Changes in the Brazilian regulatory landscape have intensified in recent years mainly due to the process of social transformation that puts pressure on productive sectors, regulatory agencies and government institutions. After the Legal Framework of Startups and Innovative Entrepreneurship and the General Law for the Protection of Personal Data (LGPD), the wave of changes reaches the world of securitization through Provisional Measure (MP) 1.103/22, which creates the legal framework of securitization. Among other points, MP exponentially amplifies the chances of securitization of securities backed by credit rights.

The framework also fulfills the function of unifying the rules on securitization, until then laid down, mainly, in Law 9.514/97 – which regulates Certificates of Real Estate Receivables (CRI) and was later edited by Law 10.931/04 – and Law 11.076/04 – which regulates Agribusiness Receivables Certificates (CRA). These and other sparse norms left gaps on the subject. CVM Instruction 480/09, for example, does not present a specific treatment for securitizers, treating them only as other issuers of securities.

The discussion on a regulatory framework for securitizations was opened by the Public Hearing SDM 05/20, proposed by the Brazilian Securities and Exchange Commission (CVM), and implemented by the MP, which sought to define its own needs and obligations, aligned with the reality of the entities.

MP is insightful and welcome especially when bringing a clear definition about securitization operations. According to article 17, "securitization transactions are considered to be the issuance and placement of securities with investors, the payment of which is primarily conditional on the receipt of funds from the credit rights that support it".

We understand, therefore, that securitizations may use any credit rights as a ballast of receivables certificates (CR), which "are titles of nominar credits, issued in a book-entry form, issued exclusively by securitizations, free trading, and constitute a promise of payment in cash, preserved the possibility of payment, and extrajudicial executive title", according to art. 19 of the MP.

Until then, this prerogative was limited only to the credit rights arising from CRIs and CRAs. The update therefore expands the securitization market to all sectors.

The standard also raises discussions about the possibility of emissions with restricted efforts from securities other than CRIs and CRAs. Under CVM Instruction 476/09, only these two certificates of receivables can be the subject of public offering with restricted distribution efforts. Considering the new rules on CRs edited by the MP, however, it is possible to understand that securitizers can use debentures or commercial notes to enable these transactions.

Another unfolding of the standard refers to the fiduciary regime and separate assets.

In accordance with Article 24 of the MP, securitizations may institute the fiduciary regime for the purposes of payment of RCs or other securities representing securitization operations, which will allow the individualization of liabilities and assets of an operation. This will give more security to the business and enable the execution of simultaneous operations without risk dependence between them. This concept can be applied, for example, to the issuance of debentures based on financial credits, provided for by Resolution 2,686 of the National Monetary Council.

The standard also expressly establishes the possibility of aggregating new credit rights as a ballast of securitization operations, as provided for in the issuing instrument (Articles 21, X, and 26, §2). The measure can be used by different sectors of the economy, especially with regard to mitigating the risk of asset failure.

In addition, MP provides for the issuance of Letters of Insurance Risks (LRS) and the flexibilization of the requirement of exclusive provision, by financial institution, of the bookkeeping and custody of securities.

LRS is securities linked to a portfolio of insurance and reinsurance policies. With mp, the issuance of LRS will be made through Specific Purpose Insurance Companies (SSPE), whose sole purpose is to carry out operations of acceptance of insurance risks, supplementary pension, supplementary health, reinsurance or retrocession. The flexibility of the exclusive provision requirement, in turn, aims to encourage the development of new technologies and innovations in the Brazilian capital market, by allowing cvm to modulate the requirement and, eventually, to withdraw it in certain markets.

The changes of the Regulatory Framework of Securitization come at a time conducive to the emergence of new types of operations and products. We will continue to watch out for further developments.