Apresentao do PowerPoint

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6th ACSDA International Seminar Punta del Este,
Uruguay - October 27-28, 2005 CSD Functions and
Benefits Luiz Felipe C. Paiva
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CBLCs Depository Services
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CBLC Brazilian Clearing and Depository
Corporation

• Established in 1997, following its spin-off from
  the São Paulo Stock Exchange
• For-profit corporation owned by market
  participants
• Board composed by brokers and banks
• Self-regulatory organization under the
  supervision of the Brazilian Securities
  Exchange Commission (CVM) and the Brazilian
  Central Bank
• Core Business CSD, SSS and CCP

The creation of CBLC was the result of a joint
decision of the stock exchange and the market
participants to have a modern infrastructure in
depository, clearance, settlement and risk
management activities
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CBLC Depositorys Features (I)

• Central Securities Depository
• For equities, fixed income instruments,
  asset-backed securities, real estate investment
  fund units and other instruments
• Securities registered under ISIN codes
• Dematerialization
• Pioneer in dematerialization of securities held
  in its depository services (1990)
• Asset Servicing
• Corporate actions processing for all securities

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CBLC Depositorys Features (II)

• Fiduciary ownership of all securities
• At the issuer level CBLC appears as nominee for
  safekeeping purposes
• Daily reconciliation
• Comparison of the number of securities held in
  CBLC service with the securities registered with
  the issuer in the name of CBLC as the fiduciary
  owner
• Segregated accounts at the level of the investor
• The investors of all securities are identified in
  CBLC records
• The custodians are responsible for holding and
  moving securities held in the investors accounts,
  according to the Brazilian Securities and
  Exchange Comission (CVM)
• Allow CBLC to directly inform the final investors
  of their holdings in the depository service

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Segregated accounts at the level of the investor
CBLC
Custodian
Custodian
Investor Account
Conta própria
Investor Account
Custodian Account
Custodian Account
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But, what is a CSD?
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A CSD is
A facility (or an institution) for holding
securities, which enables securities transactions
to be processed by book entry. Physical
securities may be immobilised by the depository
or securities may be dematerialised (ie so that
they exist only as electronic records). In
addition to safekeeping, a central securities
depository may incorporate comparison, clearing
and settlement functions. (Bank for
International Settlements, 2003)
Core business of a CSD Safekeeping Asset
servicing
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Benefits of a CSD
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Benefits of a CSD (I)

• Act as a intermediary between the issuers, market
  participants and investors

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Benefits of a CSD (I)

• Act as a intermediary between the issuers, market
  participants and investors

CSD
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Benefits of a CSD (II)

• Utility
• Infrastructure
• Risk control
• Costs reduction
• Information provider for market participants
• Harmonization / standardization
• Neutrality
• Specialization
• Development of core competences
• Scale economies
• Identification of trends and opportunities

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Some conclusions
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Some conclusions
There are inumerous models that can be carefully
choosen, considering .....
Market particularities
KEY ISSUES
International Recommendations
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Some conclusions

• Market particularities
• Characteristics of the financial system
• Regulatory basis
• Objectives and requirements of the regulators
• Types of instruments
• Expectations of market participants
• Rules and market practices
• Issuers
• Stock exchange
• Market participants (brokers, banks, etc.)

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Some conclusions

• International recommendations
• G30 / ISSA / CPSS / IOSCO
• ...The range of depository eligible instruments
  should be as wide as possible. Immobilization or
  dematerialization of financial instruments should
  be achieved to the utmost extend possible..
• Local laws and regulations should ensure that
  there is segregation of client assets from the
  principal assets of their custodian and no
  possible claim on client assets in the event of
  custodian bankruptcy or a similar event.
  Regulators and markets, to further improve
  investor protection, should work
• to ensure clarity on the applicable law on cross
  border transactions
• to seek international agreement on a legally
  enforceable definition of finality in a
  securities transaction
• to ensure that local law fully protects the
  rights of beneficial owners
• to strengthen securities laws both to ensure the
  rights of the pledgee and the protection accorded
  to client assets held in Securities Systems

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www.cblc.com.br