Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 6

Convergence of Securities Systems, both within countries and across borders, should be encouraged where this eliminates operational risk, reduces cost and enhances market efficiency.

1.	Is the depository linked electronically and in real time with other segments of the core market infrastructure (e.g. trading platforms, netting systems, matching platforms, payment systems)?	CBLC systems (clearing, settlement and depository) are not only integrated in the same platform but also are electronically linked with all electronic trading and comparison systems CBLC render services to (Megabolsa for equities traded in BOVESPA, BOVESPA FIX for corporate bonds traded in BOVESPA, Soma Trader for equities traded in SOMA/OTC, SISBEX Trading and SISBEX Comparison for government bonds traded in BVRJ). CBLC systems will also be linked to the Brazilian payment systems in April, 2002 in order to instruct DVP in central bank money (on a net basis and guaranteed) and also to effect payments related to corporate actions (on a gross basis and not guaranteed).
2.	Is there one or more depository or settlement system in the market?	CBLC is the depository for equities, the Central Bank (SELIC) is the depository for government bonds and both CBLC and CETIP act as depositories for corporate bonds. CBLC is the settlement systems and central counterparty for equities and corporate bonds. SELIC is the settlement systems (not central counterparty) for government bonds trades. CBLC already acts as a facilitator of settlement for the government bond market and, as from April 2002, CBLC will also act as central counterparty to this market. Finally, BM&F is the settlement systems and central counterparty for the derivatives markets. With the introduction of RTGS facilities in the payment systems by the Brazilian Central Bank, the private sector organised itself to create deferred net clearing and settlement systems for foreign exchange transactions as well as for payments. Those systems should be launched also by April, 2002.
3.	If there are several, has a consolidation been considered? If yes, by when?	Up to now a consolidation is considered in the securities and derivatives clearing and settlement systems. No timetable has yet been discussed.
4.	Does (do) the securities system(s) allow other domestic or foreign systems to establish direct links on an equal basis to local members?	Initially, it is important to clarify that the institutions eligible to participate as CBLC clearing and/or depository agents must necessarily be established in Brazil according to the Brazilian legislation. Please refer to question below. Moreover, until now there is no case of another SSS (domestic or international) qualifying as a clearing or depository agent of CBLC. Rather, CBLC has worked together with other CSDs/SSS in order to build the necessary clearing, settlement and depository infra-structures to support cross border trading.
5.	Does (do) the securities system(s) allow foreign market participants to become direct participants?	In order to become direct participants of CBLC foreign institutions have to be regularly authorized to function in Brazil by a regulatory authority (Central Bank for financial institutions, SUSEP for insurance companies and so on).