fact must also be communicated to the component of Deorf to which the institution is subject, within a maximum period of five days from its occurrence.

CHAPTER III

On Limits and Operational Norms

Article 6. In carrying out committed operations, the calculation base for the operational limits of the institution shall be its respective Reference Equity (RE).

Article 7. Qualified institutions for carrying out committed operations are subject to the following operational limits:

I - thirty times the calculation base, for operations, individually or cumulatively, with:

a) Treasury Financial Letters and Central Bank of Brazil Letters, regardless of their remuneration conditions and term;

b) securities issued by the National Treasury and/or the Central Bank of Brazil with remuneration contracted based on exchange rate variation, regardless of their term conditions, limited to fifteen times the calculation base;

c) other securities issued by the National Treasury and/or the Central Bank of Brazil and credits securitized by the National Treasury, limited to eight times the calculation base, observing also a maximum of five times the calculation base for operations with securities with a remaining term equal to or greater than 180 days on the date of assuming the commitments;

d) securities and financial instruments issued by states, the Federal District, or municipalities, as well as by public sector entities, referred to in Article 1, § 1, item I, letter "c", of Resolution No. 2,827 of March 30, 2001, observing the limits and conditions established in that regulation;

e) private securities, limited to two times the calculation base;

II - the updated amount of securities in circulation issued by the respective states and/or municipalities, in the case of institutions that administer state and/or municipal public debt funds.

§ 1. The commitments to purchase and sell forward provided for in Article 1, items V and VI, must be computed for the purposes of the operational limits established in the caput, item I.

§ 2. Institutions that administer state and/or municipal public debt funds, in carrying out committed operations with securities other than those issued by the respective states and/or municipalities, must observe the operational limits established in the caput, item I.

§ 3. The risk diversification limit provided for in Article 2 of Resolution No. 2,844 of June 29, 2001, does not apply to state and municipal public securities involved in committed operations under the caput, item II.

§ 4. The committed operations referred to in Article 1, items III and IV, should not be computed for the purposes of the operational limits established in the caput.

Article 8. In the event of qualification of more than one institution by a financial conglomerate, the operational limits established in Article 7 must be calculated on a consolidated basis, observing the conditions provided for in the current regulation.

Sole paragraph. The provisions of this article do not apply to the operational limit provided for in Article 7, item II.

Article 9. For the purpose of verifying compliance with the operational limits established in Article 7, the following procedures must be observed:

I - if the repurchase or resale term and profitability are defined, committed operations must be computed by their respective settlement values;

II - if the repurchase or resale term is open, or stipulated for any time during a specified period, and profitability is defined, committed operations must be computed, respectively, by the redemption value of the securities or by the settlement value provided for at the end of the agreed period;

III - committed operations without a defined repurchase or resale price, involving securities with remuneration contracted based on a fixed rate, must be computed by the redemption value of the securities;

IV - committed operations without a defined repurchase or resale price, involving securities with remuneration contracted based on post-fixed rates, must be computed by the value of the securities, evaluated by the last updated nominal value plus accrued interest, if any;

V - commitments to purchase and sell forward, involving securities with remuneration contracted based on a fixed rate, must be computed by their respective settlement values;

VI - commitments to purchase and sell forward, involving securities with remuneration contracted based on post-fixed rates, must be computed by their respective settlement values, if provided, or by the value of the securities, evaluated by the last updated nominal value plus accrued interest, if any.

Article 10. For the purposes of operational limits, the following are not computed:

I - commitments to repurchase or resell securities that have served as collateral (securities of the same type, issuer, maturity, quantity, and remuneration base), respectively, to commitments to resell or repurchase assumed by the same institution, provided that they cumulatively meet the following conditions:

a) both the commitment to repurchase or resell and the respective commitment to resell or repurchase have the same future settlement date;

b) the financial settlement of the operations for purchase with commitment to resell and sale with commitment to repurchase is processed by Selic or by a system for the registration and financial settlement of assets authorized by the Central Bank of Brazil;

II - commitments to repurchase or resell securities involved in committed operations with own clients that have served as collateral (securities of the same type, issuer, maturity, quantity, and remuneration base), respectively, to commitments to resell or repurchase assumed by the same institution, for the same future settlement date, as defined in item I, letter a, observing also that:

a) the use of the option is limited to the total financial value of the corresponding commitments to resell or repurchase;

b) the total financial values of the operations for purchase with commitment to resell and sale with commitment to repurchase must appear in the transfer documents processed by Selic or by a system for the registration and financial settlement of assets authorized by the Central Bank of Brazil;

III - commitments to sell forward provided for in Article 1, item V, provided that the ownership or certainty of ownership under the conditions established therein refers to securities of the same type, issuer, maturity, quantity, and remuneration base.

Sole paragraph. For the purposes of the provisions of this article, it is admitted that the securities involved in a certain commitment to resell, repurchase, or sell forward may serve as collateral in more than one committed operation.

Article 11. In carrying out committed operations with securities issued or accepted by the institution itself or by affiliated institutions, the provisions of Resolution No. 2,107 of August 31, 1994, and subsequent regulations must be observed.

CHAPTER IV

On Intermediation

Article 12. Regardless of qualification under the terms of Article 5, the institutions referred to therein may intermediate committed operations, assuming commitments to repurchase, resell, and purchase and sell forward, observing the following conditions:

I - commitments to repurchase, resell, and purchase and sell forward must be related to commitments to resell, repurchase, and sell and purchase forward of the same securities (type, issuer, maturity, quantity, and remuneration base), concluded on the same day, settled on the same day of conclusion or on the same future date, and registered simultaneously in Selic or in a system for the registration and financial settlement of assets authorized by the Central Bank of Brazil;

II - commitments to repurchase, resell, and purchase and sell forward must be related to commitments to resell, repurchase, and sell and purchase forward assumed with institutions qualified to carry out committed operations;

III - the financial settlement of commitments to resell, repurchase, and sell and purchase forward assumed with institutions qualified to carry out committed operations must be processed by Selic or by a system for the registration and financial settlement of assets authorized by the Central Bank of Brazil;

IV - the financial values of the operations for repurchase and forward purchase must be lower than those of the operations for resale and forward sale.

Sole paragraph. For the purposes of the provisions of this article, it is admitted that the securities involved in a certain commitment to resell, repurchase, and sell and purchase forward may serve as collateral in more than one committed operation.

CHAPTER V

On Disclosure of Information and Submission of Documents

Article 13. The Central Bank of Brazil is authorized to regulate the conditions for providing and disclosing information on operations with fixed-income securities carried out by financial institutions and other institutions authorized to operate by the said Autarchy.

CHAPTER VI

On General Provisions

Article 14. At the discretion of the Central Bank of Brazil, operations for the purchase of securities that have been the subject of final sale by the buyer, carried out at prices other than market prices or that constitute, in any way, the payment of defined or established profitability based on a remuneration parameter, may be characterized as committed operations, therefore subject to the regulations of this regulation.

Article 15. The institutions referred to in Article 5, which do not have an individualized account in Selic and in a system for the registration and financial settlement of assets authorized by the Central Bank of Brazil, may only carry out committed operations under the terms of Article 12.

Article 16. Non-compliance with the regulations embodied in this regulation and, in particular, the occurrence of any of the situations listed below, regardless of the characteristics they assume in practice, will subject the institution and its administrators to the sanctions provided for in the current legislation and regulation:

I - carrying out committed operations involving securities other than those referred to in Article 2;

II - sale of securities without the seller having ownership of the negotiated securities at the time, except for the committed operations referred to in Article 1, items II, IV, and VI, observing the provisions of Article 2, §§ 2 and 3;

III - trading of securities at a unit price notably different from that practiced in the market or, in the absence of publication informing the market price, at a price notably different from the updated nominal value;

IV - creation of artificial trading conditions or manipulation of prices of securities subject to repo operations;

V - non-compliance with the operational limits established in this regulation;

VI - failure to comply with the obligation to remit, at the times established in the current regulation, information regarding repo operations;

VII - adoption of a practice that deliberately implies the presentation of inaccurate information.

Art. 17. The Central Bank of Brazil may:

I - suspend the carrying out of any of the types of repo operations, as well as render such suspension ineffective;

II - prohibit the carrying out of repo operations involving any of the securities provided for in Art. 2;

III - regulate the movement of securities subject to repo operations;

IV - alter the conditions related to the commitments to buy and sell forward linked to public offerings of securities issued by the National Treasury and/or the Central Bank of Brazil, as provided for in Art. 3;

V - review the operational limits, as well as the respective calculation base, for the carrying out of repo operations;

VI - modify the procedures to be observed for the purpose of verifying compliance with the operational limits regarding repo operations;

VII - at any time, determine the suspension of the carrying out of repo operations by an institution that does not meet or ceases to observe the conditions established in this regulation.