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Brazil’s capital markets are seen as falling short of reasonable standards of integrity, according to a new survey from the country’s securities regulator. The results of CVM's study suggest that confidence in the system is fragile, with many respondents criticizing investment advisors and real estate fund managers. Experts told 9fin the study sheds light on issues long raised by foreign investors such as slow processes, weak sanctions, and limited protection for minority shareholders.

The survey, the first effort from CVM to measure perceptions of ethics and regulatory effectiveness, received 1,526 responses, with only 10 coming from outside Brazil. They gave the country’s capital markets an overall integrity score of 2.57 out of 5 — below the mid-point of three on the CVM’s scale, which represents “reasonably” ethical or effective standards. The scoring system was designed by the CVM specifically for this survey, inspired by similar perception studies carried out by the CFA Institute in other markets, but it is not a global standard and reflects only the views of respondents on a one-to-five scale.

The market has welcomed the report’s creation, with Joaquim Oliveira, a co-founding partner of Brazilian law firm Cescon Barrieu, calling the move “very positive,” noting to 9fin that the local market has grown significantly, making it essential for the regulator to have new tools to highlight vulnerabilities and steer priorities.

Gustavo Rabello, a capital markets partner at SouzaOkawa Advogados, called the 2.97 score a “glass half-full result,” saying that it both acknowledges Brazil’s “sophisticated regulatory framework” while recognizing “gaps in enforcement and investor protection”.