Originally published by NeoFeed February 2026
For the past two years, the Brazilian fund industry has been undergoing one of the most significant regulatory transformations in its history. Fund managers raced to meet the CVM 175 deadline – a transformative overhaul that modernised our regulatory framework and aligned it with leading international markets.
The changes have created a more connected and transparent ecosystem, and with the market now on firmer ground – we estimate that more than 80% of firms are now compliant – we’re entering a new era, defined by speed.
That speed has coincided with – and likely also led to – a global erosion of the traditional ‘buy and hold’ approach, as investors respond to interest-rate cycles, macroeconomic volatility, and global events. In 2016, the average holding period for an equity fund was seven years. By 2024, it had dropped to just four years – a 40% reduction. The trend is especially pronounced across global equity and bond funds, which have both seen their average holding period halved. The result is a surge of trading global trading volumes which rose across our network by 80% between 2018 and 2024. It’s a trend we’re seeing more and more of here in Brazil too and funds must act fast to facilitate this new approach.
The Cost of Speed
This behavioural acceleration comes at a cost. When investors held a fund for seven years, the operational costs were spread over a long period. When that same investor reallocates more frequently – every four years, every year, or even multiple times within a year – those operational costs multiply.
That’s because manual processes – emails, spreadsheets, re-keyed orders, batch cycles – do not scale. If a fund’s back office intervenes manually in each trade, an 80% rise in trade volume does not increase operational workload by 80%; inefficiencies and opportunities for delay, inconsistency, or error multiply. In short, inefficiency is fixed, but its impact is exponential.
And, since CVM 175 requires fees to be broken down and disclosed transparently, fund managers can no longer disguise inefficiency in opaque fee structures. Suddenly, investors can see exactly what they’re paying for, and operational inefficiency becomes a problem for managers, eating into margins and limiting the fund’s growth.
Digital Investors Meet Legacy Infrastructure
This is where the modern Brazilian investor clashes with legacy infrastructure. Despite much progress, manual processing remains deeply embedded – anyone who works in the Brazilian fund industry knows how common it is to still see trades arriving via e-mail or manually keyed into portals.
Trades sent via email are prone to error and require manually uploading spreadsheets, undermining straight-through processing entirely. These batch-based systems create hours of drag, which, for an investor accustomed to real-time settlement in their everyday financial lives, is unacceptable.
While CVM 175 has modernised the regulatory framework, true transformation depends on bringing the operational one up to speed.
The Case for Automation
We have already seen how markets that embraced straight-through processing early have benefited. In the UK, for instance, around 95% of fund order routing is now automated – a shift that has delivered substantial efficiencies. When volatility drives sudden surges in trading activity, their infrastructure absorbs it seamlessly: costs stay stable, errors remain low, and operations scale without strain.
For Brazil, automation goes beyond cost-saving – it would enable firms to unlock the full benefits of CVM 175. The new rules open up cross-border investing for both retail and institutional clients, but cross-border flows are more complex, and managing them manually is operationally and financially risky.
By automating the trade lifecycle – order routing, execution, settlement, reconciliation, reporting – firms can protect margins, reduce manual error, and, crucially, deliver the speed and transparency that digital investors have come to expect.
Enabling the Next Leap
CVM 175 has given Brazil the regulatory framework to compete alongside the world’s leading fund markets. But regulation alone does not guarantee competitiveness. As investors trade more frequently, the operational drag created by manual processing will emerge as the defining limit on a fund’s ability to grow.
The next frontier, therefore, is ‘operational alpha’: the value added by adopting more efficient processes and procedures, unrelated to portfolio strategy. Managers who adopt automation and operate at the speed of the modern market will lower costs and simply deliver a better investor experience, outperforming those relying on manual, outdated infrastructure.
Brazil’s fund industry has already done the hard work of regulatory change. Now there is an opportunity to build an infrastructure that matches the ambition and velocity of the investors it serves.
