Self-Regulation in Brazil. The role of ANBID

Transcription

1 Self-Regulation in Brazil The role of ANBID November 2008

2 ANBID National Association of Investment Banks Professional Association that: Represents its members; Self regulate members activities; Promotes market information; Promotes investors education, certifies capital and financial market professionals. Nbr. of Members 133 (banks, investment banks and independent asset managers). Associate Members (Investment Fund s Self Regulation) - 108

3 Self-Regulation Established in 1998 as a Voluntary self-regulation model; All members of the Association must adhere to norms (if desired, non-members may adhere as well); Norms implemented through Codes, a setof norms with focus on specific subject / market instrument and its supervision. Current Codes: Public Offering Investment t Funds Certification Securities Service (Custody and Fund Administration) Private Banking Responsible organisms: Technical Division, Commission and Council ANBID s Self-Regulation is voluntary and enforced by supervision

4 Rulemaking and Enforcement Independent Governance External entities, representing investors and other stakeholders, take part of the Council, giving to it the necessary independence 5 members indicated by ANBID 6 members indicated by other entities (representing pension funds, Insurance, brokers, analysts) Rulemaking GENERAL MEETING Change rules ANBID S BOARD approval Committees approval Sub-Committees New iniciatives X Enforcement COUNCIL Initiates an action COMISSION approval TECHNICAL DEPARTMENT Investigation TECHNICAL DEPARTMENT Routine Supervision

5 Disciplinary Proceedings Carried out by a Reporting Councilmember appointed randomly If any Councilmember is conflicted with the subject matter he is declared unable to vote. Possible outcomes: Judgment Dismissal Penalties Settlement (the party agrees to cease and correct the acts that characterize non-compliance and proposes additional measures)

6 Penalties Without Disciplinary Actions In case of limited potential for damage and with the agreement of the President of the Council and Commission. Private Censure or Recommendation Letter from the Technical Divisioni i Objective Fines Aft Di i li A ti After a Disciplinary Action Private Censure Letter from the Council Fines Public Censure from the Council Suspension of the right to use ANBID s Seal Cancellation of membership

7 Agreements ANBID / CVM ANBID and the Securities and Exchange Commission of Brazil (CVM) have entered into two agreements on august 20 th, The first agreement enables ANBID to do the pre analysis of the public offerings registration requests, reducing the period for the registry s concession by CVM (50 days to 25 days). The second agreement permits (i) the exchange of information between ANBID and CVM; and (ii) the mutual consideration of de the penalties imposed. If, for example, ANBID imposes a penalty on a firm and the CVM seeks to impose a penalty on the same firm for the same violation, CVM may take into consideration the penalty imposed by ANBID, and vice versa.

8 Self-Regulation in Brazil Self Regulated Markets November 2008

9 Public Offerings Operations totaling about USD 40 bi in 2008 Code of Public Offerings: Since 1998 Registration and analysis of all Offerings 697 offerings registered 283 private censure or recommendation letters 102 fines 25 - Disciplinary proceedings

10 Custoty and Securities Services Assets Under Custody USD 909 bi Code of Qualified Services: Since 2004 Annual audit program 3 private censure or recommendation letters 16 fines

11 Private Banking Code of Private Banking Since 2006 Annual audit program 16 private censure or recommendation letters 3 fines

12 Certification Number of certificated professionals Code for the Certification Program Since 2002 Letters of Recommendation 160 Fines 5

13 Mutual Funds Assets under Management: USD 544 bi Number of Funds: Number of shareholders: 10,5 Millions Code of Funds: Since 2000 Registration and analysis of all Funds (prospectuses, MtM and advertisement) analysis private censure or recommendation letters 924 fines 26 disciplinary proceedings

14 Self-Regulation in Brazil Mark to Market in the Mutual Funds Industry November 2008

15 Mark to Market MtM Guidelines - set of rules enacted by the Council in 2004 Define principles for MtM and Fair Valuation Define specific rules Define the structure the member should maintain to support the MtM. ANBID establishes the Guidelines for the industry but each Manager has its own Mark to Market Manual Since 2005 all asset managers must register its MtM Manual; All Manuals are analysed/critized on annual and/or event basis by the technical area of ANBID.

16 Mark to Market Liquid -use market price but provide a secondary source of prices for critical occasions Type of market Not Liquid but with Indicative Prices use indicative prices and provide a secondary source for critical occasions Not Liquid and without Indicative Prices use models and MtM committees but register inputs and all information relevant for decision

17 Mark to Market Fair valuation models and appraisals are suboptimal, but necessary, practices to mark assets to market. Divergences can arise due to different criteria Volatility can be perceived to be low compared to the correct market volatility Supervision by a self regulatory organization can assure the confidence in the practices and promote the convergence of prices and spreads.

18 Mark to Market 3 types of supervision Analysis of the registered Manual Evaluation of the adherence to the Guidelines Filter of risk/return (Sharpe): Every month funds are chosen, usually the ones with greater returns and less volatility in a fund s type; After funds are chosen ANBID requires portfolio of 5 subsequent business days, usually beginning and end of month. Observation of credit spreads used by major funds] If a spread is considered outlier the Manager is called to explain it s reasoning, if the explanation is considered unsatisfactory the Manager should change it s practice.

19 Luís Fernando Affonso Self-Regulation Manager (Investment Funds)