In this guide to Brasil Bolsa Balcão SA (“B3”), we explain what the B3 is and how it works. We’ll also discuss membership requirements and fees for using this exchange. We provide a list of brokers that give access to commodity trading.
What Is Brasil Bolsa Balcão (B3)?
Brasil Bolsa Balcão SA (“B3”) is one of the world’s largest market infrastructure providers by market capitalization.
The enormous reach of its products, clearing, and technology services makes B3 one of the preeminent global multi-asset exchange operators.
B3 products and services help individuals and institutions raise capital and provide liquid, global marketplaces to trade, and clear a wide array of securities.
Brasil Bolsa Balcão Services
The publicly-traded company is headquartered in São Paulo, Brazil, and operates in multiple lines of business:
|Membership||Clearinghouse and Foreign Exchange access, Participant searches|
|Solutions for Issuers||Listing segments, Increased liquidity, Remote voting, and other services|
|Trading||Commodities, Interest rates, Exchange rates, Fixed income, Formula sets, Equities, and Market Maker|
|Trade repository||OTC derivatives, Netting agreement, Fixed income & securities, Structured transactions, Open-end fund shares, Risk mitigators, and Insurance transactions|
|Clearing and settlement||Including foreign exchange clearinghouse|
|Central Depository||Centralized deposit, Exclusive deposit, and Investor Channel|
|Collateral Management||Liens and encumbrances, Sistema Nacional de Gravames (SNG), Collateral|
|Additional Services||Tesouro Direto, Securities lending, Fee schedules, Netting agreement, Informational services, and ESG products|
How is B3 Regulated?
B3 sets out some of its policies regarding regulation in its Compliance Policy manual. The document serves as an overview of the areas in which the exchange acts as a self-regulatory organization (SRO).
This document and BM & FBOVESPA Corporate Governance Guidelines set out the principles that underpin B3’s regulatory and compliance framework:
|Monitor Regulatory Environment||The exchange monitors changes in regulatory policies so it can assure that the appropriate group within B3 adheres to laws and regulations.|
|Verification of Compliance|
|Independence and Autonomy||B3 believes its compliance personnel should act independently and autonomously to assure impartiality in all its operations.|
|Periodic Review of Integrity Program||The exchange proactively endeavors to prevent, detect and combat violations of laws and regulations.|
|Cooperation with Regulators||B3 endeavors to do the following:
|Reporting||B3 reports information related to compliance activities to the Board of Directors and Executive Board.|
The Compliance Manual delineates the specific responsibilities of each department within the self-regulatory framework:
|Executive Board||Conducts business policies that comply with norms issued by regulatory authorities.|
|Department of Internal Controls, Compliance & Corporate Risk|
|Department of Communications, Human Resources & Financial Market Education||Hold periodic mandatory staff training courses on the Integrity Program|
In addition to the self-regulatory compliance function within B3, outside regulators also have responsibility over enforcing regulations.
The Brazilian financial sector regulatory structure is comprised of four specific regulators. Each one of these plays a role in regulating different aspects of B3’s businesses:
- Securities and Exchange Commission (CVM): Responsible for business conduct and market regulation of intermediaries and the other secondary markets, equity, derivatives and non-governmental debt
- Central Bank: Responsible for prudential and financial institution supervision
- Superintendent of Private Insurance (SUSEP): Responsible for regulation of the insurance sector
- National Superintendency of Complementary Social Security (PREVIC): Responsible for regulation of pension sector
Trading Products on B3
B3 offers a variety of trading products including commodities, exchange rates, fixed income, equities, interest rates, and OTC markets. We breakdown each of these categories below.
|Products||Notes (See Codes Below)|
|Anhydrous Fuel Ethanol||F|
|Arabica Coffee 4/5||F, O, SO|
|Arabica Coffee 6/7||F, O, SO|
|Corn||F, CSF, O, SO|
|Crystal Sugar||CSF, O, SO|
|Gold||F, O, FWD, SPOT|
|Hydrous Ethanol||CSF, O, SO|
|Live Cattle||CSF, O, SO|
|Soybeans||CSF, O, SO|
|Products||Notes (See Codes Below)|
|CSF available for both regular and mini|
|New Zealand Dollar||CSF|
|South African Rand||CSF|
Mini US Dollar
|CSF available for both regular and mini|
|Products||Notes (See Codes Below)|
|Government Bonds||SPOT, FWD, REPO, AUC|
|Sovereign Debt Instruments||10-year US Treasury Cash Settled Future|
|Products||Notes (See Codes Below)|
|Brazilian Depositary Receipts (BDRs)||Financial and physical settlement for both sponsored and unsponsored BDRs, FWD|
|Brics Index||BVMF FTSE/JSE Top40 Index Futures Contract, BVMF Hang Seng Index Futures Contract, BVMF MICEX Index Futures Contract, BVMF BSE Index Futures Contract|
|F, O, SO|
|Brazil Index 50||CSF, O|
|Certificates of Potential Additional Construction (CEPACs)||Cash market|
|Stock ETFs||Both physical (delivery of the components in the fund) and financial settlement|
|Investment Funds||Cash market for: Stock Investment Funds (FIAs), Amazon Investment Funds (FINAM), Northeast Investment Funds (FINOR), Sectoral Investment Funds (FISET), Economic Development Fund of Espirito Santo (FUNDES)|
|S&P 500 Index||CSF, O, SO|
|Products||Notes (See Codes Below)|
|One Day Interbank Deposit (DI)||CSF, O, SO|
|DI x Extended Consumer Price Index (IPCA) Spread Futures||CSF|
|DI x US dollar Spread Futures||CSF, SO, SWAP|
|US Dollar Spread Futures Contract Referencing One-Day Repurchase Agreements||CSF, SO, SWAP|
|Futures on the Average Rate of One-Day Repurchase Agreements||CSF, O|
|Flexible Options||Defined at the parties’ discretion|
|Forwards||FX Forwards: The Non-deliverable forward allows trading of foreign exchange rates or future parities. Commodity Forwards: Allows registration of forward trades in which the underlying asset is the price of agricultural, metal and energy commodities traded in several markets.|
|Swaps||Cash flow exchanges based on the comparison of profitability between two indexers.|
Other Product Categories
|Indexes||B3 offers trading in a variety of indexes including Broad, Corporate governance, Segment, Sustainability, Sector, S&P / BVMF, and Miscellaneous||Traders can consult the Products section of the B3 website for details about each of these categories of products.|
|Alternative||Tesouro Direto||An alternative investment in which the investor knows, at the time of investment, how his/her money will yield in the future.|
*Currencies trade in terms of Brazilian Reals (BRLs)
F = Futures for physical delivery
O = Options on futures
SO = Structured Operations (futures calendar spreads)
CSF = Cash Settled Futures
FWD = Forward Contract
SPOT – Spot Trading
REPO = Repos
AUC = Auction Forwards
SWAP = Swap
B3’s Trading Platform
PUMA is the feature-rich electronic trading platform that traders on B3 use to execute trades in different asset classes as well as manage risk. B3 offers developers many tools to help connect to the platform.
Some of the key architecture of the PUMA platform includes the following:
- EntryPoint: A multi-asset order entry messaging format for PUMA. Some advantages of using EntryPoint include the following:
- Messages remain the same across all markets
- Low latency for order processing
- All PUMA Trading System functionality available via FIX messaging
- Possibility to implement multiple trading strategies
- United Market Data Feed (UDMF): This is a service that provides low latency access to market data. UMDF allows client systems to access the full set of exchange-traded instruments in different asset classes:
- Derivatives (futures, options on futures, forwards, private bonds, cash equities, ETFs and options on equities)
- BM&FBOVESPA’s indexes including Ibovespa and IBRX-50
- The UMDF PUMA Conflated platform: A service that uses the TCP protocol, unlike UMDF which uses UDP.
This platform costs less to implement and maintain:
- It requires reduced bandwidth due to the subscription mechanism (Client systems select what market data information they would like to receive.)
- It throttles order book updates
There are two types of B3 memberships:
- Foreign Exchange Clearinghouse
Full Trading Participant (PNP) is the trading authorization for Equities and Corporate Debt, Derivatives, and Foreign Exchange.
Here’s how the access breaks down by membership type:
|Equity & Corporate Debt||✅||❌|
The membership accreditation process involves four steps:
- Definition of Access Model: Applicant presents a business model to the exchange that outlines its needs to access particular categories of trading.
- Admission Procedure:
- Applicant must submit registration documents to the particular category for analysis by the exchange.
- BM&F Markets Supervision (BSM) conducts a pre-operation audit to verify compliance with the Professional Qualification Program.
- BSM then forwards documents to the Board of Directors for final approval.
- Operation and Technological Infrastructure SetupThe institution, once admitted for membership, finalizes the contracting of access to operational and technological infrastructure.
- The institution finalizes contracting of services and solutions appropriate for its business model.
- BM&FBOVESPA requires these steps for participants to go into operation.
- Institution deposits securities for safeguarding funds.
- Institution assures that its employees are accredited and qualified to transact business on the exchange.
- After these steps are completed, the participant can transact in the exchange markets.
Traders can obtain additional details about the registration and accreditation process along with fees and documents at the Membership section of the B3 website.
B3 Fees and Charges
B3 charges trading, settlement, custody and registration fees for products traded on the exchange. These fees vary by product category.
In addition, the exchange charges fees for services such as market data feeds, colocation of servers, infrastructure and other information services.
Traders can find a full detailed explanation of these fees at the Fee Schedule section of the website.
B3 analyzes risk of traders’ portfolios by calculating the risk of a closeout of a portfolio consisting of several markets and asset classes. This risk measure is known as Closeout Risk Evaluation (CORE).
CORE accomplishes the following:
- Calculates the worst case for accumulated cash flow during the portfolio closeout process
- Considers the joint risk for positions and collateral
- Models three types of risk: market, liquidity for positions and collateral and cash flow
- Forecasts an accurate closeout strategy: position closeout transactions and collateral execution
- Severe loss (stress test): confidence level of 99.96% or a 10-year crisis
- Considers 10,000 scenarios: historical (since 2002), quantitative and prospective
- Looks at positions over multiple horizons
- Applies full valuation
Traders can learn the margining cycle and see examples of how CORE is used in the Risk Management section of the BM&FBOVESPA website.
Market Data Available From B3
BM&FBOVESPA market participants can access real-time market data through authorized distributors of the exchange. Authorized distributors have different rights depending on the market segment they cover.
- Market quotes for Financial and commodity derivatives, foreign exchange, and federal securities.
- News about the derivatives markets
- Quotes for equities trading on the cash, forward and options markets, including companies listed on the Novo Mercado and at Corporate Governance Levels 1 and 2
- Indexes (Ibovespa, IGC, ISE and others)
- Quotes for corporate fixed-income securities, securities lending and trades on the organized OTC Market
- News about the market and the companies listed on the exchange
The exchange also makes a variety of types of historical data available for additional fees:
- Daily Bulletins: Data from previous trading sessions
- Equities: Historical quote data
- Derivatives: Settlement prices, statistical summaries and information recovery systems
- Foreign exchange: A variety of market statistics and summaries
- Fixed income: Historical series, data by asset, comprehensive data, and electronic trading.
Where Can I Trade Commodities?
Start your research with reviews of these regulated brokers available in .
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74%-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Below we answer some common questions about B3.
What type of educational materials does B3 provide?
Traders have online resources for learning about B3 products and strategies for trading them successfully. Additionally, B3 encourages visits to its headquarters in São Paulo. Visitors can go on guided tours and learn about financial and capital markets through several interactive resources: 3D Cinema, Talks, Display Panels, and the Memory Center.
The B3 Educational Institute lists different Knowledge Areas and provides study guides that traders can download to get certified in different areas:
- Back Office
- Sale Off (settlement professionals)
- Customer Base
The Institute also offers online courses on areas such as fixed income, derivatives, clearing financial markets and behavioral finance.
What is the history of Brasil Bolsa Balcão?
B3 formed in March 2017 when two leading Brazilian financial institutions merged:
BM&FBOVESPA S.A. Securities, Commodity and Futures Exchange (BM&FBOVESPA): This relatively new exchange formed in 2008 when the São Paulo Stock Exchange merged with the Brazilian Mercantile and Futures Exchange. The resulting exchange became the leading South American marketplace for trading equities, fixed income, commodities and futures.
Cetip S.A. Organized Markets (Cetip): Latin America’s largest depositary of private fixed income securities and Brazil’s largest private asset clearinghouse. Cetip provides electronic delivery solutions utilized for the registration of vehicle financing contracts and the custody of this information.
BM&FBOVESPA is the division of B3 directly connected to the trading of listed financial markets. Both the Brazilian Mercantile and Futures Exchange (BM&F) and the São Paulo Stock Exchange (BOVESPA) have long and storied histories.
|1890||Bolsa Livre, the first incarnation of the São Paulo Stock Exchange, began operations|
|Early 1960s||Became a mutualized not-for-profit exchange|
|1970s||Implemented automated systems and begins price quotes via computer|
|Early 1980s||Introduced mutual funds and began transition to an electronic booking system for trades|
|Consolidated with Bolsa de Mercadorias de São Paulo to form a leading Latin American exchange for the trading of commodities and derivatives||1990s|
|Implemented electronic system for trading derivatives and closed trading floor||2000||Integrated with other eight exchanges in Brazil to become the only local exchange operator for equities|
|2005||Closed trading floor and becomes fully electronic market|
|2011||Technological cooperation with the Chicago Mercantile Exchange (CME) results in the development of a new multi-market and multi-asset electronic trading platform. The PUMA Trading System began operating in:
|2013||PUMA Trading System began operating in the following BOVESPA segments:
|2014||PUMA Trading System began operating in private fixed income markets|
|2017||In March 2017, three key regulators approved the merger of Cetip and BM&FBOVESPA:
Who are the Brasil Bolsa Balcão executives?
The executive board of B3 is comprised of five executive officers. Each of these individuals has extensive industry and financial services experience.
|Chief Executive Officer||Gilson Finkelsztain|
|Chief Operating Officer||Cícero AugustoVieira Neto|
|Chief Financial Officer & IR Officer||Daniel Sonder|
|Chief Product and Client Officer||José Ribeiro De Andrade|
|Chief Technology Officer||Rodrigo Antonio Nardoni Goncales|
Does Brasil Bolsa Balcão have vendor partners?
B3 lists the following companies that are licensed as market data distributors on is BOVESPA and/or BM&F platforms.
- Activ Financial Systems, Inc
- Agencia Estado S/A
- Apligraf Aplicativos Graficos Ltda
- Banco Bnp Paribas Brasil S/A
- Banco Btg Pactual S/A
- Banco Jp Morgan S/A
- Barchart.com, Inc
- Bco Brasil S/A
- Blk Financial Systems
- Bloomberg Finance LP
- Bovestor Online Midia Ltda
- Cedro Bpo E Soluções Em Tecnologia Ltda
- Cedro Technologies Ltda
- Cma – Consultoria, Metodos, Assessoria E Mercantil S/A
- Cqg, Inc
- Datagro Consulting
- Dtn Llc
- Ecm Consultoria S / C Ltda (traderdata)
- Editora Globo S/A
- Enfoque Informacoes Financeiras Ltda
- Eversystems Informatica Com Rep Imp E Exp Ltda
- Factset Research System
- Fidessa Plc
- Financial Stock
- Fis Global Trading
- Fmr Llc (fidelity)
- Goldman Sachs, Inc
- Guanahaní Participações S.a. (tryd)
- Imagine Software, Inc
- Infoselective S/A De C.v.
- Infostocks Informacoes E Sistemas Ltda (infomoney)
- Instinet LLC
- Interactive Brokers LLC
- Interactive Data Corporation
- Internet Group Do Brasil Ltda
- Investcenter Sistemas De Informação Ltda.
- Investment Technology Group Inc (itg)
- It Evolution Informações Ltda.
- Lopes Filho Assoc Cons Invest Ltda
- Lote 45 Participacoes Ltda.
- Markit Group Limited
- Morgan Stanley & Co Incorporated
- Morningstar Real-time Data
- MZ Tecnologia (Cartezyan)
- Nelogica Sistemas De Software Ltda
- Neovest Inc.
- Neuralsof Softwares Ltda.
- S10i – Soluções De Software Iinteligentes Ltda (smarttbot)
- Saxo Bank S/A
- SIX Financial Information
- Sofimerc Tecnologia Em Informática Ltda. // Trader Gráfico / Sofimerc Ti
- Timber Hill LLC
- Townsend Analytics Ltd
- Tradingscreen, Inc
- Universal Telecom S/A
- Valemobi Consultoria Empresaria S/A
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