Copom options grow more than 350% in the first quarter, says B3 CFO
Copom options grew by more than 350% in the first quarter of the year, consolidating itself as one of the fastest growing financial instruments in the Brazilian market.
According to B3's CFO, André Milanez, the product, developed a few years ago, has attracted increasing attention from investors seeking to protect themselves or anticipate monetary policy decision movements.
How the instrument works
The product was created to allow the market to anticipate the movements of the Central Bank's Monetary Policy Committee. As explained by Milanez during an interview with the Numbers Falam program, a NeoFeed production in partnership with CNN Money. "This product is a product that allows the investor to anticipate or protect themselves from these monetary cycle movements through this option", he stated.
Before the launch of the instrument, the market was already carrying out this type of operation, but in a way that was considered inefficient, using other mechanisms, such as the futures market. The identification of this gap, assesses Milanez, motivated the development of a solution more suited to the protection profile sought by investors.
Growth prospects
The tendency is for the product to continue advancing in the coming periods. According to B3's CFO, the observed performance reinforces the responsibility of continually expanding the range of available solutions, anticipating market demands. "Brazilian investors will increasingly continue to become more sophisticated and, ultimately, expand the way they operate in the financial market", he stated.
Follow-ons total R$ 13.6 billion in the 1st quarter and give a positive signal
The Brazilian capital market recorded around six follow-ons and almost R$ 14 billion raised in the first quarter of the year, in addition to an IPO, the first after a long period without public offerings. The numbers show positive signs, but they still do not allow us to say that the market is fully unlocked.
Follow-ons are operations carried out by companies that are already publicly traded and return to the market to raise new funds.
The characteristic volatility of the Brazilian economy is a determining factor in this context. Windows of opportunity for funding "open and close much faster than what happens in other markets", which imposes limitations on the consolidation of a more lasting favorable cycle.
Robust pipeline, but demand is the bottleneck
The central problem identified is not the lack of companies willing to access the market. There are between 50 and 100 companies in the pipeline that could come to the market under more favorable conditions, and at least 50 of them already have approved public company registration and are waiting for the appropriate moment to move forward.
"Our problem is not one of supply, the problem is one of demand", said Milanez. For the local investor, the interest rate directly influences behavior. For the foreign investor, geopolitical and macroeconomic factors weigh on the decision. The assessment of B3's CFO is that the current window is open selectively, favoring projects with greater solidity, whether for debuts on the stock exchange or for funding in the debt market.
Número Falam
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Source: CNN