B3’s (B3SA3) monopoly did not emerge overnight. It was built layer by layer. The consolidation of Brazil’s regional exchanges concentrated equity trading at Bovespa; in 2008, its merger with BM&F brought equities and derivatives under the same roof; and in 2017, the combination with Cetip added securities registration, depository services and much of the country’s over-the-counter market infrastructure. The result was far more than a stock exchange: it became an integrated piece of financial plumbing, difficult to bypass and even harder to replicate.
Cade, Brazil’s antitrust watchdog, saw the issue before B3 even existed under its current name. When it approved the Cetip merger in 2017, the regulator highlighted the market’s high barriers to entry, particularly access to central securities depository infrastructure, and imposed restrictions on the deal. Nearly a decade later, those barriers are finally being tested. A5X has raised R$360 million in a funding round led by Morgan Stanley, Goldman Sachs and Kaszek, taking total capital raised above R$730 million as it prepares to launch a derivatives exchange with its own clearinghouse in 2027. Its shareholder base includes some of the very market participants that could help solve the hardest problem facing any new exchange: liquidity.
But the more interesting question is not how many new exchanges Brazil may get. It is how they intend to compete. B3 was built by aggregating markets; new entrants can attack it by unbundling them. They do not need to recreate the entire ecosystem at once — equities, futures, registration, clearing, custody and data inside a single company. They only need to identify a sufficiently profitable segment where they can offer better technology, pricing or execution. Derivatives here, equities there, post-trade services somewhere else. The fortress does not have to fall for pieces of it to start being chipped away.
B3 still possesses the most powerful weapon in this business: liquidity. Financial markets have brutal network effects. Investors want to trade where other investors already trade. That is why tens of millions spent on technology offer no guarantee that a new exchange will succeed. But it is also why market share may not be the most important metric for B3 shareholders. Competition does not need to capture half the trading volume to erode the economics of the monopoly. If the mere presence of alternatives forces B3 to cut fees, offer more incentives, spend more to retain clients or accelerate product launches, part of its monopoly rent disappears even if most orders continue to flow through its systems.
That challenge is arriving just as market infrastructure itself is changing. B3 is working on tokenization, longer trading hours, new collateral structures and products that increasingly blur the line between trading and payments. The company is not merely defending the market it inherited; it also needs to invest in building the market that could eventually replace parts of it. That creates an uncomfortable paradox: the incumbent must spend enough to preserve a position whose historical appeal rested largely on how difficult it was to challenge.
None of this requires believing that B3 will cease to be Brazil’s dominant market infrastructure. It may remain so for many years. The point for shareholders is subtler: dominance and pricing power are not the same thing. B3 took years to consolidate its ecosystem, and its challengers are trying to prove they do not need to rebuild that ecosystem in full. They only need to force B3 to start pricing — and investing — like a company that has competitors.
Leave a Reply