This peer review examines two topics relevant for financial stability in Brazil: trade reporting and its use in systemic risk monitoring, and the regulation and supervision of investment funds. The review focuses on the steps taken by the authorities to implement reforms in these areas, including by following up on relevant FSB initiatives and recommendations.
The peer review finds that significant progress has been made in recent years on both topics. Brazil stands out among its FSB peers for the pioneering work it has carried out on trade reporting and its use in systemic risk monitoring. The regulatory and supervisory framework for investment funds has been strengthened, while regular monitoring of liquidity risk in the sector is underway. However, there is additional work to be done in both areas. On trade reporting, this involves intensified monitoring of any increased operational risks within private financial market infrastructure; implementing international data standards; and establishing arrangements to facilitate authorities’ access to trade repository-held data on a cross-border basis. On investment funds, this involves defining and monitoring leverage on an ongoing basis; reviewing the range and functioning of liquidity risk management tools; and reviewing arrangements with an industry body (ANBIMA) so that regulatory authority for investment funds is exerted by the Securities and Exchange Commission (CVM) or by a self-regulatory organisation that is subject to oversight by CVM and free from conflicts of interest. The peer review sets out recommendations to the Brazilian authorities to address these issues.