Brazil peer review report - Financial Stability Board

Peer Review of Brazil

Review Report

19 April 2017

Peer Review of Brazil

Review Report

Table of Contents Foreword ....................................................................................................................................3 Abbreviations ............................................................................................................................. 4 Executive summary....................................................................................................................6 1. Introduction.....................................................................................................................13 2. Trade reporting and systemic risk monitoring ................................................................14 3. Regulation and supervision of investment funds ............................................................29 Annex 1: Framework for the oversight of the financial system in Brazil................................50 Annex 2: Structure of the financial system in Brazil...............................................................57 Annex 3: Data fields reported for different asset classes to TRs in Brazil ..............................63 Annex 4: Examples of the use of TR data by authorities in Brazil..........................................65 Annex 5: Contagion analysis ? The case of the "Car Wash" operation ..................................73 Annex 6: Follow-up of other key FSAP recommendations.....................................................77

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Foreword

Financial Stability Board (FSB) member jurisdictions have committed, under the FSB Charter and in the FSB Framework for Strengthening Adherence to International Standards,1 to undergo periodic peer reviews. To fulfil this responsibility, the FSB has established a regular programme of country and thematic peer reviews of its member jurisdictions. Country reviews focus on the implementation and effectiveness of regulatory, supervisory or other financial sector standards and policies agreed within the FSB, as well as their effectiveness in achieving desired outcomes. They examine the steps taken or planned by national authorities to address International Monetary Fund (IMF)?World Bank Financial Sector Assessment Program (FSAP) and Report on the Observance of Standards and Codes (ROSC) recommendations on financial regulation and supervision as well as on institutional and market infrastructure that are deemed most important and relevant to the FSB's core mandate of promoting financial stability. Country reviews can also focus on regulatory, supervisory or other financial sector policy issues not covered in the FSAP that are timely and topical for the jurisdiction itself and for the broader FSB membership. Unlike the FSAP, a peer review does not comprehensively analyse a jurisdiction's financial system structure or policies, or its compliance with international financial standards. FSB jurisdictions have committed to undergo an FSAP assessment every 5 years; peer reviews taking place 2-3 years following an FSAP will complement that cycle. As part of this commitment, Brazil volunteered to undergo a peer review in 2016. This report describes the findings and conclusions of the Brazil peer review, including the key elements of the discussion in the FSB's Standing Committee on Standards Implementation (SCSI) in March 2017. It is the nineteenth country peer review conducted by the FSB, and it is based on the objectives and guidelines for the conduct of peer reviews set forth in the March 2015 version of the Handbook for FSB Peer Reviews.2 The analysis and conclusions of this peer review are based on the responses to a questionnaire by financial authorities in Brazil and reflect information on the progress of relevant reforms as of December 2016. The review has also benefited from dialogue with the Brazilian authorities as well as discussion in the FSB SCSI. The draft report for discussion was prepared by a team chaired by Anne Le Lorier (Deputy Governor, Banque de France) and comprising Daniel Lawlor (Central Bank of Ireland), Paul Eastment (Australian Securities and Investment Commission), Kevin Fine (Ontario Securities Commission) and Jeong Jae-Ryong (Financial Supervisory Service, Korea). Dimple Bhandia, Susan Nash, Costas Stephanou and Lawrence White (FSB Secretariat) provided support to the team and contributed to the preparation of the peer review report.

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ANBIMA ANVISA BCBS BCB BNDES CAR CCP CD CET1 CETIP CIP CIP-C3 CIR CMN CNPC CNPJ CNSP

COMEF COMOC COPOM COREMEC

COSIF CoVaR CPF CPMI CRI CSD CVM

CVMWEB DESIG DI D-SIB ETF FGC FGCoop FSB FI FIDC-IE FMI FSAP FX GDP IAIS IBRACOR

ILE INSS IMF IOSCO IRS

Abbreviations

Brazilian Financial and Capital Markets Association National Health Surveillance Agency Basel Committee for Banking Supervision Brazilian Central Bank (Banco Central do Brasil) Brazilian development bank Capital adequacy ratio Central counterparty Certificate of Deposit Common equity tier 1 capital adequacy ratio Organized OTC market for securities and derivatives Interbank Payments Clearinghouse (C?mara Interbanc?ria de Pagamentos) Credit Assignment Central (Central de Cess?o de Cr?dito - C3) Committee on Risk Identification National Monetary Council National Council for Complementary Social Security National Registry of Legal Entities National Council of Private Insurance (Conselho Nacional de Seguros Privados) Financial Stability Committee Technical Commission on Currency and Credit Monetary Policy Committee Committee of Regulation and Supervision of Financial, Securities, Insurance and Complementary Pension Markets Accounting Plan for Institutions of the National Financial System Conditional value-at-risk Taxpayer Registration Number Committee for Payments and Market Infrastructure Certificates of Real Estate Receivables Central securities depository Securities and Exchange Commission of Brazil (Comiss?o de Valores Mobili?rios) CVM Web BCB's Financial System Monitoring Department Interbank deposits Domestic systemically important bank Exchange-traded fund Credit Guarantee Fund Cooperative Guarantee Fund Financial Stability Board Financial institution Asset Backed Securities Fund ? Infrastructure Financial Market Infrastructure Financial Sector Assessment Program Foreign exchange Gross Domestic Product International Association of Insurance Supervisors Brazilian Institute of Self-Regulation of Insurance Brokerage Market, Reinsurance, Capitalization and Open Pension Funds Structural Liquidity Ratio National Social Security Institute International Monetary Fund International Organization of Securities Commissions Internal Revenue Service (Receita Federal do Brasil)

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IVG-R KAs LA LCR LEI LEI-ROC LR LTV MOF MOJ MoU MPDG MSP NAV NFSR NPL OFIs OTC PCO PFMI PRC PREVIC

RAET RAIS RBS RI SA-CCR SCR SFN SIFI SISBACEN SPB SME SRO SMM STR SUMEF SUSEP TEBU TEMTD TR VaR VCP UPI UTI

Financed Residential Real Estate Collateral Value Index Key Attributes of Effective Resolution Regimes for Financial Institutions Liquid Assets Liquidity Coverage Ratio Legal Entity Identifier LEI Regulatory Oversight Committee Liquidity Ratio Loan to Value Ministry of Finance Ministry of Justice Memorandum of understanding Ministry of Planning, Development and Management Staff Manual of the Brazilian Central Bank Net Asset Value Net Stable Funding Ratio Non-performing loan Other financial intermediaries Over-the-counter Predicted Cash Outflow Principles for Financial Market Infrastructure Credit Risk Profile National Superintendence of Complementary Pensions (Superintend?ncia Nacional de Previd?ncia Complementar) Temporary Special Administration Regime Annual Social Information Relation Risk Based Supervision Intrinsic Risk Standardised Approach for measuring Counterparty Credit Risk Credit Information System National Financial System Systemically important financial institution Brazilian Central Bank System Brazilian Payment System Small and medium-sized enterprise Self-regulatory organisation Liquidity and Market Risk Monitoring System Reserves Transfer System (Sistema de Transfer?ncia de Reservas) Subcommittee for Monitoring the Stability of the National Financial System Superintendence of Private Insurance (Superintend?ncia de Seguros Privados) Bottom-up Stress Tests Macroeconomic top-down stress test Trade repository Value at Risk Valued by Participant derivatives Unique Product Identifier Unique Transaction Identifier

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