Trading at Brasil Bolsa Balcão


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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.

B3 has global offices in Brazil, the United States, China, and the United Kingdom.

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:

ServiceDescription
MembershipClearinghouse and Foreign Exchange access, Participant searches
Solutions for IssuersListing segments, Increased liquidity, Remote voting, and other services
TradingCommodities, Interest rates, Exchange rates, Fixed income, Formula sets, Equities, and Market Maker
Trade repositoryOTC derivatives, Netting agreement, Fixed income & securities, Structured transactions, Open-end fund shares, Risk mitigators, and Insurance transactions
Clearing and settlementIncluding foreign exchange clearinghouse
Central DepositoryCentralized deposit, Exclusive deposit, and Investor Channel
Collateral ManagementLiens and encumbrances, Sistema Nacional de Gravames (SNG), Collateral
Additional ServicesTesouro 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:

Guidelines/PrinciplesDescription
Monitor Regulatory EnvironmentThe exchange monitors changes in regulatory policies so it can assure that the appropriate group within B3 adheres to laws and regulations.
Verification of Compliance
  • B3 confirms with the appropriate regulators and internal personnel its compliance with laws and regulations
  • The exchange communicates with staff regularly about the importance of knowing and discharging obligations
  • Independence and AutonomyB3 believes its compliance personnel should act independently and autonomously to assure impartiality in all its operations.
    Periodic Review of Integrity ProgramThe exchange proactively endeavors to prevent, detect and combat violations of laws and regulations.
    Cooperation with RegulatorsB3 endeavors to do the following:
  • Oversee and follow up compliance with regulators
  • Facilitate the sharing of information with regulators
  • Assure proper execution of regulations
  • Guarantee timely communication with regulators
  • ReportingB3 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:

    DepartmentResponsibility
    Executive Board Conducts business policies that comply with norms issued by regulatory authorities.
    Department of Internal Controls, Compliance & Corporate Risk
  • Disseminates the Compliance Manual
  • Structures and implements the Integrity Program
  • Helps business divisions within B3 comply with requirements of regulators
  • Oversees plans to rectify and address policies that infringe on regulatory requirements
  • Reports alleged infractions, civil or criminal offenses to Board of Directors, Executive Board and Legal Department
  • Produce reports and participate in discussions concerning regulations
  • Coordinate processes related to Code of Conduct
  • Legal Department
  • Orients the company with regard to regulations, rules and laws
  • Conducts public consultations and hearings to coordinate proposed rules changes
  • Assists with developing and maintaining mandatory staff training courses on the Integrity Program
  • Department of Communications, Human Resources & Financial Market EducationHold periodic mandatory staff training courses on the Integrity Program

    Outside Regulators

    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:

    1. 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
    2. Central Bank: Responsible for prudential and financial institution supervision
    3. Superintendent of Private Insurance (SUSEP): Responsible for regulation of the insurance sector
    4. 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.

    Codes and footnotes are below the tables.

    Commodities

    ProductsNotes (See Codes Below)
    Anhydrous Fuel EthanolF
    Arabica Coffee 4/5F, O, SO
    Arabica Coffee 6/7F, O, SO
    CornF, CSF, O, SO
    Crystal SugarCSF, O, SO
    GoldF, O, FWD, SPOT
    Hydrous EthanolCSF, O, SO
    Live CattleCSF, O, SO
    SoybeansCSF, O, SO

    Exchange Rates

    ProductsNotes (See Codes Below)
    Argentine PesoCSF
    Australian DollarCSF
    Canadian DollarCSF
    Chilean PesoCSF
    Chinese YuanCSF
    Euro
    Mini Euro
    CSF available for both regular and mini
    Japanese YenCSF
    Mexican PesoCSF
    New Zealand DollarCSF
    Norwegian KroneCSF
    Pound SterlingCSF
    Russian RubleCSF
    South African RandCSF
    Swedish KronaCSF
    Swiss FrancCSF
    Turkish LiraCSF
    US Dollar
    Mini US Dollar
    CSF available for both regular and mini

    Fixed Income

    ProductsNotes (See Codes Below)
    Government BondsSPOT, FWD, REPO, AUC
    Sovereign Debt Instruments10-year US Treasury Cash Settled Future

    Equities

    ProductsNotes (See Codes Below)
    Brazilian Depositary Receipts (BDRs)Financial and physical settlement for both sponsored and unsponsored BDRs, FWD
    Brics IndexBVMF FTSE/JSE Top40 Index Futures Contract, BVMF Hang Seng Index Futures Contract, BVMF MICEX Index Futures Contract, BVMF BSE Index Futures Contract
    Ibovespa
    Mini Ibovespa
    F, O, SO
    F
    Brazil Index 50CSF, O
    Certificates of Potential Additional Construction (CEPACs)Cash market
    Stock ETFsBoth physical (delivery of the components in the fund) and financial settlement
    EquitiesCash market
    Investment FundsCash 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 IndexCSF, O, SO

    Interest Rates

    ProductsNotes (See Codes Below)
    One Day Interbank Deposit (DI)CSF, O, SO
    DI x Extended Consumer Price Index (IPCA) Spread FuturesCSF
    DI x US dollar Spread FuturesCSF, SO, SWAP
    IPCACSF
    US Dollar Spread Futures Contract Referencing One-Day Repurchase AgreementsCSF, SO, SWAP
    Futures on the Average Rate of One-Day Repurchase AgreementsCSF, O

    OTC Market

    ProductsNotes
    Flexible OptionsDefined at the parties’ discretion
    ForwardsFX 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.
    SwapsCash flow exchanges based on the comparison of profitability between two indexers.

    Other Product Categories

    CategoryProductsNotes
    IndexesB3 offers trading in a variety of indexes including Broad, Corporate governance, Segment, Sustainability, Sector, S&P / BVMF, and MiscellaneousTraders can consult the Products section of the B3 website for details about each of these categories of products.
    AlternativeTesouro DiretoAn 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)

    Codes:

    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.

    B3 PUMA Trading Systems

    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

    B3 Memberships

    There are two types of B3 memberships:

    1. Clearinghouse
    2. 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:

    ClearinghouseForeign Exchange
    Equity & Corporate Debt
    Derivatives
    Foreign Exchange

    The membership accreditation process involves four steps:

    1. Definition of Access Model: Applicant presents a business model to the exchange that outlines its needs to access particular categories of trading.
    2. Admission Procedure:
      1. Applicant must submit registration documents to the particular category for analysis by the exchange.
      2. BM&F Markets Supervision (BSM) conducts a pre-operation audit to verify compliance with the Professional Qualification Program.
      3. BSM then forwards documents to the Board of Directors for final approval.
    3. 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.
    4. Conclusion
      1. Institution deposits securities for safeguarding funds.
      2. Institution assures that its employees are accredited and qualified to transact business on the exchange.
      3. 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.

    B3 also charges fees to issuers and commodity grading and agricultural commodities depositary fees.

    Traders can find a full detailed explanation of these fees at the Fee Schedule section of the website.

    Margin Requirements

    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:

    1. Calculates the worst case for accumulated cash flow during the portfolio closeout process
    2. Considers the joint risk for positions and collateral
    3. Models three types of risk: market, liquidity for positions and collateral and cash flow
    4. Forecasts an accurate closeout strategy: position closeout transactions and collateral execution
    5. Severe loss (stress test): confidence level of 99.96% or a 10-year crisis
    6. Considers 10,000 scenarios: historical (since 2002), quantitative and prospective
    7. Looks at positions over multiple horizons
    8. 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.

    BM3 Risk Management

    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:

    1. Daily Bulletins: Data from previous trading sessions
    2. Equities: Historical quote data
    3. Derivatives: Settlement prices, statistical summaries and information recovery systems
    4. Foreign exchange: A variety of market statistics and summaries
    5. 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 .

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    CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. <b>Between 53.00%-83.00% of retail investor accounts lose money when trading CFDs.</b> You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

    FAQ

    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:

    • Operations
    • Risk
    • Back Office
    • Sale Off (settlement professionals)
    • Customer Base
    • Compliance
    • Commercial
    • Custody
    • Record

    The Institute also offers online courses on areas such as fixed income, derivatives, clearing financial markets and behavioral finance.

    B3 Courses

    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.

    See B3 history prior to 2011.

    BM&FYear(s)BOVESPA
    1890Bolsa Livre, the first incarnation of the São Paulo Stock Exchange, began operations
    Early 1960sBecame a mutualized not-for-profit exchange
    1970sImplemented automated systems and begins price quotes via computer
    Early 1980sIntroduced 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 derivatives1990s
  • Introduced Computer-Assisted Trading System (CATS), which operates alongside trading pits
  • Organized the Brazilian Clearing and Depository Corporation (CBLC) for trade clearing
  • Implemented electronic system for trading derivatives and closed trading floor2000Integrated with other eight exchanges in Brazil to become the only local exchange operator for equities
    2005Closed trading floor and becomes fully electronic market
  • Began demutualization process to prepare for public offering
  • Trading of BM&F shares on the Novo Mercado segment of the BOVESPA began in November 2007 under ticker symbol BMEF3
  • 2007
  • De-mutualized to prepare for listing as a public company
  • Trading of BOVESPA shares on the Novo Mercado segment began in October 2007 under ticker symbol BOVH3
  • YearEvent
    2011Technological 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:
  • Derivatives
  • Spot Foreign Exchange
  • 2013PUMA Trading System began operating in the following BOVESPA segments:
  • Stock Market
  • Equity Derivatives
  • 2014PUMA Trading System began operating in private fixed income markets
    2016
  • In April 2016 the Boards of Directors of BM&FBOVESPA and Cetip approved the financial terms for a merger of the two companies’ operations
  • In May 2016 the shareholders of both companies met to vote on the merger
  • 2017In March 2017, three key regulators approved the merger of Cetip and BM&FBOVESPA:
    1. The Central Bank of Brazil
    2. The Securities & Exchange Commission of Brazil (CVM)
    3. Administrative Council for Economic Defense (CADE), which is Brazil’s antitrust authority

    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.

    PositionName
    Chief Executive OfficerGilson Finkelsztain
    Chief Operating OfficerCícero AugustoVieira Neto
    Chief Financial Officer & IR OfficerDaniel Sonder
    Chief Product and Client OfficerJosé Ribeiro De Andrade
    Chief Technology OfficerRodrigo 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.

    See all licensed distributors for B3.

    • Activ Financial Systems, Inc
    • Advfn
    • Agencia Estado S/A
    • Apligraf Aplicativos Graficos Ltda
    • Avelacom
    • 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.
    • Investflex
    • 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.
    • Refinitiv
    • 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

    Further Reading

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