New Rules For Securities Portfolio Management In Brazil

On March 26, 2015 the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliário - CVM) issued CVM Instruction No. 558 (CVM Instr. 558/2015), which regulates the professional exercise of securities portfolio management and updates and substitutes CVM Instruction No. 306, of May 5, 1999.

The securities portfolio management is the exercise of professional activities directly or indirectly related to the operation, maintenance and management of a securities portfolio, including the application of funds in the securities market on the investor's account. It is a private activity of a person (individual or legal entity) authorized by CVM.

The registry of securities portfolios manager can be required in both or in one of the following categories: (a) trustee (administrador fiduciário) who/which is responsible for controllership, custody of assets and liabilities and in general for the supervision of the health management of the securities portfolio; and/or (b) asset manager (gestor de recursos), who/which is responsible for the investment decision making. The creation of these two categories will provide greater clarity about the duties of each participant and greater proportionality between the costs of compliance with the standard and the effective benefits to the investors.

The following entities can be registered as trustee:

financial institutions and other institutions authorized to operate by the Central Bank of Brazil (Banco Central do Brasil - Bacen), in accordance with the specific regulations; legal entities that keep continuously the equivalent values corresponding to at least 0.20 of the administered financial resources (total and divided between funds and portfolios for qualified and nonqualified investors) or more than R$ 550 thousand, whichever is greater, in each of the following accounts of the balance sheet drawn up in accordance with Law No. 6,404, of December 15, 1976 (the Brazilian Corporation Law) and CVM standards: (a) net worth; and (b) funds availability, together with investments in federal public securities; and legal entities that carry out the activities of trustee exclusively in managed portfolios and certain investment funds, comprising: (a) participation investment funds (fundos de investimento em participação - FIP); (b) mutual funds investing in emerging companies (fundos mútuos de investimento em empresas emergentes - FMIEE); (c) investment funds in participation investment fund units (fundos...