Legal aspects

Law 4,595/1964 regulates the functioning of Brazilian financial system. It sets forth that the National Monetary Council (CMN) is the entity in charge of elaborating the money and credit policy. CMN is also responsible for promoting the improvement of institutions and financial instruments to ensure higher efficiency of the payments system. The Banco Central do Brasil (BCB), under the CMN policy directives, is responsible to authorize the functioning of financial institutions, supervise them, and issue currency. In addition, the BCB is empowered to intervene in the financial institutions or place them under special administrative regimes, and to determine their compulsory liquidation (Decree-Law 2,321/1987 and Law 6,024/1974).

Law 10,214/2001 is the main legal instrument that regulates the Brazilian Payments System (SPB) and the entities operating settlement and funds transfer systems. It is the legal framework of the SPB reform by recognizing the multilateral clearing and enabling effective implementation of safeguards under these systems even in case of participants’ insolvency. According to the Law, entities that operate a systemically important system1 should act as a central counterparty2 and, excepting for issuer risk, ensure settlement of these operations on their system.

Resolution 2,882/2001 empowers the BCB to regulate, authorize the functioning and supervise clearing and settlement activities. Regarding securities settlement systems (other than government securities and corporate bonds issued by banks), these competences are shared with the Brazilian Securities Commission (CVM).

Circular 3,057/2001 regulates the operation and supervision3 of clearinghouses and other clearing and settlement services providers by the BCB.

According to Law 12,865/2013, payment schemes4 and payment institutions5 are also a part of the SPB. Resolution 4,282/2013 establishes the guidelines to be observed in the regulation, monitoring, supervision and oversight of these institutions and schemes.

Circular 3,682/2013 regulates the payment services provided by payment schemes, as part of the SPB.

Law 12,810/2013 defines the activities of central securities depositories, securities settlement systems, central counterparties and trade repositories. Also defines the competences of BCB and CVM to authorize, oversee and establish conditions for the performance of such activities.

Regarding the monitoring and evaluation of the safety, efficiency, integrity and reliability of clearing and settlement systems of the SPB, as well as central securities depositories, securities settlement systems, central counterparties and trade repositories, BCB also uses the Principles for Financial Market Infrastructures (PFMI), published by the Committee on Payments and Settlement Systems of the Bank for International Settlements (CPSS/BIS) and the Technical Committee of the International Organization of Securities Commissions (TC/IOSCO) as reference.

Click here to see the main regulatory documents, in Portuguese.

1 Systemically important system: a settlement system in which the volume or the business nature, at the discretion of the BCB, is able to offer risk to the soundness and smooth functioning of the National Financial System.

2 Central counterparty: entity that acts as the buyer to every seller and the seller to every buyer for a specific number of contracts, for example, those executed on a stock or commodities exchange.

3 In clearing and settlement services applicable regulations, the term "supervision" is used in reference to the role of "oversight".

4 Payment schemes: set of rules and procedures which regulates the provision of certain payment service to the public accepted by more than one recipient/payee, by means of direct access by end users, payers and recipients/payees.

5 Payment institution: legal person, adhering to one or more payment schemes, having as main or ancillary activity: providing cash-in and cash-out services of the funds held on payment accounts; manage payment accounts; issue payment instrument; payment instrument acquiring; remittances; and other established in the Law.