Resolution n. 3/2020 of the Securities and Exchange Commission of Brazil (CVM) updated rules related to Brazilian Depositary Receipts (BDRs), expanding the possibilities for trading and issuing. It seeks to respond to the increasing demand of portfolio diversification in face of lower interest rates.

Resulting from public consultation that ended in February, resolution n. 3/2020 expands the scope of possibilities for trading and issuing of BDRs. Its structure on three levels was preserved and some restrictions have been removed.

While previously allowing the backing of BDRs only in shares issued by foreign public companies, the update allowed for the security to be backed by shares issued by foreign companies with domestic assets and revenues or by debt securities (even those issued by Brazilian public companies).

The resolution also allowed for non-qualified investors to trade BDRs in level I, depending on the market in which the ballast securities are listed.

More information on the update process can be found in the public consultation’s report, available here (in Portuguese).