On February 6, the Brazilian Securities and Exchange Commission (CVM) issued Instruction No. 619, which amends specific issues of Instruction No. 592/17 (on the activity of securities consulting), to expressly allow investment consultants based abroad to operate in Brazil.

According to the CVM, the standard esteems an approach of multilateralism aligned with a future accession of Brazil to the Organization for Economic Cooperation and Development (OECD). By promoting the opening of the Brazilian market to foreign investment consultants, CVM Instruction 619, which enters into force on June 1 of this year, adapts the regulatory treatment applicable to the issue to the reality of an increasingly global market.

When operating in Brazil, investment consultants not based in Brazil will be subject to the same regulatory framework applicable to local consultants, i.e., the new rule favors symmetry of regulatory treatment, a plea claim greatly reinforced during the public hearing that culminated in the issuance of the instruction, on the grounds of avoiding any risk of "regulatory arbitrage."

In this regard, the mandatory recognition by the CVM of investment consultants based abroad is highlighted, as is the observance of the rules issued by the agency on suitability (CVM Instruction 539/13) and prevention of money laundering and financing of terrorism (CVM Instruction 301/99). However, these requirements will only apply when the foreign consultant operates in Brazil, as expressly provided for in article 2, sole paragraph, of CVM Instruction 592/17, introduced by CVM Instruction 619/20.

In our view, this provision correctly delimits the scope of CVM Instruction 619 to investment consultants based abroad that provide services in Brazil to investors residing here, thus eliminating the regulatory barrier that required these consultants to have their headquarters or domicile in Brazil. Thus, the CVM's recognition provided for in the rule should not cover consultants domiciled abroad if their service is rendered exclusively outside Brazil, even if to investors residing in Brazil.

In other words, nothing should change in the operations of foreign investment consultants who continue to perform their activities only abroad: they will continue having to comply with the requirements and conditions for licensing and conducting activities established by foreign law. However, still more caution will be needed in order to avoid the risk of Brazilian law becoming applicable to their activities, especially the requirement for recognition by the CVM established by the new instruction, among other rules.