CVM Changes Investors' Reporting Obligations Under CVM Rule No. 358 To Include Cash Settled Derivatives

On September 17, 2015 the Brazilian Securities and Exchange Commission ("CVM") enacted CVM Rule No. 568 ("Rule 568") that, among other changes, modifies CVM Rule No. 358 dated January 3, 2002. This is a very important rule especially for institutions that trade in large positions in Brazil through cash settled swaps.

There are several changes that may affect investors' reporting obligations, but the most critical one is that market participants are now required to report any acquisition or disposal of derivatives (including cash settled derivatives) that exceeds (either upward or downward) the thresholds of 5%, 10%, 15% (and so on and so forth) ("Rule 358 Threshold") of any type or class of shares issued by publicly held companies.