BM&FBOVESPA Market Supervision published its second quarter of 2011 activity report together with consolidated figures for the first half. One of the main results singled out in the report was the completion in April of fieldwork for the 2010 Audit Program, involving all 90 brokerage houses. Of the 91 audit reports that were produced (one brokerage house had two reports), 52 were completed and 39 were at the final stages of elaboration on June 30.
Each shortcoming identified in the BSM Audit Program represents a risk score that varies from 1 to 5 depending on seriousness. Of the 52 completed reports, 39 were archived and shall serve as a point of reference for future analysis, one resulted in the commencement of hearings and 12 resulted in requests for Plans of Action with measures to prevent repetition of the detected irregularities. The risk scores given to the institutions whose reports were completed by the end of the first half demonstrate a 20% improvement in 2010 compared to the audits for 2009, in areas such as registration, order execution, settlement, and custody transfer.
Audit of Introducing Brokers
In the second quarter, the program began for the audit of introducing brokers that are active in the BM&FBOVESPA markets, checking these brokers’ legal and regulatory compliance. Fieldwork was concluded in July, and 35 introducing brokerage offices were audited.
Market Supervision
There is daily supervision of trading on BM&FBOVESPA markets, seeking to identify artificial demand, price manipulation, unfair practices and insider trading. In the first half of 2011 there were 4,137 occurrences analyzed, which resulted in 53 reports. In 2010 there were 5,589 cases and 31 reports, which points toward increased efficiency and agility in market supervision.
Most reports (33) were in regard to the prices and liquidity of assets and derivatives, followed by reports regarding investors’ participation (18). Observance of BM&FBOVESPA trading rules and CVM norms, and requests by CVM and other entities authorized by or managed by BSM, resulted in a report each.
Hearings
There were eight hearings held over the period, involving 13 defendants, among which brokerage houses and their directors, employees or agents. Agreement was reached in eight of these cases. Another five defendants were judged and subject to the following penalties: two warnings, two fines and a suspension from trading in the markets managed by BM&FBOVESPA.
Investor Compensation Mechanism (MRP)
In the first half there was a continuance of the trend seen in the immediately previous period, of more conclusions to the complaints received. There were 22 complaints to the MRP and 50 cases were concluded. In the same period last year, the BSM received
66 complaints and concluded 67 cases. There was the preliminary analysis of 41 complaints in the half, which resulted in the 28 cases opened and 13 complaints shelved.
With the examination of merits there were 37 cases concluded, of which seven were closed by agreement between the parties or by the claimant’s desistance, without having to go before the Board of Supervision. The Board judged another 30 cases