Enhancements in the Brazilian Payment System and Securitization Rules

Enhancements in the Brazilian Payment System and Securitization Rules

Introduction:
In recent years, Brazil has witnessed significant developments in its payment system and securitization rules. The implementation of Lei Nº 12.865 in 2013, also known as "L12865", has brought about important changes in the arrangements for payments and the institutions involved in the Brazilian Payment System (SPB). Additionally, the Brazilian Securities and Exchange Commission (CVM) has made amendments to the regulations governing securitization companies. This article aims to explore these advancements and their implications for various sectors of the economy.

Arrangements of Payment and Institutions in the SPB:
L12865 is a crucial legislation that regulates the payment system in Brazil. It establishes the framework for payment arrangements and the institutions operating within the SPB. By providing guidelines and rules, this law ensures the smooth functioning and security of payment transactions in the country. The implementation of this law has led to increased transparency, efficiency, and reliability in the payment system.

Changes in Securitization Rules:
The CVM has made significant changes to the regulations governing securitization companies in Brazil. One notable change is the extension of "revolvência," which allows for the purchase of new credit rights using resources generated from existing credit rights and other assets. This expansion of revolvência applies to all sectors of the economy, providing greater flexibility and opportunities for securitization companies.

Another important change is the uniformization of definitions such as "credit rights" and "fiduciary regime" in line with the concepts outlined in CVM Resolution 175 and the Legal Framework of Securitization. This standardization brings clarity and consistency in understanding these terms across the industry.

The new rules also permit the establishment of a fiduciary regime in Special Purpose Entities (SPEs), providing securitization companies with more control and autonomy in organizing special investor assemblies. Moreover, the transposition of deadlines and procedures for quorum installation and decision-making in these assemblies, as systematized in the Legal Framework of Securitization, ensures a streamlined process.

Enhanced Control and Custody of Assets:
The CVM's revised regulations now allow securitization companies to exercise control and custody over their assets without the need for a custodian. This change simplifies the process and reduces dependency on third-party custodians, allowing securitization companies to have more direct oversight and management of their assets.

Exemptions and Clarifications:
To facilitate the securitization process, certain exemptions and clarifications have been introduced. The requirement of preparing a rating report for assets initially offered to professional investors has been waived. This exemption streamlines the process and reduces the burden of unnecessary paperwork, benefiting both securitization companies and investors.

The limit on credit concentration per debtor or co-obligor in issuances to professional investors has been revised to allow the submission of debtor or co-obligor information based on the credit risk of each operation. This flexibility ensures that the risk is adequately assessed and mitigated, providing investors with a clearer understanding of the credit exposure involved.

Furthermore, cooperatives engaged in agriculture and livestock activities are exempt from the limit on exposure per debtor or co-obligor, provided they disclose their audited financial statements. This exemption recognizes the unique nature of agricultural cooperatives and promotes their participation in securitization activities.

Actionable Advice:

1. Embrace the opportunities offered by the enhanced securitization rules. Explore the extension of revolvência to all sectors of the economy and consider how it can benefit your business.

2. Streamline and simplify your securitization process by taking advantage of the dispensations and exemptions provided by the updated regulations. This includes the waiver of rating reports for assets offered to professional investors.

3. Ensure proper risk assessment and disclosure by submitting debtor or co-obligor information based on the credit risk of each operation. This will help investors make informed decisions and mitigate potential risks.

Conclusion:
The implementation of L12865 and the amendments made by the CVM have provided a significant boost to the Brazilian payment system and securitization practices. The enhanced regulations have increased transparency, efficiency, and flexibility, benefiting both payment institutions and securitization companies. By embracing these changes and leveraging the exemptions and opportunities they offer, businesses can optimize their operations and unlock new avenues for growth in the Brazilian market.