Resolution CMN No. 3054 — Dispenses with the requirement for title ownership in repo transactions under the Regulation annexed to Resolution 2,950 of 2002

RESOLUTION NO. 3054

Dispenses with the requirement for title ownership in repo transactions under the Regulation annexed to Resolution 2,950 of 2002.

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 a session held on December 19, 2002, based on Article 4, items VI and VIII, of the aforementioned law and on Articles 9, 10, 14, and 29 of Law No. 4,728 of July 14, 1965,

RESOLVES:

Article 1. In the execution of repo transactions referred to in the Regulation annexed to Resolution No. 2,950 of April 17, 2002, the sale of securities is permitted even if the seller does not own the securities being traded at the time of the negotiation, provided that such transactions are registered and financially settled within the scope of the same clearinghouse or of the same clearing and settlement service provider authorized by the Central Bank of Brazil, which acts as a contracting party for the purpose of settling the transactions carried out through its intermediation.

Article 2. As a consequence of the provisions of Article 1, Article 16 of the Regulation annexed to Resolution No. 2,950 of 2002 is amended, which shall henceforth read as follows:

"Article 16. Institutions and their administrators shall be subject to the sanctions provided for in the legislation and regulations in force for non-compliance with the rules embodied in this regulation and, in particular, for the occurrence of any of the situations listed below, regardless of the characteristics they may have in practice:

I - execution of repo transactions involving securities other than those referred to in Article 2;

II - sale of securities without the seller having ownership of the traded securities at the time, except for the transactions referred to in Article 1, items II, IV, and VI, observing the provisions of Article 2, paragraphs 2 and 3, as well as those registered and financially settled within the scope of the same clearinghouse or of the same clearing and settlement service provider authorized by the Central Bank of Brazil, which acts as a contracting party for the purpose of settling the transactions carried out through its intermediation;

III - trading of securities at a unit price notably different from the market price 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 transactions;

V - non-observance of the operational limits established in this regulation;

VI - failure to comply with the obligation to remit, at the times established in the regulations in force, information regarding repo transactions;

VII - adoption of a practice that deliberately implies the presentation of inaccurate information." (NR)

Article 3. The Central Bank of Brazil is authorized to adopt the measures and issue the rules deemed necessary for the execution of the provisions of this resolution.

Article 4. This resolution enters into force on the date of its publication.

Brasília, December 19, 2002

Arminio Fraga Neto
President