B3 S A Brasil Bolsa Balcão : 4/6/23 048-2023-PRE-Circular Letter Recurrence of Operating Balance, Open Position Concentration Limit and Pre-Trade Residual Risk Limit (LiNe) Violations

April 06, 2023 048/2023-PRE

CIRCULAR LETTER

Listed B3 Participants

Re.: Recurrence of Operating Balance, Open Position Concentration Limit and Pre-Trade Residual Risk Limit (LiNe) Violations

As per Circular Letters 064/2021-PRE, dated June 1, 2021, and 008/2022-PRE, dated January 20, 2022, B3 may, among other measures, apply the procedures below for imposing a penalty, as foreseen in the B3 Clearinghouse Rules and in the B3 Clearinghouse Risk Management Manual in cases of recurrence of:

1. Operating balance violation (non-compliance)
2. Open position concentration limit violation
3. Pre-traderesidual risk limit (LiNe) violation

In this respect, this Circular Letter changes, only for cases of open position concentration limit violations, the number of violations to be accounted for until the penalty is applied, as described below.

• Formal communication

For open position concentration limit violations, the formal communication occurred as of the first violation and will now occur as of the second violation.

This document produces effects as of the date of its publication. Any specified time limits for validity shall apply.

This free translation into English from the original version in Portuguese is available for information purposes only, has not1 been reviewed by B3's legal counsel, and is therefore not legally binding. Any questions arising from this free translation

should be clarified by consulting the original version in Portuguese. In the event of any discrepancy between this free translation and the original version in Portuguese, the original version in Portuguese shall prevail.

INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION

048/2023-PRE

• Written warning

For open position concentration limit violations, the written warning occurred as of the fourth violation and will now no longer be sent.

• Fine

For open position concentration limit violations, the application of a fine occurred as of the fifth violation and will now occur as of the third violation.

• Cumulative fine

For open position concentration limit violations, the cumulative fine occurred as of the sixth violation and will now occur as of the fourth violation.

Due to these changes, the evaluation period to account for open position concentration limit violations (12-month variable window) will resume on April

17, 2023.

We reiterate that there will be no changes to the procedure in cases of operating balance violations (non-compliance) and pre-trade residual risk limit (LiNe) violations.

To facilitate the full interpretation of the topic, the current set of accounting criteria and the respective measures to be taken, in cases of recurrence established for the treatment of violations and non-compliance are presented in a consolidated manner in the Annex to this Circular Letter.

This Circular Letter revokes and replaces Circular Letters 064/2021-PRE, dated June 1, 2021, and 008/2022-PRE, dated January 20, 2022.

This document produces effects as of the date of its publication. Any specified time limits for validity shall apply.

This free translation into English from the original version in Portuguese is available for information purposes only, has not2 been reviewed by B3's legal counsel, and is therefore not legally binding. Any questions arising from this free translation

should be clarified by consulting the original version in Portuguese. In the event of any discrepancy between this free translation and the original version in Portuguese, the original version in Portuguese shall prevail.

INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION

048/2023-PRE

Further information can be obtained from Risk Monitoring by telephone on [phone] or by email at [e-mail]

Gilson Finkelsztain	Mario Palhares
Chief Executive Officer	Chief Operating Officer - Electronic
	Trading and CCP

This document produces effects as of the date of its publication. Any specified time limits for validity shall apply.

This free translation into English from the original version in Portuguese is available for information purposes only, has not3 been reviewed by B3's legal counsel, and is therefore not legally binding. Any questions arising from this free translation

should be clarified by consulting the original version in Portuguese. In the event of any discrepancy between this free translation and the original version in Portuguese, the original version in Portuguese shall prevail.

INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION

Annex l to CIRCULAR LETTER 048/2023-PRE

Recurrence of Operating Balance, Open Position Concentration Limit and Pre-Trade Residual Risk Limit (LiNe) Violations

In order to reinforce governance and meet B3's operating limits, as well as bring greater clarity to the provisions contained in Chapters IV and V of the B3 Clearinghouse Rules (articles 98, 100 and 155), and in Chapters IV (item 4.2 and 4.3.9) and V of the B3 Clearinghouse Risk Management Manual and in Circular Letter 033/2019-VOP, dated August 22, 2019, B3 establishes accounting criteria and the respective measures to be taken in cases of recurrence of:

1. Operating balance violation (non-compliance)
2. Open position concentration limit violation
3. Pre-traderesidual risk limit (LiNe) violation

The criteria detailed below apply to investors, groups of investors, Full Trading Participants (PNP) and Settlement Participants (PL).

The abovementioned violations or non-compliance will be accounted for according to the criteria and metrics described below.

a) Operating balance violation (non-compliance)

• Accounting criterion: Each operating balance violation (non-compliance) not corrected upon closing of the allocation window and that must be reported to the Central Bank of Brazil on the following business day.

This document produces effects as of the date of its publication. Any specified time limits for validity shall apply.

This free translation into English from the original version in Portuguese is available for information purposes only, has notI been reviewed by B3's legal counsel, and is therefore not legally binding. Any questions arising from this free translation

should be clarified by consulting the original version in Portuguese. In the event of any discrepancy between this free translation and the original version in Portuguese, the original version in Portuguese shall prevail.

INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION

048/2023-PRE

1. • Evaluation period: Last 24 months.
   • Metrics evaluated: Moving sum of the number of accounted for violations.
2. Open position concentration limit violation
3. • Accounting criteria
   • 1. For investors and groups of investors: Each Limit 2 violation actively occurring and without waiver granted by B3. In the event of a violation caused by a group of investors, the violation will be accounted for all investors holding a position at the time of the violation.
     2. For PNP and PL: Each Limit 2 violation actively occurring and without waiver granted by B3, not complied with by an investor/group of investors or by participants acting as PNP/PL of the same investor or group of investors within the timeframe established by B3, and for which an action plan has not been presented and accepted to comply with the limit.

In addition, the metrics will also account for Limit 2 violations actively occurring and without waiver granted by B3, for the PNP/PL aggregation level, namely, positions held by different investors, registered under the responsibility of a given PNP or PL.

• Evaluation period: Last 12 months.
• Metrics evaluated: Moving sum of the number of accounted for violations

This document produces effects as of the date of its publication. Any specified time limits for validity shall apply.

This free translation into English from the original version in Portuguese is available for information purposes only, has notII been reviewed by B3's legal counsel, and is therefore not legally binding. Any questions arising from this free translation

should be clarified by consulting the original version in Portuguese. In the event of any discrepancy between this free translation and the original version in Portuguese, the original version in Portuguese shall prevail.

INFORMAÇÃO PÚBLICA - PUBLIC INFORMATION