Securities Lending to Non-Resident Investors

Mandatory

NRIs will be able to participate in Brazil’s securities lending market

Currently, non-resident investors (NRIs) face regulatory restrictions that prevent them from participating in Brazil's securities lending market, due to differences in local and international regulations. In the Brazilian model, all lending transactions must go through a CCP (Central Counterparty Clearinghouse), which centralizes and guarantees the transactions. In other markets, however, securities lending occurs bilaterally, allowing the collateral to remain in the lender’s possession, whereas in Brazil, it must be deposited with the CCP.

Following a few studies, B3 found a solution whereby NRIs may lend their assets registered with B3’s Central Depository. In the new model, the withdrawal of the CCP as the guarantor of the transaction’s principal is essential for lenders to secure full collateral coverage of the transaction, in accordance with the laws of the respective NRIs’ jurisdictions.

Project Tags:

Depository

Trading

Listed

In Progress

Securities Lending

Clearinghouse

Product benefits

Increased liquidity

In the equities market.

Improved price formation

With a greater supply of assets for lending, conditions tend to be more competitive, benefiting the securities lending and equities markets.

Stability

Greater stability for the securities lending market.

Learn more

Non-resident investors may lend their assets that are registered with B3’s Central Depository and get paid for those assets.

Non-resident investors are responsible for approximately 40% of free float assets, i.e., that are available for trading at B3’s Central Depository. This represents an opportunity to both encourage these investors’ activities and boost liquidity in the securities lending market.

Non-resident investors will be able to lend the assets they hold at B3’s Central Depository and get paid for those assets. In this model, in line with the top international stock exchanges’ practices, B3’s CCP will no longer act as the guarantor of the transaction’s principal. In this case, lenders will have full control over the collateral, making the process safer and more compliant with foreign investors’ requirements.