Regulatory Gaps in Automated Financial Markets: Algorithms, Systemic Risk and Challenges for Brazilian Governance

Abstract

The increasing automation of financial markets has transformed the way orders are executed, risks are transmitted and market infrastructures are supervised. In Brazil, the modernization of trading platforms, the growing use of algorithms, electronic market access mechanisms and the sophistication of financial intermediaries make it increasingly relevant to assess whether the existing regulatory framework is sufficient to address technology-driven systemic risks. This article examines regulatory gaps in automated financial markets, with emphasis on the interaction between algorithmic trading, critical infrastructure, non-bank financial intermediation, investor protection and financial stability. The research adopts a qualitative, documentary and legal-regulatory approach, based on the analysis of Brazilian rules, institutional documents, technical standards and specialized literature on algorithmic governance and systemic risk. The article argues that the central problem is not the absolute absence of regulation, but the fragmentation between different normative layers: order execution, supervision of intermediaries, technological security, market infrastructure and macroprudential analysis. It concludes that Brazilian governance of automated markets should move toward a more integrated approach, capable of articulating innovation, market integrity, investor protection and the prevention of systemic risks in a financial environment increasingly dependent on technology.