B3 Sees Solid 2018 and Q4, FX Rates Volumes & Revenue Soar

For the full year, total revenue for B3 was $1.42 billion.

The Brasil Bolsa Balcão S.A, more commonly referred to as B3, has published its financial results for the fourth quarter and full year of 2018. 2018 marked the first year of B3 operation and taking a look at the results, the exchange managed to achieve a solid performance.

The B3 exchange is the result of the merger of three separate exchanges – São Paulo Stock Exchange (Bovespa), the Brazilian Mercantile and Futures Exchange (BM&F) and CETIP. Through BM&F, investors can trade foreign exchange (FX) rates, commodities, stock indices, interest rates and more.

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For the full year, total revenue for B3 was R$5.352 billion ($1.42 billion). This represents an increase of 20.6 percent when measured against revenues achieved in 2017, as 2018 reported growth in all business segments.

FX Rates Volumes Grow in 2018 on B3

Taking a look at the BM&F segment, the average daily volume for the unit was 3.7 million contracts in 2018. When comparing this against 2017, it is up by 20.8 percent. According to the report, this uptick is thanks to growth in the volume of more relevant contract groups.

The volume of contracts in Interest rate Brazilian real (BRL), which holds the largest trading volume for the BM&F segment, was more than 1.9 million contracts, which represents a rise of 2.3 percent year-on-year.

“Both years were marked by volatility and uncertainty, particularly due to the reduction in interest rates in 2017 and the Brazilian elections in 2018,” the statement from B3 said.

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Moving on to FX rates, contract volumes were boosted by a 31.6 percent increase in Interest rate in USD contracts, which reflected higher demand for hedging against exchange rate variates.

As a result, in 2018, the average daily volume for FX rates was 690,100 contracts. This is up by 27.4 percent when measured against the previous year, which had an average daily volume of 541,800 contracts.

Strong USD Pushes FX Rate Revenues Higher

Revenue per contract (RPC) also managed to climb by 7.3 percent year-on-year for the BM&F segment in 2018. This was largely driven by a 17.1 percent appreciation in the USD against the BRL in the year. This lead to a positive effect on the RPC of FX rates and Interest rates in USD contracts.

Specifically, the average RPC for FX rates was R$3,355 ($890.50) in 2018, which is 11.4 percent higher than that achieved in 2017. The RPC for interest rates in USD also grew by 18.6 percent year-on-year.

For the fourth quarter of 2018, the average daily volume in the derivatives market (BM&F), came in at 3.7 million contracts, jumping by 15.6 percent when compared with the final quarter of 2017.

According to the report, this was driven by a 41.7 percent increase in the volumes of Interest rates in USD and a 26.7 percent year-on-year growth in FX rates. Trading volumes for Stock indices almost doubled during the quarter.

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