Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 1

Securities Systems* have a primary responsibility to their users** and other stakeholders. They must provide effective low cost processing. Services should be priced equitably.

* Securities Systems = depositories, settlement and clearing systems
** Users = customers of the securities system, and all other parties to whom the securities system owes a duty of care

1.	Is the board that governs the depository answerable to its users?	CBLC is a for profit company, organized as a corporation and owned by 86 shareholders, most of which are banks and brokerage firms. CBLC Board of Directors is composed of 7 (seven) permanent members and 3 (three) alternates: 2 (two) representatives from the full clearing agents category, 2 (two) representatives from the self clearing agents category, 2 (two) representatives from the São Paulo Stock Exchange and the CEO. The Board has the capacity to vote on most matters but generally vote upon recommendations made by CBLC executives. The executive responsibilities are divided into three areas: Operations, Risk Control and Products & Services.
2.	Does any single organisation, or sector (e.g. brokers, custodians, Stock Exchange) have a large voting position at the board of the depository?	CBLC shareholders are mainly banks and brokerages firms, acting as full or selfclearing agents. Note: full clearing agents can render services to third parties while self clearing agents can only settle their own proprietory transactions and their immediate clients' transactions. Financial institutions in general are eligible for acting as full clearing agents while only member brokerage firms of BOVESPA are eligible for the self clearing agent category.
3.	Is there cross subsidisation of products (e.g. international services subsidised by local ones or transaction costs subsidised by asset servicing charges)?	Information on costs/revenues distribution among CBLC products and services is considered to be confidential and is only available internally. CBLC fees are disclosed to its participants through official regular communication.
4.	What process is in place at the depository to ensure that it meets the needs of all its stakeholders (e.g. institutions, broker dealers, retail investors, issuers)?	CBLC participants are direct and electronically linked to CBLC through its network. Access to the variety of services rendered by CBLC depends on the role of the institution in CBLC - clearing agents, depository agents, brokerage firms, issuers and others. Through the CBLC network, participants have access to all areas required to perform their daily activities. In addition, participants have access to all general information areas of the networkCBLC also provides information to issuers regarding the ownership of securities held in its Depository Service. As the Brazilian Securities Commission enforces the depository to maintain the record keeping of securities in the name of the beneficial owner, CBLC is able to inform issuers directly about any changing in ownership of securities. Also, as a result of beneficial owner identification, CBLC is able to provide information directly to retail and institutional investorsCBLC sends monthly statements on securities holdings directly to the investors home address. Investors can access information on their custody positions also through the Internet or fax provided they have the necessary passwords issued by CBLC.
5.	What is the communications strategy of the depository to its stakeholders and how is this run?	CBLC strategy for communicating with its participants is to be able to make available as soon as possible all necessary information for the better performance of their activities. CBLC is also oriented to provide information direct to investors in order to contribute to their safety and control. However, it is not in CBLC's interest to compete with custodian institutions understanding that the areas of expertise are different. CBLC is also very concerned with confidentiality of information and have implemented specific measures in order to control and supervise the information flow both internally and externally. CBLC auditing department is responsible for the monitoring of all access to CBLC systems both by CBLC employees and participants, keeping track of all access made. Finally, aiming at greater integration and efficient of communications links, CBLC gives technical and operational support to its participants regarding all aspects from physical connection to specific training programs.