The Brazil Securities Commission (CVM), through its Economic Analysis, Risk Management and Integrity Office (ASA), published a Regulatory Outcome Evaluation study on the application of CVM Resolution 30 governing investor profiling and suitability. The study concludes that the rule has had a positive effect, but below its potential, and it identifies improvement areas, including a material gap between the intended role of suitability and investors’ perceived usefulness of the process as conducted by intermediaries. The assessment draws on data from CVM and self-regulators (BSM and ANBIMA), a thematic survey of 2,815 voluntary investor respondents, and a cross-jurisdiction comparison with the United States and the European Union, which found broad convergence in core features. The study also points to two CVM rules issued in 2024 as likely to strengthen the effectiveness of CVM Resolution 30: CVM Resolution 179, which requires disclosure of remuneration owed to investment advisers in the distribution process and potential conflicts of interest, and CVM Resolution 210, which sets rules for portability of securities investments. On monitoring indicators, it highlights a reduction in the number of audits relative to the number of CVM-registered intermediaries (2019 to 2023), a decline in the share of unmapped risk profiles, and complaints about unsuitable investments not rising in the same proportion as the increase in new stock exchange investors. On investor perceptions, 65% of respondents said they rarely or never take the suitability assessment into account in their financial decisions, and the Net Promoter Score for how decisive broker advice is in their investment decision-making was -61. The seven recommended rule improvements cover, among other items, risk-profile information sharing in open finance, clarifications on the use of information beyond minimum regulatory requirements, the use of utilities or centralising participants for onboarding, an explicit prohibition on intermediary interference in the risk-profile assessment, incorporation of relevant Circular Letter interpretations into the rule, revision of the “Termo de Ciência de Desenquadramento e Risco”, and adding “complexity” as a criterion for analysing and classifying categories of securities.
Brazil Securities Commission (CVM) 2025-01-21
Brazil Securities Commission evaluates suitability regime under CVM Resolution 30 and proposes seven enhancements
The Brazil Securities Commission (CVM) study on Resolution 30 found positive impacts on investor profiling but identified improvement areas. Based on CVM data, self-regulators, and a survey, it highlights gaps between suitability roles and investor perceptions, suggesting rule enhancements like risk-profile sharing and prohibiting intermediary interference. Despite more new investors, audits and complaints about unsuitable investments declined.