Public Securities: Treasury, BC and CVM announce negotiation – 06/16/2023 – Market

The Ministry of Finance, the Central Bank and the CVM (Comissão de Valores Mobiliários) will evaluate the possibility of allowing simultaneous trading of Brazilian domestic public debt securities in the domestic and international markets, the National Treasury informed on Friday (16).

According to a statement, the three institutions signed a joint decree the day before to create a working group to evaluate an international central depository (DCI) accreditation for internal federal public debt securities, which would allow for accompanying trading.

In February, Treasury Secretary Ruggero Cerrone predicted that in about two years, government bonds would be traded in reals on the Belgium-based Euroclear platform, facilitating non-residents’ access to Brazilian securities.

By the way, expect the establishment of a working group with the Central Bank to start the first technical preparations to make the procedure possible, through which the government intends to attract institutional and individual investors.

A source familiar with the matter told Reuters on Friday that the task force is targeting Euroclear as a potential, but not exclusive, option, which would open the door to domestic debt trading through any international central depository.

Today, these securities are only traded on the treasury platform and requires activation of brokers working in the local system. With this change, the minister said in February that he hoped that in addition to facilitating access, the cost of operations would be reduced for these investors.

According to the Treasury memorandum, the working group will last for 120 days, extendable for an equal period, and will conduct technical feasibility analysis and potentially propose operational measures and changes in legislation needed for DCI accreditation.

The group will be coordinated by the National Treasury – which will issue a report with the conclusions of the studies at the end of the group’s activities – and will have representatives from the Federal Revenue Service, the Central Bank and CVM.

“With such an initiative, it is expected to expand the access of non-resident investors to the public bond market, which will generate significant benefits for the national financial market, such as increased liquidity, lower costs and an increase in the attractiveness of public bonds to investors in general,” the Treasury said in the statement.

In April, Brazil announced the release of Government bonds in dollars In the international market, marking the return of the country’s debt sales abroad after nearly two years without operations of this kind.