This week Brazil’s securities regulator, the CVM, published the regulation for capital market trials using distributed ledger technology. The CVM calls it a Pilot Program, a label that normally implies live transactions, but the regulation rules out real transactions, assets or investors. The timeline is aggressive, requiring applications within 15 business days of Wednesday’s publication, so roughly November 5. Testing begins the day after the deadline and runs for 60 days, extendable by 30.
That said, some institutions have been preparing already. Networks must be proposed by associations or self regulatory organizations in the CVM’s existing Tokenization Working Group (GTT). Capital markets association ANBIMA launched its DLT pilot project last year, with broker association Ancord and Abrasca also expected to host tests. There is no limit on the number of test networks. While all participants must be CVM regulated entities, under exceptional circumstances the CVM can allow others to take part, potentially opening the door to technology providers and foreign firms.
“Tokenization is already transforming capital market infrastructure, offering significant opportunities to enhance efficiency and innovation, while providing access to new business models,” said Otto Lobo, Chair of the CVM. He added that the pilot will allow “the Commission to gain a practical understanding of the opportunities, challenges, and risks associated with the use of distributed ledger technology in the capital markets.”
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