Non-resident investor

Posting Collateral Abroad to 4373 Nonresident Investors

The CMN Resolution 4569 authorizes nonresident investors to post collateral abroad for the transactions in the Brazilian financial and capital markets carried out within the scope of the clearinghouses and clearing and settlement service providers authorized by the Central Bank of Brazil (BCB).

In BCB Resolution #304/2023, BCB established that clearinghouses and clearing and settlement service providers may accept the posting of collateral abroad from non-resident investors, provided that their total amount, including the haircuts, does not exceed 8% (eight percent) of the total collateral required by the settlement system.

Posting collateral abroad is available for trades in BM&FBOVESPA segment. Nonresident investors can post collateral abroad in B3’s accounts with DTCC (The Depository Trust & Clearing Corporation), Euroclear and Citibank.

The nonresident investors domiciled in the United States of America, United Kingdom, Netherlands, France, Luxemburgo and Cayman Islands, are allowed to post collateral abroad in accordance with the B3 Clearinghouse Risk Management Manual. Such investors must use B3’s accounts with DTCC (The Depository Trust & Clearing Corporation), Euroclear, Citibank or J.P. Morgan, depending on the collateral that will be posted

In connection with the nonresident investors domiciled in the USA that are incorporated as brokers or investment firms and are subject to the procedures provided for in the Securities Investor Protection Act, the clearinghouse does not accept the post of collateral abroad.

Nonresident investors who intend to post collateral abroad must send their supplementary registration information, through their Brazilian broker, to B3 Participant Registration Center. The investors who have been duly registered may request to B3, through the relevant broker, a request for limit reservation for the post of collateral abroad.

In compliance with Circular #3838, the Circular Letter 011/2017-DO, establishes the operation for posting collateral abroad in favor of the Clearinghouse by nonresident investors.

• The following assets are accepted as collateral posted abroad (only for nonresident investors that comply with the criteria established in Clearinghouse Risk Management Manual)
  • U.S. dollars [Citibank only]
  • Euro [J.P Morgan only]
  • U.S Treasury bonds [DTCC and Euroclear only]
  • ADRs representing stocks eligible to be accepted as collateral [DTCC and Euroclear only]
  • German Treasury bonds [Euroclear only]

  The valuation of collateral posted abroad is calculated and updated in accordance with CORE methodology, as described in B3 Clearinghouse Risk Management Manual

  In the case of Euro, it may be posted as collateral only by nonresident investors domiciled in the United States of America, United Kingdom, and Netherlands

• Detailed information about B3's account at DTCC

  B3’s account in DTCC = 0822

  To transfer securities held in any other account at the Fed to the DTC’s Fed account on any business day, the Fed securities movement must always be made by 3:15 p.m. New York time through the Federal Reserve book-entry securities transfer system.  Here is how to instruct the movement from their Fed account to DTC's account at the FRBNY.  

  DTC's ABA#:	026002066
  DTC's Name:	DTC SDFS
  Receiving Account:	CUST
  Receiving Bank Info:	FDO/participant number (Note: this would be the participant that will submit the pledge, not B3)
  Cash Value:	0.00
  Par Amount:	The quantity of securities to be transferred

   

• Detailed information about the B3's account at Euroclear

  B3's account in EUROCLEAR for NON US Investors = 17957

  B3's account in EUROCLEAR for US Investors = 25393

  To transfer securities held in any other account at the Fed to the Euroclear’s Fed account on any business day, the Fed securities movement must always be made by 07:00 pm Brussels time.  Here is how to instruct the movement from their Fed and DTC account to Euroclear's account at the JP Morgan Chase. 

  Fedwire Format (free of payment) for US investors:
  
  Fed Account : 021000021 / EURCLR
  SPC INS:  G21691 EURO25393
  DTCYID: 1970

  Fedwire Format (free of payment) for NON US investors:
  Fed Account : 021000021 / EURCLR
  SPC INS:  G21691 EURO17957
  DTCYID: 1970
  
  DTC Format (free of payment) for US investors:
  DTC account: 1970
  SPC INS:  G21691 EURO25393
  Agent Bank: 00025787
  Institution Number: 00026097

  DTC Format (free of payment) for NON US investors:
  DTC account: 1970
  SPC INS:  G21691 EURO1795

  Agent Bank: 00025787
  Institution Number: 00026097

   

• Procedure to post U.S. Treasuries, ADRs and German Bunds as collateral
  • The investor chooses to pledge to B3 at either Euroclear or DTCC;
  • The investor asks its Brazilian broker to apply to B3 for the client to be allowed to post collateral abroad;
  • B3 authorizes collateral to be posted abroad by the relevant nonresident investor upon verification of the limit availability;
  • The investor specifies collateral information to his broker, submitting details including ISIN or CUSIP securities ID, amount, maturity, trade date, settlement date and the counterparty account number;
  • In turn, the Broker requests the post of collateral by sending instructions to B3 (request the pledge at collateral management system - NGA);
  • The investor instructs its custodian bank to deliver the securities to B3’s account at Euroclear or DTCC;
  • At DTCC, B3 will be automatically notified when the investor´s collateral is transferred to its pledgee account;
  • At Euroclear, B3 instructs it to receive (free of payment) the securities;
  • When the transfer is settled, B3 collateral management system considers the securities as collateral.

   

  Events: B3 do not authorizes to post as collateral assets that will have coupon payment or that has the maturity date in next ten working days counting from the record date. For the collateral posted, B3 will request to substitute or withdraw ten working days before the coupon payment or the maturity date counting from the record date.

   

  Costs: The costs to B3 charged by DTCC or Euroclear for the custody of assets are proportionally shared by B3’s brokers who request this service and who may transfer these costs to the investor.

  More info at: www.dtcc.com and www.euroclear.com.

• Procedure to post U.S. Dollars as collateral
  • The investor requests to its Brazilian broker the post of dollars as collateral;
  • The investor asks its Brazilian broker to apply to B3 a limit reservation request for the client to be allowed to post collateral abroad;
  • B3 authorizes collateral to be posted abroad by the relevant nonresident investor upon verification of the limit availability;
  • The broker requests to B3 the post of dollars as collateral (register collateral posting request at collateral management system - NGA);
  • The investor transfers the dollars to B3’s cash account with Citibank;
  • As soon as Citibank confirms the post, B3 considers it as collateral; 
  • The broker is notified by the collateral management system.

  Remuneration: collateral in currency are not remunerated for any reason.

• Procedure to post Euros as collateral
  • The investor requests to its Brazilian broker the post of euros as collateral;
  • The investor asks its Brazilian broker to apply to B3 a limit reservation request for the client to be allowed to post collateral abroad;
  • B3 authorizes collateral to be posted abroad by the relevant nonresident investor upon verification of the limit availability;
  • The broker requests to B3 the post of euros as collateral (register collateral posting request at collateral management system - NGA);
  • The investor transfers the euros to B3’s cash account with J.P Morgan;
  • As soon as J.P Morgan confirms the post, B3 considers it as collateral;
  • The broker is notified by the collateral management system;

  Remuneration:collateral in currency are not remunerated for any reason.