Good morning, ladies and gentlemen, and welcome to the audio conference call of B3's earnings results for the third 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 the time. If you should require assistance during the call, please press the star key followed by zero. 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 Marcela Bretas, Head of IR and Strategic Planning.
Thank you. Good morning, everyone. Thanks for joining our call. This quarter was very important to B3. We had several important strategic advances over the last couple of months that I'd like to share with you. In October, we announced the acquisition of 100% of Neoway. Neoway is one of the largest Data & Analytics and Artificial Intelligence companies in Brazil. For this acquisition, we are paying BRL 1.8 billion, and it's in line with our strategy to diversify revenues and look for companies that have attractive growth opportunities within what we consider to be a first adjacency to our core business. Neoway reinforces our product development capacity and accelerates our go-to-market for Data and Analytical products.
We are hoping to obtain over the next few weeks the necessary approvals to go on and close this transaction. This transaction is subject to a shareholder's approval. We've called for an EGM in early December 9, and we hope you guys do join and participate in this meeting. We are pending regulatory approvals from both CVM and Cade, which is the antitrust entity here in Brazil. In October, we announced an investment in a company called Pismo for $10 million. Pismo is a fintech company that offers technology platforms in the cloud for financial services. It's a very interesting company and a very high-growth one with differentiated product portfolio offering.
We think this acquisition will help us strengthen our relationship with a key supplier for future developments here at B3. Finally, in October, we also obtained the regulatory approvals from CVM and Cade to close the investment in Dimensa. Dimensa is the company of TOTVS that we invested in BRL 600 million in exchange for a 37.5% stake. Also as a highlight for the quarter, we had the issuance in September for bonds amounting to $700 million with a 10-year tenure and semi-annual payment of interest in the amount of 4.125%. This issuance diversifies B3 sources of funding and will provide funding for us to pay debt scheduled to mature in 2022.
B3 became the first exchange in the world to issue a sustainability-linked bond that has two sustainability targets linked to it. The first one is the creation of a Diversity Index here at B3 by December 24th, and the second one is to increase the percentage of women in leadership positions here at B3 to a minimum of 35% by December 26th. With this new debt issuance, B3 reviewed its leverage guidance for the year from 1.5x to up to 2x EBITDA of the last 12 months. Finally, I'd also like to highlight two important operational developments for us. The first one was the amendment of the corporate law here in Brazil that now allows for super-voting shares to be issued by companies that are looking to IPO here in Brazil.
This is an important development for the local capital markets and will likely incentivize a number of companies that were considering IPO in other markets to list locally. B3 has actively participated in those discussions and think this is a very important development for the local market. Additionally, in the end of August, we obtained the approval from the central bank to go ahead and establish our receivables platform that is in trial phase as of now and will likely be launched by year-end. Moving on to financial and operational results. In the third quarter of 2021, we saw interest rates rising as a result of higher inflation. Even with this scenario, we saw growth in all of our segments revenue line.
We have achieved record levels in terms of capital raising here at B3, with close to BRL 50 billion being raised through 25 offers, of which 17 were IPOs and 8 were follow-ons. Year to date, capital raised through IPOs and follow-on has reached BRL 127 billion here at B3. Revenues reached BRL 2.5 billion, which is in line with what we observed in the second quarter of this year, and with what we had in a small increase versus last year. When we disconsider provision reversals that we had in the second quarter of this year and the third quarter of last year, revenues were 7% higher than last year and in line with the second quarter.
EBITDA has reached BRL 1.8 billion, a 9% growth compared to third quarter 2020. Moving on to highlights of volumes. In the Listed segments, ADTV for shares for equities reached BRL 31.5 billion in the quarter, almost 10% higher than what we had last year, and 5% lower than what we had in the second quarter, which is explained partly by the seasonality that we usually observe during the vacation months of the northern hemisphere. In Listed Derivatives, ADV grew for all contracts in line with higher volatility that we observed in the market. In our OTC segments, volumes were up, revenues were up 11%.
We saw funding instruments issuances rising 3%, mostly driven by time deposits and fixed income stock was up 10%. In the Infrastructure for Financing unit, volume was up, revenues were up close to 11%, driven by higher stronger volumes of Vehicle Financing and also Real Estate Financing activity. In the Technology and Data segment, revenues were up 19%, driven by the number of clients that we have in our monthly utilization service, which are a reflection of a more active buy-side industry here in Brazil. We also saw an increase in data revenues driven partly by exchange rates. With that, I want to open up for questions. Thank you very much, everyone.
Ladies and gentlemen, we will now begin the question and answer session from investors and analysts. Our first question comes from Ricardo Buchpiguel, BTG.
Congrats on the good results. I have one question here. In the past couple of years, we haven't seen turnover velocity for the Equity business accelerating significantly for several different reasons. With a more challenging market environment in the last two quarters, we saw that turnover decrease sequentially. I understand that there is a lot of uncertainty involved, but could you please comment on our view for how turnover should behave in 2022 compared to the levels we saw in this quarter? Thank you.
Good morning, Ricardo. Thanks for your question. It's a tough one to answer. You are absolutely right. Over the last couple of years, we saw a sustained increase in the level of turnover velocity here at B3. That is explained by several different factors. At first, when the early 2020 pandemic hit, that turnover velocity was driven mostly by volatility. But as volatility started to decline, we saw other factors coming in and playing a role in helping sustain higher than what we had observed historically in terms of turnover velocity. One of the drivers of higher turnover velocity is more investors coming in our Equities business. This is a trend that started in 2019.
We started the year with close to 800,000 accounts at the depository, and we finished the year with 1.6 billion. 1.6 million, I'm sorry. This is something that was driven by a decrease in interest rates. Since then, this number has multiplied by almost fivefold. Now we are running with close to 4 million accounts at our depository. New investors that come in, they have an immediate impact on the increase in turnover velocity here at B3. Additionally, we saw a sustained demand from especially local institutional investors as they navigated a scenario where real interest rates were at its lowest points in Brazil ever.
This sustained demand from both retail and institutional local investors over the last couple of years has encouraged several companies to come in and go ahead with their capital raising plans. We saw a number of IPO and follow-on offers taking place at B3, both of which contribute to the increase of ADTV, both in the market cap line as well as in the turnover velocity side of the equation. We are seeing sort of a shift in terms of ADTV from the sectors that we typically had a higher weight in the ADTV to other new sectors starting to gain importance in those sectors such as Retail, Technology, et cetera. They typically come with a investor behavior that has a higher turnover velocity.
Also we have worked and promoted a number of new products such as BDRs, for instance, and ETFs, that have been major hits with our investors. To give you a sense, BDRs in the beginning of 2020 they represented about BRL 20 million in ADTV, and now this number is closer to BRL 400 million. Combined with ETFs, we now have ADTV from these new classes of products that have gained importance over the last few months, adding up to almost BRL 2 billion in ADTV.
Finally, I think it's worth mentioning that we implemented in February a new pricing table, this intermediary model that we've been talking about, that incentivizes two classes of market participants that also might have an important impact on turnover velocity, which are retail investors by the exemption of the fees that they pay in our depository, as well as day traders for which we are offering deeper discounts for their transactions. If those two groups of clients if we are successful in our strategy and those two groups of clients increase the volumes that they trade here at B3, that also might play a sustainable part in keeping turnover velocity at higher levels. Finally, we just had this change in corporate law that I mentioned, allowing for super voting rights.
We'll still have to wait and see what the impact of this will be. Potentially, theoretically, what we could see is companies coming in with higher free floats in their IPOs and follow-ons, along with higher free floats that also tends to have an impact on turnover velocity. With that, all I'm saying is that structurally, we had some factors that played in to justify a higher turnover velocity. On the other side of the equation, what we'll have to balance is the increase we are observing in interest rates and how this will play out over the next few months. We'll kind of have to wait and see. Sorry if I can't be more precise in my answer.
No, it was very great. Thank you.
Our next question comes from Carlos Gomez, HSBC.
Hello, good morning. Thank you for taking my question. First, I would like to know if you could give us an update on your legal contingencies, in particular the one disclosed recently about the case coming back from 1999. We saw that you updated the amount. We would like to know if you have any news and when you expect the court to take its course on the case and to issue a resolution, if you have any new information. The second I would like to ask about the change in leverage. I mean, you have taken more, you have changed the guidance. We're in the middle of an interest rate cycle everywhere, rates are going up.
Is this the right time for you to be taking on more leverage? Thank you so much, and congratulations on the results.
Good morning, Carlos. Thanks for your questions. The first one, if I understood correctly, you wanna talk about the case from Marka/FonteCindam that we announced the reclassification last quarter.
That's correct.
This case, we have no news since then. I think it's probably gonna be a while before we have anything to report on that front. Our lawyers their best guess at this point is that it's likely gonna take probably another three years, two to three years for us to have a trial, a new trial on this case. It's unlikely that we'll have any news to report on that front in the near future. On the leverage front, I think we have some debt redemptions is scheduled for next year. I think one of the goals was to prepare ourselves ahead of in an election year. That is, in the coming year, we'll have elections.
Typically, what we see in election years is a more, probably a more volatile market that could impact our ability to raise funds at an attractive rate. We wanted to anticipate ourselves in case that scenario materialize, and we wanted to take advantage of a good market conditions that we observed and prepare ourselves liquidity-wise. This increasing leverage should be temporary.
Okay. That's clear then. All right. On the first case, sorry, on the legal case, can you remind what the interest rate is accrued for the amount at risk?
It's sort of an inflation index plus 6% a year.
Plus 6%. Okay. What is it, the São Paulo Stock Index? Or...
Yes. STJ.
STJ. Okay. Thank you so much.
You're welcome.
Our next question comes from Ian White, Autonomous Research.
Much for doing the call. Just a few questions from my side, please. First of all, on Neoway, I wondered if you're in a position to provide any update on synergy opportunities there at this stage. I think I remember from the call you had recently, this was something you were still exploring and there might be some guidance in the future. Anything else that could be said on that would be of interest, please. Secondly, can you help me understand roughly what percentage of your revenue is inflation-linked? Is it substantially just the technology and data contracts, or are there other areas where you have inflation linkages within the pricing agreements, please?
Can you help me understand what has happened in other revenue within technology and data during the quarter? I think it was fairly healthy year-over-year growth, but sequentially stepped down about 28% versus 2Q 2021. Just keen to understand what's changed there, please. Thank you.
Hi, Ian. Good to hear from you. On your first question regarding synergies arising from the Neoway transaction, we anticipate mostly synergies coming on the revenue front from potentially new products and leveraging on their established platform to accelerate our go-to market for our Data & Analytics products. We are not providing, at this time, any guidance related to the level of synergies yet. We are working on trying to detail these new initiatives that we could potentially develop in partnership with them. At this point, we're still waiting for the antitrust authority's approval, so we are somewhat limited in the work that we can do and the level of granularity that we can have.
We are working on putting together this plan, and we'll detail this over the course of the next few months. As I said, we expect important synergies coming from the complementarity of the data that both companies have, B3 and Neoway, and from the platform that they already have in place as a distribution platform for our Data & Analyticss products for B3. Not only in the Credit and Retail segments, but potentially also for the data for capital markets and financial services that we are working on. Moving on to your second question, which was... The second question, can you repeat that? Sorry, Ian.
Yeah. Yeah, sure. It's just, I was just wondering if you can help me understand, roughly what percentage of your revenue is inflation-linked?
Directly, inflation-linked, we have part of the technology monthly utilization line is typically annually readjusted by inflation. In our infrastructure for financing unit, the services that we provide for the SNG and the contract system typically are also annually readjusted by inflation. In other segments, we have the indirect benefit from inflation in the sense, for instance, typically volumes could increase in the listed segments with more inflation, right. As we charge a basis points fee on the volume that is traded or the number of contracts that is negotiated, that will tend to capture some increase in inflation in some form. In the OTC segment, we have the stock of fixed income instruments here at B3 being adjusted by nominal interest rates.
This should also capture in some form, and we charge basis points fee on this as well. This sort of capture the increase of inflation as well. I think for most of our revenue lines, we are sort of protected from inflation in the sense that volumes or prices will tend to grow, at least with inflation. Finally, for your question, Fernando will address your question on the other revenue line in the Technology and Data services.
It's mostly about the services. We have a drop in auctions that we hold in B3. We have a platform for auctions. There was less auctions this quarter. Fines, which is we have if a market participant doesn't comply with some rules about our settlements, we have a fine and there was a decrease in that also in the quarter. It's not something that is relevant.
Super. Very clear. Thank you.
Our next question comes from Kaio Prato, UBS.
Hello, everyone. Thank you for the opportunity for asking questions. I have two questions here, if I may, please. The first is related to the average fees charged on the Exchange. We saw a reduction again this quarter, with the implementation of more incentives in June. Just would like to have an update and understand if all pricing changes were already implemented now. What are you expecting in terms of prices for the following quarters? The second is related to the public hearing in CVM. Just wondering, if you have, if you expect any movement until the end of this year or if you have any update on the timeline for this resolution, please. Thank you.
Good morning. Your first question, I'll start by the second question about CVM and the public hearing process. We do not have any insights in terms of timing here to share with you guys. It's completely up to CVM's discretion. Second question about the pricing for the Equity segment. As of now, we have not implemented the full model that we intend to do. We are still working on it, and it's still very much our intention to go ahead with the full model as soon as possible. Again, we are here not completely in charge of the timing of it.
We are hoping to go ahead and complete the full model as soon as possible, hopefully over the coming few months. With regards to potential price fluctuations you might see, it's sort of the characteristic of this new pricing table that margins will adapt and adjust according to volumes. In a quarter in which you'll see higher volumes, you probably will typically see an average lower ticket and vice versa. This pricing might fluctuate and it's sort of the nature of the new pricing scheme that we are implementing.
Okay, thank you. Just a follow-up on this. Just to have the full implementation, what is missing on your side today?
In order to have the full implementation, it is required that all market participants make some adjustments to their systems. That's an ongoing process, those adaptations. Once it's finalized, then we'll be able to implement the full model.
Okay, great. Thank you very much.
Our next question comes from Tito Labarta, Goldman Sachs.
Hi, good morning, Marcela. Thanks for the call. My question on the goodwill lawsuit, you released a notice to the market during the quarter, I think this is 2017, potential fine, I think it's BRL 240 million. Just to understand, or BRL 204 million. What is the impact or the potential penalty on that one? Just on the total goodwill lawsuits, what are the potential, if you can just kind of remind us the total potential penalty from the goodwill lawsuit. There was another one related to the tax rate for the CME, also about BRL 1.1 billion. If you can give us, you know, what is the potential risk there? Have you provisioned anything for that? Just give us an update on that as well. Thank you.
Hi, Tito . This new goodwill notification that we received from the Receita Federal is a total of close to BRL 200 million. It's basically just penalties because for the time period to which it relates, we actually had a net loss, so we hadn't compensated in that quarter any gains with the tax shield from the goodwill. It's basically just the penalties and it amounts to close to BRL 200 million. The outstanding cases that we had prior to this, they amount to close to BRL 12 billion. That's sort of where we stand and no new developments in the other cases that we have outstanding. Fernando will talk a little bit about the CME case.
Hi, Tito Labarta. The CME case, we had a stake in CME, it's about 5% of CME. We sold a part of that in 2015 and a part of that in 2016. The case that we are discussing now, it's a case in 2016. It's about the FX variation on the investment that we had when we sold our stake in CME. We recognized a gain, and this gain, we included the FX variation, which was favorable to us. The IRS is disputing that with us, and we are more than confident that we are gonna also win this case because we did everything strictly by the law. We couldn't do any other way.
We just recognized this FX variation on the investment. We recognized that when we were paying the taxes. That's about it. We had another case. This is about the 2016 case. The 2016 sale and the 2015 sale is also disclosed in our reference form. If you wanna check it out, it's there. Okay.
All right. Thanks, Marcela, Fernando. Just on that CME, I think it was BRL 1.1 billion, right? That's the potential penalty that you don't think you'll lose, is what you're saying.
Yeah, no, we don't. We are pretty confident that we are also gonna win this case.
Okay, great. Thank you. Maybe just one question on the receivables market. I think you said. Just remind us, when do you expect to start? I know, you know, there's been some, you know, several issues there, I think, on the interoperability and, you know, settlements, of transactions. Do you think, you know, that'll be a concern for you as you enter that market? How comfortable are you that those issues will get resolved? What is the potential, you know, upside that you may see, for you in terms of your revenues that may come from that? Thank you.
Tito, we are in the pilot test phase of our platform. Our intention is to launch it by year-end. I think we are pretty comfortable with the stage that we are in. In terms of interoperability and how the platform is working, I think the market seems to have overcome the technical difficulties that it had in the past. For us, it could potentially in the future become an important revenue opportunity. It's likely that it's gonna take some time to build volumes over there. At this point, as you know, we don't disclose guidance in terms of what we see as revenue potential. This will probably be a gradual process of build-up, but we are optimistic about the potential size of this market in the future.
Okay. Thank you, Marcela.
Our next question comes from Antonio Ruette from Bank of America.
Hi, Marcela. Thanks for the call. My first question here is on revenue diversification. If you could comment on the multiple business lines that you are adding, and if you have appetite for further M&A activity, especially on Data, in the short to mid term after Neoway. A second question here. If you could comment on the behavior of the retail investor after the strong addition in traders over the last years. How did they behave over these last three months with greater macro uncertainty, especially in Brazil? Thank you.
Good morning. Thanks for your questions. Starting with the strategic view that we have on Neoway transaction and overall our strategy to expand. After the merger between BM&FBOVESPA and Cetip back in 2017, we designed medium-term strategic plan for B3, in which we decided that there were basically two pillars for our strategy going forward. The first one was to strengthen and maximize the potential of our core business. The second one was to selectively look for growth opportunity in what we consider to be first adjacencies to our core businesses, diversifying our revenue streams. The acquisition of Neoway is in line with the second pillar, as well as is the case for the investment in Dimensa.
In these two cases, what we saw were markets that were very close to our core business, serving potentially very similar clients and offering new products that we see a great growth potential going forward. Data for sure, Data & Analyticss, it's an important avenue for us to pursue in terms of future growth. As you probably see other Exchanges around the globe have been very active in growing their data revenue lines. It provides a new source of revenues that is typically less transaction-oriented, and it's high growth.
We think that in B3 we have very unique data that we could leverage and offer products to the market that could really add value to our clients' credit activities, their assertiveness in their sales and marketing efforts, in their KYC, AML practices. We think those products could really add value and there could be a very strong demand for this. Definitely Data is an important avenue of growth that we want to pursue. We have several organic initiatives within B3 in line with these strategies.
Eventually we might consider doing M&As when we think that this will either bring us an expertise that we don't have in-house or provide a faster go-to-market or bring in complementary data or help us in our product development efforts. That's what we did with, in the case of Neoway. Moving on to your question relating to volumes and if I understood correctly, you're asking about the volumes of day traders in a scenario where you see more volatility. Was that it?
Yeah. Especially in Brazil, we have an uncertain macro, and it's really added a lot of investors over the last years. How are they behaving now?
For now, we continue to see an increase in the number of both retail and day traders here at B3. It's as we disclosed the number of accounts, you know, depository grew 4% sequentially. We continue to see this trend playing out despite the scenario of higher interest rates.
Okay. Thank you.
Ladies and gentlemen, as a reminder, if you like to pose a question, please press the star key followed by the one key on your touch-tone phone now. This concludes today's question-and-answer session. I would like to invite Marcela Bretas to proceed with her closing statements.
Again, everyone, thanks so much for your time and for listening to our call. Your continued support to B3 is very important to us. The full IR team is available if you have any follow-up questions. We'll be glad to talk to you. Thanks so much and have a nice day.
That does conclude B3's audio conference for today. Thank you very much for your participation. Have a good afternoon, and thank you for using Chorus Call Brazil.