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Banks, Financial Services, Fintechs and Digital Assets Newsletter No 5
June 13th, 2023
Central Bank of Brazil
BCB Resolution No. 318, May 10, 2023
Amends BCB Resolution No. 130 of August 20, 2021, which regulates the provision of independent audit services to consortium administrators, payment institutions, brokerage firms and distributors of securities, as well as exchange brokerage firms authorized to operate by the Central Bank of Brazil (“BCB”). In addition, the new Resolution establishes specific procedures for the drafting of reports resulting from the independent audits carried out in financial institutions and other institutions authorized to operate by the BCB.
This Resolution will enter into force on July 01, 2023, in connection with amendments to art. 8 of BCB Resolution No. 130, of 2021. Amendments relating to other provisions have already entered into force on June 01, 2023.
Read BCB Resolution No. 318 in full.
BCB Resolution No. 319, May 18, 2023
Establishes the maximum limits of risk exposure per client and the maximum limit of concentration risk. It also amends BCB Resolutions No. 201 of March 11, 2022, and No. 265 of November 25, 2022.
The new regulation establishes that payment institutions belonging to prudential conglomerates classified as Type 3, defined in BCB Resolution No. 197 of March 11, 2022, must comply with certain maximum limits of risk exposure per client, in addition to a maximum limit of concentration risk.
The rule also provides for:
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- the possibility of offsetting positions (long and short) relating to instruments classified in the trading portfolio, under BCB Resolution No. 265 of November 25, 2022, originating from the same issuer, as long as certain established conditions are met;
- the mitigation of credit risk, through a mitigating instrument used to calculate the Risk-Weighted Asset (RWACPAD) portion mentioned in BCB Resolution No. 200, of March 11, 2022;
- the forwarding of information to the BCB;
- the requirements applicable to the institutions framed under S5; and
- the possibility of excesses.
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The Resolution will enter into force on July 01, 2023.
Joint Resolution No. 6, May 23, 2023
Establishes the requirements for sharing data and information on evidence of fraud to be followed by financial institutions, payment institutions and other institutions authorized to operate by the Central Bank of Brazil (“BCB”).
The rule seeks to reduce information asymmetry and strengthen the procedures and controls of institutions for fraud prevention.
In addition, the Resolution seeks to enhance the fraud prevention capabilities of supervised institutions, as well as to improve their internal controls. In order to ensure the appropriate sharing of information, a minimum set of data to be shared was established, including the identification of the person responsible for the fraud, description of the evidence of actual or attempted fraud, identification of the institution responsible for registering the data and information, and identification of the recipient account data and its holder, in the case of transfer or payment of funds.
However, the institutions are responsible for the proper use of the data and information obtained through the electronic system, as well as for the preservation of the bank secrecy of clients.
Financial institutions must obtain consent from their clients for the processing and sharing of fraud-related data. This consent must be included in a contract with a highlighted clause.
This Resolution will enter into force on November 01, 2023.
Read Joint Resolution No. 6 in full.
BCB Normative Instruction No. 377, May 02, 2023
Announces the schedule for checkpoints regarding the ongoing process of publishing version 1.0.0 (or subsequent versions) of open data APIs for Open Finance Capitalization, Pension, and Personal Insurance.
BCB Normative Instruction No. 184, of November 12, 2021, was repealed.
This Normative Instruction entered into force on the date of its publication.
Read BCB Normative Instruction No. 377 in full.
BCB Normative Instruction No. 378, May 09, 2023
Creates and amends accounting entries in the list of accounts of the Accounting Standards of Institutions Regulated by the Central Bank of Brazil (“Cosif”).
This Normative Instruction entered into force on June 01, 2023.
Read BCB Normative Instruction No. 378 in full.
BCB Normative Instruction No. 380, May 15, 2023
Consolidates the procedures for providing information to the Central Bank of Brazil (“BCB”) regarding transactions involving non-resident accounts in Brazilian reais held by an embassy, consular office or representation of an international organization recognized by the Brazilian Government, under BCB Resolution No. 277 of December 31, 2022.
This Normative Instruction entered into force on June 01, 2023.
Read BCB Normative Instruction No. 380 in full.
BCB Normative Instruction No. 381, May 15, 2023
Consolidates the procedures for the submission of files to the Central Bank of Brazil (“BCB”) regarding information on inflow of foreign currency with pre-established values abroad in Brazilian reais and foreign currency purchase and sale transactions, established, respectively, in item I of art. 81, and paragraph 3 of art. 78 of BCB Resolution No. 277, of December 31, 2022.
This Normative Instruction entered into force on June 01, 2023.
Read BCB Normative Instruction No. 381 in full.
BCB Normative Instruction No. 382, May 16, 2023
Amends BCB Normative Instruction No. 243 of March 16, 2022, which establishes procedures to be followed in order to participate directly in the Instant Payment System (“SPI”), for opening an Instant Payment Account (PI Account). In addition, the Normative Instruction sets the maximum terms for validation and settlement of instant payment orders, established in the Regulation attached to BCB Resolution No. 195 of March 03, 2022.
This Normative Instruction entered into force on June 01, 2023.
Read BCB Normative Instruction No. 382 in full.
BCB Normative Instruction No. 383, May 18, 2023
Amends BCB Normative Instruction No. 32 of October 26, 2020, which establishes the format, frequency and information to be provided by Pix participants, to insert new information that must be sent periodically.
This Normative Instruction entered into force on February 01, 2024.
Read BCB Normative Instruction No. 383 in full.
BCB Normative Instruction No. 384, May 18, 2023
Announces version 5.1 of the Pix User Manual, which makes up the Pix Regulation.
In the new version, a subsection has been included in existing Section 3.2.2.7, which introduces a new time frame for filing an infraction notice requesting returns, after the registration of the user’s demand.
This Normative Instruction will enter into force on January 01, 2024.
Read BCB Normative Instruction No. 384 in full.
BCB Normative Instruction No. 387, May 31, 2023
Announces the schedule for checkpoints regarding the ongoing process of publishing version 1.0.0 (or subsequent versions) of Investment client data APIs as well as Consent and Resources APIs for Open Finance.
This Normative Instruction will enter into force on July 01, 2023.
Read BCB Normative Instruction No. 387 in full.
National Monetary Council
CMN Resolution No. 5,073, April 18, 2023
Sets the annual global limit for contracting credit operations with bodies and entities of the public sector in 2022, 2023 and 2024, to be followed by financial institutions and other institutions authorized to operate by the Central Bank of Brazil (“BCB”).
Accordingly, the Annex to CMN Resolution No. 4,995, of March 24, 2022, will enter into force with the amendments included in the Annex to this Resolution.
This Resolution entered into force on June 01, 2023.
Read CMN Resolution No. 5,073 in full.
CMN Resolution No. 5,076, May 18, 2023
Amends Resolution No. 4,557 of February 23, 2017, and Resolution No. 4,606 of October 19, 2017.
The Resolution will enter into force on July 01, 2023.
Read CMN Resolution No. 5,076 in full.
CMN Resolution No. 5,077, May 18, 2023
Amends Resolutions No. 4,557 of February 23, 2017, No. 4,606 of October 19, 2017, and No. 4,677 of July 31, 2018.
This Resolution entered into force on June 01, 2023.
Read CMN Resolution No. 5,077 in full.
ALSO CHECK OUT: NEWS | ADMINISTRATIVE AND JUDICIAL DECISIONS
BCB announces institutions selected to participate in Digital Brazilian Real pilot project
The Central Bank of Brazil (“BCB”) announced the selection of 14 institutions interested in participating in the Digital Brazilian Real pilot project (“RD Pilot”). Overall, the BCB received 36 proposals submitted by more than 100 institutions from several financial segments.
The Executive Management Committee (“CEG”) of the RD Pilot carried out the selection based on the criteria established in the Regulations of the Digital Brazilian Real pilot project platform. Applications from interested entities were received from May 02 to May 12, 2023. In general, all applications were required to be supported by documents or information that either declared or evidenced:
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- the issuance, redemption or transfer transactions regarding the financial assets to be tested in the RD Pilot, as well as the financial flows resulting from trading events, when applicable to the financial asset subject to the test, correlating the suitability of such transactions to their respective business model, or the suitability of their business model to the proposed environment;
- their information technology (IT) testing history for projects coordinated by the BCB within the National Financial System (“SFN”) or the Brazilian Payment System (“SPB”), such as the approval tests required for participating in Pix or Open Finance; and
- their experience with transactions, or with applied research and development of products or services based on Distributed Ledger Technology (DLT), preferably compatible with Ethereum Virtual Machine (EVM).
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The integration of the selected interested parties to the RD pilot platform will commence in mid-June 2023, stage in which privacy and programmability features will be tested through the implementation of a specific use – a delivery versus payment (DVP) protocol for federal public securities between clients of different institutions, in addition to the services included in this transaction.
“Crypto Framework” enters into force while practical effect is unclear
On May 17, 2023, our partner Fabio Braga was interviewed by magazine Valor Econômico for an article about the “Crypto Framework”.
New Law No. 14,478 provides guidelines to be followed regarding the provision of virtual asset services and the regulation of their service providers and will enter into force 180 days after the date of its publication, which took place on December 21, 2022.
According to Braga, certain provisions of the law under discussion can already be used for the adaptation of virtual asset service providers (“Vasps”) in activity. What is more, a practical advantage is already available for active providers that adapt their practices, procedures and policies to the provisions of the new law, which tends to be positive within the authorization process, as soon as the new regulation is published.
Another advantage of initiating activities before the infralegal rules are published is that active Vasps can count on a minimum time frame of six months to undergo the authorization process, without suspending their operations – unlike providers that are established after the regulations are published. Therefore, Vasps can already adapt their policies, procedures and operational manuals to the new rules.
Digital Banks – Disruption: the strategy for survival” by Cantarino Brasileiro, and “Panel: Crypto, a disruptive feature of financial services.”
Our partner, Fabio Braga, was a speaker at the event “Digital Banks – Disruption: the strategy for survival”, held on May 18, 2023.
The meeting, aimed at financial market professionals from all types of organizations who intend to be up to date on the most innovative and outstanding current and future developments, had the purpose of discussing the trends and regulations that turn into opportunities for digital banks to continue to grow. Employees of companies that are part of the National Financial System (“SFN”) also attended the event, as established by the Central Bank of Brazil (“BCB”).
Cantarino Brasileiro is a hub that fosters innovation in the financial ecosystem through actions of market intelligence, dissemination of knowledge, relationships and brand empowerment.
ALSO CHECK OUT: REGULATION | ADMINISTRATIVE AND JUDICIAL DECISIONS
ADMINISTRATIVE AND LEGAL DECISIONS
Superior Court of Justice
According to the Third Panel, BM&F Bovespa is not liable for irregular sale of shares carried out by broker
The Third Panel of the Superior Court of Justice (“STJ”) reversed the decision of the Court of Justice of the State of Rio de Janeiro (“TJRJ”) and overturned the penalty imposed on the São Paulo Stock Futures and Commodities Exchange (“BM&F Bovespa”) to indemnify an investor for the irregular sale of shares through a false power of attorney.
The document was allegedly presented to the broker, which, in turn, ordered the sale of shares. According to the Court, there is no consumer relationship between the Stock Exchange and the investor as to justify the application of the Consumer Protection Code (“CDC”) in this case.
According to the reporting judge of the case: “The clearing and settlement entity provides fundamental services within the scope of capital markets, but not to the consumer market, nor to the general public, and maintains a relationship exclusively with securities distributors and brokers – institutions previously authorized by the Brazilian Securities Commission (“CVM”) to carry out such activities.”
According to CMN Resolutions No. 1,655/1989 and No. 1,656/1989, the duty to verify the authenticity of the power of attorney of a holder of shares falls on the broker and not on BM&F Bovespa, which is only responsible for ensuring compliance with the order given by the institution. The Court has decided that it is impossible to hold Bovespa accountable for the losses arising from the negotiation of shares on the stock exchange, despite the possibility of holding Bovespa liable in the event that a willful conduct is actually proven, which should be subject to analysis on the merits.
São Paulo Court of Justice
According to TJSP, a document signed digitally through an entity not accredited with ICP-Brasil is valid
The 24th Private Law Chamber of the Court of Justice of the State of São Paulo (“TJSP”) acknowledged, in an interlocutory appeal judgment, the validity of a credit instrument digitally signed through links sent to the signatory. The trial court decision, in turn, required a physical signature or a signature from a certifying entity accredited with the Brazilian Public Key Infrastructure (“ICP-Brasil”).
During the court enforcement of the debt instrument, the creditor company presented a credit instrument signed through a company system that is not on the list of ICP-Brasil accredited institutions. The claimant alleges that this fact is not sufficient to invalidate the documents signed through the platform.
Appellate and reporting Judge Rodolfo Pellizari emphasized, in his vote, that the Brazilian Code of Civil Procedure allows for the use of electronic documents produced and kept in accordance with the specific legislation. He also pointed out that Provisional Measure No. 2,200-2, of 2021, which established ICP-Brasil, states that: “the use of another method of proving authorship and integrity of documents in electronic form, including those that use certificates not issued by the ICP-Brasil, is not prohibited, provided that it is acknowledged by the parties as valid, or accepted by the person to whom the document is addressed.” Thus, he concluded that it is up to the opposing party to argue for any possible document forgery.
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