2019 Viewpoints: Gilson Finkelsztain, CEO, B3

Published by: The WFE Focus Team Jan 2019

Please outline the three most important macro trends that you believe will impact the market infrastructure industry in 2019.

The first is ever-higher standards of market integrity. To achieve these, B3 constantly invests in upgrades to its market infrastructure. This is evidenced, for example, by the project to integrate our equities and derivatives clearinghouses into a single infrastructure, finalized in 2017, creating a multi-asset clearinghouse. Other important trends that are increasingly relevant to the industry include cybersecurity (risks, investments, prevention, regulatory frameworks), and the impact of new technologies (blockchain, AI, big data) on FMIs’ operations.

The WFE’s Sustainability Principles (launched in October 2018) and annual ESG survey show us that more and more exchanges and CCPs are taking a leadership role in promoting the sustainable finance agenda. How is your business taking a more sustainable approach to the financial system?

At B3 we believe development of the financial and capital markets is feasible only if we emphasize environmental, social and governance (ESG) principles and values. This is clear from the commitments we established in 2004 as the world’s first securities exchange to sign up to the UN Global Compact, for example. Since then our commitments to the agenda have only increased. In 2018 we achieved major progress in pushing sustainability in the exchange industry. As well as offering ESG indices and related products (ETFs), and in addition to our transparency agenda and sustainability guides, we have enhanced the visibility of green bonds in our trading system, created a sustainability mentoring programme that helps our customers introduce sustainability into their corporate practices, begun a process of engagement with brokerage firms by including two socio-environmental items in B3’s Operational Qualification Programme (PQO), and, in partnership with our regulator (CVM), the Global Reporting Initiative (GRI) and the UN Global Compact Network Brazil, launched the document “The Capital Markets and the SDGs”, which correlates the items of the regulator’s reference form with the GRI’s standards and the Sustainable Development Goals (SDGs). Exchanges and regulators are experiencing steadily growing pressure from stakeholders, especially investors, to extend their role as catalysts of market growth and development to the ESG pillars.

In your view, what’s the technology most likely to disrupt global capital markets in the next 12 months?

In our view, blockchain/DLT is a technology with potential, which we’re watching closely through prototypes and proof-of-concept for some of our activities. However, we believe this technology is still maturing and raises questions (governance, scale, integration with other technologies) that need to be answered but may create opportunities for B3 and other FMIs. Moreover, we try to anticipate industry trends. To this end we have joined an international consortium and are ready to work on a number of prototypes. B3 has a history of investing in technological infrastructure to drive business and service development, and will continue to innovate in both operational and business areas, ensuring that our staff who work on this agenda come increasingly into contact with the growing adoption of agile project methodologies, and delivering quality, security and efficiency to our customers and the market.

What are the key strategic initiatives you’re working on at the moment?

In 2018 we streamlined our service areas to focus on customer relationships with dedicated coverage, stepped up the dynamism of product development and strengthened our corporate culture, combining efficiency and operational credibility in an integrated company that sees beyond its own frontiers.

For the coming years we have a customer-focused strategy and will continue working to be the market’s platform of choice, always resilient and reliable, to operate as a financial market infrastructure that innovates in products and services with the most advanced technologies, and to be constantly concerned to add value for customers, regulators, shareholders and staff. We have an important new product agenda, with launches that started in December 2018 and are set to continue throughout 2019. We plan to announce the new product pipeline for 2020 at the end of the first half of this year.

This is the new spirit we want for the company: operational robustness supported by advanced technology, guaranteeing an outstanding customer experience, engaging with regulators and developing people – in sum, practising and implementing our corporate culture every day.