Big money lawsuits stir doubt in Brazilian markets

At some point in the coming months, Brazil’s Superior Court of Justice (STJ) is expected to try an old but highly consequential case involving São Paulo stock exchange B3 and the Central Bank. More than two decades after the suit was initially filed, the bourse appears slightly less certain about its chances of winning — not least because the dispute involves billions of Brazilian Reais.

The case refers to the role of the Central Bank and B3 — then called BM&F (Brazilian Mercantile and Futures Exchange) — in operations carried out on the futures market to assist Brazilian banks Marka and FonteCindam. The incident in question happened in January 1999, a period notorious for massive currency devaluation in Brazil. 

The STJ does not have a deadline to conclude the case, but a recent change made by B3 caught the market’s attention for all the wrong reasons.

Last month, upon presenting its solid Q2 results, B3 revised its contingent liability risk rating from “remote” to “possible,” indicating that the company is less bullish about its...