10/6/20

B3 Announces Change to BDR and ETF Round Lot Size

In line with the development of the equity market, especially as the number of individual investors grows, B3 has announced the reduction of the round lots...

In line with the development of the equity market, especially as the number of individual investors grows, B3 has announced the reduction of the round lots of equity BDRs and ETFs. The change will take effect from September 28, when the minimum traded amount of Level I Unponsored BDRs, equity ETFs and Options on equity ETFs will go from 10 units to 1 unit. Furthermore, Level II or III Sponsored BDRs will move from 100 units to 1 unit.

In 2018 B3 started working together with the market to develop BDRs. As well as listing more than 500 programs, B3 began to accept BDRs as collateral and authorized securities lending transactions with Unsponsored BDRs. All these initiatives are focused on a wide range of investor types, such as the fund industry and the retail market, which have shown keen interest in the product.

“This change to BDRs was largely anticipated by the market and, when associated with the ongoing review of parity of the programs, creates better conditions for individual investors to access international shares and, consequently, institutional investors. This is another major step taken by B3 to boost liquidity and product volumes,” says Felipe Paiva, Customer Relationship director at B3.  

The change to BDRs comes at a significant time for the Brazilian capital market. Once CVM approves B3 Issuer's Regulation and Manual, the product will be available to individual investors.

Release of BDRs for individual investors

On August 11, CVM announced the change to the BDR rule extending it to individual investors. Since then, B3 has worked on the operationalization of the product by submitting its regulations for CVM approval. The product will be available to retail investors upon CVM’s authorization.   

“Our long-standing partnership with CVM and the market allows us to work very carefully so that all these steps are taken. We hope that by October, individual investors can effectively invest in international shares”, points out Mario Palhares, Listed Products director at B3.   

The new rule also enables the development of the ETF market in Brazil, as CVM has authorized foreign ETFs and debt securities to be used as ballast for BDRs. “These changes are an excellent opportunity to expand investment alternatives in Brazil and further strengthen the Brazilian financial and capital markets”, adds Paiva.

For further information, please contact your RM.