Brazil – BVMF Limits Set for Open Positions

Brazil – BVMF Limits Set for Open Positions

On 22 August 2019, BVMF issued group position concentration limits.

  • Investor group open position concentration limits in BM&FBOVESPA clearinghouse.

Concentration Limits

  • Ins 283 sets criteria used by clearinghouse to set open position concentration limits.
  • Open position concentration limits set for derivatives, securities lending agreements apply to: positions held by same investor, registered under responsibility of a specific full trading participant (FTP) or settlement participant (SP) or more than one FTP, SP.
  • Aggregated positions by different investors of same investor group, as defined by the clearinghouse, registered under responsibility of a specific or more than one FTP, SP.
  • Aggregated positions by different investors, registered responsibility of same FTP, SL.
  • Two limits set for each derivative/securities lending agreement: level 1 exceeding limit entails an additional margin requirement; level 2 exceeding the limit entails mandatory reductions to the excess position within a timeframe established by the clearinghouse.
  • The clearinghouse may also determine: additional margin requirements and/or fines.
  • Open position concentration limits may be waived as per risk management manual.

Investor Group Monitoring

  • In assessing compliance group investors deemed by clearinghouse to be those who act in concert and/or have same decision-making center for trading purposes and/or represent same interests defined at the sole discretion of the clearinghouse or CVM.
  • For specific investor groups compliance with open position concentration limits is controlled automatically whilst for others, monitoring of compliance requires analysis.
  • A table is provided to show different types of investor groups used by clearinghouse, whether compliance with limits controlled automatically or by clearinghouse analysis.