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CVM launches regulatory impact analysis study on exclusivity of autonomous investment agents


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This post was translated by Regulatory.News for informational purposes only; the content below is not an official translation from the regulator. See the content in its original language here.

Material, which recommends the removal of this requirement from CVM Instruction 497, will support regulatory reform

CVM Instruction 497 was a regulatory framework in the capital market, regulating the activities of autonomous investment agents (AAI).

And the requirement of exclusivity between this professional and intermediary for the distribution of securities now becomes a central theme of the study of regulatory impact analysis of the Brazilian Securities Commission (CVM), which will support the regulatory reform provided for in the Regulatory Agenda of the Municipality.

This requirement had as main objective to avoid that the potential multiplicity of controls to which an independent agent could be subject end up hindering the inspection of this type of participant by its contractor, the market intermediary (securities brokers and distributors). However, according to the Economic Analysis and Risk Management Advisory (ASA / CVM), the area responsible for preparing this study, in recent years there have been several developments in the market for the distribution of financial products that have led to a reassessment of the need for the regulatory requirement.

“To produce the study, interviews were carried out with market participants, evaluation of experiences in foreign jurisdictions, with emphasis on the United States and Australia, review of the literature on remuneration rules, which is a very relevant point in the provision of this type of service, and a cost-benefit analysis on two different prospective scenarios: relaxation or expansion of the exclusivity rule ” – Bruno Luna, head of ASA / CVM.

Bruno Luna points out that the study concluded that the withdrawal of the exclusivity requirement should only happen if the multivinculation occurs in common agreement between the participants involved and if potential conflicts are addressed in the service provision contracts. “Our aim is to offer the CVM a rich material on the subject, which is widely debated in the market and of interest to several strategic audiences of the institution, assisting in decision-making for the regulatory reform provided for in the CVM Regulatory Agenda and, if applicable, in best possible change”, Reinforces Bruno.

Study motivation

For ASA, the study explores alternative or complementary explanations to the frequent observation that the distribution of bonds between AAIs and intermediaries, which presents significant concentration, would be caused by the regulatory requirement of contractual exclusivity of these participants for the distribution of securities.

“We observed that the performance of market intermediaries as investment platforms in an open architecture configuration (where the intermediary distributes financial products from issuers from other economic groups), as opposed to closed architecture (where the intermediary distributes only products from linked issuers – a vertical structure), can lead to concentration of bonds. This behavior is also documented in other sectors of the economy that have businesses in the form of platforms: social networks, streaming services, marketplaces. The firms’ business model has a relevant impact on the market configuration ”, said Iury Santos, an analyst at ASA / CVM.

Study content

  • Historical evolution of the norms directly linked to the activities of AAIs.
  • Mapping of AAIs and intermediary records, as well as the links between them.
  • Market practices (such as forms of remuneration and supervision) that are not strictly prescribed in regulation.
  • History of the conduct of AAIs from different perspectives and direction of a potential alternative (or complement) to explain the improvement observed in the conduct of these participants.
  • Analysis of the business model known as “open architecture platforms” successfully adopted by intermediaries, its relationship with the concept of two-sided markets and their potential implications for the configuration of the AAI sector.
  • Analysis of related regulations in some foreign jurisdictions.
  • Cost and benefit analysis in two different scenarios related to the exclusivity rule for AAIs and intermediaries.

This AIR study, which, among other topics, evaluated the competitive dynamics of the international intermediation industry and benchmarks, collaborates a lot to better understand the evolution of the AAI segment and will certainly be an important subsidy for decision making reflected in the future public audience “ – Francisco José Bastos Santos, Superintendent of Market Relations and Intermediaries (SMI / CVM)

“AIR studies are an important tool for decision making involving regulatory changes. The theme of exclusivity is complex and the inputs now received will be of great value for the reform of CVM Instruction 497 that is ahead. ” – Antonio Berwanger, Standards Development Superintendent (SDM / CVM)

Live CVM to debate study on CVM Educacional channel on Instagram

To talk more about how the ASA’s analysis work was carried out to prepare the study and the importance of this material for CVM and the market, Bruno Luna will participate in the next Live CVM, which takes place on the CVM Educacional channel on Instagram.

“During Live, we will explain what an AIR is, focusing on this study released by the CVM on the requirement of exclusivity in the exercise of the activity of Autonomous Agents or, as they are better known by the market, Investment Advisers”, informed Bruno.

Make a note in the agenda and participate! Come to know more about CVM’s shares and its role in the capital market.

Live CVM: Investment advice on the securities market

Date: 11/24

Hour: 13h


More information

Access the full version of the study.

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Regulator Information

Abbreviation: CVM
Jurisdiction: Brazil

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