Brazil Moves Ahead With DLT Pilot for Securities Tokenization
Summary
- Brazil’s financial authorities said they will launch a securities tokenization pilot program using distributed ledger technology (DLT).
- The pilot will test the full process of securities issuance, public offerings, distribution, trading, ledger management, custody, central depository functions and settlement on DLT networks.
- Brazil’s Securities and Exchange Commission, the CVM, said it will use the pilot results for related regulatory improvements and designed the program so that it does not hinder technological innovation.
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Brazil’s financial regulator is moving ahead with a pilot program for securities tokenization using distributed ledger technology, or DLT. It plans to test whether DLT can be applied across capital-markets functions, from issuance and trading to custody and settlement, and use the results to help refine related rules.
According to Brazil’s Securities and Exchange Commission, or CVM, the Tokenization Working Group recently submitted to the board a draft resolution laying out how the DLT pilot program would operate. The proposal is awaiting board approval.
The pilot will test securities issuance, public offerings, distribution, trading, ledger management, custody, central depository functions and settlement through DLT networks. No actual securities or investors will participate. Instead, the program will use simulated transactions to assess whether the technology and regulatory framework can work in practice.
Assets that may be included in the test include stocks, corporate bonds, securitized receivables and fund interests. Other investment products, including collective investment contracts, may also be added if needed.
The program will run for 60 days and may be extended by up to 30 days if technical issues arise or further verification is needed. The CVM plans to connect directly to the selected test networks to monitor transaction records in real time.
Bruno Gomes, the CVM’s superintendent for securitization and agribusiness finance, said the regulator sought input from a wide range of market participants to avoid limiting the scope of the test to any specific technology. He added that the pilot was designed so as not to hinder future technological innovation.
