Fitch: New rules promote modernization of Brazilian asset management industry

Fitch Ratings anticipates that changes to the asset management regulatory framework enacted by the Brazilian Securities and Exchange Commission (CVM) recently will modernize the country's asset management industry while also simplifying relationships among agents and increasing transparency.

A special report recently released by the globally recognized statistical rating organizations predicted the CVM's much-anticipated easing of limits for investments abroad will be beneficial for the development of the Brazilian asset management industry now that investors will be able to increase the diversification of their portfolios.

Another highly anticipated change was a revision to service providers' compensation, which prohibits any type of kickback or rebate to portfolio managers that would affect their decision making unless regulators see no conflict of interest, such as in the cases of  mirror funds.  In making the change, the CVM is trying to align with international practices and improve overall transparency. 

Other changes more clearly outline the responsibilities between fund administrators and managers;  add new manager responsibilities; and clarify the rules that must be observed in relation to co-managed portfolios.

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