Good morning, ladies and gentlemen, and welcome to the Audio Conference Call of B3's Earnings Results for the Second Quarter of 2021. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions to participate will be given at that time. As a reminder, this conference is being recorded and broadcasted live via webcast. The replay will be available after the event is concluded.
I would now like to turn the conference over to Mr. Daniel Sonder, Chief Financial, Corporate and Investor Relations Officer.
Thank you, Everyone, thank you for joining the call. I'm here with Marcel Abreitas, Managing Director for Investor Relations, M and A and Strategy and the rest of the Hi, our team. And just wanted to start by thanking them for putting together all the materials for our Q2 release. I will make some very brief comments. Marcela will also make some very brief comments.
And then We can open for Q and A and hopefully have a fruitful discussion for everyone. So just to start, We are seeing a very favorable environment for our business and for the development of capital and financial markets in general. We still have low interest rates and inflation under control in Brazil. And this obviously has helped support the development of several lines of our business and has contributed to the positive results in all areas of our company in the year on year comparison that we released yesterday. In the capital markets, we had record Inflows of money in equities with BRL46 1,000,000,000 total in Transactions with 13 IPOs and 10 follow ons as well as our fixed income business which has done Very well with 14% year on year growth on fixed income issuances.
We continue to see a very, very strong pipeline of transactions both in equity and fixed income. And this obviously has encouraged us to continue to pursue our strategy of further developing our product set within B3. So, Marcelo will discuss a little bit the numbers and then I'll come back at the end. Thank you.
Thank you, Daniel. Good morning, everyone. So I'll go briefly through the results of our main business segments, Starting with the listed segments for equities and SICC. ADTV in the quarter was BRL33 1,000,000,000 which was 17% higher than last year, but 10% lower than in the previous quarter. What we've noticed here is that we continue to see an appreciation of the assets.
So market cap was up 54% year on year and 6% quarter on quarter. However, we saw a declining volatility, which caused turnover velocity to reach a lower level in the Q2 of 149%. Overall, listed segment revenues were up 19.5% year on year. For the OPC segment, revenues were up 6.8%, driven by more Firming instruments issuances, especially time deposits as banks continue to fund themselves to Expand credit activity here in Brazil. OTC Derivatives continue to contribute with Positive growth, which were up 22% in stock this quarter.
In the financing for infrastructure unit, we saw an increase in revenues of 48.5 percent driven by the recovery of the vehicle sales and financing market, which were heavily impacted by the pandemic last year. So this year we see a much more positive dynamic in this segment. Finally, in the Technologies segment, we saw revenues up 24.3%, Driven mostly by the monthly utilization line, which continued to see a growth in the number of market participants, mainly New funds that continue to surge here in Brazil. In the wire transfers line, the test line, we saw a decrease in volumes of 23.5%. However, given the nature of the pricing here, which has a high correlation with volume, the decrease in the revenue for this line was not as Sure.
Since volumes have decreased as volumes decrease since discounts decrease as volume decrease as well. Finally, moving on to expenses, we published a new guidance for adjusted expenses to reflect The higher activity and the expansion of our business lines. So we have a new guidance in place that is roughly 5% higher than the guidance that we had previously. And in May, we issued BRL3 billion in local debentures, bringing our total leverage to BRL1.4 gross debt to EBITDA. So moving back to you, Daniel.
Thank you. I just wanted to take a minute to discuss the recent transaction that we Executed with Tautus as a partnership investing in Gimensa, which is a Company that was spun off out of Tatus for their financial services vertical. And We're very, very excited about this transaction. Sartus is a fantastic company and we're sure they're going to be a great partner. We've had a relationship with them for a long time.
And I think it's a great example of how we are becoming more flexible and more open to pursuing initiatives In areas adjacent to our business, this is another transaction. We've done 2 smaller M and As back 2 years ago. And I think we'll continue to pursue ways in which we can develop beyond the current activities of B3 with which by the way we are Extremely excited and where there's a lot of innovation and new product development as well. And we can discuss this in the call when we've tried to Make it clear in our materials. This transaction creates a separate entity out of Tacos, Demensa will be a separately managed company with a refreshed management team coming from Experiences outside, but also counting on the successful trajectory that they've already had in serving the financial industry.
Their main clients are the back office functions of the large custodians and fund managers. And we are obviously bringing in not only capital, but also our know how and our strength as a financial market infrastructure and our relationships With all these clients, which are already clients of B3, and we hope we can leverage in developing new products and expanding the footprint of Dimensa. The transaction is aligned with our strategy of diversifying around our core business And we're going to have an active role participating in the senior leadership positions as well as the Board We're still waiting for the final regulatory approvals for this deal, but I wanted to highlight That's a very positive development in our strategy. And finally, I just want to make note that you might have read in our release That we have made a reassessment of one of our contingent legal discussions in contingencies. And I'm happy to answer questions in the Q and A if you want to address that as well.
Thank you. And we can now move to Q and A.
Ladies and gentlemen, we will now begin the question and answer session for investors and analysts. Our first question comes from Mario Pierry with Bank of America.
Good morning, everybody. Congratulations on the results. You continue to deliver strong revenue growth, Strong margin expansion, so congratulations on that. My question, Daniel, is related to what you just said at the end, right? Of this legal contingency from remote to possible, it is quite a sizable amount, right, of About BRL31 billion, which represents almost 1 third of your market cap.
So I'd like to understand a little bit more Why are you doing this now? If you need to build if you think you're going to need to build Any provisions in the future? And when should we expect a final decision on this matter?
Okay. Mario, so let me take your questions directly and then I'll talk a little bit broadly more broadly about the case. So we don't expect to have to make any provisions. We believe we're going to win this case. And it's classified as a possible.
And therefore, no provisions are required and we don't expect to have to make. In terms of the timing, it's very, very unclear. What the best That I can tell you right now is exactly what we hear from our new advisors, which is they expect this to be ruled within 3 years. That's as accurate as one can be unfortunately in the That's the appeals court in the senior courts in the judicial system in Brazil. They are obviously they have a lot of cases.
And therefore, we I cannot be more precise than that. Taking now A step back, I just want to make a few remarks here. This is an old case and it's a relevant case obviously. And from the very beginning, B3 adopted a conservative position regarding its disclosure. Although it was classified as a remote probability of loss, which does not Technically require any disclosure by the company, we have from the very outset of this case many, many years ago chosen to disclose it in our financial statements and in our 20 F Formula de Finis.
So This is the first thing that I wanted to mention that although it might not have been on the radar Of many people, it's something that the company always followed very closely and took very seriously in terms of making sure that people had access To this information. The second point I want to make is that the last ruling on this case was amply favorable to be 3. We had a positive decision of 4 to 1 in the appeals court in 2017 regarding this case, reversing a negative decision that we had in the lower court. The case, I'm not going to get into the details, but the case dates back to 1999 at the time of the currency crisischange of the currency regime in Brazil, There were, as some of you might remember, there was an imminent systemic crisis That was about to happen. The Central Bank intervened in the financial markets to prevent a domino effect of banks' Contagion.
And years later, there was a suit brought on by The authorities against the 2 banks at the time, Their owners, the Central Bank, the Directors and Officers of the Central Bank, And they chose to include BM and F at the time, which was a predecessor company of B3. And the link that they brought on to the MNF's alleged Involvement in these events was that BMNF stated to the authorities At the time, they believed that there was a risk of a systemic crisis. And The case alleges that because of this statement that BMNF made, the authorities took some decisions, which were hurtful to the public purse. So that is the nature of this case. We have very strong defense arguments and that is what led to the positive decision.
In fact, we had a judicial expert that provided a statement Saying that in fact there was systemic risk that BM and F did not receive any financial benefits or gains from this Events that they not even did our company present any losses From what ensued, which was the Central Bank intervention. So even if there were no Central Bank intervention, this evaluation Says that we will not have had any losses and therefore that there were not and finally that there were no losses to the treasury regarding these transactions. These statements which I just made were very Significant to leading to this positive decision that I just mentioned. We also brought several experts To support our case that what we did was absolutely within The rightful behavior for a financial market infrastructure given the circumstances back in 1999. So we are very confident that this will turn out well.
However, this is a case that is, let's say, alive And therefore, it has some procedural steps that it takes, which I could detail more if you would like. But our legal advisors, given the number of Small things that have happened over the course of time since the last judgment came to us with a reassessment And we chose to be conservative and take that recommendation. And also we chose, as You know us, you know how we are in this company. We also chose to be very upfront with you, with the shareholder community about it and supported obviously by all the governance bodies of the company, the audit committee, The Board of Directors, the fiscal Board and so forth. I hope this was helpful, but please let me know if you have any follow ons.
Yes. No, that's very clear. So like you said, right, a final decision could still take another 3 years. So can you go through these procedural steps? What are we expected to hear and when?
So what are the next That's here. When can we be expecting some news flow?
Sure, Mario. I can't tell you when we can expect news flow. What will happen next is that the case was accepted for appeal. So The government side, right, the state prosecutors appealed the 421 decision, which is in our favor. And their appeal was not reviewed on its merit, but it was accepted as a legitimate Grounds for appeal in the supremo Tibuna, which is the, I'd say the circuit court equivalent in the U.
S, the second to last court level before the Supreme Court. And That's where it stands. And it might be looked over in the next 36 That's what we hear from our legal advisors.
Okay. Thank you.
Our next question comes from Marco Calvi with Itau BBA.
Hello, good morning. My question is regarding the recent agreement with TOTUS On Gimena, can you guys share with us what is the game playing here to is it to eventually lease the company? And from a capital allocation standpoint, could we expect these sort of new investments in business that not necessarily Our part of the core business of the company, but has a clear synergy with the core business of the company like new Agreements like you guys did with Taltus towards new business? That's my 2 questions. Thank you.
Okay. So, Marco, in the second area, I think we have Discuss that we are pursuing within our strategy plan, this Idea of expanding beyond the core business, right? We have, as I mentioned, a very, very Strong business, in the core. And when we planned our next few years, a few years ago, We basically said there's 3 important things that we need to do. 1 is to make sure that we have The strength necessary to continue to maintain our capabilities as well as the choice of our clients in the core business, investing in technology, investing in risk management, investing in updating our platforms And making sure that all the potential areas where people could, let's say, See vulnerabilities and potentially attack us in the core would be well covered.
And we I think we have executed on that. We also Decided to focus a lot of efforts and people and energy and resources on expanding the core business, which means Launching new products and services. And I think that if you look at our roadmap and if you look at the That's the execution track record that we've had over the last 2 years roughly in every quarter announcing new launches In and around the core, you will see that we have also been fairly successful in that part of the strategy. And we also announced at the time that we would focus maybe onethree of our resources and time and energy in these areas of expanding beyond the core business, which we call first adjacencies. And I think we've looked at a lot of opportunities.
It's not always easy to execute on these ideas. Some of them are organic plans and some of them involve partnerships and acquisitions. And I think that the Dautilus example is one where we felt very strongly that this is an area where we want to be in. There is Huge transformation going on in the, let's say, technology areas of banks, To put it very simply, so if you think of how incumbents are having to react to the new demands of clients and the new competitive environment. And if you think about the number of new entrants and FinTechs and new investment companies and new insurance companies And on and on and on that are entering the market, you can begin to estimate the amount of money that will be, let's say, available In this space and the amount of services that will be demanded.
Taltus is a great company And they had this division. And frankly speaking, this was not for sale. Tafu Financial Services was not for sale. And that's But we wanted to be in it and they felt it was a great opportunity. They wanted to spin it off and we had A bilateral negotiation that took a few months to agree on the business model for this.
They wanted to give it an independent life and they wanted to have more capital to deploy to pursue on a strategy that has Two essential parts. 1 is really strengthening the product set that they currently have. They are in 3 business lines. 1 is that they Are essentially the largest player in the fund managementcustody Business helping all the large players in that role. They also have what they call a core banking product, which is a Kind of a bank of the shelf, if you will, or bank as a service platform that you can basically use to put together all the Key functions of a bank and they also have a smaller credit card processing unit And they and that's also in there.
So some of the investments will go towards growing that business And some of the investment will go towards an M and A strategy and there is a very strong opportunity Consolidating this sector, it's a very fragmented sector. There's tens and upon tens of small software providers that Orbitate within the financial ecosystem. And I think Dimesa will be in a very strong position to be a consolidator Using some of the skills that Taltus over time and in particular Taltus' CEO, which came from Linx, As acquired in being a consolidator in the software segment. Great. Thank you.
Very clear.
Our next question comes from Ian White with Autonomous Research.
Hi, morning. Thanks for the presentation and for taking my questions. I have 2, please, both really focused on retail trading. And firstly, I'd be interested to hear your thoughts On the addressable market for your mini derivatives product. So in other countries, we see some debate about The extent to which leverage products are suited to a broader range of investors, most recently in the U.
S, How do you see it in Brazil? And has there been any recent discussion or change in tone from the CVM on this point, please? That's question 1. And just secondly, could you provide a bit of extra detail around the investor electronic channel that you mentioned you launched in June? Are there any KPIs that you're tracking that might tell us whether this has had or led to greater activity Or engagements among retail investors as a result of this innovation at this early stage, please?
Thank you.
Okay. Thank you, Ian. Thank you for joining. And the I don't think that the CVM has changed its tone Regarding derivatives for retail, I think these products in Brazil Are developing. I think as you mentioned, there is significant growth in that.
But It doesn't seem to us that there is a particular, let's say, reason for concern That there would be regulatory action on this. I think this is a constant discussion. The regulators obviously monitor it. I think that they expect That the industry will self regulate and that it will not, let's say, use Any strategies that are too aggressive for this. But it is a concern of ours and of CVM.
I think we've B3 and CVM play on the same side of this discussion of suitability. And I think it's an important matter That we keep an eye on it, including leverage that you mentioned and that the broker community also understands You know that this is, let's say, an opportunity that has to be managed within, let's say, the limits Of what's reasonable and adjusting the products and the sales strategy to The type of investor that you're dealing with. So which means obviously taking a more careful approach when you talk about retail. So, I don't think it is a big deal at this point in our mind. So maybe I'll ask Marcela to take the question on the investor channel.
Thank you.
Good morning, Ian. So this new investor channel is part of our strategy To cater to the new retail investors that have been joining our markets. So as you know, the number of retail investors has increased sharply over the last couple of years. We now have more than 3,000,000 individual investors Trading in our equities segment, for instance, but not only equities, I mean, the diversification of Volumes is something that we've seen across all assets driving demand across all asset classes. So the intention of this new Our portal for investors is to improve user experience from those retail investors When accessing the information so that it's easier for them to manage their portfolio across all different asset classes that they have invested Within B3.
So we changed the interface that this portal has with clients and we are adding New features that will make their life easier hopefully in terms of managing They are positioned within B3. We are adding APIs in order to complement The technology that we offer in house and the idea is that we will continue to add More features so that these investors can frankly have in this portal a one stop shop For managing their portfolios.
Yes. Let me just make one comment here Going back to your previous point about mini contract, we only have about 200,000 individuals that trade the mini Ibo Vespa and about 130,000 individuals who are trading in the mini U. S. Dollar. So it's obviously it's the volume has increased a lot, but it is not like a product that There are millions upon millions of people that are newcomers in the market that are using it in our view.
But still, I stick to my earlier comments on the importance of managing suitability very, very well and we are obviously on the side of prudence in this.
Understood. Thanks for those answers. Very helpful.
Our next question comes from Mark Jason with InvestorCall.
Yes. Hi, Daniel. Thank you very much For taking the time this morning. So I just want to follow-up on Mario Pierry's question. And I want to understand what went into the Decision to reclassify from possibility of loss from remote to possible.
I just need to understand more about what were the key changes, the reasoning from your legal team? Can you give us some more insight into this?
Sure. I think from the management of the company, the main reason is the recommendation of outside counsel, of which more than 1, which we strongly rely on. And The if I want to go a little bit deeper into this, if you Consider that for you to be classified as a remote case, you need To have 70 plus comfort 70% plus comfort that you're going to win. And they felt that it was maybe slightly less than that. And there was a combination Of events, this is obviously a case that we won 4:1, but it was not unanimous.
That's one reason. The second is that when we won 4:1, it was a reversal of a lower court decision, which Maybe the higher court will take that. The higher court has, as I mentioned, Accepted the grounds for appeal, not reviewed the merit, but accepted that it will review the case. And finally, we had these memos by the prosecution Stressing, obviously, making their case again, but also highlighting That there were some other connected cases, which are Not this case directly, but they were connected to the financial crisis of 1999 where there were some negative decisions Against the not against us, but against some of the other co defendants, particularly the bank Owners, the owners of the 2 small banks which are connected to this. So the prosecution brought on these reasons.
And finally, the fact that the court chose a judge to review the case and be The rapporteur, as we call the gelator of the case. So this is The reasons that were outlined for us and again, the Our view is that we have to be conservative and transparent about these things and then that's what we did. So there's no one big reason. As I mentioned, and you say what's unusual here, None of these things, frankly, are unusual in and of themselves. It was a combination of them, kind of Sort of a tipping point that slightly moved the needle from probability remote to probability Possible.
Is that better?
Yes, that's helpful. I'm just wondering, how So in terms of the probability of something happening here, someone said it was 30% to 70% Potential? And then maybe that would be reduced if you settle so the potential loss, Do you have you come up with an estimate of a potential loss?
No, we don't. We don't have That's a number of the potential loss, the right way to disclose this is the way we are doing it, Which is basically give you two numbers. 1 is actually, one is not a number. 1 is a range, Which is 30 to 70, which is what technically means when you say there's a possible case. And the other one is the full amount of the potential loss.
So there's Not a lot more than that I know or that I should give you because this is the way that the profession requires us To disclose.
At what point would you have to make a provision? What would have to change for there to be provisioning associated with this?
Sure. So the let's say the methodology, right, from a Legal perspective and from an accounting perspective is as follows. The legal experts will basically Say whether this is remote, possible or probable. Remote is if you think you're going to win With 70% or more likelihood, probable loss If you think you're going to lose with 70% or more probability and possible is everything in between. And then they don't say the percentage that they are attributing to this because it's not a scientific Number.
It's a range. And the second part is That then the accounting rules will say, if you have a remote case, you don't have to make any provisions. And in fact, we don't have to disclose. Although, as I mentioned at the beginning, we did choose to disclose it, even though it was classified as remote. Then it says, if you classify it as possible loss, Then you have to make a disclosure, but you still don't have to make any provisions.
And if you classify as a probable loss, Then you have to make a full provision. That's how this works. In cases in, let's say, situations where there is a very large number of small cases. So for example, companies, which is not the case of B3, but just to companies that have a lot of, let's say, labor claims in Brazil, They do statistic treatment. So instead of looking at each one of the individual cases, they will say, statistically, we lose X percent, so we're going to provision X percent of all the case that we have.
We don't have that situation of, let's say, mass A number of a vast number of cases or any type of things like that. So we look at each case individually and decide On the provision that we're going to do.
Okay. Great. I appreciate that. Thank you so much.
No problem.
The next question comes from Tito Labarto with Goldman Sachs.
Hi, good morning. Daniel and Martella, thank you for the call. A couple of questions also. Maybe just one follow-up, since we're on the legal topic. How about on the goodwill lawsuit?
Just could you give us an update on the timing of that? Any additional Color you can provide there. And then I guess along those lines, in terms of timing for this contingency, Is this something that could be similar to the goodwill lawsuit that you will just kind of get held up in the courts for several years? Or just any colleague can provide on the timing? And then my second question on the revised OpEx guidance.
Do you think is this just a one time or given all the investments in product that you're making, Will you continue to need to have more expenses related to these products? And any color you can provide on No potential payback at any of these products where you see your Increasing the ability to gain revenues from them and you get a payback on these expenses? Thank you.
Sure. Tito, thank you. So there are no updates on the goodwill case. We are still following that very closely. As you might know, the administrative court that reviews tax cases in Brazil, which is called the CARFI, They have basically taken on only small cases since the beginning of the pandemic in March 2020.
So for the last 18 months, they have not reviewed any large tax cases. And obviously, our cases are very large. They decided to do that because they were working remotely and so on. And also, there is, as you might recall, there was a recent change in the law, Which says that the revenue services, which make up these appeal courts Alongside representatives of the private sector and of the taxpayers, the revenue service does no longer have The casting vote, if there is a tie, which was an important element in these rulings, particularly Including the cases of B3, which we always lost by the casting vote. So there was a tie And the revenue services undid the tie by voting against us.
This new law came into effect, but the revenue service decided to appeal it. So it's under appeal. And it seems to us and to some legal advisers which are in this market That's one of the reasons why they've also not reviewed many large cases is that they seem to be waiting for their appeal to be considered And try to regain this cash flow, which is obviously an important feature of the appeals model. So sorry for the long answer, but I just wanted to give you a little bit of context of why we haven't heard anything On the goodwill cases recently. You mentioned, Again, the timing of this other matter, which relates to the FX revaluation of 1999, We don't know how much time it will take.
I We asked this question a million times from our advisors and I insisted very much that our team would come up with Some information that I could share with you regarding the timing and the best that they can do is that they expect that this would be in the next 36 months. And That's all I can say right now, but it could be much longer. Obviously, there are cases that stay And in the higher courts for several years. So that's what I have. And finally, your question on expenses.
We are Speeding up or increasing our execution of projects And new launches in the company, this is good news. And I think that we are comfortable given The success that we're having in so many businesses and the cash flow that the company is generating, we feel very comfortable increasing our guidance By 5 roughly 5%, BRL 70,000,000 to support the efforts of all the business teams and the operations teams that are developing these platforms. So we I think we went over a few Of the launches in the materials that we disclosed, we can review them if you'd like. But it's a Small things that we keep adding, small features in fixed income, in Government bonds, as we referred to in futures and so on. And this is what Kind of makes up the full product suite of the 3.
We don't give out individual kind of Guidance is on what the incremental amount of these things will be. But as you've seen in our numbers, I think we've done very well in serving our market. And it's also very important from a strategic point of view that we don't let Any flanks that we don't leave any openings For potential competitors to challenge us and for clients to say, that was something that we wanted to have done and you couldn't do it. So for us preserving the core business and the strength that we see in the growth of the equities and futures and registration markets It's also dependent on building out these new products even though they might be small for some time And then all of a sudden, they might become relevant. And that's the case for things like Chioso de Gereto, for things like ETFs, for example, BDRs, things that several years ago, If I were to tell you and you've been kind enough and patient enough to follow us for many, many years, if I were to tell you just a few years back That REITs, which are Fondros Innovation Mobilario, plus BDRs, plus ETFs Would be giving us BRL2 1,000,000,000 of ADTV per day.
We wouldn't have believed it, me and I you and I. So and this is the case today. These three products bring in average of BRL2 1,000,000,000 of ADTV today and they were these Kind of marginal investments that we did in the past. So we're very comfortable that this is The right choice even though our expenses are a little bit higher this year. And we obviously we don't like to review guidance, But when the company demands it and the business supports it, it's The right thing to do and obviously in our budget exercise for next year and our guidance for next year, we'll take we'll try to take into account the Increased capacity of the company to deliver more product services to the clients.
Great. Thanks, Daniel, for the very thorough answers. Maybe just one follow-up then, because you mentioned part of this is strategic and not leave For competitors, any update on the competitive front, any segments where you see competition could be imminent? Any color on that would be helpful.
Sure. Look, I think it's a very interesting question. I think we continue to see Competitors around us and this is something that motivates us to continue to improve our services. We have registration platforms that have a very, very small market share. I think we've been Able to do a number of things to maintain our dominance In securities registration, bank funding instruments and so forth, including a recent launch that we mentioned in our Materials of a new more flexible platform for 1 of the large financial groups in Brazil.
This was kind of a Specific projects that we used a partnership with a FinTech company to put together something in a few months That I think now we can scale and offer to other people, but it was a fantastic, let's say, new way of the 3 developing Thanks. And which, let's say, meets head on the kind of pitch that another registration platform I would say to a client, which is, oh, we are small, we are nimble, we are faster than we 3, we can deliver a solution to you. And we went there and did exactly that using a partnership with a very great FinTech team that works alongside us. So we're very happy to be exploring these new ways Because again, it's a way to keep the competition at bay. The Other area, which I think is worth mentioning regarding competition is listings, right?
If you recall, our conference calls maybe 2.5 years ago, There was a lot of discussion about the potential risk of the most relevant and Most interesting listings being exported out of Brazil, and this was at the time of the listing abroad of 3 financial related Companies and there was some concern about that. And I think that We have worked and also the investor community in Brazil has worked to make sure that That B2B remains the chosen place for most of the listings. Yes, 1 or 2 will happen abroad, but we work with the regulators on BDRs. We worked with investors to also educate them on a number of things, and I think that we have been Rewarded by more and more companies, including some of the most, let's say, technologically Focused and innovative companies choosing to live here. So the competition will be a fact, will be a feature of what we do.
And I think we're trying to take actions to maintain the kind of credibility And the relationship that we want with our clients. And in terms of competition in equity trading, There hasn't been any new developments recently.
Great. That's very helpful. Thank you, Daniel.
Our next question comes from Marcelo Teles with Credit Suisse.
Hi, Daniel. Thanks so much for your time. I have a question regarding the public Consultation, what is the latest? Do you have an expectation in terms of when We could expect that to come to light, will take a while or could be in the short term. And where do you see the potential for the ILP for cash equities Or how do you view the potential for organic generalization?
If you could comment on that, that will be great. Thank you.
Thank you, Thales. Thank you for the question. We don't have any updates on when the CDM expects To move on any of the three parts of the public review and the public consultation on Rule 461, We are continuing to work on this. We have I think I've mentioned to you, we produced a lot of good reports and consulting work and so on, which were made available To the regulators, we've since then had deeper discussions with them, including using these Consultants to make deeper dives in some of the aspects of this, some of the concerns that we raised, Some of the opportunities that we see, but also calling attention to some of the experiences that we've seen In foreign markets that in our view should really inform the regulator here. The one of the, let's say, advantages, if you will, of having stayed a little bit behind in the development is that you can learn the lessons From other more mature markets, which have experienced, let's say, certain degree of deregulation and market fragmentation over the last 10 to 15 years and now are seeing the repercussions of that.
And I think if you follow the recent comments by the head of the SEC in the U. S, He has brought up a lot of points that I think deserve also the attention of our regulators to ensure that we don't move in the direction that others are actually moving away from. And so we continue to have these discussions. We've also tried to engage market participants in this and tried to bring to their attention some of these aspects. And with respect to RLP, we don't have any more recent We continue to be in the discussions.
As you know, there was a second round of there was a Request for us to have a second round and expand RLP a little bit, the CGM came with some demands from our side. And now we're in the process of, let's say, explaining technically some of these aspects, trying to accommodate some of their Requests while maintaining the product, we believe strongly that RLP is a good way for the market to develop. It's Safe. It's within the bounds of the 3. It's transparent and it's limited in its size so that it doesn't hurt the price formation.
So we are working to be able to maintain the product and maintain it in a healthy and disciplined way.
Thank you, Daniel. Can I just follow-up on your last comments? Now regarding The RLP, I mean, have you seen a benefit from the RLP For many contracts in terms of liquidity price formation, I was under the impression that I think you guys at some part were Suppose to release a study on the impact of the RRP in the market, is that in the making or are you planning on Publishing that at some point?
Look, I think we do see benefits and I think that the regulator also recognizes These benefits and that's why they are exploring or considering expanding it into other products. I think because of the fact that it has brought on more people into this activity, well, Considering that it creates an opportunity, a commercial interesting commercial opportunity for some of the brokers, it has led to more people Joining this market and since there is a limit of only 15% of the asset class that can be done through RLP, there is the spillover of the remaining Liquidity into the main book. So I think our view is a positive one and so is the regulators. Thank you.
This concludes today's question and answer session. I would like to invite Mr. Daniel Sonder to proceed with his closing statements.
Sure. Thank you very much for joining. Thank you for the questions. I hope I was able to clarify Everything, we remain very committed to transparency, very committed to Letting you know what's going on, even when there are some changes in assessments and so forth. And this is the way of doing things in our view.
And we thank you for your interest, your confidence. And if you have any further questions, please do let us know. We continue to run the business with 100% focus on Our clients, on our operations and on the amazing opportunity that there is for growth in the financial and capital markets. So thank you very much and again thanks for the communications and the IR team for all the hard work over the last few days.
Everyone, I think we ran out of time, but if you have any follow-up questions, the IR team is available. Reach out to us and we'll be happy to help. Thank you so much for joining our call. Have a good day.