The Brazil Securities Commission (CVM), through its Institutional Investors Supervision Department (SIN), issued Circular Letter CVM/SIN 1/2026 setting out its technical interpretation of paragraph 3 of article 73 of Normative Annex I to CVM Resolution 175 for FIFs. The clarification is limited to funds offered to the general public and to transactions carried out with the purpose of leveraging the fund’s portfolio. SIN explains that derivatives may be used for three mutually exclusive purposes: hedging exposures already held in cash, taking directional risk positions, or leverage by amplifying the risks of a spot position. Under SIN’s interpretation, the regulatory limitation referring to “coverage or margin of guarantee in organised markets” should be applied only to derivative transactions undertaken for leverage.
Brazil Securities Commission (CVM) 2026-01-19
Brazil Securities Commission clarifies that FIF derivative margin limits apply only to leverage trades in retail funds
The Brazil Securities Commission (CVM) issued Circular Letter CVM/SIN 1/2026, clarifying the use of derivatives in FIFs under CVM Resolution 175. The guidance specifies that derivatives can be used for hedging, taking directional risk positions, or leverage, with regulatory limitations on "coverage or margin of guarantee in organised markets" applying solely to leverage transactions.