Central Bank of Brazil launches public consultation on settlement cycle deadlines

On October 01, 2025, the Central Bank of Brazil (“BC”) launched Public Consultation No. 125/2025, aimed at gathering contributions to support the assessment of the costs and benefits associated with a potential reduction in the settlement cycle deadlines for transactions involving financial instruments, within the scope of the Brazilian Payment System (“SPB”).

The BC’s initiative seeks to engage market participants potentially affected by the proposed changes, inviting comments on regulatory aspects that may require attention. The contributions will support a more thorough analysis to strengthen the soundness and improving the efficiency of the SPB, while aligning Brazilian market practices with international standards already adopted or under consideration by key financial jurisdictions.

Currently, in Brazil, settlement cycle deadlines vary depending on the type of transaction.

• Spot transactions involving shares, investment fund units traded on the stock exchange, and foreign currency are currently settled within two business days (D+2).
• Spot transactions involving financial assets and other securities are settled within one business day (D+1).
• Money transfers are settled on the same business day (D+0).

A potential reduction in settlement cycles can help mitigate credit and liquidity risk exposures, while also lowering requirements related to collateral and margin obligations. These improvements could be achieved without compromising the security and integrity of clearinghouses as well as clearing and settlement service providers. However, implementing these changes would require greater efficiency in post-trade processes, which could result in additional operational costs and, as a result, temporarily increase the risk of settlement failures.

Public Consultation No. 125/2025 encompasses 22 questions, organized into four thematic blocks:

• Post-Trade: Addressing topics aimed at deepening the understanding of post-trade processes.
• Operating Costs: Addressing matters related to estimating the costs associated with a potential reduction in settlement cycles, enabling an assessment of the impacts on different economic agents.
• Expected Benefits: Addressing questions designed to support both qualitative and quantitative analyses of the expected benefits associated with the proposed changes.
• International Impacts: Exploring the effects of differences in settlement cycles across jurisdictions, particularly with regard to institutions operating internationally or serving non-resident investors.

The BC recommends that respondents differentiate the impacts of reducing the maximum settlement cycle from D+2 to D+1, and from D+1/D+0 to D+0 when answering the questions.

Suggestions and comments regarding Public Consultation No. 125/2025 may be submitted until December 30, 2025, via the form available on the BC’s website or through the Participa + Brasil portal.

Responses containing sensitive information or that cannot be publicly disclosed may be submitted via letter or email to: dirif.deban@bcb.gov.br.

Demarest’s Banking and Finance team is available to assist clients and partners with any clarifications on the subject.