Internal Letter No. 26/2024/CVM/SDM - Proposal for Experimental Regulatory Environment - Access Registration

SECURITIES AND EXCHANGE COMMISSION OF BRAZIL
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Dear Members of the Collegiate Board,

I. Background

1. This proposal for normative alteration began with the establishment of a Strategic Project, within the scope of the CVM Strategic Management Committee, with the aim of improving the regulatory approach and operational dynamics related to registration procedures in the securities market. In this sense, one of the aspects of such a project aims to facilitate the entry of new investors into the securities market.
2. In line with the pursued objective, and after technical interactions, B3 S.A. – Brasil, Bolsa e Balcão (“B3”) submitted a proposal to create an experimental regulatory environment, on a temporary basis, to implement a registration solution for Brazilian natural persons with intermediaries (“Access Registration”), in accordance with art. 26 of CVM Resolution No. 67/2022.
3. Given that, as pointed out by B3, the registration of natural persons is one of the main challenges for expanding access of the Brazilian investor to the securities market, B3 specifically suggests altering the mandatory minimum content of the registration of natural person investors, provided for in item I, of art. 1 of Annex B of CVM Resolution No. 50, of August 31, 2021.
4. On this topic, in 2019, the CVM mapped the main operational challenges related to investor registration in a study elaborated jointly with the Institute of Technology and Society of Rio (ITS Rio) in 2019, which describes, among others, the following understanding:

Even though it is normally done by institutions and for distinct purposes, it is worth noting that there is a relevant overlap of registration data within the banking and securities market sectors. (...) Observing in greater detail, it is worth pointing out that there is a greater overlap in the case of natural person clients. Here, for cases that represent the norm, the main difference found lies in the requirement related to client profile analysis, which is specific to the securities market. In this subset, an updated bank account registration, although not directly substituting a registration with a securities market intermediary, could provide most of the necessary information, speeding up the information collection process. On the other hand, it would be possible to open a bank account for a natural person starting from the information in a securities market registration.
5. As detailed in the study, the information required within the banking sector, that is, under the supervision of the Central Bank of Brazil (BCB), is compared with the registration data required for registration with the securities market, under the supervision of this Autarchy, and an opportunity for optimization is identified, since the fields required for the first access to registration with the BCB are all provided for in the fields required by the CVM, but the fields required by the CVM exceed those required by the BCB - as per the comparison made by B3 and available in annex A of the request.
6. The study also mentions the following improvement opportunities related to filling out the natural person registration:
Difficulty in complying with some registration requirements: certain informational items required are more complex to obtain and verify, potentially leading to a burden of compliance costs potentially disproportionate to the benefits. (...) Information required regarding the assets and income of natural person investors may entail relevant costs for obtaining (it is a consensus that there is much reluctance on the part of investors to provide them), and this is not necessarily faithful or standardized, nor even feasible to validate.
7. B3, in its request, points out that, despite the challenges, there has been an increase in the number of natural person investors accessing trading in the organized markets administered by B3 (Stock/Listed), notably since 2019, according to the Report on individuals – 1st quarter of 2024 from B3 and the information contained in the table below.
8. B3’s perception is that there is great potential for increasing access of natural persons to these markets, once a new, more optimized and evolutionary scenario can prevail in the market, initially on an experimental basis.
9. In this sense, and with the purpose of promoting sustainable economic development and fostering access of natural persons to the capital market, B3 proposes that access to this market by natural persons be a simple, safe, and innovative experience.
10. Furthermore, it was mentioned that Brazil has experienced in recent years a comprehensive movement of banking inclusion, which made it possible to open bank accounts and payment accounts for practically the entire population, without friction and using mobile technology. In B3’s understanding, this has not yet reached its potential in the capital market given the existing challenges, especially for investors in the retail segment, especially for small amounts.
11. On the other hand, B3 also emphasized that the importance of identity verification mechanisms and the existence of investors operating in the securities market should not be ignored, nor the care that must be adopted, especially to curb practices of illicit acts, such as money laundering and terrorism financing, fraud, and unauthorized access, which are cardinal concerns of this Autarchy.
12. Thus, B3 argues, based on these reasons, that the proposed proposal should be implemented in an experimental environment, with clear limits regarding the participants and investor profiles involved in this controlled context.
II. Proposal for normative act
13. The SDM, after analyzing the request and interacting with the Superintendence of Market and Intermediary Relations (SMI), with the Superintendence of Institutional Investor Supervision (SIN) and with the CVM’s AML/CFT Core, suggests the creation of an experimental regulatory regime, with the objective of promoting an alternative means, in a test environment, for the purpose of facilitating the registration process of natural person investors, in accordance with the draft attached to this process.
14. The proposed alteration represents an opportunity to modernize and optimize this process, aligning it with the most contemporary technological and regulatory practices. The use of an experimental regulatory environment allows testing innovative – and sometimes bold – solutions in a controlled manner.
15. It is thus considered that the implementation of this regulatory environment, in accordance with art. 26 of CVM Resolution No. 67, of March 10, 2022, will enable testing the proposal in a monitored scenario before adopting regulatory alterations whose impacts are unknown, allowing the application of specific controls and the progressive analysis and study of expected results.
16. The proposal balances the need to simplify registration with the aim of expanding access to the capital market, especially for small-scale investors who may enter the market, with the maintenance of robust mechanisms to guarantee market integrity, mitigating risks associated with fraud, money laundering, and other illicit practices. This approach reflects the CVM’s commitment to investor protection and the sustainable development of the securities market.
17. The regime is intended for intermediaries who carry out new registrations of natural person investors, up to an investment limit of R$ 30,000. Additionally, the Access Registration can only be used for investors who are classified and maintained in the category of lowest propensity to assume risk, as established by the intermediary’s internal rules and procedures, and in accordance with CVM/SMI Circular Letter No. 09/2019, of December 18, 2019, and Joint CVM/SMI/SIN Circular Letter No. 01/2024, of August 29, 2024.
18. These Circular Letters, in summary, provide for the possibility that the intermediary (i) adopts an “asset allocation portfolio,” which allows the investor to have assets of various categories within their profile; and (ii) classify the investor in the category of lowest propensity to assume risk without them answering a specific questionnaire.
19. With the Access Registration, the investor will be exempt from filling out the suitability questionnaire, being automatically classified in the category of lowest propensity to assume risk. However, if they carry out transactions or deposits outside this profile, or request a change in their classification, the intermediary must complete the registration in accordance with item I, of art. 1 of Annex B of CVM Resolution No. 50.
20. However, it is important to highlight that this exemption – regarding the classification of the risk profile of the investor’s products, services, and operations – does not exempt intermediaries from the obligation to comply with the rules, procedures, and internal controls related to the classification of the investor’s AML/CFT risk, which must be carried out by the intermediary as established in CVM Resolution No. 50.
21. Thus, the alteration in the mandatory minimum content of the registration, combined with the guidelines present in the aforementioned circular letters, will provide greater flexibility and efficiency to the account opening process with intermediaries, improving the experience of the new investor and, at the same time, ensuring market protection and integrity.
22. The period proposed for the CVM to analyze the results of this experimental regime is up to 5 (five) years. During this period, the CVM may (i) interrupt the experiment, if it verifies any problems or misuse of the regime; (ii) extend it, if it is considered that more time is necessary to evaluate the results; or (iii) implement the measures permanently through the issuance of a normative act of a permanent nature.
III. AIR and Public Consultation
23. Regarding the need to carry out a regulatory impact analysis, we envision the possibility of exemption under art. 4, VII, of Decree No. 10.411, of June 30, 2020, reflected in art. 14, VII, of CVM Resolution No. 67, of March 10, 2022, since it is a normative act that reduces requirements and obligations with the aim of reducing regulatory costs.
24. In addition, the issuance of the norm is proposed without submitting the matter to public consultation, based on art. 31, II, of CVM Resolution No. 67, of 2022, which determines that normative acts of an experimental nature may not be submitted to public consultation, as decided by the Collegiate Board, in accordance with art. 26.
IV. Conclusion
25. For the above reasons, we forward this Internal Letter to the CVM Collegiate Board for deliberation on the issuance of the resolution, within the scope of the experimental regulatory environment, currently proposed, forwarding the following documents as attachments: (i) B3’s request; and (ii) draft of the amending resolution in word.

Sincerely,
Antonio Carlos Berwanger
Superintendent of Market Development
Agreed,
André Passaro

Document electronically signed by Antonio Carlos Berwanger, Superintendent, on 12/20/2024, at 15:31, based on art. 6 of Decree No. 8.539, of October 8, 2015.
Document electronically signed by Andre Francisco Luiz de Alencar Passaro, Superintendent, on 12/23/2024, at 12:00, based on art. 6 of Decree No. 8.539, of October 8, 2015.
The authenticity of the document can be verified on the site https://sei.cvm.gov.br/conferir_autenticidade, informing the verification code 2226242 and the CRC Code C0C528AA.
This document's authenticity can be verified by accessing https://sei.cvm.gov.br/conferir_autenticidade, and typing the "Verification Code" 2226242 and the "CRC Code" C0C528AA.
Reference: Process No. 19957.011162/2024-88 SEI Document No. 2226242 Superintendent of Market and Intermediary Relations