CPMI and IOSCO published a Level 2 assessment report on the implementation monitoring of Principles for financial market infrastructures (PFMI) in Brazil. The assessment concludes that the legal, regulatory, and oversight frameworks, as of May 31, 2018, for the financial market infrastructures in Brazil are complete and "consistent" (the highest rating) with the PFMI. The possible rating levels are “Consistent,” “Broadly consistent,” “Partly consistent," “Not consistent,” and “Not applicable.” The report makes recommendations where any minor gaps have been identified or where the framework could be further improved.
The Brazil-adopted measures applicable to systemically important payment systems, central securities depositories, securities settlement systems, central counterparties, and trade repositories were found to be complete and consistent with the PFMI. Notwithstanding the consistent ratings for this assessment, the Assessment Team is of the view that the Brazilian regulatory regime for financial market infrastructures can be further strengthened. At a minimum, this could be done by providing public clarity on the hierarchy between the pre-existing regulations and the new implementation measures. The Brazilian authorities may also wish to consider measures that incorporate explicit references to the PFMI in all relevant regulations or Instructions. Translation was also a complicating factor in assessing the legal, regulatory and oversight frameworks for financial market infrastructures in Brazil.
However, the Assessment Team concluded that any gaps, with respect to the pre-existing regulations and the PFMI, are addressed by virtue of the policy statements of BCB. This position was founded on three items: the strength of the policy statements, overlap in the responsibilities of the authorities, and confirmation through supervisory evidence. A more detailed assessment, including citations of the relevant legislation, regulation, policy, and guidance, and notes explaining the assigned ratings, has been provided in the online CPMI-IOSCO PFMI Level 2 implementation database. The report presents a table that covers the identified gaps and recommendations. The assessment was conducted as a peer review from July 2018 to December 2019. The relevant Brazilian authorities for the assessment were BCB and Securities and Exchange Commission of Brazil (CVM), as they are responsible for the regulation, supervision, and oversight of financial market infrastructures in Brazil. The rating framework used in Level 2 assessments is an adaptation of the approach described in the PFMI Assessment Methodology.
Keywords: Americas, Brazil, Banking, Securities, PFMI, Level 2 Assessment, Implementation Monitoring, Systemic Risk, FMI, CPMI, IOSCO
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