The capital markets are well placed to host the contracts that put a price on the probability of events, along a gradual path that can begin with professional investors.
João Pedro Nascimento · Originally published in InfoMoney, October 2026 · Portuguese original
September opens the soybean planting window in Brazil’s Center-West and brings back the question that defines the harvest: will the rain come at the right time? The price of soybeans already finds protection in the futures market. Climate risk can find its own as well, and prediction markets open one of the possible paths: a contract that pays out if the rain fails can serve as complementary protection (a hedge) for the crop. To that end, these contracts can gain space in the capital markets, under the supervision of the Brazilian Securities and Exchange Commission (CVM).
Prediction markets are trading venues for contracts whose payout depends on a future event that is uncertain and verifiable. Each contract pays a fixed amount, such as BRL 100, if the event occurs, and zero otherwise. The quoted price expresses the probability assigned to the event: a contract trading at BRL 30 signals an estimated chance of around 30%. Investors know their maximum gain and loss in advance, and the market gains, in real time, an indicator of expectations.
In the United States, the Commodity Futures Trading Commission (CFTC) treats these instruments as derivatives and organizes this market. Brazil has followed the movement. In April 2026, B3 began trading event contracts referenced to the Ibovespa index, the U.S. dollar and Bitcoin, with access restricted, for now, to professional investors. The law points in the same direction: since Law No. 10,303/2001, Law No. 6,385/1976 has included derivative contracts among securities, regardless of the underlying assets (Article 2, item VIII). Event contracts function as derivatives and therefore fall within the remit of the CVM. And the country already has a model for integrating them.
The Crypto Precedent
A few years ago, crypto assets circulated outside the regulatory perimeter. During our tenure at the head of the CVM, we issued, in 2022, CVM Guidance Opinion No. 40 (Parecer de Orientação CVM nº 40), which clarified when a crypto asset is subject to capital markets rules. Then came Law No. 14,478/2022, Decree No. 11,563/2023, which assigned to the Central Bank of Brazil (BCB) the regulation of virtual asset service providers, and BCB Resolutions Nos. 519, 520 and 521, preceded by public consultations. In tokenization, the CVM’s Circular Letters No. 4/2023 and No. 6/2023 brought legal certainty to offerings of receivables tokens on crowdfunding platforms, which grew from around BRL 220 million in 2023 to BRL 1.5 billion in 2024.
The experience leaves at least three lessons: each authority acted within its own mandate, in a coordinated manner; the rules were born of open dialogue; investors gained protection, and the country preserved innovation. A recent development in the betting market makes this roadmap even more timely.
A Clearer Boundary
On September 25, Provisional Measure No. 1,394/2026 prohibited the operation, offering, intermediation and advertising of fixed-odds betting in the country, on the grounds of economic, social and public health impacts. The measure now depends on the National Congress. A BCB study had already estimated between BRL 18 billion and BRL 21 billion per month in Pix transfers to betting companies in 2024, including from families that receive Bolsa Família benefits.
The decision reinforces the boundary that regulation had been drawing. In fixed-odds betting, the operator sets the odds and acts as the bettor’s counterparty. In event contracts, the price results from supply and demand, the platform acts as an intermediary and the underlying has economic relevance. In the capital markets, these contracts come with a registered intermediary, suitability checks, risk disclosure and CVM supervision. Agribusiness, for example, shows the value of this distinction.
What a Dry Spell Is Worth
Consider a contract that asks whether rainfall measured at a station of the National Institute of Meteorology (INMET) will stay below 100 millimeters in October, paying BRL 100 in the event of a “yes.” If the “yes” trades at BRL 20, the estimated probability of a dry spell is 20%. A producer who expects to lose BRL 1 million with a dry October buys 12,500 contracts for BRL 250 thousand. If the dry spell comes, the producer receives BRL 1.25 million, which covers the loss and the premium. If it rains, the producer bears the premium and harvests the expected crop. In both scenarios, the outcome becomes predictable.
The idea has precedents: U.S. exchanges have traded weather futures since 1999. The modeling must address basis risk, that is, the difference between the rainfall measured at the station and the rainfall received on the farm. The decisive distinction lies in function. Treated as a curiosity, rain comes close to entertainment. Measured as an index, with an impact on the income of a production chain, it comes close to economic protection.
Calibrating CMN Resolution No. 5,298/2026
In April 2026, the National Monetary Council (CMN) prohibited derivatives linked to sporting events, online games and political, electoral, social, cultural or entertainment themes. A month earlier, the CVM, through Official Letter No. 4/2026/CVM/SMI, had restricted binary-outcome contracts to professional investors. Since then, B3 has been discussing with the CVM the expansion of this target audience.
The CMN resolution had the merit of separating prediction markets from betting and of safeguarding the electoral process. Its architecture leaves room for improvement: the rule adopted a thematic criterion, uniform for the entire market, whereas the capital markets usually calibrate access according to the function of the instrument and the profile of the investor. The text itself opens space by admitting “other benchmarks related to variables of relevant economic or financial interest,” as delimited by the CVM. An official rainfall index can bring these attributes together.
The gradual expansion of the investor base has a precedent. In 2021, a Regulatory Impact Analysis (AIR) study by the CVM recommended easing requirements for retail investors and considering, in addition to net worth, certification and professional experience. Under CVM Resolution No. 175/2022, issued during our tenure, the quotas of receivables investment funds (FIDCs) came to reach retail investors.
The natural starting point is the professional investor, defined in Article 11 of CVM Resolution No. 30/2021. In the first stage, the CVM could consolidate in a rule, after a public consultation and an AIR, the regime for event contracts for this audience. In the second, it would assess the extension to qualified investors. In the third, it would analyze retail access, with suitability, exposure limits and financial education. With the right design, the stages can follow one another swiftly, and the CVM’s regulatory sandbox allows models to be tested before a broad offering.
A Vocation of the Capital Markets
Agribusiness illustrates one application among many. An investor can express a view on the next decision of the BCB’s Monetary Policy Committee (Copom), a logic that B3 already offers through the Copom option. Small and medium-sized enterprises (SMEs) can protect themselves against the price of an imported input or against the weather in fractions compatible with their size, where conventional derivatives require the scale and collateral typical of large companies.
In all these cases, event contracts fulfill classic functions of the capital markets: forming prices, allocating risks and conveying information. The opportunity lies in defining, with sound criteria, the place and the rules for these contracts. It is up to the authorities, with a technical approach and dialogue, to assess this path, starting with professional investors, using the same method that integrated the crypto economy into the regulated environment, in the certainty that prediction markets and the capital markets have much to gain from this convergence.
