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Brazilian regulators meet to launch new capital markets initiative

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Brazilian regulators meet to launch new capital markets initiative

Brazilian financial regulators and officials from the country's economy ministry met June 3 to launch a new capital markets initiative aimed at steadying markets, Valor Econômico reported.

The so-called IMK working group, which included members from Banco Central do Brasil, securities commission CVM and insurance watchdog Susep, will evaluate and propose regulatory improvements to ultimately drive growth.

Among several objectives, the group will look for ways to reduce market distortions, Adolfo Sachsida, an economic policy secretary, was quoted as saying. "We gain economic efficiency and productivity, which translates into growth in the long term," Sachsida said.

Central bank chief Roberto Campos Neto said the working group will evaluate and propose regulatory improvements to reduce the cost of capital to "stimulate the growth of long-term savings and the efficiency of financial intermediation."

The working group is reportedly planning to submit proposals for the initiative in the coming six months, including a regulatory sandbox scheme, which aims to attract startups with temporary licenses that can bring innovative ideas to the table. According to Valor, the plan also will study improvements in rules for real estate loan collateral, the expansion of a credit database, the creation of a market capitalization indicator, and potential changes to exchange hedging mechanisms.

Furthermore, the initiative reportedly also studies allowing the issuance of local debt in foreign currency by nonfinancial companies.

The plan is a part of Brazil's central bank focus on "micro" measures like boosting accessibility to financial markets to raise credit and lending, instead of turning to macroeconomic approaches, Reuters reported, citing Campos Neto.