CVM establishes guidelines for Copytrade operations and declares that the system "is an investment recommendation"

The CVM (Comissão de Valores Mobiliários)—Brazil’s equivalent of the SEC—has taken a clear stance on Copytrade platforms. It has issued guidance stating that Copytrade operations constitute investment recommendations. This classification brings significant regulatory implications.

What the CVM Declared

The CVM has clarified that Copytrade systems fall under the concept of investment advice or recommendations, especially when:

The system automatically replicates operations of one investor (the “signal provider” or “master trader”) in the account of another (the “copier”).

The copier doesn’t make active decisions but merely follows someone else’s trades.

This interpretation comes from the understanding that:

“By following the trades of another person, the copier is effectively acting on a third party’s recommendation, even if automated.”

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Regulatory Consequences

Because it's treated as an investment recommendation, Copytrade platforms and participants must comply with specific CVM regulations, particularly:

CVM Instruction 592 (now part of CVM Resolution 35): Regulates the activity of securities advisors.

Only individuals or firms authorized by the CVM (e.g. investment advisors, portfolio managers) can issue investment recommendations to the public.

Platforms that offer Copytrade services may be required to register with the CVM or partner with regulated entities.

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Implications for Platforms and Users

Unregulated platforms offering Copytrade may be in violation of securities laws.

“Influencers” or traders who allow their trades to be copied might also fall under regulation, especially if they profit from followers copying them.

Investors using Copytrade should be aware that they are essentially acting on investment advice, and the providers should be properly qualified and licensed.

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CVM’s Broader Objective

The CVM aims to protect retail investors by ensuring that:

Investment advice is provided by qualified professionals;

There is transparency about risks and conflicts of interest;

Responsibility and accountability apply to those who influence public investment decisions.