Anyone following the markets has heard of credit rating agencies — those that assign the famous AAA or B– scores that guide investors on where to put their money. An AAA means minimal risk; a B–, high chance of default. In Brazil, this machinery is also supervised: the CVM regulates the agencies and now wants to update its rules to align with ESMA, the European authority that sets the global standard.
The idea sounds technical, but its impact is very real. The CVM wants Brazil’s rules to be recognized again as “equivalent” to Europe’s — a status lost six years ago. Regaining it would allow local rating agencies to issue notes valid for European investors, giving Brazilian issuers cheaper and more locally attuned options when tapping foreign markets. Without equivalence, those ratings don’t count abroad — and companies must rely on the big global houses.
The draft regulation tightens the screws: issuers must be notified a day in advance, agencies must disclose methodological errors immediately, rotate analysts regularly, publish ratings outside trading hours, and open 30-day consultations for any methodological change. Transparency is the goal, but too much oversight risks backfiring.
The eight public submissions say as much. Fitch, Moody’s, S&P and AM Best back convergence but urge materiality — only report what matters. Local firms Finaxis and Liberum call for proportionality, so smaller players survive. The IBGC demands clear limits on cross-ownership, while the Instituto Livre Mercado insists that economic freedom and innovation should remain guiding principles.
In the end, the CVM is keen to prove its discipline — but risks becoming the class’s most obedient student. The challenge is to find the right balance: strict enough to inspire global confidence, yet flexible enough not to turn equivalence into another barrier for the very capital market it seeks to strengthen.