B3 S A Brasil Bolsa Balcão : Financial Statements 2020

Dear Shareholders,

B3 S.A. - Brasil, Bolsa, Balcão ("B3" or "Company") hereby submits for your consideration the Management Report regarding activities performed in 2020.

HIGHLIGHTS OF THE YEAR 2020 will go down as one of the most challenging periods in history, with the spread of COVID-19 having deep impacts on the economy and society. We had to adapt and reinvent ourselves as a company, in how we conduct our business and in the relationships we have with our employees, clients, regulators and shareholders, and as Brazilians, trying to do our share in contributing to the efforts towards economic recovery and humanitarian relief in this unprecedent scenario.

The global pandemic situation brought along great uncertainty and caused, in the early months of 2020, intense volatility in the financial and capital markets, as reflected in the 45% decrease in the Bovespa Index and the 48% appreciation of the USD against the BRL at the peak of the crisis. In March alone, the stock exchange's circuit breaker was activated and halted trading six times - since its creation in the late 1980's, this stock market security mechanism had gone off 17 times until then. The number of trades processed on our platforms reached peaks of 12.1 million per day, three times higher than historical average rates and the average number of 3.9 million trades per day for 2019.

With such a challenge facing our operations, we worked relentlessly to provide our clients with a secure and stable infrastructure on which they could conduct their transactions, keeping our trading platform available practically 100% of the time during the year, even under extremely adverse conditions. The resilience of our operations is a result of our ongoing preparation and planning of responses to crises, as well as steps we timely took to ensure the continuity of our business, such as monitoring capacity indicators, prioritizing operating improvements, reinforcing cybersecurity initiatives, and expanding the capacity of trading, clearing and depository systems. Proper risk management was also key for us to get through that period without any longer-lasting consequences-we managed more than R$400 billion in collateral, with calculations of margin exposure for the entire portfolio invested in B3 updated every 15 minutes, and our safeguard system effectively ensured market integrity, without any default events involving clearing members or brokerage firms.

However, unlike other periods of volatility we experienced in Brazil in the past, inflation was under control and interest rates remained at historically low levels throughout the year. This context favored development of the local capital market, which took a leap in relevance in investors' portfolios and has become an increasingly relevant source of financing for companies. In 2020, 53 IPOs and follow-ons were held, raising more than R$117.7 billion, up by 31.8% against 2019, and the retail investor base grew by 93.9%, amounting to 3.2 million accounts within the equities depository in December.

Not only did we keep all of our markets up and running, we also took care of the well-being and safety of employees, adopting remote work measures at a large scale, to which about 90% of our 2,200 employees adhered. For those whose presence in our headquarters was indispensable, we adopted additional precautions, such as social distancing on office premises and team rotation. Our teams' commitment to maintaining our schedule of deliveries to the market, in a time of growing demand from our customer for more sophisticated products and more efficient solutions, was crucial. We moved forward in training and reorganizing our teams in the agile methodology, aiming to add collaboration and agility to the development of services and solution and to accelerate our deliveries, reaching more than 750 people working on squads focused on the business and on our clients. With a more agile dynamic in product development, we were able to steer our teams toward meeting the demands imposed by the pandemic without letting go of our roadmap of deliverables to the market, which remained intense over the year in all of our lines of business, with more than 80 products and services. Among them we can highlight the following: in the listed segment, securities lending screen, COPOM option and BDRs for retail investors, including those from Brazilian companies listed abroad; and on the OTC market, Secured Financial Bills (Letra Financeira Garantida), in which we worked together with the Central Bank on the development of a solution for easier access to credit during the pandemic, and solutions for the integration in the post-trade, in addition to products in financing, new services on the real estate platform, as well as in our institutional initiatives, with new features and content in the Financial Education Hub (edu.b3.com.br), in line with our purpose of stimulating financial education and encouraging the development of the capital market in a sustainable and conscientious way.

We also released our new pricing policy for Listed cash equities products, the implementation of which began in February 2021 through an interim model. The changes foreseen in this model, with adjustments in fees for day traders and measures aimed at sustaining growth in our retail investor base, represent a reduction in fees of approximately R$250 million per year, if applied to the annualized volumes for 2Q20, bolstering our commitment to sharing with our customer the benefits from the Company's gain in scale and operating leverage.

In the course of the year, we also strove to contribute to the modernization of the regulatory framework for the operation of stock exchanges in Brazil, undertaking great efforts to prepare our answer to the public hearing launched by the CVM at the end of 2019 with the objective of updating CVM Instructions No. 461 and No. 505, which cover themes of paramount importance, such as the block trading environment, best execution rules and self-regulation. As we await the regulator's final position, we are certain that the new rules will assist with the sustainable development of our market, keeping Brazil a global benchmark for equal treatment of investors and transparency. The construction of a culture that favors development, collaboration, excellence and focus on clients, whether external or internal, which is how we refer to relationships between B3's teams, has underpinned our effortssince the creation of the Company, and, as a result, we are also moving forward in making B3 one of the best companies to work for.

Additionally, we took several actions to contribute to diversity and inclusion and to offer equitable conditions to our people, with recruitment, mentoring and development programs for young black people and institutional actions aimed at fostering fair representation of gender, sexual orientation and social inclusions, with initiatives such as a) PlurALL, for people with disabilities, b) an internship program for black people, and c) More Women in IT (Mais Mulheres em TI). We were also recognized as a TOP10 Company by GPTW, and as a benchmark for adoption of inclusion practices for people with disabilities.

We also took action to mitigate the effects of the pandemic on society through donations from both B3 and B3 Social, a non-profit association of which B3 is a founding member. At the end of the year, our health care, food, micro-entrepreneurial and community business initiatives added up to R$50 million. Our supported initiatives are in line with the commitments we have made to the UN Global Compact, of which we were the first stock exchange in the world to subscribe back in 2004.

The year 2020 brought solid financial performance to the Company. A substantial increase in traded volumes on our platforms drove a 41.8% growth in revenues, which amounted to R$9.3 billion in 2020 and, combined with discipline in expense management, resulted in a 659 bps increase in our EBITDA margin, which reached 78.7% in 2020, reflecting our operating leverage. Cash generation from operating activities in the period, as adjusted by changes in financial investments and margins of operations, totaled R$6.1 billion, up by 23.9% against 2019, which was to a great extent distributed to our shareholders in the form of dividends, IoC and repurchase of shares.

In line with our goal of having an efficient capital structure suitable for the Company, our gross debt by the end of 2020 was approximately R$7.0 billion, equivalent to 1.1x our recurring EBITDA. We should highlight the execution of our diversification plan for funding instruments used by the Company, as reflected by the issuance of a R$1.25 billion bank loan in June, the issuance of debentures in the local market amounting to R$3.55 billion in August, and the issuance of CRIs in the amount of R$0.2 billion in December.

While we understand the severity of the crisis caused by pandemic and the difficulties of making any predictions, we believe in the evolutionary process of the Brazilian market, which has a huge untapped potential. In an environment underpinned by interest rates kept far below historical levels, we believe the Brazilian market still has a relevant growth potential to realize. On the demand side, the sophistication and diversification of portfolios of investors seeking profitability calls for new products, while increasing the demand for existing assets. On the supply side, Brazilian companies have been increasingly using local capital markets as a long-term funding source.

As we enter 2021, we hope that we have the worst of the sanitary crisis behind us and that we have a lot of energy to continue working on meeting the market needs, whether related to operations or the development of products and solutions, always seeking to be our customer's platform of choice for making business.

Listed

Equities

2020

2019

2020/2019

(%)

Cash marketADTV (R$ millions)

• 29,112.7 16,738.7

  73.9%

  Margin (bps)

• 3.988 4.335 -0.347 bps

  Average market capitalization (R$ billions)

• 4,167.4 4,060.8

  Turnover Velocity Options market (stock/indices)

  Annualized (%)

• 173.9% 102.2%

  ADTV (R$ millions)

  • 703.8 338.9

2.6% 7,172 bps 107.7%

Margin (bps)

• 11.527 14.139 -2.612 bps

Forward market

ADTV (R$ millions)

• 212.2 184.9

  14.8%

  Margin (bps)

• 12.999 12.968 0.031 bps

Future stock indices Number of Investors Securities lending

ADV (thousands of contracts)

2,538.9

1,474.7

Average RPC (R$)

1.001

1.004

72.2% -0.2%

Average (thousands) Average open positions (R$ billions)

2,690.8

1,256.2 114.2%

74.0

59.3 24.9%

Note: "ADTV" stands for Average Daily Traded Value, "ADV" stands for Average Daily Volume, "RPC" stands for Revenue per Contract, "bp" stands for basis point, and "turnover velocity" results from dividing the volume traded on the spot market in the period by the average market capitalization for the year.

In the equities segment, the highlights were the 73.9% growth in the cash equities market's ADTV and 72.2% increase in stock indices futures contracts' volumes. In the cash equities market, the increase reflects the volatility from uncertainties about the pandemic and the higher turnover velocity, which reached 173.9% in the year 2020, while average market capitalization remained at the same levels as in 2019. For the stock indices futures contracts' market, the performance can be attributed to the continued growth in trading of mini contracts, particularly by individual investors and by High Frequency Traders (HFT).

The trading/post-trading margin in cash equities was 3.988 bps. The 0.347 bps decrease is mostly explained due to (i) discounts given to the market according to the Company's pricing policy1 and (ii) the increased share of local institutional investors and day traders, who pay lower fees. The average RPC for stock indices futures contracts was R$1.001, in line with the previous year. The average number of active investors in the equities depository grew 114.2%, mainly due to the increased interest in diversifying investments in a lower interest rate environment. In 2020, B3 supported brokerage firms focused on attracting new customers to this market, through incentive programs and pricing mechanisms.

FICC

Interest rates in BRLADV (thousands of contracts)

2020 3,058.1

2019

2020/2019 (%)

2,811.7 8.8%

Average RPC (R$)

0.891 0.876 1.7%

Interest rates in USD

ADV (thousands of contracts)

288.5

• 349.4 -17.4%

Average RPC (R$)

2.291 1.742

31.5%

FX rates

ADV (thousands of contracts)

953.9

750.4 27.1%

Average RPC (R$)

5.207 3.877 34.3%

Commodities

ADV (thousands of contracts)

Average RPC (R$)

Total

ADV (thousands of contracts)

14.1 2.187 4,314.6

9.3 2.241

51.9% -2.4%

3,920.8 10.0%

Average RPC (R$)

1.943 1.531 26.9%In 2020, the average daily traded volume totaled 4.3 million contracts, up by 10%, reflecting a rise in traded volumes for all products, except for interest rate contracts in USD. Average RPC increased by 26.9% in the period, primarily influenced by (i) a 28.9% appreciation of the USD against the BRL, which had a positive impact on the RPC of FX rates and Interest rates contracts in USD, since they are priced in US dollar, (ii) an increase in the share of FX rates contracts in the mix of products during the period, and (iii) an increase in longer-term Interest rates contracts in BRL, which have a higher RPC.

1 According to the table of fees in force in 2020, marginal discounts were given to the entire market whenever the average daily trading volume (ADTV) for the month exceeds the levels of R$9 billion, R$11 billion and R$13 billion.