Increasingly common in the investment universe (especially in alternative assets, such as crypto-assets), the Copytrade service – or portfolio replication – has been offered by various participants through electronic means.
Given its novelty in the regulation of the securities markets in Brazil, the Superintendence of Institutional Investor Supervision (“SIN”) of the Brazilian Securities Commission (“CVM”) issued Circular Letter No. 3/2025/CVM/SIN, on July 1, 2025 (“Circular”), providing general guidance on the matter.
The SIN’s initiative comes at a relevant moment in the development of this business model worldwide and aligns with a recent statement by the International Organization of Securities Commissions (“IOSCO”)1.
1. Regulatory Status
SIN defines Copytrade as the service that, through frequent use of technological tools, allows a given investor to automatically replicate trades executed by other (typically more experienced) investors.
From the Superintendence’s perspective, this service has characteristics that may be interpreted as implicit investment recommendations and, therefore, as an activity reserved for licensed securities analysts under CVM Resolution No. 20, dated February 25, 2021 (“CVM Resolution 20”).
Copytrade services would be classified as securities analysis if they exhibit the following characteristics: (i) regularity, (ii) direct influence of the service on the decision-making process regarding investment management, and (iii) recurring compensation.
It is important to note that the Circular makes no distinction between a Copytrade service provider located in Brazil or abroad, nor between whether the provider is an individual or a legal entity. Thus, any Copytrade service targeted at investors domiciled in Brazil may be subject to the jurisdiction and, consequently, the oversight of the Brazilian securities market regulator.
2. Licensing
If a Copytrade service provider falls within the situation described above, the guidance of the Circular is that such a person must obtain registration as a securities analyst (either as a legal entity or individual, as applicable).
Currently, such licensing is governed by CVM Resolution 20/2021 and is granted exclusively by the Association of Capital Market Investment Analysts and Professionals of Brazil – Apimec Brasil.
3. Rules of Conduct
In line with the general rules of conduct applicable to securities analysts, the Circular provides detailed guidance for the Copytrade service along three main pillars, as outlined below.
a. Transparency
The Copytrade service provider licensed as a securities analyst must ensure full transparency to its clients regarding the risks of such a practice, including warnings about potential losses due to various market factors, risks associated with market volatility, and the well-known disclaimer that past performance is not indicative of future results.
The Circular also requires providers to supply clear information about the service, including details on how trades are replicated, criteria for selecting traders, and the specific risks of each strategy.
b. Conflicts of Interest
The Copytrade service provider licensed as a securities analyst must also pay close attention to identifying and managing conflicts of interest.
Accordingly, the provider must avoid recommending assets in which it has significant financial or commercial interests (particularly when it could benefit from generating demand or liquidity for certain assets).
c. Trading by Analysts
Finally, the Circular addresses a specific conflict of interest that may arise from analysts trading securities covered in their analysis reports.
In line with the restrictions established under CVM Resolution 20/2021, the Circular requires that trades performed by analysts under a Copytrade model must be executed exclusively in a simulated environment. This measure prevents the analyst from personally benefiting from the influence their Copytrade service may have, ensuring that during blackout periods provided by applicable regulation, the analyst does not trade in securities that such analyst has analyzed.
4. Conclusions
Although it does not reflect the opinion of the CVM’s Board on the matter, the Circular plays an important role in guiding how this topic is interpreted by CVM. Therefore, it is advisable that any service provider operating or intending to operate with the so-called Copytrade service carefully considers the guidance outlined in the Circular.
1. IOSCO. Online Imitative Trading Practices – Copy Trading, Mirror Trading, Social Trading. Maio de 2025. Available at https://www.iosco.org/library/pubdocs/pdf/IOSCOPD793.pdf. Access on July 7, 2025.
