Brazil: Institutional Features - OTC Market

Article Index

The over-the-counter market

As far as dealings in shares are concerned, the Brazilian over-the-counter market has little economic significance. The exchange markets account for almost all share transactions in the country. The success of electronic negotiation systems like CATS and SENN confer considerable advantages to the formal market. In recent times the CVM has taken over the regulation of the organized over-the-counter market for shares and the market maker in order to make the capital market more accessible to smaller companies and break up the concentration of the main market in which the exchanges deal.

The over-the-counter market for debt certificates and derivatives contracts is already highly significant. CETIP - the Central Office for the Custody and Liquidation of Private Bonds - is a company which operates a securities trading system throughout the country and recourse is made to it by financial institutions for the custody, negotiation and financial liquidation of certificates of deposit, interfinancial deposits, commercial paper, bills of exchange, gold, debentures, privatization certificates, future contracts, swaps, etc. Considered extremely reliable and secure, CETIP is the preferred system for participants in the Brazilian financial system.

The average daily volume of securities negotiated in this market in 1995 was US$29.0 billion, of which 95% corresponded to bank and inter-bank deposit certificates and other types of private securities, while 5% was accounted for by Swaps and other derivatives.