Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  Equities  >  Bolsa de valores de Sao Paulo  >  BM&F Bovespa SA    BVMF3   BRBVMFACNOR3

End-of-day quote. End-of-day quote  - 02/24
19.02 BRL   --.--%
02/21 BM&F BOVESPA : Carbon Neutral
02/17 BM&F BOVESPA : Results Release
02/15 BM&F BOVESPA : Notice to the Market - Clarifications on news report
SummaryQuotesChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsSector newsTweets 

Brazil's BM&FBovespa, seeking to fight competition, cuts fees

share with twitter share with LinkedIn share with facebook
share via e-mail
0
03/05/2013 | 06:10pm CET

Brazil's financial bourse BM&FBovespa SA took a key step on Tuesday aimed at protecting its home turf by cutting trading fees and vowing to review custody pricing as foreign rivals prepare to enter the country's buoyant exchange sector.

It reduced trading fees in the cash equities market by 28.5 percent to 0.005 percent, or 0.5 basis point, from 0.007 percent, Chief Executive Edemir Pinto said at an event. Assuming no additional volume stemming from the fee reduction, revenue could fall as much as 20 million reais ($10 million,) he said.

Apart from that, BM&FBovespa will offer discounts for day trades and progressive fee reductions based on market average volumes - moves that should be welcomed by clients, especially those with above-average turnover velocity, analysts said.

The announcement signals the exchange, which says it is the world's third-largest by market capitalization, is ready to play hardball with any new rival planning to enter the local market.

In practical terms, the moves "reduce slightly the costs for some investors and increase dramatically the challenges for potential new players, mainly for those not relying on a vertically integrated platform but only on trading," Credit Suisse Group analyst Victor Schabbel said in a client note.

The aim of the new policy is to "divide the gains in scale with all market participants" and not to discourage potential competition, Pinto said. Direct Edge Holdings LLC, the fourth-largest U.S. stock exchange operator, has announced plans to request a license to operate a Brazilian bourse.

Shares of BM&FBovespa posted their biggest intraday gain in more than a month, adding 2.7 percent at 13.68 reais. The increase helped erase some of the 3.8 percent decline so far this year.

The bourse is analyzing a thorough revision of fees in the BM&F derivatives segment, including contracts for interest rates and currency futures, as well as for agricultural commodities, Pinto added. The BM&F segment makes up 41 percent of its net revenue, while the Bovespa equities segment contributes 48 percent.

In the case of day trades, which account for 35 percent of equities trading volume, clients will have access to the same pool of discounts available to investors in the high-frequency trading segment, executives said.

"Our main goal is to increase market liquidity," Marcelo Maziero, head of products at the bourse, said at the same event.

Retail and non-resident investors, as well as banks, will be beneficiaries of a full reduction in fees, while institutional investors will see the cost of post-trading fees move up to 2 basis points from 1.8 basis points. Between April 1 and December 1, the fee cuts will be booked as a discount, while they will be effective from December 2 onward.

'RAISING THE BAR'

Starting on December 2, BM&FBovespa will offer a reduction of 57 percent in fees, to 3 basis points, if average daily trading volumes are between 11 billion reais and 13 billion reais. If ADTVs top 13 billion reais, the discount could come at 2 basis points, the executives added.

With ADTVs between 9 billion reais and 11 billion reais, the fee would decline to 4 basis points. If trading volumes are up to 9 billion, the 5-basis-point fee will apply. Implementation of these specific cuts is pending determination of some details.

"In our view, this should be seen as the most important measure to be soon implemented by the exchange," Schabbel said. "While the impact on revenues is also fairly limited ... we note that it raises the bar for any new potential player to come in."

Under current rules, BM&FBovespa enjoys a near monopoly on all trading, clearing and settlement services for most locally traded shares. While depositary receipts in New York or other global financial hubs provide a possible alternative to trading on BM&FBovespa, many investors cannot trade them due to legal or tax restrictions.

BM&FBovespa is unlikely to share clearing, custody and settlement facilities with potential rivals until at least 2015, Pinto said. Direct Edge does not rule out working with other so-called post-trading platforms in case talks with BM&FBovespa over sharing clearing services fail.

There are no legal rules currently in place requiring BM&FBovespa to sell or rent clearing services, a strategic part of any trading business that requires a major investment.

Given Brazil's market structure, competitors would only rival BM&FBovespa's leading position by investing substantially in a post-trading platform or renting BM&FBovespa's. In both cases, newcomers may see a payback only after many years.

Pinto said a revision in pricing of custody and post-trading services for retail investors would soon be announced, without offering details.

He also said that, as of now, there are more than 40 plans for initial public offerings in the exchange in the pipeline.

($1 = 1.97 Brazilian reais)

(Reporting by Danielle Assalve and Guillermo Parra-Bernal; Editing by Gerald E. McCormick, Jeffrey Benkoe, Dan Grebler and Dale Hudson)

By Danielle Assalve and Guillermo Parra-Bernal

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on BM&F BOVESPA SA
02/21 BM&F BOVESPA : Carbon Neutral
02/17 BM&F BOVESPA : Results Release
02/15 BM&F BOVESPA : Notice to the Market - Clarifications on news report
02/14 BM&F BOVESPA : Welcome to the Exchange!
02/13 BM&F BOVESPA : Material Fact - CADE - request for an extension of the period of ..
02/08 BM&F BOVESPA : Notice to the Market - Clarifications on news report
02/06 BM&F BOVESPA : Market Performance
02/06 BM&F BOVESPA : Notice to the Market - Clarification on a news report
02/03 BM&F BOVESPA : Market Maker Program
02/03 BM&F BOVESPA : Notice to the Market - Clarification on news report
More news
Sector news : Financial & Commodity Market Operators - NEC
06:33p European shares ease on weaker insurance sector, Italian stocks surge
06:13p FTSE ends higher on some positive earnings, insurers slip
05:33p LONDON STOCK EXCHANGE : LSE had doubts over Deutsche Boerse CEO leading merged f..
05:30p LSE HAD DOUBTS OVER DEUTSCHE BOERSE : sources
01:49p Hong Kong pins Aramco IPO hopes on China's deep pockets
More sector news : Financial & Commodity Market Operators - NEC
Advertisement
Financials ( BRL)
Sales 2017 2 598 M
EBIT 2017 1 598 M
Net income 2017 1 855 M
Finance 2017 72,0 M
Yield 2017 3,92%
P/E ratio 2017 17,57
P/E ratio 2018 17,04
EV / Sales 2017 13,3x
EV / Sales 2018 11,9x
Capitalization 34 521 M
More Financials
Chart BM&F BOVESPA SA
Duration : Period :
BM&F Bovespa SA Technical Analysis Chart | BVMF3 | BRBVMFACNOR3 | 4-Traders
Full-screen chart
Technical analysis trends BM&F BOVESPA SA
Short TermMid-TermLong Term
TrendsBullishBullishNeutral
Technical analysis
Income Statement Evolution
More Financials
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 14
Average target price 18,5  BRL
Spread / Average Target -3,0%
Consensus details
EPS Revisions
More Estimates Revisions
Managers
NameTitle
Edemir Pinto Chief Executive Officer
Pedro Pullen Parente Chairman
Cícero Augusto Vieira Neto Chief Operating & Product Officer
Daniel Sonder Chief Financial & Investor Relations Officer
Luís Otávio Saliba Furtado Co-Chief Information Officer
More about the company
Sector and Competitors
1st jan.Capitalization (M$)
BM&F BOVESPA SA15.52%11 115
CME GROUP INC6.30%41 611
INTERCONTINENTAL EXCHA..3.33%34 708
HONG KONG EXCHANGES AN..6.14%31 242
DEUTSCHE BOERSE AG8.25%17 093
INTERACTIVE BROKERS GR..2.74%15 391
More Results