Brazil’s securities regulator has authorized the country’s first structured entry into the prediction market space, clearing the way for B3 to launch binary event-based derivatives aimed initially at professional investors. The approval signals the start of a regulated framework for financial-linked prediction contracts, while broader questions remain about how non-financial event markets will be supervised.

The Brazilian Securities and Exchange Commission (CVM) confirmed that it has analyzed and approved new options contracts under existing regulations. In a statement, the regulator said it “monitors, within its legal authority, the evolution of initiatives in the capital markets and is permanently modernizing regulation and supervision, in light of various factors such as innovation, supervisory experience and market participants’ demands.” It added that the “new options contracts approved by the authority were analyzed based on current regulation.”

B3 to Launch Binary Contracts for Professionals

B3 plans to introduce its first prediction-style derivatives during the first quarter of 2026, with the rollout expected no later than early in the second quarter. Access will be limited at the outset to professional investors holding more than R$10 million in financial investments.

The initial products will take the form of binary options tied to financial assets, including the U.S. dollar, the Ibovespa index, and bitcoin. Investors will select either a “yes” or “no” outcome for defined scenarios. Examples include whether the dollar will fall below R$5 by a certain date or whether the Ibovespa will exceed 200,000 points in May.

Explaining the concept, one scenario would involve two investors taking opposing positions. If one participant wagers R$40 that the Ibovespa will reach 200,000 points in March and another stakes R$60 that it will not, the correct prediction secures the combined R$100. The pricing of these contracts fluctuates according to the perceived probability of the event.

In an interview, B3’s president Gilson Finkelsztain said: “Increasingly, the derivatives world is approaching this frontier of the predictive market.”

Luiz Mazagão, vice president of products and clients at B3, described the appeal of such instruments, stating: “There is an audience looking for this simplicity. It’s a gateway, and then [the target audience] can evolve in their investments. That’s one of the product’s greatest values.”

B3 already operates products with comparable mechanics, such as options linked to decisions by the monetary policy committee (Copom) on the Selic interest rate. Institutional investors dominate that segment, though retail participation has begun to increase. Exchange executives have indicated they will seek approval to expand access beyond professional investors, as retail investors globally account for a significant share of activity in prediction markets.

Regulatory Lines Remain Under Discussion

Although CVM supervision currently frames these products as derivatives, uncertainty persists regarding event markets that extend beyond financial indicators. Sports betting in Brazil falls under the Ministry of Finance’s Secretariat of Prizes and Betting. Market participants continue to debate whether certain predictive contracts should fall under securities regulation, central bank oversight, or gambling rules.

Claudia Yoshinaga of FGV EAESP noted that every new financial product prompts regulatory reflection, similar to earlier debates surrounding cryptocurrencies and sports betting. She observed that contracts linked to financial assets resemble established derivatives more closely and may therefore face fewer classification hurdles.

Legal practitioners have highlighted potential complexities. According to BNL Data, Lisa Worcman of Mattos Filho described the segment as operating in a gray area in Brazil and warned that the country should draw lessons from recent betting regulation. “And let’s remember we are in a World Cup and election year in Brazil,” she said, noting that major events tend to stimulate demand for predictive contracts.

Paulo Brancher, also of Mattos Filho, stressed caution, stating: “Innovation alone cannot set aside the safeguards that this type of activity entails.” He pointed to U.S. practices in which each contract undergoes prior review to prevent problematic offerings, including contracts that could be “self-fulfilling.”

Eduardo Carvalhaes of Lefosse argued that oversight will likely involve multiple authorities rather than a single framework. He cautioned: “If there is a regulatory vacuum, the service will still be provided, but outside the bounds of regulation.”

Prediction markets have expanded internationally, with research firm Eilers & Krejcik estimating potential annual global volumes of up to US$1 trillion. In the United States, platforms such as Polymarket and Kalshi have experienced rapid growth, particularly during presidential elections. Kalshi operates under the supervision of the Commodity Futures Trading Commission, while legal disputes continue between state regulators and market operators.

Intercontinental Exchange, parent of the New York Stock Exchange, has invested in Polymarket, underlining institutional interest in the sector. However, major U.S.-based operators have not yet entered Brazil directly. Market sources indicate that Kalshi may consider launching locally, while both domestic and international companies await clearer guidance.

Within Brazil, initiatives such as Prévias and Palpitada already operate in the predictive space, and a new platform, Futuriza, plans to begin operations in March. Futuriza intends to offer B2C markets covering politics, economics, sports, entertainment, and culture, alongside B2B services designed to capture collective insights for corporate decision-making.