On February 23, 2021, the Circular Letter No. 2/2021 was published by the Superintendence for Institutional Investor Supervision (SIN) of the Brazilian Securities and Exchange Commission (CVM), which details the elements expected by the regulator about compliance activities and the Conformity Report, as provided under CVM Instruction No. 558/2015.
As required of portfolio managers by Articles 19 to 21 of CVM Instruction No. 558, the structuring and maintenance of good compliance routines and controls are of fundamental importance, and contribute to the Conformity Report as provided under subsequent Article 22. However, SIN/CVM has observed through its supervisory actions that, at times, Conformity Reports are not fulfilling their objective of offering the institutions’ top management a continuous and detailed view of the behavior of the company and its employees in relation to the applicable regulations and compliance related internal controls.
Therefore, to assist market participants, the Annex of the Circular Letter presents portfolio managers with the topics that should necessarily be addressed in the Conformity Report, which include, but are not limited to, updating registration data, providing information about policies and their enforcement, mapping conflicts of interest, information safety, risk management, quota calculation, credit risk, among others.
SIN/CVM ratified that the Letter does not establish new obligations but details the understanding of what is due from the regulator’s perspective, and expects the guidelines to be followed for the Conformity Report due by April 2021, which refers to the activities of 2020. More information can be obtained on the website here.
For more information, please, contact our Compliance and Corporate Governance team.
Authors: partner Bernardo Viana and trainee Matheus Leone.