Derivatives in Brazil are regulated both as financial instruments and as securities, regardless of whether they reference other securities. This makes them subject to the rules of the Brazilian Securities Commission (Comissão de Valores Mobiliários, or CVM) and the financial regulators – the National Monetary Council and the Central Bank of Brazil (“Financial Regulators”). There is no functional separation between the types of derivatives and their regulation: all derivatives (whether tied to commodities, credit, equities, or interest rates) fall under both regulators.

A distinctive feature of Brazil’s derivatives framework is the registration requirement for over-the-counter (OTC) derivatives. Even before the 2008 financial crisis, all OTC derivatives had to be registered with an authorised trade repository overseen by both the Central Bank of Brazil and the CVM. This early adoption of reporting standards gave regulators visibility into the aggregate exposure of banks and corporations, as well as insight into the types of underlying assets and strategies in use. Following the 2008 crisis, registration became a condition for the validity of a derivative transaction – a development that prompted even unregulated counterparties to register their trades.

In the aftermath of the 2008 crisis, Brazil adopted bilateral margin rules and revised its capital requirements for banks in accordance with Basel III standards. However, certain post-crisis standards that became widespread in other jurisdictions – such as real-time public reporting and mandatory clearing – have not been implemented in Brazil.

Brazilian law imposes few restrictions on the types of derivatives that may be entered into, and the market accommodates most structures seen internationally. As a general rule, any asset with a publicly available price – or one that can be determined through a methodology independent of the trading and sales functions of the offering institution – may serve as the underlying of a derivative transaction.

There are two notable exceptions. First, credit derivatives are limited to credit default swaps (CDS) and total return swaps (TRS), with additional restrictions on illiquid credit references (such as private credit) and on which counterparties may sell protection for certain risk categories. Second, prediction markets are restricted to “economic or financial events,” effectively excluding derivatives tied to sports outcomes or other non-financial events.

Although derivatives existed in Brazil before 2002, their use was limited by Civil Code provisions that treated them as a form of gambling. This changed when the country’s new Civil Code took effect in 2002, expressly recognising derivatives as valid agreements. Combined with the classification of derivatives as “securities” in 2001, these reforms created a solid legal foundation for the market’s growth. The first major test came in 2008 – not from exposure to credit-linked instruments like CDS or Collateralised Debt Obligations (CDOs), but from leveraged foreign exchange derivatives. Several major Brazilian corporations had taken short positions in the US dollar, and when the global crisis caused the Brazilian Real to drop sharply, these positions led to significant losses. While some disputes reached the courts, judges upheld the enforceability of these agreements, reinforcing legal certainty in the market.

After the 2008 crisis, Brazil adopted several global regulatory standards, including bilateral margin requirements, although it did not implement mandatory clearing. The following decade saw a notable rise in retail investor participation in derivatives markets, drawing increased regulatory attention, particularly from the CVM. At the same time, the Brazilian Central Bank began gradually relaxing certain restrictions on derivatives. Key developments in this liberalisation include:

• enabling the issuance of structured notes;
• streamlining cross-border transactions; and
• comprehensively reforming the rules governing credit derivatives.

Another important milestone was the introduction of close-out netting protections in Brazil’s corporate bankruptcy law in 2020.

More recently, the CVM has focused on derivatives marketing and sales practices, as these products increasingly reach retail investors. This remains an area to watch in the coming years, as the regulator and market participants continue to debate how best to oversee a product that, despite its classification as a security, functions quite differently from traditional stocks or bonds.

Another significant development is the entry of new market participants. A new exchange dedicated exclusively to derivatives is preparing to launch, challenging the Brazil Stock Exchange (Brasil, Bolsa, Balcão – B3)’s longstanding monopoly on derivatives trading and clearing in Brazil. This coincides with the expansion of recently authorised OTC derivatives' registrars, fostering greater competition and enabling faster deployment of innovative strategies.

The majority of trading volume in futures and options is concentrated in foreign exchange, interest rate, and inflation-linked products. Brazil’s historically high interest rates, persistent inflationary pressures, and volatile exchange rates have made these instruments the most actively traded on the B3, the country’s sole derivatives exchange as of the date of this publication. A particularly noteworthy product is the “Cupom Cambial” forward contract, which tracks the onshore US dollar interest rate. This instrument reflects the implied yield on US dollars held locally, calculated as the spread between Brazil’s domestic interbank rate (known as DI) and the foreign exchange forward premium.

Recent developments in this area include contracts tied to macroeconomic indicators such as gross domestic product (GDP) and inflation, which represent the permitted form of prediction markets in Brazil, as well as futures and options on cryptocurrencies – introduced in 2024 – currently covering Bitcoin, Ethereum, and Solana. Both traditional and newly launched derivatives are subject to the same regulatory framework, trading rules, and market oversight.

The type of underlying asset does not determine which regulator has authority over a derivative in Brazil. All derivatives are regulated by both the CVM and the Financial Regulators. There is no rule requiring that a certain type of derivative be traded in a particular way, such as under specific agreements, exclusively on an exchange, or subject to clearing. Brazilian regulation takes a more general approach to derivative products, with the exception of credit derivatives and events' contracts, and regulatory differences emerge primarily when comparing cleared derivatives with over-the-counter (OTC) derivatives.

As a general rule, OTC derivatives can be freely traded with any counterparty as long as:

• the agreement complies with general requirements for the underlying asset; and
• the transaction is registered with an authorised trade repository.

Any asset with a publicly available price or one that can be determined through a methodology independent of the trading and sales functions of the offering institution may serve as the underlying asset of a derivative transaction.

The notable exceptions are credit derivatives and prediction markets. For credit derivatives, only financial institutions (such as banks and credit unions) and professional investors may act as protection sellers (risk receivers). For illiquid credit underlyings, such as private loans, the protection buyer must own and hold the underlying credit for the entire term of the derivative. For prediction markets, the National Monetary Council has recently restricted event contracts to those linked to financial or economic events, effectively prohibiting derivatives tied to sports, elections, and other non-financial events.

For listed derivatives, the main distinguishing requirement is that any new contract must be approved by the CVM before trading begins, whereas OTC derivatives are not subject to the same level of prior oversight.

Forwards are not treated differently from other derivative transactions.

Substantially the same requirements apply to all listed and OTC derivatives. The main difference is that listed derivatives must be previously approved by the CVM, while OTC derivatives are reviewed and approved by the trade repository that checks whether it complies with the broad requirements set out by the regulators.

For both listed and OTC derivatives, the bulk of the market consists of interest rate and foreign-exchange transactions. As described in 2.1 Futures and Options, Brazil’s historically high interest rates, persistent inflationary pressures, and volatile exchange rates have made these instruments the most actively traded. These conditions have attracted both hedgers and speculators, creating a highly liquid and dynamic derivatives market.

Nevertheless, recent years have shown increased interest in equity-linked solutions for both individuals and companies. Individual investors are now trading derivatives strategies such as collars and call spreads, or using derivatives to gain exposure to equities traded abroad or to a broad basket of assets simultaneously. On the corporate side, the use of derivatives as financing strategies (such as collar loans) or as tools to gain significant exposure to publicly traded companies has increased in recent years.

One market that remains underdeveloped is the credit derivatives market. Until 2022, the National Monetary Council greatly restricted who could act as a protection seller and the types of underlying assets permitted under the regulations. Recent reforms have significantly expanded the possibilities for using credit derivatives, and market participants are now working through the Brazilian Financial and Capital Markets Association (Associação Brasileira das Entidades dos Mercados Financeiro e de Capitais – ANBIMA) and with the Central Bank to standardise documentation and practices for these products. This market is expected to grow in the coming years.

Another restriction relates to prediction markets. The National Monetary Council has clarified that only financial and economic underlying assets may be used in derivatives. Event contracts tied to sports, elections, or other non-financial outcomes cannot be structured as derivatives and must instead be offered through approved betting companies.

The two main exceptions are deliverable foreign exchange transactions and commodities – both on the financing side and in physical commodities trading. Regarding foreign exchange regulations, both spot and forward deliverable transactions are governed exclusively by the foreign exchange (FX) rules. While Brazil allows free convertibility of currency and capital flows, the FX rules are designed to enable regulatory and tax authority oversight of foreign-exchange transactions. These rules include reporting obligations, requirements to explain and document the origin and destination of funds and the underlying transaction between the currency buyer and seller, and the requirement to use only authorised FX banks for any foreign-exchange transactions. It is worth noting that forward deliverable transactions involving Brazilian Reais are not regulated or treated as derivatives. Although commodity forwards can be traded under derivatives regulation and documentation, several products serve an equivalent purpose without being regulated as derivatives. The main example is the Cédula de Produto Rural, a financing agreement commonly entered into by banks with agribusiness clients that allows for both physical delivery and financial settlement of commodities. In this arrangement, the bank pays an upfront amount and receives either the physical commodity or its financial equivalent at a future date.

There are no state or local level regulators in Brazil.

The ANBIMA (Associação Brasileira das Entidades dos Mercados Financeiro e de Capitais) is the Brazilian Financial and Capital Markets Association, operating as a private self-regulatory organisation for the Brazilian financial and capital markets. In the derivatives space, the ANBIMA regulates the negotiation of OTC derivatives through its Code of Negotiation of Financial Instruments and associated Rules and Procedures, which establish mandatory requirements for participating institutions, including client classification (suitability), derivative product categorisation, internal controls, and risk disclosure standards. The ANBIMA works closely with the Brazilian Central Bank and the CVM, either by receiving delegated authority or through agreements with the regulators to promote change and faster regulatory oversight. While the ANBIMA is technically a private self-regulatory body, virtually the entire Brazilian banking and broker-dealer market – including all relevant banks and brokers – are members or adherents to its codes, making its rules effectively industry-wide in scope.

The ANBIMA’s self-regulatory framework promotes market standardisation through principled codes and detailed Rules and Procedures that establish uniform conduct standards, including ethical principles, fair competition rules, transparency requirements, and procedural uniformity across regulated activities. To enforce these rules, the ANBIMA maintains a dedicated Market Supervision structure (Supervisão de Mercados) that monitors compliance, conducts supervisory reviews, issues recommendation letters, and can apply automatic fines for non-compliance. More serious violations are referred to disciplinary councils and are subject to penalties under the ANBIMA’s Code of Processes, including warnings, fines, and temporary prohibition from using ANBIMA seals, with decisions publicly disclosed. While the ANBIMA’s supervision is limited to its own codes and does not extend to official regulatory rules imposed by the Central Bank or CVM, participating institutions expressly agree that their regulated activities exceed mere compliance with statutory regulation and must also adhere to the ANBIMA’s higher standards.

The BSM (BM&FBOVESPA Supervisão de Mercados) is the self-regulatory branch of the B3, responsible for supervising and monitoring trading activities in all markets where the B3 acts, including OTC derivatives (as a trade repository), cleared derivatives and listed derivatives. The BSM oversees compliance with the B3’s rules, investigates potential violations, and has the authority to impose sanctions on market participants. It operates under the oversight of the CVM and plays a critical role in maintaining market integrity for listed derivatives.

Both the ANBIMA and the BSM are subject to oversight by federal regulators. The ANBIMA’s activities fall under the purview of both the Central Bank of Brazil and the CVM, depending on the specific activity being regulated. The BSM operates under CVM supervision as part of the exchange’s self-regulatory obligations.

Brazilian clearing brokers are required by regulation to sign a clearing and custody agreement with their clients. The content of this agreement is determined by both the CVM and the B3, the country’s sole clearing house as of the date of this publication. The mandatory provisions already grant clearing brokers the right to call margin at their own discretion or to reduce the exposure of any client. As a result, there is very little room for negotiating these topics in Brazilian law clearing agreements – an area that is typically one of the greatest concerns in any negotiation.

It is also worth noting that the content of the clearing agreement does not vary depending on the type of derivative. Both listed derivatives and cleared derivatives are subject to the same terms and conditions and are usually governed by the same contract.

Brazilian regulators do not require external legal opinions from law firms for any financial product. Instead, they accept internal assessments for matters such as netting and collateral enforceability.

Enforcement priorities in Brazil have shifted toward preventing fraud, money laundering, and criminal activities in the capital and financial markets. Recent high-profile scandals revealed that the rapid growth of fintechs and lesser-known financial players had, in some cases, been exploited for illegal purposes. Both the CVM and the Central Bank of Brazil are now working to close regulatory gaps and strengthen their supervisory capabilities.

On the regulatory front, both regulators remain committed to their innovation agenda, which has been ongoing for several years. Brazil has seen remarkable expansion in market structures, with new entrants challenging established players and new regulations easing longstanding restrictions. As previously mentioned, recent developments include a new derivatives exchange preparing to launch in Brazil, relaxed restrictions on credit derivatives, the use of cryptocurrencies as underlying assets for derivatives, and a clear regulatory path for the use of derivatives in prediction markets.

Both the CVM and the Central Bank of Brazil regularly share their regulatory priorities with the public. Both institutions have indicated that they will continue to focus on innovation-related topics such as tokenisation and open finance.

With respect to derivatives, the following upcoming rules and discussions are particularly noteworthy:

• Repurchase of Shares Using Equity Derivatives. In Brazil, the CVM serves as both the primary corporate law regulator and the securities markets regulator. Whenever an issuer trades its own shares or derivatives linked to its shares, the CVM examines both the corporate law aspects to ensure the issuer will not jeopardise its financial stability by repurchasing its own shares and whether the issuer might be manipulating its share price. In 2025, the CVM opened for consultation a reform in its rules governing trading with a company’s own shares and this rule is expected to be enacted at some point in 2026.
• Review of Structured Notes Offering Rules. Structured notes are also classified as securities, due to their derivatives component. In recent years, there has been public concern about the product after some notes were offered too broadly despite their high risk of loss. Accordingly, the CVM is exploring ways to enhance conduct standards in this market and has included this topic in its regulatory priorities for 2026.
• Review of Suitability Rules. This includes a much-needed review of the definitions of retail investor, qualified investor, and professional investor, as well as improvements to current suitability requirements.
• Cross-Border Offering of Securities in Brazil by Foreign Brokers, Including Derivatives. When the National Monetary Council issued its rule on using derivatives contracts for prediction markets, it immediately blocked foreign entities from offering those products in Brazil. This is one of many instances involving foreign brokers and markets offering derivatives to Brazilian investors. The CVM has included in its regulatory agenda for 2026 a public consultation on how foreign brokers can partner with local brokers to offer securities in Brazil.