BRAZIL Law and Practice Contributed by: Eduardo Castro, Pedro Nasi and Gabriel Libanori, Machado, Meyer, Sendacz e Opice
duct operations designed to promote liquidity in secu - rities admitted to trading. Criteria to become a market maker include: • being a B3 participant; • having access to B3’s trading systems; and • having economic, financial, technical and opera - tional capacity. A market maker will conduct its activities whenever hired by the issuer of the security. 7.3 Regulatory Distinction Between Funds and Dealers Brazilian practice generally distinguishes between the following. • Investment funds: Investment funds trade exclu - sively for the benefit of their own portfolios and are primarily subject to the governance, operational and risk-management framework applicable to collective investment vehicles. In Brazil, the frame - work is consolidated under CVM Resolution No 175/22, which establishes a fiduciary-based struc - ture involving the fund’s administrator, portfolio manager, custodian and other service providers. • Intermediaries/dealers: Where an entity is acting as an intermediary in regulated markets, conduct is primarily governed by CVM Resolution No 35/2021, which specifies order handling, execution quality conflict management and organisational require - ments for intermediaries. 7.4 Regulation of Programmers and Programming There is no specific licensing regime in Brazil target - ed solely at programmers who develop trading algo - rithms, since algorithmic trading is incipient in Brazil.
However, insurance companies operating in a regula - tory sandbox may not cede more than 90% of their underwritten risks in reinsurance, and the simplified investment structure to which they are subject may be impacted (and they will have to comply with full investment structure requirements) if they cede more than 50% of their underwritten risks in reinsurance. Insurtechs operating outside the regulatory sandbox environment are subject to the rules and requirements generally applicable to other insurance companies. 8.2 Treatment of Different Types of Insurance In general, private pension plans and insurance struc - tured in accordance with the separate account regime or capitalisation regime (usually life insurance) are excluded from the regulatory sandboxes proposed by SUSEP. Innovative projects related to all other types of insurance are acceptable – although each regula - tory sandbox focuses on specific types of insurance. Brazil does not recognise “regtech” as a standalone regulated category. Generally, providers of monitor - ing, reporting, governance and related technologies are not directly licensed, acting solely as third-party service providers for regulated institutions. 9.2 Contractual Terms to Ensure Performance and Accuracy Brazilian regulation and legislation do not impose mandatory contractual terms or templates on regtech contracts, as regtechs are not regulated in Brazil. 10. Blockchain 10.1 Use of Blockchain in the Financial Services Industry The use of blockchain in the Brazilian financial sector continues to expand, with many traditional institutions exploring partnerships with VASPs or providing virtual asset services themselves. 9. Regtech 9.1 Regulation of Regtech Providers
8. Insurtech 8.1 Underwriting Processes
The underwriting and retention of insurable risks are key aspects of the structuring of insurance compa - nies subject to the regulatory sandboxes proposed by SUSEP, which has already had three editions. Many such companies do indeed innovate in this area.
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