The case against Brazil's only major stock exchange could reshape the country's financial market infrastructure.
Brazil's antitrust watchdog has accused the country's largest stock exchange operator of abusing its dominant position, in a case that could lead to sweeping changes in the structure of Brazil's financial markets.
The investigative arm of Brazil's Administrative Council for Economic Defense (CADE) has recommended that the Competition Tribunal find B3 guilty of abusing its dominant position. According to the regulator, B3 used its control over critical market infrastructure to make it difficult for potential competitors to enter the market.
If the tribunal upholds the recommendation, the ruling could reshape the way Brazil's financial market infrastructure operates.
What the case is about
The investigation focuses on the infrastructure for the registration and custody of financial assets — the record-keeping system that confirms ownership of securities after trades are completed.
According to CADE, B3 holds a dominant position in this segment and used commercial practices to prevent new competitors from entering the market. The regulator argues that these practices reinforced barriers to entry in markets that are essential to Brazil's financial system.
The alleged conduct includes tied selling, exclusivity clauses, conditional discounts, and loyalty programs that effectively locked customers into B3's infrastructure.
The investigation began in 2022 following a complaint from CSD BR, a company seeking to compete in the registration and custody business. The complainant alleged that B3's conduct made market entry virtually impossible.
CADE also raised concerns over interoperability — the technical compatibility that allows competing market infrastructures to connect with one another. According to the regulator, B3 created obstacles preventing rival systems from connecting to its own infrastructure, without which competing operators cannot function effectively.
The inquiry extends beyond equities and bonds to the registration of insurance operations, highlighting the extent to which Brazil's financial record-keeping is concentrated within a single company.
Why B3 holds such a powerful position
Even by global standards, B3 occupies an unusual position. The company is effectively Brazil's only major exchange operator, combining trading, clearing, settlement, and custody services under one roof.
While this concentration delivers operational efficiency, it also gives the company significant influence over the terms on which other market participants can access critical financial infrastructure.
CADE has proposed imposing a fine of approximately 100 million reais (about $19 million) and prohibiting practices that it says restrict competition, including tied selling and exclusivity agreements.
Market observers note that the proposed financial penalty is relatively modest for a company of B3's size. The structural remedies, however, could prove far more significant if they require the exchange to provide more open access to its infrastructure.
"The behavioral remedies proposed by CADE could include mandatory interoperability requirements, opening APIs to enable interoperability, and eliminating discounts tied to the use of the exchange's services,"
said Evgeny Ponomarev, an expert at the BRICS Competition Law and Policy Centre.
What comes next
The recommendation issued by CADE's investigative arm is not a final ruling, and B3 has not been found guilty.
The case will now be reviewed by CADE's Competition Tribunal, which may approve, modify, or reject the recommendation. B3 will have an opportunity to present its defense before a binding decision is issued.
The company has already informed investors of the development, noting that the recommendation has no immediate legal effect while the tribunal considers the case.
"The outcome of this case will determine whether Brazil's financial services market remains dependent on a natural monopoly or moves toward greater competition and modernization of its financial infrastructure. 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,"
Ponomarev said.
Sources:The Rio Times, Valor International (with additional commentary from the BRICS Competition Law and Policy Centre)
