Fintech Spotlight: Brazilian Fintech Guru Looks To Launch Commission-Free Trading

A lot of myths surround Brazilian stock market investing, according to Felipe Catão and Marcelo Zuppardo, the co-founders at Guru, a platform democratizing access to the Brazilian stock market.

“Only my friends that went to business school invest in stocks,” Catão said. “All of my other friends, family, and everybody in Brazil, no one really invests in stocks.”

Number Of Young Traders Surges In Brazil: Catão comes from a finance background. After starting out in retail, he became an institutional investor, running his own hedge fund.

After a successful exit from his fund, Catão spent some time said he discovered Brazilian markets were outdated, primarily due to structural problems and a lack of innovation.

“We always had very high-interest rates in Brazil. Back in 2016-17, we had 15% interest rates. Why would you take on any additional risk to get yield?”

After a change in leadership and structural reforms, rates began dropping and the stock market became more enticing, he said. 

“People are now coming into the stock market,” Catão said in a discussion on the interest of young Brazilians in the stock market. “Those 800,000 [self-directed] investors became 3.5 million in just two years.”

Guru's App: In an effort to provide Brazilians better technology and infrastructure to access markets, Guru launched a free solution last year for accessing stock market news, company financials, stock quotes and more.

“I found out about Robinhood and I was amazed by their growth, valuation, fundraising, technology, and design,” Catão said.

“In Brazil, though, it’s very hard to be a financial institution, so we thought ‘how do we make our way into the game?’”

Competing brokers weren’t providing engaging user experiences and quality data to act on, Catão said. 

“We saw an opportunity to start building a trading app that has all the market data information — news, charts, real-time quotes — everything you see in most American apps,” he said. “We started out building market data and a portfolio aggregator where we didn’t need any kind of regulation, and it was just informative.”

The idea was to empower people to make robust and informed investment decisions, increase the user base and later to offer users a way to act on the in-app insights.

Guru's Product Focus: Guru's CTO Tom Bernardes was part of the team that digitized Brazil’s exchange infrastructure.

With Bernardes and other engineers, Guru has honed in on data aggregation and technology.

“We have this portfolio control feature where we automatically import all of our users’ portfolios straight from the exchange depository. We just collect everything and show it to them, automatically,” Catão said. 

In total, Guru has over 42,000 connected portfolios with assets reaching over $350 million.

“We know how many stocks they have, how many trades they make, which brokers they have an account with and their portfolio size. In parallel, we want our users to make trades, so we’ve partnered with an infrastructure broker here in Brazil.”

The partner broker will handle all the regulatory hurdles and provide Guru’s customers a seamless, commission-free trading experience.
Guru has not yet launched the trading features, but has tested them, Catão said.

Guru's Innovation Outlook: Going forward, Guru is looking to provide Brazilians with a holistic tool for stock market engagement.

“Our customers will be able to trade stocks, options, REITs, and futures,” Catão said. “We want to launch a bunch of new features like American market data, Level 2,” among other ways to manage portfolio volatility and profitability.

Later on, Guru may allow its users to invest in the U.S. stock market. 

Guru's Pandemic Takeaways: Guru was worried about the pandemic: the company was fundraising at the time when the coronavirus struck and the stock market fell by half, Catão said.

“After a few months, it was pretty clear that the pandemic was a catalyst for our business.” 

Through the pandemic, Brazil added nearly 2 million brokerage accounts, a result of self-directed investors looking for ways to engage with the outside world while quarantining at home.

“People were at home and they had more time to open an account which, in Brazil, sucks. It’s like a 58-field registration process,” Catão said.

“I believe this trend is here to stay because Brazilians are very social and the stock market generates conversation.”