Brazil Securities Commission issues joint circular clarifying daily reconciliation duties for fund units distributed on behalf of investors

The Brazil Securities Commission (CVM) published Joint Circular Letter CVM/SMI/SIN/SSE 2/2025 to clarify the obligations of relevant administrators and infrastructure providers in reconciling investment fund units distributed “on behalf and by order” (por conta e ordem). The guidance is addressed to administrators of organised over-the-counter markets, central securities depository service providers and fund administrators that distribute funds on a por conta e ordem basis. It stresses the need for daily reconciliation between fund administrators, market administration entities and fund unit registrars, after CVM identified cases where investors’ positions in such units did not have corresponding backing in the fund administrator’s records. The circular also links these expectations to changes under CVM Resolution 175, which requires funds to hire a fund unit registrar service or, where authorised, for fund administrators to perform this role, with reconciliation between registrars, administrators and por conta e ordem distributors positioned as central to delivering practical benefits to unitholders.