FiNETIK – Asia and Latin America – Market News Network

Asia and Latin America News Network focusing on Financial Markets, Energy, Environment, Commodity and Risk, Trading and Data Management

Brazil: BM&FBOVESPA Financial Report: IT Business-CoLo-HFT-ETF’s and Sharebuyback

BM&FBOVESPA S.A. (BVMF3) today reported fourthquarter  earnings  ending  December  30,  2011.  New  strategic  areas  such  as  Securities Lending, Tesouro Direto, ETFs and High Frequency Trading (HFT) performed well in the quarter. Successful implementation of the derivatives and spot FX modules of the PUMA Trading System and forward momentum on the multi-asset integrated clearing system further boosted the Company’s technological edge.

BM&FBOVESPA announced an adjusted expense1 budget range of R$580 million to R$590 million and a capital expenditure budget range of R$230 million to R$260 million for 2012. The adjusted Opex range equals the range for 2011 as a result of the Company’s cost- cutting improvements.

“We remain focused on capturing the growth opportunities offered by the Brazilian market,” said BM&FBOVESPA Chief Executive Officer Edemir Pinto. “The execution of our investment   program   to   strengthen   our   IT   infrastructure   and   the   launching   and development of products and markets, such as ETFs, HFTs and options on single stocks, are aligned with this goal. We are also taking actions to strengthen market supervision, which will help make the Brazilian market more attractive to investors. Mr. Pinto added,“We highly welcome the government’s decision to remove an IOF tax on equity investments by non-residents.”

During 4Q11, net revenues were almost flat year-over-year. This reflected a decline in trading volumes which was offset by a 39.5% increase in other revenues. Expenses were higher as a result of a one-time extraordinary transfer of restricted funds to strengthen the BM&FBOVESPA Market Supervision (BSM) while adjusted expenses were well in line with the Company’s announced budget range. Adjusted EBITDA2margin was relatively stable at65.2% compared to 66.5% in 4Q10. Adjusted net income3 per share declined by 1.0% year-over-year.

 

Source: MondoVisione, 15.02.2012

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Filed under: BM&FBOVESPA, Brazil, Exchanges, Latin America, , , , , , , , , , , , ,

LatAm Traders reach home base – Brazil/Mexico

Latin America continues ease market access for foreign capital, and in the process, garners home bias from local participants.

Throughout the 1980s, U.S. capital flow to foreign markets averaged roughly U.S. $50 billion per year. Such levels have risen greatly to pre-financial crisis times; outflows to foreign capital markets increased to reportedly $2.1 trillion in 2007. While net inflows dipped by approximately 75% during the financial crisis, the emerging markets today have bounced back at a healthier rate than the sluggish developed economies of the U.S and Europe.

Due to its macroeconomic and private-sector growth, as well as its ease of market access, U.S. investors and traders have come to favor Latin America. Currently, a reported $57 billion of U.S. dollar is being poured into Brazil—often seen as the region´s  most developed nation.

Mexico comes in second with approximately $20 billion coming in from the U.S. last year. Local entities have poured interest in Mexico as well, as Mexican pensions, which aggregate $150 billion, have a primarily domestic mandate. Carlos Slim, the world’s richest investor, also recently announced plans to surge a $10 billion peso investment in Mexico’s telecom industry.

As a result of budding local and foreign interest, LatAm’s sell side has gone to work in building a “best-of-breed” suite of products to help provide access to Mexico. The Bolsa Mexicana de Valores, the country’s equity exchange and its derivatives exchange, MexDer are channeling efforts to better technology and infrastructure to attract liquidity providers. Yet, just how effective is the push to be better?

In 2011, MexDer experienced a 30% increase of trades to roughly 43,000 a day. Mexican brokerage assets were $21.4 million in 2005, to $2 billion in 2011–a clear reap of rewards from the sell side’s efforts to host opportunities for market participants.

While high frequency traders increased their activity in Mexico by 105% in 2011, buy-side views on trading via local resources have been mixed.

“Local knowledge on the part of on-the-ground brokers and exchanges is useful, but, it’s not essential to have a well developed sell side,” said Nick Robinson, director of the $250 million dollar Aberdeen Latin American Equity Fund. “As long as the market works and you can use the market without counter party risk then that should give (participants) enough comfort.”

MarketMedia, 15.02.2012

Filed under: BM&FBOVESPA, BMV - Mexico, Brazil, Exchanges, Latin America, Mexico, Trading Technology, , , , , , , , , , , , , ,

Hong Kong and Singapore as Asia´s Financial Gateways

Celent predicts a paradigm shift around access to Asia. There is likely to be two gateways, providing access to different Asian regions, with Singapore emerging as the preferred gateway to Southeast Asia and Hong Kong becoming the gateway to Mainland China.

In a new report, the third of a series looking at the financial markets in Hong Kong and Singapore, Celent aims to provide a comparative analysis of Asia’s two main financial gateways, focusing particularly on derivatives. Asia’s Tale of Two Cities: Hong Kong and Singapore as Financial Gateways begins by noting that Western governments have emerged from the financial crisis in a weakened state, with economic prosperity blunted by high unemployment and an emerging debt crisis. The question is no longer when or if we need to enter the Asian markets, but how to best think about the issues of accessibility, entering the market, developing products, and forming strategic partnerships. The fundamental question that needs to be asked now is: “Where do we go from here, Hong Kong or Singapore?”

Although the HKEx and SGX may not be the biggest derivatives players in Asia-Pacific, they tend to be the most accessible for segments located outside the region. Taking advantage of their geographic location, political climate, and internal strengths, these city-states are poised to become hubs for trading of Asia’s regional products while also being easily accessed by US traders via retail trading accounts.

There are several factors that are likely to continue to drive growth in the derivatives market. These include:

• A relatively muted response to regulating over-the-counter markets as compared with the US and Europe. The type of products that led to the financial crisis in the West are not widely established throughout Asia, and as a result, the regulatory structure governing OTC markets are unlikely to change significantly.

• Continued desire to manage foreign exchange risk.

• Continued enhancement of processes of structuring derivatives risk management policies.

“We are seeing changes in relation to access to Asia. Hong Kong is no longer destined to become the sole hub to Southeast Asia,” says Alexander Camargo, Analyst and coauthor of the report. “Inherent strengths in Singapore are making it an extremely attractive financial gateway. Both English and Chinese are frequently spoken in Singapore, making it an ideal cross-roads for East and West. Furthermore, Singapore is viewed by most Asian countries as a neutral party and less politically tied to China than Hong Kong. This is likely to entice Indian investors and even Japanese and Korean investors to Singapore’s shores.”

However, this does not mean that Hong Kong will recede as a major financial center in Asia. Hong Kong residents are often fluent in both English and Chinese; contract laws are strong; and there remain strong historical ties to the West. As a Special Administrative Region of the People’s Republic of China, Hong Kong has stronger political ties to China. Hong Kong has also been busy integrating its financial markets with mainland China. These factors make it likely that Hong Kong will become a key gateway to mainland China.

This report begins with an overview of each country’s financial infrastructure and regulations, providing an introduction to the countries’ various demand market segments, followed by a look at the main exchanges, HKEx and SGX. A summary of HKEx and SGX focuses on derivatives trading, providing a brief description of products offered, market access, alliances, and clearing on the exchanges. The report then looks at each country’s fixed income markets, OTC derivatives, and FX markets. It concludes with a discussion of market supremacy and also the countries’ ongoing efforts to improve market structure and access.

Source: Bobsguide, 10.02.2012

Filed under: Asia, China, Exchanges, Hong Kong, Indonesia, Japan, Korea, Malaysia, News, Singapore, Thailand, Vietnam, , , , , , , , , , , , , ,

SunGard Opens Trading Network Hub in Chile

SunGard has established a SunGard Global Network (SGN) hub in Santiago, Chile. SGN provides global order routing, market data and associated services on 120 markets worldwide, linking 2000 asset managers and 500 broker dealers. The Santiago hub, SunGard’s third in Latin America after Mexico City and Sao Paulo, will provide international investors with access to Bolsa de Comercio de Santiago (BCS), Chile’s equity and derivatives exchange. In addition, financial institutions in Chile will be able to access the SGN brokerage community.

SunGard will also offer Valdi Market Access to Chile, which delivers Software-as-a-Service* (SaaS) based connectivity to markets worldwide through SGN. This direct market access service gives exchange members and their clients the ability to trade on electronic markets from any application connected to SGN. It is fully managed by SunGard, helping reduce their infrastructure and support costs. For Bolsa de Comercio de Santiago (BCS), the Valdi Market Access servers will be directly co-located at the exchange, offering low latency services.

Mr. Andres Araya Falcone, chief information officer of the Bolsa de Comercio de Santiago, said, “Chile continues to grow, and the region is focused on being an important player in the global economy. SunGard is supporting this growth by providing electronic trading solutions and global connectivity to market participants in Chile, which will help our exchange members find new investment opportunities. In facilitating exchange connectivity, this should also help attract new firms to the Bolsa de Comercio de Santiago.”

Danielle Tierney, an analyst at Aite Group, said “Opening a new hub in Santiago is a very strategic placement for SunGard. Santiago is the third largest individual exchange in Latin America by market capital and volume, in addition to being a part of the MILA integration of the Andean exchanges. By establishing this additional point of connectivity, SunGard has essentially made its SGN hub into a pan-LatAm offering.”

Philippe Carré, global head of connectivity of SunGard’s global trading business, said, “SunGard’s Valdi and SGN address the connectivity and execution challenges of trading multiple asset classes on multiple markets. SunGard already offers Valdi and SGN solutions in Argentina, Brazil, Chile, Colombia, Mexico and Peru, helping traders in Latin America access new markets and diverse liquidity, as well as helping international traders access Latin America markets.”

Source: A-TEAM Electronic Trading, 13.12.2011

Filed under: Argentina, Brazil, Chile, Colombia, Latin America, Mexico, News, Peru, Trading Technology, , , , , , , , , , , , , , , ,

Mexico´s Exchanges take huge steps to boost High-Speed Trading.

The Mexican Exchange, which is the second largest exchange in Latin America, announced a number of strategic and technology initiatives designed to promote foreign investment in the Mexican financial markets and its position as a Latin American leader in high-frequency trading.

While Brazil continues to be the hottest emerging market in Latin America, the Mexican Exchange (BMV Group), is taking huge steps to boost its growth in the high-speed marketplace.

The Mexican Exchange, which is the second largest exchange in Latin America, announced a number of strategic and technology initiatives designed to promote foreign investment in the Mexican financial markets and its position as a Latin American leader in high-frequency trading.

Mexico now provides worldwide participants with seamless, high-speed and efficient access through low touch direct market access (DMA), high speed co-location services, and FIX standard protocol for order routing and market data Part of Mexico’s success is down to its determination to improve its operative rules to better comply with international market standards, as well as adopting new technology.

In 2012, the Mexican Exchange will announce the launch of a new trading engine, internally developed. This multi-market, multi-asset, flexible and scalable trading engine has throughput of more than 200,000 messages per second. The trading engine will be ultra low latency, executing trades in 100 microseconds roundtrip (improvement over 25 milliseconds on legacy trading system). Full deployment is planned for Q2 2012. Further in 2012, The Mexican Exchange will introduce several new initiatives including midpoint hidden order book trading, aimed at institutional investors looking to trade large blocks anonymously with reduced execution risk. Simpler cross order rules will also be implemented; all stocks, global market equity securities and debt instruments will be crossed within the best bid/ask spread with no intervention. And, VWAP executions for the day will be able to be entered from 8:00 AM CT to 2:40 PM CT.

Recently, the Mexican Exchange has established major alliances broadening investment opportunities in the Mexican market. The Mexican Derivatives Exchange (MexDer) and the Chicago Mercantile Exchange (CME) established phase one, “south-to-north,” of its strategic order routing agreement, giving Mexican investors access to CME Group’s benchmark derivatives contracts, including interest rates, foreign currencies, equity indexes, energy, metals and agricultural commodities.

Phase two of the partnership, “north-to-south,” now in place provides CME Group customers with access to MexDer benchmark products, including Mexican Stock Exchange Index futures, bond futures and MXN Peso / US dollar futures contracts.

Source: Wallstreet&Technology, Melanie Rodier, 18.11.2011

Filed under: BMV - Mexico, Exchanges, Latin America, Mexico, , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Finamex launches Algorithms with US Equities in the Mexican market

Finamex, a full-service independent broker dealer from Mexico City, and leading provider of innovative trading solutions, has released four opportunistic market trending algorithms for use by Direct Market Access (DMA) clients. The main idea is to allow clients to effectively gain arbitrage profits while mitigating collocation and/or their own strategy development costs.

Finamex’s latest release of arbitrage algorithms have been designed to build opportunities on fungible domestic equities displayed in the Mexican exchange marketplace. Execution calculations work through pre-programmed algorithms built on leveraging theoretical quote pricing as the primary driver of behavior, speed and momentum.

There are a variety of features to how the Finamex arbitrage algorithms provide opportunities with US equities in the Mexican market:

1. Hunter – is an algo which seeks to take advantage of sudden inefficiencies between the equities of foreign listed symbols in Mexico versus their originating market (such as the QQQ or AAPL on the Nasdaq or NYSE markets). The Hunter algorithm computes required data-sets and adjusts itself independently within defined price spreads on the Mexican Stock Exchange (Bolsa Mexicana de Valores: BMV).

2. Ghost – has a characteristic of lying dormant until a desired buy/sell signal appears with a non-previously indicated ask/bid price then it executes contrarily. Similarly with the Finamex “Hunter” algo, Ghost receives the side, quantity and spread parameters of opposing bids/offers satisfying spread parameters of its local market yet quickly hitting IOC type status. This feature helps in the recognition of desired price opportunities without revealing trade strategy intentions by its clients.

3. Scaled – uses a two-spread metric like the Hunter algo, with a signal that triggers in a suddenly inefficient environment. The Scaled algo strategy is seen on a big spread definition, called a “base.” Scaled reacts instantaneously when a lower spread, called the “target”, is satisfied on the other side. Unlike the Finamex “Ghost” algo, the Scaled algo’s intentions are exposed but move immediately when the target spread is satisfied. The Scaled strategy allows other market participants to preview this algo’s activity, causing them to sometimes take a glance on the board, which in turn drive executions over the spreads.

4. Market-maker – a next generation algo intended to provide liquidity and act as a market maker within the local Mexican marketplace. Market-maker absorbs the last trade, adds an indicated spread and automatically places or replaces the order with an indicated quantity. In combination with pegging and short-sell models, the Marketmaker algo is highly beneficial for market making strategies and for acting on market divergences.

“We’re putting in place all of these free strategies for clients who want to access the Mexican stock market with an almost-zero setup price. Our goal is to take Mexico to a higher level in the emerging markets priority list of global investors,” states Hector Casavantes, head of Electronic Trading at Finamex. “We wanted to offer automated algo strategies in order to let investors know how active and easy this market can be to trade. All algorithms were architected with profitability in mind. They’re highly customizable, completely auditable and comprehensive, fully meeting our clients’ demands”.

“With the addition of these tools, we’ve further enhanced our suite of algorithmic-trading products beyond our well-known execution algos in VWAPs, TWAPs, Implementation Shortfall and POV, “Roberto Larenas, Head of Equity Markets at Finamex added. “While we are aware that these algos are more opportunistic, we are still keeping our business model as pure-agency. Buy-side firms are increasingly requesting new tools, new ideas, and new ways to exploit opportunities in emerging markets. Finamex is fully committed in addressing these demands with our best-of-the breed solutions

Source: A-Team, 14.11.2011

Filed under: BMV - Mexico, FIX Connectivity, Latin America, Mexico, Trading Technology, , , , , , , , , , , , , , ,

Mexican Market Leaps Forward – FIX, Technology, Co-Location and Regulation

In the last 12 months dramatic changes have occurred at Mexico’s stock exchange and among its brokerage clients. Cross border partnerships, technology upgrades, new FIX infrastructure and business friendly regulatory changes have opened the Mexican market to high frequency trading (HFT).

While US regulators can be seen to scold HFT firms, the Mexican market has opened its arms. The Mexican Exchange (BMV) and its brokerage firms have upgraded their infrastructure and sought business opportunities north of the border. Earlier this year after the CME Group and the BMV signed their partnership, high frequency traders on the CME Globex trading system began to route orders to the Mexican Derivatives Exchange or MexDer. Today 90 percent of average daily volume on the MexDer comes from high frequency traders north of the border.

Mexico’s brokerage firms have completed significant infrastructure upgrades. Last spring only a few brokers in Mexico could handle a highfrequency hedge fund client and many Mexican brokers could process no more than one connection to the Bolsa Mexicana de Valores (BMV) at a time. The landscape has changed quickly and improvements in broker and exchange systems have ushered in a new capacity for speed in the transmission and execution of orders in Mexico.

Over the summer a major milestone occurred for the industry. Working with the BMV, Mexico’s brokers completed an industry-wide upgrade to FIX 4.4. The top 25 brokers are now certified with FIX 4.4 to the BMV. Leading the way, are brokerages like GBM, Interacciones, Actinver, UBS Mexico, IXE and others.

Now that Mexican brokers speak FIX 4.4, all of the order routing to the BMV can now be done through FIX allowing the BMV to retire the antiquated SETRIB protocol. The only way the BMV will allow Mexican brokers to continue to use SETRIB is by paying excessive fees, and even this will not be allowed by the end of 2011. Retiring SETRIB sets the stage for more positive changes in the industry and at the BMV.

Work is already underway to upgrade the BMV’s trade matching engine. The existing engine was built in the 1990s for a Tandem mainframe. Retiring the Tandem has many benefits. Faster order matching and processing is high on the list. In addition, more choices for application and software vendors and significant cost savings are expected. Retiring the mainframe will also eliminate the scheduling nightmares associated with the limited availability of the central mainframe for testing with the broker community. The new matching engine will be hosted on modern Unix based hardware. The release of the new matching engine and infrastructure is planned for the first quarter of 2012.

Another important milestone is the availability of a state-of-the-art co-location facility at KIO Santa Fe. The BMV infrastructure is located here and starting in October it will be easy for brokers and third party providers to collocate order routing and market data in this hosting facility leading to high throughput low latency services.

While all of the infrastructure and matching engine upgrades are momentous, they would bear no fruit without the simultaneous modernization of Mexican regulations. The initiative to modernize Mexico’s regulations, called RINO, began a year ago and phase two is due to rollout in the fall of 2011. The goal of RINO is to conform Mexican regulations to international standards. By converging with international standards, regulators hope to bring more international order flow and greater liquidity to the market, resulting in increased investment in the Mexican market.

While regulations in the US like Sarbanes Oxley and Dodd-Frank can be seen to drive businesses offshore, the regulatory changes in Mexico are removing handcuffs from businesses and facilitating opportunities. The first step forward occurred early this year with RINO I. RINO I allowed brokers to have multiple channels to the BMV’s electronic trading system. Previously all orders were in a single queue. Multiple access points per broker provides more flexibility in executing strategies and handling client requests, including separate BMV channels for program trading and orders called into the trading desk. RINO I also eliminated sizebased criteria from order management,  thus leveling the playing field in the processing of orders. RINO II takes effect on October 10, 2011, bringing more modernizations including pegged orders, improvements in crossing operations, average price operations, price delivery regardless of volume, and decimal bids for fixed income securities.

Crosses, in which a brokerage carries out a transaction through the stock exchange between two of its clients, were permitted previously but the rules were very arcane. Starting in October, the crossing operations will be vastly simplified allowing clients to simply choose whether to cross inside or outside the spread. With this modernization, the BMV hopes to repatriate orders that brokers would previously carry out in the US, where crossing orders was possible using ADRs in dark pools or at the NYSE.

In addition the RINO II regulations a very important new mid-point hidden book order. The orders execute at the midpoint, broker anonymity is guaranteed and the order priority is determined by volume. This is effectively a dark pool. Similar to Xetra, this new BMV order helps the market participants and simultaneously protects the BMV from  providers toying with moving into the Mexican marketplace.

As the regulations modernize and the FIX infrastructure hardens, opportunity beckons. Brokers are beginning to push for more high frequency trading algorithms, more efficient routing of international orders, and more sophisticated risk controls, all of which will attract even more international business. As the need for speed grows, co-location previously offered by the exchange may become more strategic, particularly to brokers wanting to attract high frequency traders.

All of this progress was made possible in large part because of the exchange’s demutualization and subsequent listing in 2008. The demutualization coincided with rule changes allowing Mexico’s pension funds or AFORES to invest. Before the rule changes, the AFORES were forced to invest almost entirely in short-term government paper. Today, Mexico’s pension funds are allowed to invest up to 25 percent, in individual stocks and shares and 12 percent in a hybrid of corporate debt and equity capital to allow companies to raise funds to expand businesses.

Considered together, regulatory improvements and infrastructure updates have morphed the BMV and the Mexican brokerage community into a thriving and modern marketplace. The BMV reported a 22 percent jump in earnings last year, with operating income increasing 70 percent in the last three months. A record six initial public offerings made it to market last year and overall trading volumes rose 50 percent in 2010. This year Mexico’s IPC index has tested and hovered near record highs.

In 2011 there are fewer IPOs, but trading volume remains strong. The order-routing agreement signed with Chicago’s CME Group has opened Mexico’s derivatives market to the world. Now, electronic trading infrastructure and investor friendly regulations have set the stage for act two.

Latin America has enjoyed a strong recovery for the most part it has sailed through the recession without lasting damage. Boosted by capital inflows, by record prices for commodity exports, by sound policies and by a heady expansion in domestic credit, the region saw economic growth of 6% last year and is on course to notch close to 5% this year. The region faces slower growth but not disaster. To up the pace, now is the time for reforms to boost productivity.

The main engines for growth in Latin America are China’s demand for minerals, food stuffs and raw materials – this looks set to continue – and consumption as tens of millions edge out of poverty and benefit from newly available credit.

Source: FIX Global Trading, 15.09.2011

Free Subscription of FIX Global Trading Magazin at http://fixglobal.com/subscription

Filed under: BMV - Mexico, FIX Connectivity, Latin America, Market Data, Mexico, News, Risk Management, Trading Technology, , , , , , , , , , , , , , , , , , , , , , , , , ,

China & Brazil: Shanghai Stock Exchange and BMF&BOVESPA launch all-round cooperation

The 2nd China-Brazil Capital Markets Forum, jointly sponsored by the Shanghai Stock Exchange (SSE) and BM&F BOVESPA, was held on 27 October in Shanghai. SSE President Zhang Yujun said that the SSE would cement all-round cooperation in the capital markets of both sides with BM&F BOVESPA.

Marcos Caramuru, Ambassador of the Consulate General of Brazil in Shanghai, and Edemir Pinto, CEO of BM&F BOVESPA attended the forum presided over by Zhou Qinye, SSE Chief Accountant.

This February, Zhang Yujun, SSE Vice President Xu Ming and their entourage participated in the 1st China-Brazil Capital Markets Forum held in Brazil and signed a memorandum on closer cooperation with BM&F BOVESPA. Both sides fixed upon negotiation to hold the 2nd China-Brazil Capital Markets Forum in China in late October, 2011.

At the forum held in Shanghai, both sides compared notes on the intensification of cooperation and exchanges in China-Brazil Capital Markets and the in-depth development of the exchanges in the two countries under the new backdrop. Besides, special sub-forums were held to respectively discuss the opportunities for and internationalization of enterprises in emerging markets, the challenges and opportunities of emerging markets for investment in multinational capital markets and the practices and experience in the investor education and protection.

According to the cooperation memorandum signed previously, both sides reached an intent of cooperating in information, exchange, product development, trading platform construction, mutual personnel dispatch. Besides, both sides had common views on the periodical visit mechanism of senior managers as well as the exchanges in bond, fund, information, technology, investor education, academic science and personnel dispatch.

Zhang Yujun said at the forum that with the rapid growth of Chinese economy in recent years, the two countries had seen a good trend of economic cooperation. In the South America, China had become the biggest source of capital flowed as FDI into Brazil. All this would require the domestic financial industry, especially all the participants in the capital market, to provide better financial services and supporting services for further opening-up of the Chinese economy. The cooperation between the SSE and BM&F BOVESPA should be cemented in response to the new trends of the economic growth and capital market development in the two countries.

Finally, Zhang said that after the 1st China-Brazil Capital Markets Forum, more and more exchanges in the domestic capital market strengthened the cooperation with all the participants in the Brazilian capital market. For instance, a participant in the Brazilian capital market directly invested in the IPO of CITIC Securities in Hongkong. In the future, more domestic securities companies and fund management companies will provide financial services for Chinese enterprises’ investment in foreign capital markets.

Source: MondoVision, 31.10.2011

Filed under: Brazil, China, Data Management, Exchanges, News, Trading Technology, , , , , , , , , , , , , , , , , ,

Brazil: BM&FBOVESPA – News October 2011 – Nr.21

BRIC exchanges announce alliance

The exchanges of the BRIC emerging markets bloc announced a joint initiative on October 12, during the 51st AGM of the World Federation of Exchanges (WFE) in Johannesburg, to offer investors access to their dynamic economies. Initially the exchanges – which accounted for over 18% of all exchange-listed derivative contracts traded by volume worldwide as of June this year – will cross-list benchmark equity index derivatives on the boards of other alliance members. Following this, the alliance will develop innovative products to track the BRIC exchanges.

The seven exchanges are:

  • BM&FBOVESPA – Brazil
  • MICEX – Russia
  • RTS – Russia
  • Hong Kong Exchanges and Clearing Limited (HKEx) – China
  • Johannesburg Stock Exchange (JSE) – South Africa
  • The National Stock Exchange of India (NSE) – India
  • BSE Ltd (formerly known as Bombay Stock Exchange) – India

These seven exchanges represent a combined listed market capitalization of USD9.02 trillion, equitymarket trading value/month of USD422 billion and 9,481 companies listed.

BM&FBOVESPA new trading hours

In view of the start of daylight saving time on October 16, 2011, since October 17, 2011, the new trading hours (Brasília Time) for the BM&FBOVESPA markets – BOVESPA and BM&F segments – will be as follows:

Regular session: 11:00 a.m. – 6:00 p.m.

– After-Market: 6:30 p.m. – 7:30 p.m. (pre-opening phase to trading phase);

– Blocking / Exercise on the stock options market
Days prior to expiration: 11:00 a.m. – 5:00 p.m. (exercise of holder position).
Expiration date: 11:00a.m. – 12:30 p.m. – trading of the expired series to the offset of the position, that is, the sale for the holder of the position and purchase for blocking for the writer of the position / 12:30 p.m. – 2:00 p.m.: exercise of the holder position;

– Blocking / Exercise on the Index Options Market:
Days prior to expiration: 11:00 a.m. – 2:00 p.m. (exercise of holder position).
Expiration date: 11:00 a.m. – 2:00 p.m. – trading of the expired series to the offset of the position, that is sale for the holder of the position and purchase for blocking for the writer of the position / After 6:00 p.m. – automatic exercise of the expired series which fit the following situations: call option (settlement index higher than the exercise price; and put option (settlement index lower than the exercise price).

– Over-the-Counter Market: 11:00 a.m. – 6:00 p.m.

> Complete information of the new trading hours (Circular Letters 009-2011-DO-Ofício Circular)

The trading hours for the BOVESPA and BM&F segments are available at this link

Market Makers for Options on the Stock of Banco Bradesco, Gerdau and Banco do Brasil

BM&FBOVESPA announced on August 3rd the start of the bidding process to select up to three market makers for options on stock of Banco Bradesco S.A. (BBDC4), Gerdau S.A. (GGBR4) and Banco do Brasil S.A. (BBAS3). This is the third stage of the Competitive Bidding Process to select market makers in equity options and BOVESPA Index (Ibovespa) options, developed by BM&FBOVESPA. The institutions (including nonresident) that wish to participate have until November 29, 2011 to deliver proposals and the winners will be announced on December 14, 2011.

> More info

Market Makers for Options on Ibovespa and on Stocks of BM&FBOVESPA and Usiminas

BM&FBOVESPA announced on October 11 the winning institutions in the second selection process for market makers for options on stocks and on the BOVESPA Index (Ibovespa). The market maker obligation shall last twelve (12) months as of December 12, 2011. Banco Citigroup Global Markets Limited, Banco Itaú BBA S.A. and Timber Hill LLC shall be market makers for options on the BOVESPA Index (IBOV), complying with a maximum volatility spread of half a percentage point (0.5%). The institutions selected for options on stocks in BM&FBOVESPA S.A. (BVMF3) were Citadel Securities LLC, Citigroup Global Markets Limited and Morgan Stanley Uruguay Ltda, which shall be market makers complying with a maximum volatility spread of four percent (4%). Meanwhile, the institutions selected for options on stocks in Usinas Siderúrgicas de Minas Gerais S.A. (USIM5) were Banco BTG Pactual S.A. and Morgan Stanley Uruguay Ltda, which shall be market makers complying with a maximum volatility spread of twenty percent (20%).

> More info

Options on OGX Petróleo and Itaú Unibanco rise with Market Maker activity

The trading volume for options on the stocks of OGX Petróleo and Itaú Unibanco rose significantly in September, strongly influenced by the fact that they have had Market Makers since September 9. The Exchange launched the Market Maker program for stocks this year in order to encourage trading in options and increase their liquidity, as well as to stimulate longer expiries on these contracts. Options on the stocks of OGX Petróleo and Itaú Unibanco now have three Market Makers.

Comparing the average daily volume in September to that of January to August, there were the following increases: OGX Petróleo ON 51.9% (BRL 13.7 million against BRL 20.8 million) and Itaú Unibanco PN 205.6% (BRL 1.7 million against BRL 5.1 million).

ETF financial volume more than doubles in the past two months

BM&FBOVESPA Exchange Traded Funds (ETFs) reached BRL 1.4 billion financial volume in August and September, at 78,809 and 75,740 trades respectively. This is more than double the BRL 668 million financial volume and 31,997 trades in July.

Common Shares in Desenvix Energias Renováveis start trading on BOVESPA MAIS

The shares of electricity company Desenvix Energias Renováveis S.A. begin to be traded on October 3 on the BOVESPA MAIS segment of the BM&FBOVESPA Organized OTC Market, under the DVIX3M ticker symbol.

USD11 billion in public offerings and follow-ons in 2011

In the year to October, 15, BM&FBOVESPA registered USD11 billion in public offerings and follow-ons. There were eleven Initial Public Offerings (IPOs) in 2011: AREZZO&CO (ARZZ3), SIERRA BRASIL (SSBR3), AUTOMETAL (AUTM3), QGEP PART (QGEP3), IMC HOLDING (IMCH3), TIME FOR FUN (SHOW3), MAGAZINE LUIZA (MGLU3), BR PHARMA (BPHA3), QUALICORP (QUAL3), TECHNOS (TECN3) and ABRIL EDUCAÇÃO (ABRE11).

BM&FBOVESPA on Twitter

BM&FBOVESPA launched its Twitter account in English last week. Please access this link

2011 EVENTS

 The World Cup of ETFs and Indexing Latin America

BM&FBOVESPA is lending its support to the World Research Group’s “World Cup of ETFs and Indexing Latin America.” The event aims at providing attendees with the best practices for ETF use, as well as a comprehensive analysis of market structure, regulations and current and future opportunities. The expected audience includes pension funds, hedge fund managers and investors, investment advisors, financial consultants, and other market participants. A BM&FBOVESPA representative will talk about the Exchange’s ETF products.

Location: São Paulo (TBC)
Date: October 17-18, 2011.
> Full Agenda and Registration

2nd FX Growth Markets Series: Brazil – Profit & Loss

BM&FBOVESPA will join the Profit & Loss FX Growth Markets conference on October 20, 2011 at the Tivoli Hotel in São Paulo. Profit & Loss has been operating its highly successful series of Forex Network and FX Growth Markets conferences for more than 10 years, with regular annual events held in London, New York, Chicago, Singapore, Brazil, Mexico, Colombia, Chile, Shanghai and Toronto, and comes to Brazil for the second time. A BM&FBOVESPA representative will talk at the event.

Location: Tivoli Hotel São Paulo, São Paulo, Brazil
Date: October 20, 2011.
> Full Agenda

2nd Brazil–China Capital Markets Forum

BM&FBOVESPA and the Shanghai Stock Exchange are coordinating the Second Brazil–China Capital Markets Forum. This event follows the First Brazil–China Capital Markets Forum, which occurred in February in São Paulo, Brazil. At the event, the Shanghai Stock Exchange shall bring 300 to 500 Chinese asset and insurance managers and representatives of listed companies.

Location: Xijiao State Guest House Shanghai, China
Date: October 27, 2011.

Volumes and trades by Direct Market Access (DMA)

BM&F Segment
In September, BM&F* market segment transactions carried out through order routing via Direct Market Access (DMA) registered 35,144,357 contracts traded and 4,311,865 trades. In August, the volume reached 41,417,494 contracts traded and 4,431,750 trades.

The volumes registered by each access modality in the BM&F segment were as follows:

  • Traditional DMA – 12,583,334 contracts traded, in 1,366,264 trades, in comparison to 17,540,231 contracts and 1,306,241 trades in August;
  • Via DMA provider (including orders routed via the Globex System) – 13,976,949 contracts traded, in 374,992 trades, compared to 14,088,756 contracts and 435,281 trades in August;
  • DMA via direct connection – 2,636 contracts traded in 447 trades, against 4,210 contracts and 830 trades in August;
  • DMA via co-location – 8,581,438 contracts traded, in 2,570,162 trades, compared to 9,784,297 contracts and 2,689,398 trades in August.

In September, transactions carried out by foreign investors presented by CME to BVMF (who use the Globex-GTS order routing system or access BVMF markets via co-location) totaled 4,685,186 contracts traded, in 1,164,510 trades, compared to 5,308,308 contracts and 1,235,349 trades in August.

BOVESPA Segment
In September, order routing via DMA in the BOVESPA* segment totaled BRL 111.41 billion and 14,298,483 trades, from BRL 138.52 billion and 17,021,408 trades the previous month.

Trading volumes per type of DMA in the BOVESPA segment:

  • Traditional DMA – Volume of BRL 95.77 billion and 11,763,618 trades from BRL 120.45 billion and 14,098,638 in August;
  • DMA via co-location – Volume of BRL 14.29 billion and 2,357,270 trades from BRL 16.69 billion and 2,755,498 in August;
  • DMA via provider – Volume of BRL 1.34 billion and 177,044 trades from BRL 1.37 billion and 167,272 in August.

* Direct access to the BM&FBOVESPA market segments is carried out through DMA models 1, 2, 3 and 4. In model 1 or traditional DMA, the client accesses the GTS or Mega Bolsa through technological intermediation of a brokerage house. In model 2 or via DMA provider, the client does not use the technological intermediation of a brokerage house, but rather connects to the system through an authorized access provider. DMA via order routing with CME Globex is also a form of DMA model 2. In model 3, the client connects to the system through a direct connection. In model 4 or via co-location, the client installs its own computer within the Exchange’s facilities.

Notes:

The volumes registered by access modality include both buy and sell sides of a trade.

The volumes by access modality for both the BM&F and the BOVESPA market segments have been reported in a consolidated manner in the BM&FBOVESPA statements since May 2009.

MARKET RESULTS

BM&F Segment September 2011

Derivatives markets in the BM&F segment (including financial and commodities derivatives) totaled 59,365,524 contracts and BRL 4.35 trillion in volume in September, compared to 78,606,873 contracts and BRL 5.23 trillion in August. The daily average of contracts traded in the derivatives markets in September was 2,826,930, in contrast to 3,417,690 in August. Open interest contracts ended the last trading day of September with 36,620,797 positions, compared to 37,821,302 in August.

BOVESPA Segment September 2011

In September 2011, the equity markets (BOVESPA segment) financial volume totaled BRL 131.437 billion, in 13,551,487 trades, with daily averages of BRL 6.25 billion and 645,309 trades. In August, financial volume totaled BRL 177.906 billion, the total number of trades 16,234,673, and the daily averages BRL 7.73 billion and 705,855 trades respectively.

Source: BM&FBOVESPA, 18.10.2011

Filed under: BM&FBOVESPA, Brazil, China, Events, Exchanges, Hong Kong, India, Risk Management, , , , , , , , , , , , , , , , , , , , , , , , , ,

Brazil: BRIC exchanges form alliance

The exchanges of the Brics emerging markets bloc have announced plans to form an alliance in cross-listing and to expose foreign investors to their dynamic economies and to increase the liquidity of their trading venues (Brazil, Russia, India, Hong Kong (China), South Africa)

This initiative was announced at the 51st AGM of the World Federation of Exchanges (WFE) in Johannesburg.

The initiative brings together BM&FBOVESPA from Brazil, MICEX from Russia (currently merging with RTS Stock Exchange), Hong Kong Exchanges and Clearing Limited (HKEx, China) and Johannesburg Stock Exchange (JSE) from South Africa. The National Stock Exchange of India (NSE) and the BSE Ltd (India) have signed letters of support and will join the alliance after finalizing outstanding requirements.

At the first stage of this project the exchanges will begin cross-listing of financial derivatives on their benchmark equity indices. It is planned to launch cross-listed products by June 2012.

“Global investors are increasingly seeking exposure to leading developing markets,” says Ronald Arculli, chairman of HKEx and of the WFE. “Thanks to this alliance, investors will gain easier access to major equity index derivatives of the BRICS markets which will now be offered in local currency on the alliance exchanges”.

This is an important milestone in the history of developing countries, continues Mr Arculli. “The alliance enables more investors to gain exposure to the emerging economies of the BRICS group whose economic power is on the rise. From a global perspective this alliance highlights the growing significance of the BRICS economies and financial markets for the coming decade, and further underlines the importance of enhancing cooperation between the BRICS members”.

At the second stage of the project members of the alliance plan to jointly develop new products for cross-listing on their exchanges. “In addition to measuring market performance, equity indices may be used as underlying assets to create new products, which can be the next step in the alliance development”, says Russell Loubser, CEO of the JSE.

“The products designed at the second stage would then be cross listed and traded in local currencies,” says Edemir Pinto, CEO of BM&F BOVESPA. “They will also ensure easy access for investors to other emerging markets through locally listed products.”

The third stage may include further cooperation in joint products design and new services development.

“Apart from cross-listing products, there are other opportunities for growth and development within this alliance. For example, creation of joint products combining various underliers which will facilitate liquidity growth in the BRICS markets and improve the understanding of other developing markets by local investors,” says Ruben Aganbegyan, President of MICEX.

All the partnering exchanges estimate the potential for cooperation created by this alliance very positively.

“The BRICS exchanges alliance has a great potential as it will create avenues for Indian investors to diversify their portfolios and expand into other emerging markets. It will also provide unique opportunities to investors in other BRICS nations to participate and contribute in India’s growth. BSE will actively work towards bringing world-class products to India as well as developing new products for other BRICS markets.” says Madhu Kannan, CEO of BSE Ltd.

Interest towards the BRICS markets is supported by the above-average growth forecast for these regions, as well as the rising consumer power generated by growing middle classes in each of the participating economies” says Ravi Narain, MD of the National Stock Exchange of India.

According to the WFE these six exchanges represent a combined market capitalization of USD 9.02 trillion, the number of their ussuer companies totals 9.5 thousand.

As per the research by the Futures Industry Association these six exchanges accounted for 18% of the global turnover in financial derivatives in H1 of 2011.

Source: BM&FBOVESPA, FinExtra, 12.10.2011

Filed under: BM&FBOVESPA, Brazil, China, Exchanges, Hong Kong, India, News, , , , , , , , , , , , , , ,

Brazil: BM&FBOVESPA – News September 2011 – Nr.20

Launch of the first stage of the BM&FBOVESPA PUMATrading System

BM&FBOVESPA announces the conclusion of the first stage of development and integrated tests with the market of its new trading platform, named the BM&FBOVESPA PUMA Trading System. This is a multi-asset electronic trading platform that has been developed by BM&FBOVESPA and CME Group. BM&FBOVESPA PUMA Trading System will replace the Global Trading System (GTS), Mega Bolsa, BOVESPA FIX and SISBEX, integrating them into a single system with greater processing capacity, extremely low latency, and new functions. The implementation will occur in stages:

  • 1st Stage: Substitution of GTS (derivatives and spot foreign exchange);
  • 2nd Stage: Substitution of Mega Bolsa (equities and equity derivatives);
  • 3rd Stage: Substitution of BOVESPA FIX (fixed-income corporate securities) and SISBEX (government securities).

The Exchange implemented the BM&FBOVESPA PUMA Trading System in the spot foreign exchange market on August 29, 2011. The other stages will be executed in the following weeks, at dates to be announced at an opportune moment. As part of the GTS replacement effort, instruments will migratein four-stages. At each stage, orders sent to the Exchange for these contracts will be processed exclusively by the new system. The migration stages are:

  • 1st Migration: Spot foreign exchange contracts.
  • 2nd Migration: Agricultural derivatives.
  • 3rd Migration: Financial derivatives (interest rates, foreign exchange, inflation indices, gold etc.), except for derivatives based on stock indices.
  • 4th Migration: Derivatives based on stock indices.

Automated solution for market surveillance, operation and market oversight

BM&FBOVESPA and BOVESPA Market Supervision (BSM), the Brazilian self-regulatory organization in charge of inspecting and supervising transactions and trade authorizations, announced on September 15 that they will use NASDAQ OMX’s SMARTS Integrity market surveillance platform to monitor trading across their equities and commodities platforms. Using SMARTS Integrity, BM&FBOVESPA and BSM will have a comprehensive portfolio of alert scenarios for market behavior.

> More information

BM&FBOVESPA and BNDES present new portfolio for the Carbon Efficient Index

BM&FBOVESPA and BNDES announced on September 5 the composition of the theoretical portfolio of the Carbon Efficient Index, valid from September to December 2011. The ICO2 is an index composed of stocks in IBrX-50 index companies that have accepted involvement in the initiative, adopting transparent practices as regards greenhouse gas emissions (GGEs). The calculation of shares in the ICO2 index takes into consideration the greenhouse gas emissions and free float of companies.

The portfolio valid as of today can be viewed here.

New head of BM&FBOVESPA for UK

BM&FBOVESPA announces that Sergio Gullo has been hired as the new chief representative for BM&FBOVESPA in London. He will report to BM&FBOVESPA International Business Development Officer Lucy Pamboukdjian and be responsible for operations with the European, Middle Eastern and African markets. Sergio Gullo has been active in the financial market for more than 27 years. He was Business Development Manager in the United Kingdom for BGC Partners and has worked in financial institutions such as Banco Votorantim and Renaissance Capital, specializing in emerging markets and always in commercial areas with a focus on fixed income and structured products. He also held a wide range of positions at Lloyd’s TSB Bank for 19 years, in both Brazil and the UK.

New office in London

The BM&FBOVESPA office in London has moved to One New Change, 4th floor (London, EC4M, 9AF, United Kingdom). The London office may be contacted by e-mail at sgullo@bvmf.com.br and by telephone at (+44) 203 379 3978.

BM&FBOVESPA and Shenzhen Stock Exchange Sign Memorandum of Understanding

BM&FBOVESPA (BVMF) and the Shenzhen Stock Exchange (SZSE) signed on September 26 a memorandum of understanding (MOU) which includes personnel exchange, mutual training and information and experience sharing. Ms Song Liping, President of the Shenzhen Stock Exchange, and Mr. Edemir Pinto, CEO of BM&FBOVESPA, signed the MOU last month during the 5th International, Financial and Capital Market Conference in Campos do Jordão, in the state of São Paulo.

BM&FBOVESPA’s options and capital raising activity

According to the WFE (World Federation of Exchanges), BM&FBOVESPA is ranked as #1 in volume of Stock Options contracts trades and #4 in IPOs (Capital Raised). These and other regulated exchange industry numbers are available at: http://www.world-exchanges.org/statistics

Securities Lending

In August, the total number of securities lending transactions reached a record 141,721 compared to the previous record of 121,971 in May 2011 and to 114,989 in July. Financial volume was BRL 62.63 billion in August from BRL 52.16 billion the previous month.

Ibovespa and other index portfolios, valid for September-December 2011

BM&FBOVESPA has announced the Ibovespa theoretical index portfolio, which will be valid from September 5 to December 29, 2011, based on the closing of the September 2, 2011 trading session. The new portfolio now includes common shares in BR Malls and Cia Hering, which brings its total to 68 stocks in 63 companies.

> More information

BM&FBOVESPA launches app for Google Chrome web browser

BM&FBOVESPA announced on September, 16th that users of the Google Chrome web browser can download a free app that allows real time monitoring of the share prices of companies traded on BM&FBOVESPA and of the directions taken by the main capital market indexes. This tool allows users to customize their share portfolio, storing in the “Favorites” tab the companies that they wish to monitor daily. The app includes films that explain stock investment, wealth creation, and financial education. It also contains messages that are sent to the BM&FBOVESPA twitter channel @Info_BMFBOVESPA

To obtain the BM&FBOVESPA Google Chrome app, please access the Google Web Store and download the file at: https://chrome.google.com/webstore.

2011 EVENTS

Family Office Summit – Latin America

BM&FBOVESPA is currently sending invitations for this event promoted by the World Research Group and which will be held in São Paulo September 26-28. A BM&FBOVESPA representative is scheduled to talk about alternative investments. The summit will present current trends for optimizing effective strategies and alternative methods to produce investments for single and multi family offices in the Brazilian capital market. There will be a special networking session bringing together managers, single and multi family offices, advisors and consultants.

Location: Intercontinental São Paulo – Alameda Santos, 1123, São Paulo , SP.
Date: September 26-28, 2011.

> Full Agenda and Registration

2nd FX Growth Markets Series: Brazil – Profit & Loss

BM&FBOVESPA will join the Profit & Loss FX Growth Markets conference on October 20, 2011 at the Tivoli Hotel in São Paulo. Profit & Loss has been operating its highly successful series of Forex Network and FX Growth Markets conferences for more than 10 years, with regular annual events held in London, New York, Chicago, Singapore, Brazil, Mexico, Colombia, Chile, Shanghai and Toronto, and comes to Brazil for the second time. A BM&FBOVESPA representative will talk at the event.

Location: Tivoli Hotel São Paulo, São Paulo, Brazil
Date: October 20, 2011.

> Full Agenda

BM&FBOVESPA at Chicago’s FIA EXPO

BM&FBOVESPA will exhibit at FIA EXPO 2011. The event attracts approximately 5,000 people from more than 30 countries, from senior staff at brokerage firms and exchanges to floor traders, pension fund managers, corporate treasurers, CTAs and CPOs, and individual investors. BM&FBOVESPA staff will present the Exchange’s products, connectivity, DMA access via Globlex, co-location and others.

Location: Hilton Chicago, USA
Date: October 10-12, 2011

> More info

The World Cup of ETFs and Indexing Latin America

BM&FBOVESPA is lending its support to the World Research Group’s “World Cup of ETFs and Indexing Latin America.” The event aims at providing attendees with the best practices for ETFs use, as well as a comprehensive analysis of market structure, regulations and current and future opportunities. The expected audience includes pension funds, hedge fund managers and investors, investment advisors, financial consultants, and other market participants. A BM&FBOVESPA representative will talk about the Exchange’s ETF products.

Location: São Paulo (TBC)
Date: October 17-18, 2011.

> Full Agenda and Registration

Volumes and trades by Direct Market Access (DMA)

BM&F Segment
In August, BM&F* market segment transactions carried out through order routing via Direct Market Access (DMA) registered 41,417,494 contracts traded and 4,431,750 trades. In July, the volume reached 20,009,841 contracts traded and 2,417,398 trades.

The volumes registered by each access modality in the BM&F segment were as follows:

  • Traditional DMA – 17,540,231 contracts traded, in 1,306,241 trades, in comparison to 7,440,774 contracts and 797,002 trades in July;
  • Via DMA provider (including orders routed via the Globex System) – 14,088,756 contracts traded, in 435,281 trades, compared to 7,040,432 contracts and 258,881 trades in July;
  • DMA via direct connection – 4,210 contracts traded in 830 trades, against 3,691 contracts and 977 trades in July;
  • DMA via co-location – 9,784,297 contracts traded, in 2,689,398 trades, compared to 5,524,944 contracts and 1,360,538 trades in July.

In August, transactions carried out by foreign investors presented by CME to BVMF (who use the Globex-GTS order routing system or access BVMF markets via co-location) totaled 5,308,308 contracts traded, in 1,235,349 trades, compared to 2,897,744 contracts and 688,862 trades in July.

BOVESPA Segment
In August, order routing via DMA in the BOVESPA* segment totaled BRL 138,522,096,000.00 and 17,021,408 trades, from BRL 95,030,778,000.00 and 11,225,193 trades the previous month.

Trading volumes per type of DMA in the BOVESPA segment:

  • Traditional DMA – Volume of BRL 120,451,427,000.00 and 14,098,638 trades from BRL 87,674,861,000.00 and 10,091,956 in July;
  • DMA via co-location – Volume of BRL 16,691,370,000.00 and 2,755,498 trades from BRL 6,381,361,000.00 and 1,007,081 in July;
  • DMA via provider – Volume of BRL 1,379,299,000.00 and 167,272 trades from BRL 974,556,000.00 and 126,156 in July.

* Direct access to the BM&FBOVESPA market segments is carried out through DMA models 1, 2, 3 and 4. In model 1 or traditional DMA, the client accesses the GTS or Mega Bolsa through technological intermediation of a brokerage house. In model 2 or via DMA provider, the client does not use the technological intermediation of a brokerage house, but rather connects to the system through an authorized access provider. DMA via order routing with CME Globex is also a form of DMA model 2. In model 3, the client connects to the system through a direct connection. In model 4 or via co-location, the client installs its own computer within the Exchange’s facilities.

Notes:

The volumes registered by access modality include both buy and sell sides of a trade.

The volumes by access modality for both the BM&F and the BOVESPA market segments have been reported in a consolidated manner in the BM&FBOVESPA statements since May 2009.

MARKET RESULTS

BM&F Segment August 2011

Derivatives markets in the BM&F segment (including financial and commodities derivatives) totaled 78,606,873 contracts and BRL 5.23 trillion in volume in August, compared to 44,199,125 contracts and BRL 3.35 trillion in July. The daily average of contracts traded in the derivatives markets in August was 3,417,690, in contrast to 2,104,720 in July. Open interest contracts ended the last trading day of August with 37,821,302 positions, compared to 30,716,596 in July.

BOVESPA Segment August 2011

In August 2011, the equity markets (BOVESPA segment) financial volume totaled a record BRL 177.906 billion, in a record 16,234,673 trades, with daily averages of BRL 7.73 billion and a record 705,855 trades. This was in comparison to the prior total volume record of BRL 155.55 billion in October 2010, the prior total trades record of 11,172,707 in May 2011 and the prior daily average trades record of 544,88 in February 2011.

Source:BM&FBOVESPA, 20.09.2011

Filed under: BM&FBOVESPA, Brazil, FIX Connectivity, News, Trading Technology, , , , , , , , , , , , , , , , , , , , ,

10 Trading Trends in Latin America : SunGard

Raj Mahajan, president of SunGard’s global trading business, said: “The economy in Latin America continues to grow at an exceptional pace. Led by Brazil, which has achieved an annual average growth of 3.7% over the last ten years, (nearly twice that of the US), the boom includes Mexico, Chile, Columbia and Peru. SunGard is helping Latin American trading firms capitalize on the change and growth in that region, by providing low latency execution to help them compete in the global race for liquidity with greater transparency, efficiency and access to network connectivity.”

The ten trends SunGard has identified as shaping Latin American trading are:

1. Mexico, Chile, Columbia and Peru are quickly gaining recognition as key markets in Latin America, as their combined trading volumes edge closer to Brazilian levels.

2. Brazil’s markets are going completely electronic, increasing firms’ ability to more efficiently and more quickly access liquidity. As a result volumes have skyrocketed; a 400% increase in activity in the last decade.

3. Demand for international order flow is high as volumes are rising in emerging markets: Brazil is ranked the fourth largest emerging market according to a recent article.

4. The sell-side in Latin America is consolidating; large international players are buying local brokers to quickly increase their presence and credibility.

5. FIX connectivity is increasing: As firms receive and execute more order flow internationally, the adoption of FIX has taken hold in Latin America, helping to efficiently connect buy- and sell-side firms.

6. Trading volumes are increasing across the region and firms need real-time data and analytical tools for greater transparency into market movements. It is predicted that Brazil will see a 4.9% increase in equity market performance in 2011, according to a recent report. From 2006-2010, fund flows into Brazil have totaled $10 billion.

7. As more international investors want exposure to LatAm markets, the networks into and out of these markets becomes more important. Local firms and international players are investing in telecommunications infrastructure to ensure bandwidth and reliability for their trading networks.

8. With major exchanges allowing third party software firms direct access to exchanges, traders have more network connectivity options and can now take advantage of independent software vendors to provide their technology platforms.

9. As LatAm trading volumes skyrocket, the demand for financial information within the region is growing. In terms of financial market data and news, Latin America is second only to the Asian nations in allocating more budget for this resource.

10. LatAm trading firms are investing in low latency execution and stable customizable trading solutions, leaving legacy technologies behind for greater operating efficiency.

Danielle Tierney, junior analyst at Aite, said, “Networks are the key to sustaining growth in Latin America. Approximately 25 percent of the volume traded in Latin America is international, driving the search for new sources of liquidity and establishing connections to powerful global networks.”

Sourc: SunGard, 12.09.2011

Filed under: Argentina, Brazil, Chile, Colombia, Data Vendor, Exchanges, FIX Connectivity, Latin America, Market Data, Mexico, Peru, Trading Technology, , , , , , , , , , , , , , , , , , , , ,

Brazil: BM&FBOVESPA News August 2011 Nr 29

BM&FBOVESPA International Financial and Capital Markets Conference features Robert Skidelsky and Michael Pettis

The biennial meeting held as of Thursday (August 25) in the town of Campos do Jordão in the state of São Paulo will host debates on current economic and global financial market issues, including challenges for the derivatives and capital markets, the future of financial intermediation, and algorithmic trading strategies. BM&FBOVESPA Chief Executive Officer Edemir Pinto and Chairman of the Board of Directors Arminio Fraga will receive, for lectures and debates, some of the world’s most influential experts about the matters on the agenda. Among their number are Robert Skidelsky, Emeritus Professor of Political Economy at the University of Warwick, and a specialist on the work of the economist John Maynard Keynes. Michael Pettis, a professor at Peking University’s Guanghua School of Management and expert on the Asian markets will take part in a discussion about the challenges that the Brazil-China relationship will face over the coming years.

> Full agenda of the event

BM&FBOVESPA launches eight new currency derivatives

BM&FBOVESPA launched eight new currency futures contracts this week (August, 15). They are six futures contracts and two mini futures contracts. The regular futures contracts are for the Brazilian Real against the South African Rand (ZAR), Turkish Lira (TRY), New Zealand Dollar (NZD), Chilean Peso (CLP), Chinese Yuan (CNY) and Swiss Franc (CHF). The contracts will be authorized for trading as of the September 2011 maturity, between 9:00 a.m. and 6:00 p.m. Each futures contract is sized and formatted so that it is equivalent to the USD 50,000 size of U.S. Dollar futures contract. The sizes of the respective contracts are 350,000 South African Rands; 350,000 Chinese Yuan; 75,000 Turkish Lira; 75,000 New Zealand Dollars; 50,000 Swiss Francs; and 25 million Chilean Pesos. The Mini U.S. Dollar Futures Contract (WDO) is sized USD 10,000, which represents 20% of the size of the regular U.S. Dollar Futures Contract. The Mini Euro Futures Contract (WEU) is sized €10,000, representing 20% of the size of the regular Euro Futures Contract .

> More info

International partnerships mark the expansion of the BM&FBOVESPA Institute of Education

The BM&FBOVESPA Institute of Education has been known as the “Escola para os Mercados Financeiro, de Capitais e de Derivativos” (Financial, Capital and Derivatives Markets School) since its foundation in 1986. Growing demand for professional training, however, means it has broadened its scope since 2010 and it has also begun operating as the “Escola do Investidor” (School of the Investor) and the “Escola de Empresas e Empreendedores” (Enterprises and Entrepreneurs’ School). In the first half of 2011 the Institute of Education signed cooperation agreements with internationally renowned business schools, among which the Endeavor Institute, Babson College and Chicago Booth:

  • Endeavor Institute – the “Bota pra fazer” (Sow to Reap) program of courses aimed at startup companies, in business incubators. This methodology was developed by Endeavor Brazil in partnership with the Kauffman Foundation. The Institute of Education was the first institution in Brazil to apply this methodology for qualifying entrepreneurs.
  • Babson College – Through this partnership, the BM&FBOVESPA Institute of Education offers the “Gestão e Crescimento Empresarial de Alto Impacto” (High Impact Business Management and Growth) program of courses, hand-tailored to enable Brazilian entrepreneurs to lead their companies’ growth. The second group begins in October this year.
  • Chicago Booth – The business school of the University of Chicago. This partnership has resulted in the development of a three-module academic program, focused on the capital and derivatives markets and with an international approach.  Next course in December.

BM&FBOVESPA’s options and capital raising activity

According to the World Federation of Exchanges (WFE) BM&FBOVESPA is ranked as #1 in volume of Equity Option trades and #4 (Capital Raised) in terms of newly listed companies (IPOs). These and other regulated exchange industry numbers are available at:
http://www.world-exchanges.org/statistics

Market Makers for Options on the Stock of BM&FBOVESPA, Usiminas and BOVESPA Index

BM&FBOVESPA announced on August 3 the start of the selection process for up to three market makers for options on the stock of BM&FBOVESPA S.A (BVMF3) and Usinas Siderúrgicas de Minas Gerais S.A. – Usiminas (USIM5) and for options on the BOVESPA Index (IBOV). This is the second stage of the Bidding Program to select market makers in equity options and BOVESPA Index options, developed by the Exchange. Institutions that are interested in taking part – including nonresidents – have until September 26, 2011 to deliver proposals. The winners will be announced on October 11, 2011.

> More information about the Market Makers for Options

Bradesco wins BM&FBOVESPA selection process as Depositary Institution for 10 Unsponsored Level I BDR Programs

Bradesco has won the sixth selection process for depositary institutions authorized to request registration for trading 10 Unsponsored Level I Brazilian Depository Receipt (BDR) programs, backed by shares issued by publicly traded companies with headquarters overseas. Bradesco should simultaneously present BM&FBOVESPA and the Brazilian Securities and Exchange Commission (CVM), within 60 calendar days, with the necessary documentation for submission to register the 10 Unsponsored Level 1 BDR programs. The programs should include foreign companies that do not yet have BDRs traded on BM&FBOVESPA and which are headquartered in the United States and listed on U.S. stock exchanges.

There are currently 30 Unsponsored Level 1 BDR programs available for trading on BM&FBOVESPA, which have Deutsche Bank S.A., Citibank DTVM S.A. and Itaú Unibanco S.A. as their depositary institutions. Another three lots of ten programs shall be presented to the market soon by Banco Bradesco S.A., Citibank DTVM S.A. and Deutsche Bank S.A.

> More info

Up to USD 10 billion in public offerings and follow-ons in 2011

In the year to August 15, BM&FBOVESPA registered USD 10.1 billion in public offerings and follow-ons. There were eleven Initial Public Offerings (IPOs) in 2011: AREZZO&CO (ARZZ3), SIERRA BRASIL (SSBR3), AUTOMETAL (AUTM3), QGEP PART (QGEP3), IMC HOLDING (IMCH3), TIME FOR FUN (SHOW3), MAGAZINE LUIZA (MGLU3), BR PHARMA (BPHA3), QUALICORP (QUAL3), TECHNOS (TECN3) and ABRIL EDUCAÇÃO (ABRE11). At the end of July, the 181 companies that are part of the BM&FBOVESPA’s special corporate governance levels represented 64.96% of market capitalization, 79.04% of financial volume, and 76.84% of trades in the spot market. At the end of June, there were 177 companies, representing 65.56% of market capitalization, 75.42% of financial volume, and 77.57% of spot market trades.

Number of ETF trades grows 25% from June

The financial volume registered in July by the eight BM&FBOVESPA Exchange-Traded Funds (ETFs) reached BRL 667.75 million in 31,997 trades, from BRL 598.43 million and 25,701 the previous month. In July the ETF with the highest financial volume was BOVA11 with BRL 573.83 million and 26,915 transactions.

2011 EVENTS

BM&FBOVESPA 5th International Financial and Capital Markets Conference

The city of Campos do Jordão will once again be the site of one of the year’s most important financial market events, hosted by BM&FBOVESPA. The 5th edition of the International Financial and Capital Markets Conference will have national and international guest speakers, round-table discussions, social activities and an exhibition area providing an excellent venue for participants to debate some of the most significant financial topics. Speakers include: Maria Helena Santana (Securities and Exchanges Commission of Brazil – CVM), Robert Engle (2003 Nobel Prize), Joe Gawronski (COO of Rosenblatt Securities) and Ilan Goldfajn (Chief Economist, Itau Unibanco).

Location: Campos do Jordão, SP, Brazil
Date: August 25-27, 2011

> Full agenda of the event

*Nonresident investors can apply for an exclusive 50% discount for registration at the event. Please contact the International Business Development team to request your coupon, by email to ysilva@bvmf.com.br or drodrigues@bvmf.com.br

BM&FBOVESPA at Chicago’s FIA EXPO

BM&FBOVESPA will exhibit at FIA EXPO 2011. The event attracts approximately 5,000 people from more than 30 countries, from senior staff at brokerage firms and exchanges, to floor traders, pension fund managers, corporate treasurers, CTAs and CPOs, and individual investors. BM&FBOVESPA staff will present the Exchange’s products, connectivity, DMA access via Globlex, etc.

Location: Hilton Chicago, USA
Date: October 10-12, 2011

> More info

Family Office Summit – Latin America

BM&FBOVESPA is currently sending invitations for this event promoted by the World Research Group and which will be held in São Paulo September 26-28. A BM&FBOVESPA representative is scheduled to talk about alternative investments. The summit will present current Trends for Optimizing Effective Strategies and Alternative Methods to Produce Investments for Single and Multi Family Offices in the Brazilian capital market. There will be a special networking session bringing together managers, single and multi family offices, advisors and consultants.

Location: Intercontinental São Paulo – Alameda Santos, 1123, São Paulo , SP.
Date: September 26-28, 2011.

> Full Agenda and Registration

2nd FX Growth Markets Series: Brazil – Profit & Loss

BM&FBOVESPA will join the Profit & Loss FX Growth Markets conference on October 20, 2011 at the Tivoli Hotel in São Paulo. Profit & Loss has been operating its highly successful series of Forex Network and FX Growth Markets conferences for more than 10 years, with regular annual events held in London, New York, Chicago, Singapore, Brazil, Mexico, Colombia, Chile, Shanghai and Toronto, and comes to Brazil for the second time. A BM&FBOVESPA representative will talk at the event.

Location: Tivoli Hotel São Paulo, São Paulo, Brazil
Date: October 20, 2011.

> Full Agenda

Volumes and trades by Direct Market Access (DMA)

BM&F Segment
In July, BM&F* market segment transactions carried out through order routing via Direct Market Access (DMA) registered 20,009,841 contracts traded and 2,417,398 trades. In June, the volume reached 20,409,252 contracts traded and 2,105,981 trades.

The volumes registered by each access modality in the BM&F segment were as follows:

  • Traditional DMA – 7,440,774 contracts traded, in 797,002 trades, in comparison to 8,168,492 contracts and 775,388 trades in June;
  • Via DMA provider (including orders routed via the Globex System) – 7,040,432 contracts traded, in 258,881 trades, compared to 7,365,306 contracts and 260,441 trades in June;
  • DMA via direct connection – 3,691 contracts traded in 977 trades, against 8,995 contracts and 1,376 trades in June;
  • DMA via co-location – 5,524,944 contracts traded, in 1,360,538 trades, compared to 4,866,459 contracts and 1,068,766 trades in June.

In July, transactions carried out by foreign investors presented by CME to BVMF (who use the Globex-GTS order routing system or access BVMF markets via co-location) totaled 2,897,744 contracts traded, in 688,862 trades, compared to 2,658,361 contracts and 623,653 trades in June.

BOVESPA Segment
In July, order routing via DMA in the BOVESPA* segment totaled BRL 95,030,778,000.00 and 11,225,193 trades, from BRL 88,977,494,000.00 and 10,244,578 trades the previous month.

Trading volumes per type of DMA in the BOVESPA segment:

  • Traditional DMA – Volume of BRL 87,674,861,000.00 and 10,091,956 trades from BRL 82,843,187,000.00 and 9,287,652 in June;
  • DMA via co-location – Volume of BRL 6,381,361,000.00 and 1,007,081 trades from BRL 5,206,388,000.00 and 856,246 in June;
  • DMA via provider – Volume of BRL 974,556,000.00 and 126,156 trades from BRL 927,919,000.00 and 100,680 in June.

* Direct access to the BM&FBOVESPA market segments is carried out through DMA models 1, 2, 3 and 4. In model 1 or traditional DMA, the client accesses the GTS or Mega Bolsa through technological intermediation of a brokerage house. In model 2 or via DMA provider, the client does not use the technological intermediation of a brokerage house, but rather connects to the system through an authorized access provider. DMA via order routing with CME Globex is also a form of DMA model 2. In model 3, the client connects to the system through a direct connection. In model 4 or via co-location, the client installs its own computer within the Exchange’s facilities. 

Notes:

The volumes registered by access modality include both buy and sell sides of a trade.

The volumes by access modality for both the BM&F and the BOVESPA market segments have been reported in a consolidated manner in the BM&FBOVESPA statements since May 2009.

MARKET RESULTS

BM&F Segment July 2011

In July, derivatives markets in the BM&F segment (including financial and commodities derivatives) totaled 44,199,125 contracts and BRL 3.35 trillion in volume, compared to 51,023,956 contracts and BRL 3.25 trillion in June. The daily average of contracts traded in the derivatives markets in July was 2,104,720, in contrast to 2,429,712 in June.

BOVESPA Segment July 2011

In July 2011, equity markets (BOVESPA segment) traded BRL 119.63 billion, in 11,016,993 trades, with daily averages of BRL 5.69 billion and 524,619 trades, in comparison to June when total volume reached BRL 124.19 billion, in 10,187,883 trades, with daily averages of BRL 5.91 billion and 485,137 trades.

Filed under: BM&FBOVESPA, Brazil, China, Events, Exchanges, News, Risk Management, Trading Technology, , , , , , , , , , , , , , , , , , , , ,

CME and MexDer implement north-to-south order routing

CME Group, the world’s leading and most diverse derivatives marketplace, and the Mexican Derivatives Exchange (MexDer), the derivatives subsidiary of the BMV Group and second largest exchange in Latin America, today announced the successful launch of their north-to-south order routing agreement, giving customers in the U.S. access to MexDer’s benchmark derivatives contracts, including Mexican Stock Exchange Index Futures, Bond Futures and MXN Peso / US Dollar Futures Contracts.

The first phase of CME Group’s strategic partnership with MexDer went live April 4, 2011 and gave Mexican investors access to CME Group’s benchmark derivatives contracts including interest rates, foreign currencies, equity indexes, energy, metals and agricultural commodities.

“Mexico is the 13th largest economy in the world and we continue to look for opportunities to provide our customers around the world with the broadest and most diverse range of globally-relevant products to help them manage their risk,” said Phupinder Gill, CME Group President. “This next phase of the partnership demonstrates how we continue to build on our successful track record of growing our business internationally through strategic partnerships.”

“With the successful launch of South-to-North order routing in April, the second phase of the direct order routing connection now makes it possible for both of our customers to leverage access to both MexDer and CME Group, and take advantage of a modern market with a friendly regulatory framework in Mexico and a growing sophisticated local investor base,” said Luis Tellez, Chairman and CEO of BMV Group. “Our goal moving forward is to focus on increasing our volumes together and working more closely with each other to learn how we can meet the needs of our customers.”

In March 2010, the parent company of MexDer, BMV Group, and CME Group entered into a strategic partnership that includes order routing for derivatives products as well as an agreement to pursue potential joint initiatives including product development, marketing and customer education as well as clearing opportunities. CME Group is the exclusive exchange provider of derivatives order routing services to MexDer outside Latin America, and MexDer is the exclusive exchange provider of derivatives order routing services to CME Group in Mexico.

Source: BMV 01.08.2011

Filed under: BMV - Mexico, Exchanges, FIX Connectivity, Latin America, Mexico, News, Risk Management, Trading Technology, , , , , , , , , , , , , , , , ,

Brazil: New Brazilian Derivatives Market Regulation

On July 27, 2011 the Brazilian Finance Minister, Guido Mantega, announced two new prudential measures aimed to avoid currency speculation in the derivatives market, in order to stem the United States Dollar’s fall and prevent the overvaluation of the Brazilian Real. These two measures are commented below.

The first measure is Provisional Measure No. 539, of July 26, 2011 (MP 539/2011), which basically authorizes the Brazilian Monetary Council (Conselho Monetário Nacional – CMN) to establish specific conditions for the negotiation of derivates contracts, for monetary and exchange policy purposes, regardless of the nature of the investor, with powers to also (i) determine deposits over the notional value of the derivatives contract; and (ii) set forth limits, terms and other conditions for the negotiation of such contracts.

MP 539/2011 also amends the Tax on Exchange Transactions (IOF) legislation, namely Decree-Law No. 1,783, of April 18, 1980 and Law No. 8,894, of June 21, 1994, in order to clarify that:

  1. the entities authorized to register derivatives contracts are responsible for collecting the IOF, which is calculated on the amount of the transaction;
  2. in the case of securities transactions involving derivatives contracts, the maximum IOF rate will be 25%. Up to this ceiling (25%), the Executive Branch can amend the applicable rate at any time, considering the monetary and exchange policy goals of the Brazilian Government. However, the current applicable IOF rate for derivatives transactions is 1%, as explained below when the second measure is commented;
  3. the amount of the securities transaction, for IOF purposes, is the adjusted notional value of the derivatives contract. The adjusted notional value is the reference value of the contract (notional value) revised to reflect the difference resulting from the derivatives´ price variation with respect to the underlying assets´ price variation; and
  4. the taxpayer is the holder of the derivatives contract.

As of July 27, 2011 (date of the publication of MP 539/2011 in the Official Gazette of the Union, when this measure came into force), in order to be valid all derivatives contracts must be registered with duly authorized entities, i.e. clearing houses or service providers which have been accredited by the Central Bank of Brazil (Banco Central do Brasil – Bacen) or by the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM) to operate with clearing, settlement and registry.

The second measure is Decree No. 7,536, also dated July 26, 2011 (Decree 7,536/2011), which amends the IOF regulation approved by Decree No. 6,306, of December 14, 2007. This decree repeats many of the same terms already defined in MP 539/2011.

Pursuant to Decree 7,536/2011, the current applicable IOF rate to derivatives contracts is 1% and it is due in the purchase, sale or maturity of financial derivatives contracts, whenever the settlement amount is affected by the exchange rate variation and results in increase in the net short exposure in relation to the amount calculated at the end of the previous business day within the same entity authorized to register derivatives contracts.

The net exposure is calculated as the sum product of the amount of financial derivatives contracts whose settlement amount is affected by the variation of the exchange rate set by the adjusted notional value of each contract.

Netting is permitted between exposures of the same holder cleared by different entities accredited to register derivatives contracts, provided that the holder expressly authorizes such entities to access information necessary for the calculation of the consolidated net exposure.

The applicable rate is reduced to zero in the case of the above mentioned netting as well as in any purchases, sales or maturities of derivatives contracts that at the end of the day result in net short exposure below US$ 10 million made with the same entity accredited to register derivatives contracts. Above this figure, the 1% rate will apply.

Furthermore, Decree 6,306/2011 contains a provision which is not related to derivatives contracts and deals with foreign currency loans. This provision establishes that the 6% IOF rate which is due in the case of transactions contracted for a term of less than 720 days must also be paid in the event of prepayment of loans with maturity exceeding 720 days, plus interest in arrears and a fine, which may vary from 5% to 100% of the total amount of the transaction, and a penalty of up to R$ 100 thousand to be imposed by Bacen. This measure aims to avoid that a Brazilian borrower contracts a long-term loan benefited with zero IOF rate and then agrees to reduce the term of the transaction immediately afterwards.

Source: Mondaq, 01.08.2011

Filed under: BM&FBOVESPA, Brazil, Exchanges, Latin America, Risk Management, , , , , , ,