SELF REGULATION AT ANBIMA

ASOCIACION DE ADMINISTRADORAS DE FONDOS MUTUOS DE CHILE (AAFM)

Convencíon 2011

Viña del Mar/Chile – Ago, 1-2, 2011

2

ANBIMA

ANBIMA´s Self Regulation Activity

Investment Fund Self Regulation

ANBIMA and IOSCO/SROCC

TOPICS TO BE PRESENTED

3

INSTITUTIONAL

Represents over 340 members

Daily disclosure of indicative prices of government bonds and debenturesData and analysis related to the fixed income marketSupport to Central Bank's Selic SystemThe largest market database in BrazilResearch and Publications

Trade Association

Investors’ EducationCertification of investment professionalsEducation

Products and Services

Regulation and best practices in its products and servicesAgreement with CVM to analyze registrations of public offerings of securitiesSupervision and Enforcement roles

Self-Regulation

ANBIMA – Brazilian Financial and Capital Markets Association

REGULATION AND SELF-REGULATION IN BRAZIL

4

SELF REGULATIONTimeline

1990 2000 2004 2006 2008

5

Code of Continuous

Certification

Start up as Optional Private Regulatory

Body, publishing the Code of Public

Offers, for Distribution and

Purchase of Securities

Beginning of the discussion Code of

Investment Funds

Code of Custody

Becomes member of the Iosco’s SRO Committee

Codes of Private Banking and Qualified Services (*)

Code of Processes

Signature of Agreements with CVM

(*) The Code of Qualified Services merged the Code of Custody, and included a chapter on Controlling.

Code of Wealth Managers, Code for FIP and FIEE markets and Open Market Code

6

REPRESENTATIONCOMMITTEES

Public Hearing

To be approved by the General Assembly

Supervision

Investigation procedures

Investigation technical analysis

REGULATION COUNCIL

Process and judgment

Impose penalties and enter into Instrument of Commitment.

SELF REGULATIONStructure

The committees propose norms

The Board of Directors of ANBIMA approves and proposes alterations Denunciation examination

FOLLOW UP COMMISSION

7

SELF REGULATIONCode 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

Portfolio Manager (firms only):

► Registration form

► Documents disclosure

► Background checking

► ANBIMA’s due diligence

► Ethical committee’s approval

► ANBIMA’s Board approval

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

9

SELF REGULATION

Main topics:

► Fund by-laws and prospectus elaboration

► Classification of funds

► Advertising

► Sales practices

► Suitability

► Proxy Voting

► Liquidity controls

► Portfolio Manager licensee

► MtM activity

SELF REGULATIONCode of Investment Funds

Funds Administration Portfolio ManagersSet up, registration and approval of by-laws

Investments mandate and trading of underlying assets

Prospectus, advertisement and suitability material

Proxy voting policy

Daily disclosure of NAV Liquidity control proceduresHiring of providers such as custodians and distributors

Licensee of professionals

Disclosure of NAV and MtM activity

11

SELF REGULATIONCode: funds administration vs. Portfolio managers

MONITORING INSPECTION / ON-SITE EXAMS

PRUDENTIAL SUPERVISION

- Fund registration at the Association’s database

- Analysis of daily info

- Analysis of docs (prospectus, advertisement material, proxy voting and suitability policies)

- Main filters: MtM and performance/volatility

Risk based supervision started in 2010

- Focus on portfolio managers risk management , contingency plans and information barriers policies

Thematic alerts and investigations:

- Focus on MtM of non liquid assets

- Exposure of the industry to new type of assets

12

SELF REGULATIONANBIMA´s monitoring and inspection activity

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

ANBIMA´S ENFORCEMENT FIGURES - 2010

► Sales Practices

Simplified prospectus

Suitability

► Rulemaking focusing on type of funds and type of assets

► Liquidity controls

► Expansion of on-site exams and inspections

REGULATION AND ENFORCEMENT TRENDS

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

► 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

Topics related to the Investment Funds Industry

São Paulo

Av. das Nações Unidas, 8.501 11º e 21º andar05425-070 São Paulo SP Brasil+ 55 11 3471 4200 Fax 11 3471 4230

www.anbima.com.br

Rio de Janeiro

Av. República do Chile, 230 13º andar20031-170 Rio de Janeiro RJ Brasil+ 55 21 3814 3800 Fax 21 3814 3960

Thank youMarkets Supervision Area

55 11 3471 4204

José Carlos Doherty