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SELF REGULATION AT ANBIMA

SELF REGULATION AT ANBIMA ASOCIACION DE ADMINISTRADORAS DE FONDOS MUTUOS DE CHILE (AAFM) Convencíon 2011. Viña del Mar/Chile – Ago, 1-2, 2011. TOPICS TO BE PRESENTED. ANBIMA ANBIMA´s Self Regulation Activity Investment Fund Self Regulation ANBIMA and IOSCO/SROCC. INSTITUTIONAL.

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SELF REGULATION AT ANBIMA

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  1. SELF REGULATION AT ANBIMA ASOCIACION DE ADMINISTRADORAS DE FONDOS MUTUOS DE CHILE (AAFM)Convencíon 2011 Viñadel Mar/Chile – Ago, 1-2, 2011

  2. TOPICS TO BE PRESENTED • ANBIMA • ANBIMA´s Self Regulation Activity • Investment Fund Self Regulation • ANBIMA and IOSCO/SROCC

  3. INSTITUTIONAL ANBIMA – Brazilian Financial and Capital Markets Association Represents over 340 members TradeAssociation • Regulation and best practices in its products and services • Agreement with CVM to analyze registrations of public offerings of securities • Supervision and Enforcement roles Self-Regulation • Daily disclosure of indicative prices of government bonds and debentures • Data and analysis related to the fixed income market • Support to Central Bank's Selic System • The largest market database in Brazil • Research and Publications Products and Services • Investors’ Education • Certificationof investment professionals Education

  4. Regulation and self-regulation in Brazil

  5. SELF REGULATION Timeline • Beginning of the discussion Codes of Private Banking and Qualified Services (*) Code ofInvestmentFunds • Signature of Agreements with CVM • Code of Custody Code of Continuous Certification Becomes member of the Iosco’s SRO Committee Start up as Optional Private Regulatory Body, publishing the Code of Public Offers, for Distribution and Purchase of Securities Code of Processes Code of WealthManagers, Code for FIP and FIEE markets and Open Market Code (*) The Code of Qualified Services merged the Code of Custody, and included a chapter on Controlling.

  6. REPRESENTATION COMMITTEES REGULATION COUNCIL Supervision Process and judgment Investigation procedures • Impose penalties and enter into Instrument of Commitment. Public Hearing To be approved by the General Assembly Investigation technical analysis SELF REGULATION Structure Follow up Commission The committees propose normsThe Board of Directors of ANBIMA approves and proposes alterations Denunciation examination 6

  7. SELF REGULATION Code of Investment Funds Includes: Funds 409 and Credit Receivables Investment Funds (FIDC) Objectives and General Principles: • Fair Competition • To protect the interests of the investors • Fulfill the objectives of fund investment • Disclose information in a transparent way • Not affect the trustee relationship • Not bring harm to the industry

  8. SELF REGULATION • Portfolio Manager (firmsonly): • Registration form • Documents disclosure • Background checking • ANBIMA’s due diligence • Ethical committee’s approval • ANBIMA’s Board approval

  9. SELF REGULATION • Disclosure documents requirements: • Brazilian SEC approval • Firm’s by-laws • Principal’s resume • Business Plan • Introducing letters (from members only) • Policies: • risk management system and policy • personal investment policy • business continuity policy • compliance activity independent from risk management, MtM and commercial units/activity

  10. SELF REGULATION Code of Investment Funds • Maintopics: • Fund by-laws and prospectus elaboration • Classification of funds • Advertising • Sales practices • Suitability • Proxy Voting • Liquidity controls • Portfolio Manager licensee • MtM activity

  11. SELF REGULATION Code: fundsadministration vs. Portfolio managers

  12. SELF REGULATION ANBIMA´s monitoring and inspection activity

  13. ANBIMA´S ENFORCEMENT FIGURES - 2010 • Investment Fund Industry – Council of Self Regulation • Orientation Letters - 44 (administrator/portfolio managers) • Fines - 334 (registration, daily NAV, advertizing and prospectus) • Investigations - 6 • Administrative lawsuits - 3* • Settlement agreement - 2 • * 1 administrative lawsuit ongoing

  14. REGULATION AND ENFORCEMENT TRENDS • Sales Practices • Simplified prospectus • Suitability • Rulemaking focusing on type of funds and type of assets • Liquidity controls • Expansion of on-site exams and inspections

  15. ANBIMA AT IOSCO/SROCC • Affiliate member since 2006 • SROCC – Self Regulatory Organizations Consultative Committee • 70 members: trade associations/ self regulatory activities, stock exchanges and formal SROs (Finra, IIROC and AMV) • Presidency: Japan Securities Dealers Association (JSDA) • Working groups: ahead of the curve and regulators staff training program • Consultations: formal and by invitation (SC3, SC5) • Meetings: IOSCO Annual Conference, mid year meeting, stakeholders meeting, training programs from IOSCO and SROCC

  16. ANBIMA AT IOSCO/SROCC Topics related to the Investment Funds Industry • SC3 – Intermediaries • Suitability standards (complex products) • SC5 – Investment Management • ETF • Valuation (Pricing) • Liquidity Management at CIS • Suspension of CIS redemptions • SC7 – Systemic Risk • Mitigation of systemic risk – a role for securities regulators

  17. Thankyou • Markets Supervision Area • 55 11 3471 4204 • José Carlos Doherty

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