Additional Case Studies
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BEE4
BEE4 Will Soon Become Brazil’s First Regulated Tokenized Stock Market Thanks to EP3 Technology
The Client
BEE4 is an over-the-counter (OTC) market for small and midsize enterprises (SMEs) and Brazil’s first authorized infrastructure to trade tokenized stocks.
It is among the world’s first initiatives to use blockchain in a regulated environment and is pioneering a movement that has the potential to transform the country’s financial industry and drive economic development.
With the creation of this new market, SMEs can gain access to capital markets, fund their expansion strategies, and improve their visibility. Simultaneously, clients can benefit from IPOs and invest in shares of high-potential firms typically unavailable on traditional exchanges.
The Challenge
Following its 2022 launch, BEE4 began preparing for a pivotal new phase – integration into two major Brazilian brokerage firms midway through 2024. This is a significant step forward for BEE4, which may diversify its investor base, thereby increasing liquidity and driving further development of this new market in Brazil.
Thus, BEE4 evaluated solution providers worldwide, searching for a firm that could provide tailored solutions to capital markets. Leaders sought innovative and flexible technology to adapt to Brazilian financial markets and requirements.
Connamara Technologies’ developers offered BEE4 a detailed and tailored solution using its EP3 exchange platform, which would allow the company to expand into this new market and scale quickly.
The Solution
BEE4 leveraged Connamara Tech’s APIs to customize their exchange precisely to their specifications, adapting certain rules to align with the Brazilian market.
Both teams worked to structure the required backlog of activities and prioritize these items within the specified deadline. To ensure smooth system connectivity, we allocated a dedicated support team to address BEE4’s questions and concerns throughout the development, testing, and integration phases.
The auction mechanisms specific to BEE4’s operations required modification for their use case, and our team achieved this in a fraction of the time it would have taken with legacy technology or a custom-built solution. This intricate customization and robust operation tools set the stage for a technologically advanced and highly adaptive platform.
The Results
EP3’s required modules of order matching, pre-trade risk, market surveillance, and exchange administration were implemented and integrated into BEE4’s systems.
This implementation is in the final testing phases and is expected to go into production around the first half of 2024. As activities progress, new services offered by our team are under discussion to support the company’s long-term evolution.
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TRANSCRIPT:
Patricia Stille, CEO and Co-Founder of BEE4: BEE4 is a pioneering OTC market in Brazil focused on SMEs and one of the first initiatives globally using blockchain and regulated market infrastructure. With the creation of this new market, SMEs can gain access to capital markets, fund their expansion strategies, and improve their visibility. At the same time, clients can benefit from IPOs and trade shares of high-potential firms typically unavailable in traditional exchanges.
Rodrigo Fiszman, Co-Founder and Chairman: BEE4’s trading model has a weekly auction with tunnel prices, so, at the end of the day, you can only put orders and input a trade between the tunnels in the auction. Since we’re talking about small and medium companies with less liquidity, we were focused on reducing the volatility for the owners, entrepreneurs, of those companies. BEE4 received its license in September 2021. From that day ’till one year after we launched, we were able to have more than 6,000 investors in our trading venues. We had four IPOs in a period when you didn’t have any IPOs in Brazil.
Paloma Sevilha, Head of Products: Connamara Technologies is the company behind EP3. EP3 is the order-matching engine and the exchange trading platform behind BEE4 operations and other exchanges worldwide. We chose EP3 for a few reasons. First of them, they are a well-established exchange platform. Second reason, they were very open to building these new features with BEE4. And third, they were part of the project regarding the FIX protocol which is something that is crucial for business. EP3 is very asset-neutral. And in BEE4 we work with tokenized stocks. And, we’re planning to work with different assets. We can have all these assets in EP3. We can just create a product and we can build that in a few minutes just with a few clicks. Besides that, we have the Connamara support team that is available 24/7. We work from 10 a.m. to 8 p.m., so we do need a team that is available for longer hours in case there are any bugs or any questions or any maintenance needed. They’re there and they answer really quick.
Rodrigo Fiszman, Co-Founder and Chairman: So, in the end of the day, having Connamara as a partner and using EP3, it was all about scalability and also leveraging ready-made solutions that allow us to gain a head start.
Patricia Stille, CEO and Co-Founder of BEE4: We chose Connamara’s solution after evaluating other providers across the globe. This is the kind of partnership that is key: not only to develop the SME segment but also to expand to other niches and scale up.