Brazil's state-run development bank Banco Nacional de Desenvolvimento Econômico e Social, or BNDES, on Aug. 10 began operating as an intermediator for Banco Central do Brasil's market transactions with public bonds in repurchase operations after garnering authorization from the central bank, a move that has reportedly caused surprise and controversy in the market.

In a statement, BNDES said the authorization to trade its bonds directly while not being dependent on other dealers will give it greater autonomy in the management of its financial resources.

The dealer function consists of brokering the central bank's market transactions with government securities in repurchase agreements, which allow the central bank to regulate the money supply and the interest rate on a daily basis, the bank said.

"The invitation represents the recognition and confidence of the central bank regarding the operational quality of BNDES, in terms of financial volume, efficiency and risk management and compliance," BNDES added.

The authorization has caused some controversy in the market, Valor Econômico reported, citing unnamed experts who said that giving the role of a central bank dealer to a development bank was unheard of in other countries.