Digital markets, funding and payment services
The law regulates transactions involving securities and, therefore, this market has specific rules established by the agency responsible for overseeing it: the CVM. Brazilian law adopts an open concept for security, considering as such any title or collective investment scheme that generates the right to participation, partnership or remuneration, which income is originated in the effort of entrepreneurs or third parties, including the ones resulting from the rendering of services. If any specific collective investment scheme falls under this description, it is subject to the determinations of the law and the CVM rules, which may regulate how they are distributed, offered and commercialised inside Brazilian territories or involving national companies or individuals. All regulations regarding the SFN applies to fintech organisations, if legally prescribed services or products are offered.
Recently, Brazilian authorities have legally recognised investment-based crowdfunding as a possible fundraising option for companies that the Rule considers small. Now, the Brazilian innovation ecosystem uses a Rule created specifically to regulate the distribution of securities through platforms established for this purpose, without the need to register this offer with the CVM – which is usually the rule and may be very expensive for small companies. The standard came into force in 2017 following a public consultation of the market conducted by the entity, and its current version determines some requirements and responsibilities for the operation of the platforms, details of the possible offers and recognises the possibility of syndicated investments, that is, the ones led by an investor with a high reputation in the market.
The intermediation of loans is a private activity of financial institutions, as determined by the law that constitutes the SFN. Thus, any organisation that collects money from third parties for loans or intermediate transactions of this nature must be registered and authorised to operate as a financial institution according to Brazilian law and then is subject to the supervision and regulation of the BACEN. In order to foster innovative lending models, the entity in 2017 proposed a public hearing that deals with peer-to-peer lending and crowd lending, seeking to guarantee the safety and legality of such loans. As a result, in April 2018, the BACEN published Resolution No. 4.656/18, which created two special types of financial institutions that are allowed to use electronic platforms to match creditors and borrowers (SEPs) or to lend their own resources (SCDs). Both need to request before the Central Bank authorisation to operate, but they represent a softer, easier and faster process than the one required to traditional financial institutions.
Payment services are subject to the rules regarding the Brazilian payment system (SPB), created by Law No. 12.214/01, and other entities of the SFN such as the BACEN and the CVM also regulate their operations. The members of the SPB are services or systems that:
- clear credit notes;
- clear and settle electronic debit and credit orders;
- transfer funds and other financial assets;
- clear and settle securities transactions;
- clear and settle commodities and futures transactions;
- are referred to as financial market infrastructure; and
- maintain payment arrangements and payment institutions, as provided by Law No. 12.865/13.
In order to guarantee the security of the transfer of resources, the regulation of the Brazilian payment system is quite solid and robust. In addition, the BACEN also manages and operates technological systems that guarantee interoperability among institutions, as with the System for the Transfer of Resources.
Regarding payment services, it is important to highlight the presence of the CIP – Interbank Payment Chamber – an entity composed of financial institutions, also a member of the SPB, which maintains technological solutions used by participants in payment settlement processes. In 2017, marketplaces of all kinds were determined to be part of payment arrangements, submitting themselves to the centralised settlement rules of their users' resources.
Moreover, 2018 was relevant to the means of payment market, as the BACEN introduced provisions expected to innovate and promote financial inclusion, as well as enabling a more competitive market.
By means of Resolution No. 4,707 and Circular No. 3,924 , both of 19 December 2018, the BACEN governs the use of payment arrangement receivables as collateral for credit transactions. This should make loaning to smaller structures feasible, as such receivables usually represent a significant portion of their assets, and the creditor will be granted more protection when entering into contracts with them.
With Circular No. 3,925 of 20 December 2018, which amended the Annex to Circular No. 3.682 as of 4 November 2013, the BACEN addresses the provision of payment services within the framework of the arrangements of the Brazilian Payment System, establishing guidelines and standards these service providers need to abide by.
By means of Communiqué No. 32,927 of 21 December 2018, the BACEN recognises instant payments as valid and addresses the fundamental requirements for its environment within the Brazilian payment system regulatory framework. This enables the inclusion of new players in the financial market, which is of extreme significance in a country with high rates of banking concentration such as Brazil.
Finally, there are currently no rules obliging institutions to make client or product data accessible to third parties. They are allowed to share with other financial institutions some information that can make the settling and clearing of payments faster, safer or more efficient. Nevertheless, this process must observe the applicable legal limits, as the Constitution (and specific laws such the Supplementary Law No. 105/01) protects and assures the inviolability of banking secrecy, in most cases.