Simplified registration for Foreign Investment in the Brazilian stock market

Here is a piece of old news that is getting increasingly relevant, given the surge of investments in the Brazilian stock market:

The Brazilian Securities and Exchange Commission (CVM, in Portuguese), through its Rule 419/2005, created the simplified registration of the non-resident investor in the Brazilian stock market.

Based on this Rule, the brokerage firms (and the custodians) may perform the simplified registration of its non-resident clients.

In practical terms, this rule simplified and sped up the access of non-resident investors to the Brazilian domestic capital market, since foreign investors may operate in the comfort of his home, through brokerage firms based on his own country.

To make use of this benefit, the following prerequisites shall be complied with:

• the non-resident investor must be a client of a foreign intermediary institution, duly registered under the applicable legislation of its country of origin;
• the referred intermediary institution should accept the obligation to present, whenever requested, all the information required by CVM, as well as other information required by Brazilian public agencies with inspection powers; and
• the government agency responsible for capital market regulation in the foreign country shall enter into a mutual cooperation agreement with CVM, regarding exchange of investors' financial information.

Furthermore, the country in which the foreign intermediary institution is located should not be considered of high risk in relation to money laundering and terrorism financing, and should not be classified as non-cooperative in relation to the fight against illicit actions of that nature.