A5X links up with MSCI to list Brazil index derivatives and challenge B3's turf

What's new

A5X SA and MSCI Inc. plan to roll out derivatives linked to MSCI's Brazil indexes, creating a fresh alternative to B3's Ibovespa, which has long been the main equity yardstick in the local market. The initial push is Brazil index contracts, then broader offerings. As Karel Luketic, a co founder and vice president at A5X, put it, "MSCI indexes are regarded for their efficiency and sophistication."

The roadmap starts with Brazil exposures and then broadens to instruments connected to systematic strategies, global indexes and sector slices, Luketic said. From MSCI's side, Christine Berg, head of Americas Index, called the tie up "a natural fit," adding, "We continue to invest, not just in Brazil, but more broadly across Latin America as well, so this was really an intelligent combination."

The upstart's plan and the incumbent's grip

Sao Paulo based A5X was built by alumni of XP Inc. and B3, and it intends to run an exchange for derivatives on equities, currencies and rates. The company looks to begin operations next year, with the startup anticipated in the first half of 2027, and it is in the final testing phase with Brazil's regulators, according to Luketic.

As a result, A5X will compete with B3, a venue that holds an almost monopolistic position in certain Brazilian exchange markets. The newcomer was valued at 2.7 billion reais (about 489 million dollars) in September and secured 360 million reais to fund operations until it reaches financial balance.

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Why it matters to investors

MSCI is a major index shop, with roughly 23 trillion dollars in assets benchmarked to its gauges. Global investors commonly use the MSCI Brazil Index to track large and mid cap Brazilian names, and when MSCI updates that index, passive funds often shuffle holdings to match.

Brazil's footprint in MSCI's developing markets index has shrunk from 16.8 percent at the end of 2009 to 3.9 percent today, while Taiwan sits at 28.88 percent. In plain English: if A5X brings MSCI based contracts to life, you could see another venue for trading the flows tied to those benchmarks, right alongside B3.

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