Hedge Fund Regulation in Brazil - Part 1(a)

1. OVERVIEW OF JURISDICTION

Brazil is both the largest economy in the Latin American region and the most developed in terms of the liquidity and sophistication of its financial services industry. It has long nurtured a vigorous hedge fund industry serving both the domestic market and offshore investors. Brazil is gradually building a reputation as a hedge fund centre for the reasons outlined below.

With increasing global demand for its agricultural commodities and mineral wealth, and having the benefit of an extended period of political and economic stability, Brazil now enjoys balance of payments and fiscal surpluses, low and controlled inflation and an improving level of public debt. This has created an appropriate environment for public offerings, a longer-term curve and increasing liquidity in derivatives. All these factors generate more opportunities for hedge fund managers.