Legal and Regulatory Structure of the Brazilian Securities Markets
The Securities and Exchange Commission - CVM, as any other entity in Brazil, is submitted to the Constitution and the Laws issued by the National Congress, and other rules with the same legal power, such as provisional acts, which, according to Brazil’s Constitution (article 62), are enacted directly by the President of the Republic and go immediately into force, but which also have to be ratified by the Congress 30 days after the enactment. The President may, however, re-enact provisional acts as many times as needed.
The main Laws that guide the securities market, and therefore, the CVM, are:
- Law 6.385/76 (as amended), the "Securities Law", which disciplines the securities market and creates the CVM
- Law 6.404/76 (as amended), the "Corporation Law"
Due to the agility, complexity, and constant evolution of the Financial System, it would be impossible for all related regulation to pass through the parliamentary process. Therefore, Law 4595/64 created and gave normative powers to the National Monetary Council (CMN), the highest regulatory entity within the National Financial System. The rules issued by the CMN, namely Resoluções (Resolutions), must be complied with by all the members of the System, including the Central Bank and the CVM itself.
The CVM, on its turn, has the power to issue complementary rules to the Laws and CMN Resolutions. The more relevant rules issued by the CVM are named Instruções (Instructions) and Deliberações (Deliberations). Such rules are fully disclosed in this site in their original version in Portuguese.
This system, as it can be observed in the diagram below, is complemented by the self-regulatory power of Stock and Futures Exchanges and the Eletronic Quotation System.
The aim of this part of the website is to disclose a non-legally binding free translation of the Laws and Regulation that are most important for foreign investors.