Trade Give-up Systemic Control at B3 Clearinghouse

Systemic Trade Give-Up Control at B3 Clearinghouse

We have implemented a series of improvements to eliminate the occurrence of trade give-ups off B3 Clearinghouse hours. The goal is to improve the mitigation of risks related to rule breaches contained in the B3 Clearinghouse Operating Procedures Manual and monitored by the Brazilian Securities & Exchange Commission (CVM).

We have now entered the final phase of the project. At this stage, transferring or rejecting trade give-ups between executing and carrying institutions off hours must be done systematically and be approved by the B3 Clearinghouse as is now the case with the allocation between same institution accounts.

Product Benefits

Flow enhancement

Automation adds more speed and safety to the transfer flow to ensure a more efficient trading environment.

Risk mitigation

B3 Clearinghouse’s intraday risk management and the risk management by institutions executing the trades will be improved.

Regulatory adherence

Improvements deliver better consistency in compliance with item 5.3.3 of the B3 Clearinghouse Operating Procedure Manual.

More Speed and Safety in Trade Give-Up Processes

New trade give-up process improves intraday risk monitoring at B3 Clearinghouse and its participants.

Trade give-up

Trade give-up is the procedure whereby a Full Trading Participant (executing participant) and its respective Clearing Member give up the responsibility for risk management, position management and settlement derived from a trade to a carrying participant and its Clearing Member.

This process is regulated by the B3 Clearinghouse Operating Procedure Manual and monitored by CVM. The occurrence of rule breaches should only be dealt with on an exceptional basis.

Continuous follow-up

In 2020 we began to send a monthly notice to participants informing the number of occurrences in off-hour give-ups so that they could assess their internal procedures to eliminate delays. We have also improved monitoring of such occurrences.

Automatic acceptance

In early 2021 we implemented the automatic acceptance of trades via Co-location whereby the final client is the carrying participant responsible for the trade settlement and risk management. It uses the executing participant's infrastructure to carry out its trading strategy. As well the automatic acceptance, rejection of give-ups in this modality is no longer allowed.

Deadlines

In 2021 we also adjusted the deadlines to transfer equity give-ups, which are now the same as those already adopted for derivatives. The new deadline to transfer give-ups is 20 minutes from the trade capture date. Give-up acceptance will now be 40 minutes also counted from the trade capture date.