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OTHERS
Mercosul - The Common Market of the South
Advisory Committee on International Affairs
Participation on Activities of the United Nations - UN
Participation in Meetings of the World Trade Organization - WTO
Organization for Economic Cooperation and Development - OECD
Participation in Meetings of Free Trade Area of the Americas - FTAA
Participation in the Enlarged Contact Group on the Supervision of Collective Investment Schemes - ECG
Training
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| MERCOSUL - The Common Market of the South |
The MERCOSUL is a free trade treaty between its member countries. Its basic structure is made up of the Common Market Council - CMC (the highest deliberative body) and the Common Market Group - GMC (the executive body). The forums for technical discussions are the Services Group and the 12 different working groups.
The chairmanship of Mercosur and consequently of each of the working groups is set rotationally, as follows:
- Argentina: 1st semester of even years
- Brazil: 2nd semester of even years
- Paraguay: 1st semester of odd years
- Uruguay: 2nd semester of odd years
CVM's participation in Mercosur is centered in three forums: The Services Group, the Working Group on Financial Issues (SGT-4) ant the Working Group on Investments (SGT-12).
On the SGT-4, coordinated by the Brazilian Central Bank CVM coordinates the Capital Market Commission. Currently, such commission is discussing clearing and settlement in the region and a legal framework designed for enabling cross-border commercialization of mutual funds.
This Capital Market Commission already prepared a document which sets out minimum regulatory standards for the region, later approved by the Common Market Council (the CMC) as Decision no. 8/93.
This document establishes the minimum required regulations to be followed by member countries of the MERCOSUL for issuers of securities (companies), investment funds, exchanges and brokers, independent auditors, and systems for clearing, settlement, and custody.
Another significant document for capital markets was the CMC's Decision no. 13/94, which harmonizes the content and characteristics of the quarterly and annual reports disclosed by public companies issuing securities.
The Working Group on Investments (SGT-12) was created on 2000 through the GMC's Resolution 13/00. Since its creation, CVM participates of the discussions of this group, which is coordinated by the Ministry of Economy. Among other issues, the SGT-12 works to coordinate Mercosur's positions towards the FTAA's Group on Investments. Another issue which is discussed by this group are Mercosur's Investment Agreements, named Colonia Protocol (investments within Mercosur) and Buenos Aires Protocol (investments with third parties).
Finally, CVM participates on the Services Group, coordinated by the Ministry of Foreign Affairs. Such group has a wide scope of issues, dealing from sectorial market access (telecommunication, energy, finance, etc.) to services provided by individuals. Under CVM's jurisdiction, this is represented by portfolio managers, auditors, consultants and investment advisors. In addition, the effects of the Montevideu Protocol, the basic framework for Services in Mercosur, is also analyzed. This forum is also responsible for coordinating Mercosur's positions towards the FTAA's Group on Services.
The signatories to the Asuncion Agreement (MERCOSUR) are Argentina, Brazil, Paraguay, and Uruguay. Bolivia and Chile have signed cooperation agreements with the MERCOSUR and may eventually become members.
ADVISORY COMMITTEE ON INTERNATIONAL AFFAIRS
The Advisory Committee on International Affairs is a body set up by the CVM Deliberation No. 186/95 and it has the following objectives:
a) - to contribute, where possible, towards the development of cooperation and exchange of information with a view to ensuring that the country adapts to the globalization process;
b) - to express opinions on documents of regulatory nature issued by international bodies which combine both regulatory and self-regulatory agencies and to suggest projects for standardization which could be eventually adopted in Brazil;
c) - to participate, by invitation of the CVM, in meetings which further the discussion of topics of interest to the regulatory agencies on international securities markets, governmental agencies, and international professional associations;
d) - to cooperate in the process of adapting Brazilian securities and derivatives regulation to the standards of developed nations;
e) - to collaborate in the exchange of information and development of research with a view to formulating policies which will enable the Brazilian securities market to match the technical standards and levels of international competition.
The committee comprises the Chairman and Commissioners of the CVM and representatives of the following institutions:
- ABAMEC - Brazilian Association of Market Analysts;
- ABRASCA - Brazilian Association of Public Companies;
- ADEVAL - Association of Broker-Dealers;
- ANBID - National Association of Investment Banks;
- ANCOR - National Association of Stock, Foreign Exchange, and Commodity Brokers;
- ANDIMA - National Association of Open Market Institutions;
- BM&F - Commodities & Futures Exchange;
- BOVESPA - São Paulo Stock Exchange;
- BVRJ - Rio de Janeiro Stock Exchange;
- IBRACON - Brazilian Institute of Accountants
- FOREX - Brasileiro ("Brazilian FOREX").
I - Financing for Development
Financing for Development is an United Nations' forum that congregates all member-countries of the Organization and has the purpose of discussing the changes occurred in the financial environment since the beginning of the 90's and that has been having a strong impact at the economic development of the countries. With the phenomenon of globalization, the UN believes that the inherent benefits could only be achieved through efforts, at both national and international level. In this context, governments, international organizations, private entities and the organized civil society are playing an important role in the fetching of a true integration for the development.
II - Intergovernmental Work Group of Specialists in International Standards of Accounting and Release of Information Policies - ISAR
1. introduction
ISAR was created, in 1982, by resolution of the Economic and Social Council of the United Nations (ECOSOC), with the objective of promoting the international standardization of the accounting and release policies practices of transnational companies. ISAR is a subsidiary of the Transnational Companies and Investments Division, an entity of the United Nations Conference for Trade and Development (UNCTAD), reporting directly to the International Investments and Transnational Companies Commission, which is associated to the Trade and Development Council.
The transparency of the global activities of transnational companies is considered essential for the orientation of the decision-making process followed by the various interested parties, including: investors, creditors, employees and governmental entities, both of the country of origin and of the country in which the respective company is operating. This transparency may be obtained through the application of recording, presentation and evaluation criteria that enable the comparison of information relative to the patrimonial and financial position of the company. Achieving this objective is only possible by means of reconciling the accounting standards adopted by the regulatory entities of the countries that participate in the process of integration and development of the global finacial market.
Therefore the objectives of ISAR are:
I - the maintenance of an international forum for studies and debates in the areas of accounting, professional background and the release of information;
II - to make a positive contribution to the development of accounting standards, at a national and international level, especially for the needy countries known of;
III - to make accounting a subject of interest for the development of countries with respect to release of information.
In order to attain its objectives, the functions of ISAR are characterized as follows:
I - to analyze development in the field of standards of behaviour of transnational companies, at a national, regional and international level;
II - to seek consensus about the best practices, in terms of methodology and rules, for the provision of transparency of financial and non-financial information;
III - to publish the conclusions obtained by means of consensus, for dissemination among governments, regulatory commissions and entities, transnational companies and associations of professional accountants and auditors;
IV - cooperation with other national, regional and international entities that operate in the field of accounting and release of information;
V - to promote orientation services for countries in the process of standardization of accounting practices;
VI - to report to the International Investments and Transnational Companies Commission what cooperation is to be rendered in order to achieve the mission of reconciling the international accounting standards.
2. Composition of the Brazilian Delegation
Since 1983 Brazil has been represented in the ISAR by means of the CVM. From 1992 onwards the Brazilian delegation gained representative members from the following organizations:
The WTO is the international body concerned with the rules for foreign trade between nations. It was founded on January 1st, 1995, originating from the General Agreement on Tariffs and Trade (GATT), which had existed since 1948. Its creation has been decided during the Uruguay round, initiated during the 1980's. Its main purposes are the following:
- Encourage the free flow of trade;
- To act as a forum for trade negotiations;
- To act as a forum to settle disputes between members.
The results of the Uruguay Round were endorsed by Brazil through the Presidential Decree no. 1355 of December 30, 1994. For the financial markets, the part of that agreement of foremost interest is the General Agreement on Trade in Services or GATS. This agreement has specific Annexes on Financial Services.
The CVM has been participating of the negotiating process concerning financial services since the 1997 specific round. From that round, specific commitments resulted from individual countries - the so called 5th protocol. Currently, the CVM participates on the Brazilian Delegation on the new mandate for achieving a higher degree on the international commerce of financial services.
The Organization For Economic Cooperation And Development (OECD) provides a Governmental Forum with the purpose to discuss and develop the Economic and Social Policies. Brazil is currently an observer member of the OECD.
Still in the scope of the OCDE, the CVM it follows the meetings of FATF (Financial Action Task Force), known in Portuguese for acronym GAFI. The FATF concluded the following topics on new trends and techniques related to the supervising of money laundering and the financing of terrorism, involving:
- Alternative remittance systems;
- Drug traffic related with the financing of the terrorism;
- Money laundering associated with the traffic of people and illegal immigration;
- The vulnerabilities of the insurances sector regarding money laudering;
- Methods and trends related to money laudering and the financing of terrorism.
It is worth to stand out that the FATF/GAFI, of which Brazil is part by representation of the COAF, makes, annually, inspection in Brazil to analyze the effective combat to money laudering and the financing of terrorism. The International Affairs Office coordinates these visits to the CVM and to the participants of the stock market.
At the Summit of the Americas, which was held in December, 1994, the presidents of the 34 countries of the region agreed to build a "Free Trade Area of the Americas" - FTAA and to complete negotiations for the agreement by 2005, what did not happen for decision of the involved countries, which suspended the negotiations with the intention to retake them in the future. The technician discussions were lead by 9 negotiating groups, which are in charge of drafting the agreement. Those are:
- Market Acesss
- Investment
- Services
- Government Procurement
- Dispute Settlement
- Agriculture
- Intelectual Property Rights
- Subsidies, Antidumping and Countervailing Duties
- Competition Policy
Since the year of 1999 the CVM has been following the negotiation of the services and investments groups, mainly what refers to the architecture of the general agreement and to the specific agreement on financial services. In the year of 2005, the negotiations had been suspended. However, we continue to follow the subject in set with the Ministry of Foreign Affairs, with seat in the Inter-ministerial Group of International Trade (GICI) of services, and of the National Section of ALCA (SENALCA).
ENLARGED CONTACT GROUP ON THE SUPERVISION OF INVESTMENT FUNDS (ECG)
ECG is a group composed of agencies responsible for the supervision of investment funds in developed markets, who have been meeting annually for more than 20 years to discuss issues which affect the development and regulation of collective investment schemes, as well as the improvements which have been made in the investment fund industry in each member country.
The original members of the ECG were the 12 member countries of the European Community and the non-European members of the G-10, totaling 17 nations (Belgium, Canada (Ontario and Quebec), Denmark, Eire, France, Germany, Greece, Holland, Italy, Japan, Luxembourg, Portugal, Spain, Sweden, Switzerland, the United Kingdom, and the United States of America).
In order to join the group, the CVM carried out a thorough study on the Brazilian funds industry. After a considered analysis of this research, after which it was concluded that the size, the degree of regulation, and the quality of the supervision of the fund industry in Brazil, compared to member nations, the CVM was accepted as a member of the ECG. The first meeting in which the CVM participated was held in 1996.
TRAINING
Upon request of IOSCO, the CVM, in conjunction with the BM&F, has been organizing on an annual basis, since 1995, a training program on derivatives directed to the staff of foreign regulatory agencies. The Brazilian initiative was backed by IOSCO, due to the success enjoyed by this market in Brazil. This type of training had previously only been offered, among regulators, by the CFTC, the governmental agency responsible for the supervision of the commodities and futures markets in the USA.
Already around 70 people from 20 different countries have participated in the program, in addition to various speakers from governmental authorities, self-regulating entities, brokers, and Brazilian and American consultants.
The training program covers, among other subjects, the following topics:
- Operational characteristics of the options, forward, and futures markets;
- Foreign exchange, interest rates, fixed income, and gold futures;
- Agricultural commodities;
- Technical visits to BM&F, BOVESPA, and ANDIMA;
- Clearing & Settlement and custody of futures operations;
- Market supervision and risk control;
- Characteristics of the Brazilian market;
- Relevant legislation;
- The international derivatives market;
- The supervision of the market in the United States.
It is worthwhile pointing out that the CVM has regularly sent staff members to attend training programs offered by SEC (USA), CFTC (USA), FSA (United Kingdom) and IOSCO.
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