Resolution CMN No. 3427 — Establishes Risk-Based Supervision Model for Securities Market

RESOLUTION NO. 003427

Establishes, as a policy to be observed in the securities market, and as a general orientation for the finalistic activities of the CVM, the adoption of a risk-based regulation and supervision model, with the implementation of a Risk-Based Supervision System for the securities market - SBR.

The CENTRAL BANK OF BRAZIL, in accordance with Article 9 of Law 4,595 of December 31, 1964, makes public that the MONETARY COUNCIL NATIONAL, in a session held on December 21, 2006, based on Article 3, items I and III, of Law 6,385/76, and considering the provisions of § 4 of Article 9 of the same law,

R E S O L V E S:

Art. 1. The policy to be adopted in the organization and supervision of the functioning of the securities market by the Securities and Exchange Commission (CVM), as well as in the general orientation of its finalistic activities, must contemplate a risk-based supervision model, as established in this Resolution.

Sole Paragraph. For the purposes of this Resolution, a risk-based supervision model is understood as a system of regulation and oversight of the securities market that:

I - identifies the risks to which the supervised market is exposed;

II - sizes such risks, classifying them according to levels of potential damage;

III - establishes ways to mitigate identified and sized risks; and,

IV - controls and monitors the occurrence of risk events.

Art. 2. With a view to the purpose set forth in Article 1, the Securities and Exchange Commission (CVM) shall implement a Risk-Based Supervision System - SBR, adopting institutional mechanisms for organizing its activities and prioritizing its regulation and oversight actions, capable of allowing the identification, sizing, mitigation, control, and monitoring of risks that may affect the implementation of its legal mandates.

Sole Paragraph. The Risk-Based Supervision System (SBR) to be implemented by the Securities and Exchange Commission (CVM) shall contemplate, at a minimum, the following institutional mechanisms:

I - preparation, submission for knowledge of the Monetary Council National and publication, every two years, of a Biennial Supervision Plan, in which the regulatory and supervision priorities to be observed by the CVM in the following two-year period are defined, and the identified risks, the results achieved with the execution of the previous plan, and the analyses and justifications for the adoption of the priorities included in the plan are described;

II - preparation, submission for knowledge of the CMN and publication, every six months, of a Semiannual Risk Monitoring Report, reporting on the CVM's actions regarding identified risks and the priorities established in the current Biennial Plan, and justifications, if applicable, for the update of the Biennial Plan, in the event of the emergence or worsening of risks subsequent to its approval.

Art. 3. The Securities and Exchange Commission is authorized to adopt the complementary measures necessary for the implementation of the Risk-Based Supervision System (SBR).

Art. 4. This resolution enters into force on the date of its publication, and the first Biennial Plan referred to in Article 2, item I, shall be approved by December 31, 2007.

Brasília, December 21, 2006.

Henrique de Campos Meirelles
President