A late-July outage exposed the vulnerability of a market whose infrastructure is largely controlled by a single company.
A technical outage at Brazil’s B3 exchange on July 31 almost halted market data feeds in Sao Paulo for more than three hours. The disruption came at month-end, when market participants needed to close positions, finalize their books and rebalance portfolios. As a result, trading volumes fell well below normal: just 13.6 million derivatives contracts changed hands, less than half the daily average for July.
According to Bloomberg, the outage was the second major interruption to hit B3 in the past year. In August 2025, the opening of the benchmark Ibovespa stock index was also delayed by more than three hours because of technical problems. Traders have increasingly complained about smaller glitches as well, including failures to receive pre- and post-trading data detailing clients’ positions. The problems have affected both equities and fixed income.
Can B3 Handle Its Vast Market Infrastructure?
The disruptions have put renewed focus on B3’s near-monopoly position in Brazil. The company controls much of the country’s financial-market infrastructure, including trading in equities, a large part of the fixed-income and derivatives markets, as well as clearing, settlement and central depository services. In practice, most major transactions involving financial assets in Brazil rely on B3’s infrastructure.
Analysts and market participants say B3’s overwhelming dominance may reduce its incentives to further improve its infrastructure.
“In a monopoly, companies have fewer incentives to improve, and without that competitive pressure, change tends to happen more slowly, and the market can become complacent,”
said Fernando Siqueira, head of research at Eleven Financial.
“More competition is always a positive.”
B3 took its current form in 2017, when exchange operator BM&F Bovespa merged with clearing and settlement company Cetip. The deal brought equities, fixed income, over-the-counter markets and much of the settlement infrastructure under the same umbrella. B3 describes itself as “the only securities, commodities and futures exchange in Brazil and the leading exchange in Latin America.”
That position creates high barriers to entry for potential competitors. A new entrant needs more than a trading venue: it must secure regulatory approval, build the necessary technology infrastructure, connect banks and brokers and attract enough liquidity. Competing with B3 is particularly difficult in segments where a single integrated system for trading, clearing and settlement has developed over decades.
In late June, the technical unit of Brazil’s Administrative Council for Economic Defense (CADE) recommended that the competition tribunal find B3 guilty of abusing its dominant position.
“If the CADE Tribunal upholds the allegations, B3 could be forced to fundamentally revise its commercial policies and open its clearing infrastructure to ensure interoperability with competing operators,"
said Evgeny Ponomarev, an analyst at the BRICS Competition Centre.
Competitors get ready
A 2022 rule change gave new market participants clearer guidelines for obtaining authorization to establish exchanges. Several companies are now preparing to enter markets currently dominated by B3, with both expecting to begin operations in 2027.
One of them is Base Exchange, a Rio de Janeiro-based company backed by Abu Dhabi-based Mubadala Capital. It plans to establish a stock exchange and provide clearing services for equities, real estate investment funds and exchange-traded funds, as well as securities lending. Base Exchange says it is in the final stage of obtaining the necessary regulatory approvals.
Another potential competitor is A5X, which is building a derivatives exchange. The company employs about 200 people, including former B3 executives among its leadership. A5X is awaiting approval from the central bank to begin testing its systems, expects to connect market participants by next quarter and plans to start operations in 2027. The company says greater competition could take the market to the next level.
For B3, the arrival of competitors does not yet threaten its dominant position. The exchange says it has long operated in a competitive environment and competes with the world’s leading exchanges for business, including issuers. B3 also argues that investment in an integrated market infrastructure improves efficiency rather than preventing new players from entering the market.
Still, the July outage has raised fresh questions about the resilience of that model. The cause of the disruption has not been fully disclosed. According to a person familiar with the matter cited by Bloomberg, the problems involved both the processing of specific trades and a broader system issue. B3 classified the July 31 incident internally as unprecedented. As technical glitches become more frequent, market participants are increasingly arguing that Brazil’s financial markets need more competition.
Investment is rising. What about reliability?
For B3 itself, the outage does not yet appear to pose a threat to its financial performance. BTG Pactual analysts, however, say the disruption does not change B3’s market position but reinforces the importance of technology execution and operational resilience as new competitors enter the market.
B3 has spent about 3% of annual revenue on technology in recent years, according to its financial statements, down from a peak of 5% at the beginning of the decade. The figure includes spending on hardware, equipment, software and technology projects. The company says capital expenditures alone do not fully capture its infrastructure spending because “a significant part” of its investments is classified as operating expenditure. Overall, B3’s investments rose to about 9.6% of revenue last year from 8.5% in 2021. The market will now be watching not only how much B3 invests, but whether those investments are enough to keep its system reliable as it faces growing competition.
Source: Bloomberg (with additional information from the BRICS Competition Centre)
