Derivatives Regulation In Brazil

The Brazilian monetary authorities are known worldwide to regulate and supervise the financial sector tightly and unlike other jurisdictions Brazil always adopted a very restrictive approach in the derivatives market. After the global financial crisis of 2007, several prudential initiatives have been taken in our jurisdiction to monitor and control the risks assumed by the participants of the Brazilian financial system and of all derivatives transactions entered into by Brazilian companies.

The applicable rules are set forth by the Brazilian Monetary Council (Conselho Monetário Nacional – CMN) and the regulators in charge to monitor and supervise the enforcement of such rules are the Central Bank of Brazil (Banco Central do Brasil – Bacen) and, insofar the securities market is concerned, the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM). The current regulations which govern this matter are outlined below¹.