Brazilian central bank announces stricter rules for fintechs

© . FILE PHOTO: A man stands outside the central bank’s headquarters in Brasilia Sept. 22, 2011. REUTERS/Ueslei Marcelino By Marcela Ayres BRASILIA () -Brazil’s central bank announced stricter rules on fintechs on Friday and said payment institutions will be subject to regulations based on their size and complexity and raising the standards for required capital. The new framework, which will take effect in January 2023 and be fully implemented by January 2025, will extend the proportionality of the legal requirements currently used for financial institution conglomerates to cover financial conglomerates led by payment institutions. The move is expected to affect companies such as credit card company Nubank, payments company PagSeguro, financial technology solutions company StoneCo and digital wallet PicPay. Shares of Nubank, listed in the United States, fell 4.2% in early trading, while StoneCo lost 3.4% and PagSeguro fell 1.2%. The regulatory capital calculation will not take into account assets that have little or no value to the functioning of payment institutions, the central bank said, noting that this will ensure that companies have greater ability to absorb unexpected losses. The changes the industry has been waiting for since a public consultation on the subject was launched at the end of 2020 will make it easier for new competitors in the payments sector to gain entry, “to increase systemic competition and financial inclusion,” the company said. central bank said. Fitch Ratings said the new framework is positive because it reduces systemic risk by increasing the capital requirement for larger institutions. It added in a statement that many of the companies were already preparing for the change and that no capital shortfall is expected. Traditional banks in Brazil had urged the regulator to align the rules for highly successful fintechs with their own, saying many such companies had grown at a dizzying pace amid loose regulation. The central bank sees the new rules as necessary given the diversification and sophistication of payment institutions since 2013, when it placed them under its supervision, paving the way for the nascent sector of financial start-ups that use technology to facilitate payments, transfers and loans. simplify. “In this process, part of the segment created financial subsidiaries and started taking new risks, without proportionate prudential requirements,” the central bank said. Disclaimer: Fusion Media would like to remind you that the data on this website is not necessarily real-time or accurate. All CFDs (Stocks, Indices, Futures) and Forex prices are not provided by exchanges but rather by market makers, and therefore prices may not be accurate and may differ from the actual market price meaning prices are indicative and not suitable for trading purposes . Therefore, Fusion Media does not bear any responsibility for any trading losses that you may incur as a result of using this data. Fusion Media or anyone associated with Fusion Media accepts no liability for any loss or damage resulting from reliance on any information, including data, quotes, charts and buy/sell signals on this website. Be fully informed about the risks and costs associated with trading the financial markets, it is one of the riskiest forms of investment possible.

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