Investor Relations Department. São Paulo, SP

Transcription

1 Investor Relations Department São Paulo, SP August/2016 X Public1

2 Forward Looking Statements This presentation may contain certain statements that express the management s expectations, beliefs and assumptions about future events or results. Such statements are not historical fact, being based on currently available competitive, financial and economic data, and on current projections about the industries BM&FBOVESPA works in. The verbs anticipate, believe, estimate, expect, forecast, plan, predict, project, target and other similar verbs are intended to identify these forward-looking statements, which involve risks and uncertainties that could cause actual results to differ materially from those projected in this presentation and do not guarantee any future BM&FBOVESPA performance. The factors that might affect performance include, but are not limited to: (i) market acceptance of BM&FBOVESPA services; (ii) volatility related to (a) the Brazilian economy and securities markets and (b) the highly-competitive industries BM&FBOVESPA operates in; (iii) changes in (a) domestic and foreign legislation and taxation and (b) government policies related to the financial and securities markets; (iv) increasing competition from new entrants to the Brazilian markets; (v) ability to keep up with rapid changes in technological environment, including the implementation of enhanced functionality demanded by BM&FBOVESPA customers; (vi) ability to maintain an ongoing process for introducing competitive new products and services, while maintaining the competitiveness of existing ones; (vii) ability to attract new customers in domestic and foreign jurisdictions; (viii) ability to expand the offer of BM&FBOVESPA products in foreign jurisdictions. All forward-looking statements in this presentation are based on information and data available as of the date they were made, and BM&FBOVESPA undertakes no obligation to update them in light of new information or future development. This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities where such offer or sale would be unlawful prior to registration or qualification under the securities law. No offering shall be made except by means of a prospectus meeting the requirements of the Brazilian Securities Commission CVM Instruction 400 of 2003, as amended. 2

3 REGULATION, HISTORY, BUSINESS MODEL AND CORPORATE GOVERNANCE Safety, resilience and transparency BRAZILIAN MARKET OPPORTUNITIES Main growth drivers MAIN GROWTH INITIATIVES Building an State-of-the-art platform MAIN GROWTH INITIATIVES Investments, new products and focus on the customer OPERATIONAL PERFORMANCE Notable global exchange FINANCIAL HIGHLIGHTS Cost discipline and capital return to shareholders 2Q16 RESULTS APPENDIX 3

4 Exchange sector Safety and market integrity as priorities Capital and derivatives markets in Brazil Stable and solid regulation CVM Trade and post-trade BACEN Post-trade, banks and intermediaries Main participants Intermediaries local and international brokers (linked to bank and independent) Listed companies Investors institutional, foreign and individual (retail) Exchange market characteristics in Brazil BVMF is the sole exchange, despite the market being open for competitor since 2007 Stocks exclusively traded through an exchange (Dark pools, MTFs and internalization prohibit) Identification of the final beneficial owner in the entire trading and post-trading chain Derivatives are predominantly listed and OTC derivatives must be registered mandatorily Securities lending mandatorily through a central counter-party (CCP) The exchange is responsible for oversight and self-regulation of the markets in which it operates 4

5 Why invest in BM&FBOVESPA? A global exchange 1890: Foundation of Bolsa Livre (Bovespa's predecessor) 1967: Bovespa s Mutualization Aug 2007: Bovespa Hld demutualization Oct 2007: Bovespa Hld IPO (BOVH3) 1986: Start of BM&F activities Sep 2007: BM&F demutualization Nov 2007: BM&F IPO (BMEF3) May 2008: Merger between BM&F and Bovespa Hld and creation of BM&FBOVESPA (BVMF3) High dividend payer¹: +80% of the net income and R$7.2 billion on distributed earnings since 2008 State-of-the-art trading and post-trading systems: ~R$1.6 billion invested in resilience, strength and safety Revenue diversification: trading and posttrading services for stocks, derivatives, fixed income and OTC Solid market position: dominant position in the domestic market and significant presence in the global exchanges industry Constantly seeking operational efficiency: investments in technology and cost growth below inflation² Reference in corporate governance standards: cutting edge in adopting best practices to the market ¹ Practice of the period and amount distributed from Jan/2008 to Dec/2015; ² Expenses adjusted to Company s depreciation, stock granting plan principal and social charges -, stock options plan, tax on dividends from the CME Group, transfer of fines and provisions 5

6 Multi-asset and vertically integrated model Value gained across most of the chain Services for the whole chain Trading Platform: equities, derivatives, government and EQUITY corporate bonds, funds, spot FX, among others Post-trading Platform: CASH Central counterparty (CCP) Settlement System (SSS) INTEREST OPTIONS POST-TRADE FUTURE FX Central Depository (CSD) Services for Issuers and Participants: CCP, SSS and CSD Listing Trading access (brokers) SWAP FORWARD Securities lending COMMODITIES CREDIT Custody for clubs and foreign investors (2689) Market Data (vendors) Indices Licensing Software Licensing OTC (derivatives and fixed income) 6

7 Multi-asset and vertically integrated model Value gained across most of the chain BRAZIL (Internalization of orders is forbidden) USA (Internalization of orders is allowed) TRADING Trading venues Brokers A and B DTCC Brokers A and B Broker A Broker B POST-TRADING CCP SSS CSD Investors Investors Investors Investors Model 100% vertical: clearing, settlement and central depository at the FINAL BENEFICIAL OWNER LEVEL Clearing, settlement and depository occur at the brokerage houses 7

8 Corporate governance Reference in corporate governance practices Solid Governance Practices Listed in Novo Mercado (voting shares only and other shareholders rights, transparency, etc.) Broadly Dispersed Shareholder Base 8% 7% 5% 2% Majority of the Board composed of independent members (regulatory requirement) Chairman is an independent member Other Board members are linked to market participants or strategic partner (CME); although considered non-independent, are not connected to controlling group or management All Board members are not Company s executive Well-defined and solid Board of Directors and Board s Committees Executive compensation system aligned with Company s performance and strategic objectives, as well as with shareholders longterm interests 78% Capital World Investors Oppenheimer Funds BlackRock Funds Treasury stock Others (update in Mar. 2016) (update in Out. 2015) (update in Aug. 2015) (update in Abr. 2016) (update in Abr. 2016) Note: percentage ownership are estimated but may not represent exact figures due to different information dates about largest shareholders positions 8

9 Corporate Governance Multidisciplinary knowledge in conducting business Board of Directors Composition Board Member Pedro Pullen Parente Former Minister of State; Former CEO of Media and Commodity Conglomerates Claudio Luiz da Silva Haddad Former CEO of Investment Bank; Founder and CEO of Business School Antônio Quintella Former CEO of CS Brasil and Americas; Portfolio Manager Laércio José de Lucena Cosentino TOTVS Chairman of the Board and TOTVS CEO Luiz Antônio de Sampaio Campos Former Director of CVM; Lawyer Luiz Fernando Figueiredo Former Governor of the Central Bank; Portfolio Manager Luiz Nelson Guedes De Carvalho Former Central Bank and Sec. Commission Officer; Member of IIRC and CPC/IASB; Professor of Accounting Birth Years in the Board 2/21/53 5 8/23/46 7 2/16/66 1 8/11/60-6/9/70 1 1/15/ /18/45 3 Highly qualified Board Members and well-functioning Board s Committees Commitment and independence of Board of Directors and Committees members Corporate Governance Profile - Board & Committee Summary Board Audit Nomination and CG Committees Comp. Risk Brokerage Industry # Members Independent Board Market participant + Board 4¹ Independent Non-Board Denise Pauli Pavarina Bradesco executive; Eduardo Mazzilli de Vassimon Director of Itaú e CRO of Itaú Holding José Berenguer Neto CEO of JP Morgan Brazil Charles P. Carey Former Chairman of CBOT; CME Group Board Member 4/14/ /7/58 1 9/10/66 3 9/1/53 4 Market participant Non-Board # of meetings (2015) Average attendance (2015) 94% 82% 100% 92% 80% 93% Independent members Linked to market participant or strategic partner (CME) Note: in the case of the Advisory Committee for the Securities Intermediation Industry the statistics regarding number of meetings and attendance considered the previous composition with 6 members, including two Board members. This change was implemented in Feb

10 Corporate Governance Multidisciplinary knowledge in conducting business Management and Internal Governance Human Resources Sustainability, Press and Mkt. CFO Daniel Sonder Financial, Legal, IR and Issuer Regulation COO Cícero Vieira Trading, Risk Management, Clearing, Settlement, Depository, BVMF Bank and Market Participants Relationship Board of Directors CEO Edemir Pinto CIO Luis Furtado Rodrigo Nardoni 3 Trading, Posttrading, PMO, New Products, Infrastructure, Mid- Back-Office Systems Internal Audit¹ Corporate Risk CPO Cícero Vieira² Products and Business Develop., Commercial Relations, Internat. Offices, Commercial Planning and Project Analysis 4 MD s 6 MD s 5 MD s 6 MD s Internal Working Groups Advisory Committees Market Advisory Chambers Management (5 Executives + 26MDs) Responsible for implementing the guidelines established by the Board or Directors, executing the strategic plan, monitoring and executing the Company s operations Internal Working Groups (budget, products and services, projects, others) This internal working groups are important components of the Company s corporate governance, monitoring the budget process and establishing priorities for products, services and projects development, among other things Advisory Committees (market and credit risks, corporate risk, sustainability, code of conduct, business continuity, others) Multidisciplinary internal groups that address and monitor important business and issues of the Company Advisory Chambers (commodities, listing, equities, fixed income, FX, derivatives, others) Several open channels with investors, market participants and companies which collaborate to develop and improve products and services, as well as to suggest better practices ¹ The Head of the Audit Department reports functionally to the Board of Directors and the Audit Committee. The Audit Committee may periodically assess the performance of the Head of Audit Department, after consulting the Executive Board. ² Acting CPO. 3 Non statutory Director of Post-Trading Systems Development (Elected Co-Executive Director of Technology and Information Security, with effect from September 1 st,

11 BM&FBOVESPA s Sustainability Policy Sustainability as a long-term driver 11

12 REGULATION, HISTORY, BUSINESS MODEL AND CORPORATE GOVERNANCE Safety, resilience and transparency BRAZILIAN MARKET OPPORTUNITIES Main growth drivers MAIN GROWTH INITIATIVES Building an State-of-the-art platform MAIN GROWTH INITIATIVES Investments, new products and focus on the customer OPERATIONAL PERFORMANCE Notable global exchange FINANCIAL HIGHLIGHTS Cost discipline and capital return to shareholders 2Q16 RESULTS APPENDIX 12

13 Opportunities in the Brazilian market BM&FBOVESPA is ready to capture future growth Growth opportunities in the Brazilian equities and derivatives markets EQUITIES MARKET Portfolio diversification: diversification of institutional investors portfolios with a higher participation of equities Retail investors: small number of retail investors and growth of the middle class Listed companies: low number of listed companies, while important sectors are not adequately represented on the exchange DERIVATIVES MARKET Growth of credit and fixed-rate government debt: higher demand for hedging from financial institutions and institutional investors Growth of foreign trade: higher demand for hedging through FX contracts Equities market development: growth in demand for index-based contracts OTC derivatives: capital requirements (Basel) should benefit OTC transactions through a CCP 13

14 Investors exposure to equities is low Investors portfolio opportunities shifting to equities Investors portfolios are highly concentrated in fixed income Historically high interest rates Investment Funds AUM (in BRL billions) Funds AUM evolution. Global average of 40% for equities Low level of sophistication of pension funds and some asset managers Lack of knowledge about the equity market, combined with retail investors fixed-income mindset Number of Custody Accounts (in thousands) Number of retail investors represents only 0.3% of the population (lower than global average) Pension Funds AUM (in BRL billions) Participation of equities in the portfolio of pension funds Sources: BM&FBOVESPA, ANBIMA and ABRAPP. ¹ Sep/15 and ²Feb/16. 14

15 REGULATION, HISTORY, BUSINESS MODEL AND CORPORATE GOVERNANCE Safety, resilience and transparency BRAZILIAN MARKET OPPORTUNITIES Main growth drivers MAIN GROWTH INITIATIVES Building an State-of-the-art platform MAIN GROWTH INITIATIVES Investments, new products and focus on the customer OPERATIONAL PERFORMANCE Notable global exchange FINANCIAL HIGHLIGHTS Cost discipline and capital return to shareholders 2Q16 RESULTS APPENDIX 15

16 BM&FBOVESPA IT, Risk and Operating Development Building a state-of-the-art platform to boost market growth BM&FBOVESPA is investing more than R$ 1.6 billion ( ) to build state-of-the-art IT, Risk and Operating infrastructure Capital efficiency for clients Attract and retain clients and strengthen relationship with intermediaries Development of markets and products Operational leverage for BM&FBOVESPA Innovate and enhance market robustness ahead of regulatory demands OTC MARKET NEW DATA CENTER High performance: high availability, submilliseconds latency, low standard deviation Operational leverage: easily scalable capacity Capital efficiency for clients: integrated risk calculation (equities and derivatives - OTC and listed); and unification of settlement windows Rationalization and standardization of rules, procedures and requirements Capital efficiency for clients: integrated risk calculation (OTC and Exchange Traded Derivatives) Customer relationship: strengthening relationships and adding revenue with little marginal expenses Long-term IT sustainability: significant capacity to expand co-location and own systems Customer relationship: able to host participants and clients infrastructure The implementation of IPN/CORE depends the approval of the regulators. 16

17 PUMA Trading System - Performance Enabling the increase of trades Successive records broken in recent years, without delays or availability failure Development of the number of messages/days (in millions) Source: BM&FBOVESPA. 17

18 Clearinghouses Integration and New Risk Model (CORE) Post-trade environment evolution Organization of the post-trade environment by types of assets/products 4 rulebooks and 4 manuals. Organization of the post-trade environment by process Equities, ETFs, BDRs 4 systems / back-office processes 4 participant structures 4 systems / processes for risk management 4 pools of collateral 4 distinct environments / IT architectures 4 settlement windows and 4 multilateral balances 4 registration systems for participants and clients. OTC derivatives Other products and assets Securities lending Rules and Manuals Structure of market participants Participants and customer registration Allocation and transfer Position control Clearing and settlement Risk management Pool of collateral Futures, options, forwards Government Bonds Corporate fixed income Interbank spot foreign exchange Exchange and market participation cost reduction Liquidity management improvement More efficient allocation of capital by investors Operational and technological risk reduction 18

19 Clearinghouses Integration and New Risk Model (CORE) Post-trade environment evolution What we did The achievements What is next Aug 14: derivatives phase of the new BM&FBOVESPA Clearinghouse and of the new risk model CORE What were the challenges 400 employees involved 46 legacy systems were deprecated and 31 new other were installed +65 market participants (the majority adopts SINACOR) 11 parallel production cycles CORE - complexity and sophistication Calculate and process +1.3bn instrument prices We have built a dedicated simulation environment, meeting demands from market participants Roughly R$20 billon released in collateral R$15 billion reduction in required collateral R$5 billion increase to the value of deposited collateral R$12 billion withdrawn in the early days of activity Almost 6 months since the launching Very high availability Serving participants and clients with high quality services Delivering efficiency 2016: conclusion of substantially all the IT development of the equities phase in 4Q15. Next steps are: Certification and parallel production processes Launching will depend on tests results and regulatory approval What are the challenges Integration with the CSD Settlement of securities (restrictions, failures, integration with securities lending system) Covered options and forward transactions Corporate actions treatment Settlement window unification Risk more risk factors, higher volume of calculations 19

20 Integration of the Clearinghouses Derivatives (Performance) Gains in efficiency, resilience and capacity expansion In one year trading records broken, +72MM risk calculations, +1.8MM risk simulations and 99.9% availability Development of trade numbers and records (in thousands) Source: BM&FBOVESPA. 20

21 REGULATION, HISTORY, BUSINESS MODEL AND CORPORATE GOVERNANCE Safety, resilience and transparency BRAZILIAN MARKET OPPORTUNITIES Main growth drivers MAIN GROWTH INITIATIVES Building an State-of-the-art platform MAIN GROWTH INITIATIVES Investments, new products and focus on the customer OPERATIONAL PERFORMANCE Notable global exchange FINANCIAL HIGHLIGHTS Cost discipline and capital return to shareholders 2Q16 RESULTS APPENDIX 21

22 Products and Services Development Focus on the customers demands and needs Long-term development of products, markets and services Greater liquidity for listed products Development of infrastructure for expansion of MM and HFT activity Capital efficiency generated by CORE enables/encourages the realization of new strategies Development of the securities lending platform Marketing listed products and attracting new customers Expanding the retail investor base Incentive program with market participants Expanding the portfolio to attend to the investment profile of individuals (Tesouro Direto, ETFs, FIIs...) Discussion about tax treatment simplification in the equities market Capture of institutional investors diversification into foreign securities Listing of foreign securities (non-sponsored BDRs and Foreign Index ETF) Cross-listing of futures contracts 22

23 Products and Services Development Focus on the customers demands and needs Long-term development of products, markets and services Greater number of listed companies Discussions with the Government to encourage and facilitate IPOs by SMEs Law grants exemption on capital gains for eligible SME s investors until 2023 Creation of investment fund with proper structure to invest in SMEs Reduction of maintenance and public offer cost for listed companies Include stocks in the roll of restricted public distribution efforts BNDES support to foster IPOs on BOVESPA MAIS Fixed Income and OTC markets (product, market and revenue diversification) Securities registration: (i) marketing of already-available products (CDB, LCA, LCI and COE); ii) new products (CDB - new types, Financial Bills, COE - physical delivery and repos) OTC Derivatives: (i) benefits of CORE; (ii) SWAPs and Flexible Options migration to the new platform (flexibility and operational efficiency); and (iii) development of SWAPs with cash flow Corporate bonds: (i) acceptance of securities with restricted distribution efforts (ICVM 476); and (ii) migration of trading to PUMA Constant fee structure and incentive improvements Use of pricing policies and incentives as important tools for the development of products, markets and services, as well as alignment with market participants Review and monitoring of existing pricing and incentives policies 23

24 REGULATION, HISTORY, BUSINESS MODEL AND CORPORATE GOVERNANCE Safety, resilience and transparency BRAZILIAN MARKET OPPORTUNITIES Main growth drivers MAIN GROWTH INITIATIVES Building an State-of-the-art platform MAIN GROWTH INITIATIVES Investments, new products and focus on the customer OPERATIONAL PERFORMANCE Notable global exchange FINANCIAL HIGHLIGHTS Cost discipline and capital return to shareholders 2Q16 RESULTS APPENDIX 24

25 Bovespa Segment Operational highlights AVERAGE DAILY TRADING VALUE ADTV (BRL billion) AVERAGE ANNUAL MARKET CAP (BRL trillion) TURNOVER VELOCITY² (12 months average) ¹ ¹ ¹Updated to July 31, ²Ratio of cash market trading volume to the market cap of the exchange. 25

26 BM&F Segment Operational highlights AVERAGE DAILY TRADED VOLUME ADV² (thousands of contracts) REVENUE PER CONTRACT RPC² (BRL) ¹ A-15 S-15 O-15 N-15 D-15 J-15 F-16 M-16 A-16 M-16 J-16 J-16 Interest rates in BRL FX rates Stock Indices Interest rates in USD Commodities Mini contracts OTC Total RPC ¹Updated to July 31, ² Starting from Jan/16 excludes OTC data. 26

27 Investor participation in volumes Equities and derivatives segments BOVESPA SEGMENT (EQUITIES) BM&F SEGMENT (DERIVATIVES)² ¹Updated to July 31, ² Starting from Jan/16 excludes OTC data. 27

28 REGULATION, HISTORY, BUSINESS MODEL AND CORPORATE GOVERNANCE Safety, resilience and transparency BRAZILIAN MARKET OPPORTUNITIES Main growth drivers MAIN GROWTH INITIATIVES Building an State-of-the-art platform MAIN GROWTH INITIATIVES Investments, new products and focus on the customer OPERATIONAL PERFORMANCE Notable global exchange FINANCIAL HIGHLIGHTS Cost discipline and capital return to shareholders 2Q16 RESULTS APPENDIX 28

29 Income Statement History of income statement results (consolidated) (in BRL thousand) ² Net revenue 1,510,569 1,898,742 1,904,684 2,064,750 2,126,638 2,030,433 2,216,634 Expenses (569,832) (633,504) (816,664) (763,080) (790,814) (804,070) (850,656) Adjusted expenses (446,677) (543,881) (584,521) (563,487) (575,763) (592,349) (614,350) Operating income 940,737 1,265,238 1,088,020 1,301,670 1,335,824 1,226,363 1,365,978 Operating margin 62.3% 66.6% 57.1% 63.0% 62.8% 60.4% 61.6% Equity method result - 38, , , , , ,245 Financial result 245, , , , , , ,796 Income before taxation of profit 1,186,574 1,592,515 1,588,210 1,659,791 1,687,884 1,646,680 2,807,222 Income tax and social contribution (304,505) (448,029) (539,681) (585,535) (606,588) (660,959) (603,764) Net income¹ 881,050 1,144,561 1,047,999 1,074,290 1,080, ,053 2,202,238 Adjusted net income 1,223,761 1,586,374 1,545,627 1,612,136 1,609,769 1,478,653 1,819,187 Adjusted EPS (BRL) ¹Attributable to shareholders of BM&FBOVESPA. ² Impacts of non-recurring items: (i) partial divestment in CME Group; (ii) discontinuity of the equity method of accounting; and (iii) impairment of Bovespa Holding 29

30 Adjusted¹ expenses and investment budget Focus on cost control and investments phase ADJUSTED EXPENSES BUDGET Focus on expenses control offset most of the inflationary adjustments over the past years (in BRL million) 2015 vs. 2014: 3.72% IPCA 2015: 10.67% e vs. 2015: 6.61% 4 IPCA (average) 2016e: 7.20%³ CAGR e: 2.30% 4 CAGR IPCA (average) e: 7.19%³ INVESTMENTS BUDGET: The CAPEX program initiated in 2010 renewed the Company's IT, operations and service platform (in BRL million) Review of 2016 budget: from R$ million to R$ million FX exposure: 40% Update of the timeline and budget of the Company s main projects ¹ Expenses adjusted to Company s depreciation, stock granting plan principal and social charges -, stock options plan, tax on dividends from the CME Group, transfer of fines and provisions. ² IPCA for 2015 released by the Central Bank ³ IPCA for 2016 based on market expectations released by the Central Bank in Aug. 5, 2016; 4 Considers the mid point for 2016 budget 30

31 Total Expenses Discipline Delivering efficiency through diligent expense management Adjusted expenses grew 3.7%, significantly below average inflation of 10.7% 1, reflecting prioritization of activities, review of contracts and enhancement of processes (in R$ millions) Communicat. Marketing Third party services Data processing Total Communicat. Marketing Third party services Data processing 2015 vs vs Nominal Change Real Change 3 (in R$ millions) Nominal Change Real Change 3 Personnel 2 3.9% -3.8% Personnel % -11.5% -1.8% -11.2% 16.9% -11.5% 1,8% 3.2% -6.7% -20.8% -40.0% 5.7% -4.5% -69.1% -76.6% -57.0% -61.1% -75.0% -81.0% 1 IPCA last 12 months until Dec 15 (Source IBGE) 2 Includes personnel expenses and capitalization and excludes costs from stock grant plan principal and payroll taxes stock option and bonus expenses. 3 Calculated based on the annual wage increase for personnel expenditure and the accumulated IPCA for the other lines of expenses. 31

32 Allocation of Results Return of surplus capital to shareholders Distribution of most of the cash generation, reaffirming the commitment to return capital to shareholders Payout (% of net income) 2009: 80% 2010: 100% 2011: 87% 2012: 100% 2013: 80% 2014: 80% 2015: 73% 1H16²: 171% + Share Buyback About 15% of free float repurchased in 7-year period (2H08-2Q16) Cash Generation after Investment and Interest Payments¹ (Total for Jan/09 through Jun/16, in R$ millions) ¹Data of BM&FBOVESPA (not consolidated): excludes variation in financial transactions and collateral pledged by participants, proceeds raised in connection with the acquisition of CME Group shares in 2010 and the divestment from CME Group shares in Sep/15 and Apr/16. ² 50% of the net income excluding the impact from the sale of CME Group shares in Apr/16. 32

33 REGULATION, HISTORY, BUSINESS MODEL AND CORPORATE GOVERNANCE Safety, resilience and transparency BRAZILIAN MARKET OPPORTUNITIES Main growth drivers MAIN GROWTH INITIATIVES Building an State-of-the-art platform MAIN GROWTH INITIATIVES Investments, new products and focus on the customer OPERATIONAL PERFORMANCE Notable global exchange FINANCIAL HIGHLIGHTS Cost discipline and capital return to shareholders 2Q16 RESULTS APPENDIX 33

34 2Q16 vs. 2Q15 highlights Bottom line impacted by extraordinary and mainly non-cash items Operating highlights 2Q16 (vs. 2Q15) BM&F Segment: ADV: 3.0 mn contracts, +4.0% RPC: R$1.420, -1.3% Bovespa Segment: ADTV: R$7.14 bn, +0.3% Margin: bps, bps Others high growth products: Tesouro Direto: 87.5% increase in average assets under custody ETFs: 32.4% increase in ADTV Financial highlights 2Q16 (vs. 2Q15) Total revenue: R$637.9 mn, +3.7%, BM&F Seg.: R$272.3 mn, +5.5% Bovespa Seg.: R$239.0 mn, -0.5% Other revenues: R$126.6 mn, +8.1% Adj. expenses 1 : R$146.7 mn, +3.5% IFRS net income²: loss of R$114.4 mn Excluding extraordinary items that impacted 2Q16, net income would have reached R$496.8 mn Payout: R$215.6 mn (R$0.121 per share); equivalent to 50% of the 2Q16 net income excluding impacts from the divestment from CME Group shares³ Strategic updates Proposed business combination with Cetip Approved by BM&FBOVESPA s and Cetip s shareholders in May 16 Pending regulatory approval: CVM, Central Bank and CADE (filed with CADE on June 28, 2016) Equities phase of BM&FBOVESPA Clearinghouse Integrated test and certification with market participants concluded Beginning of the parallel production phase, deployment planned for 4Q16 4 LatAm Exchanges Minority investments: 10.4% in Chile; 9.9% in Colombia; and 4.1% in Mexico 1 Adjusted to (i) depreciation and amortization; (ii) stock grant plan costs principal and payroll taxes and stock option plan; (iii) transaction cost and planning of the proposed business combination with Cetip that is still pending regulatory approval; and (iv) transfer of fines, provisions and incentive programs to market participants. ²Attributable to BM&FBOVESPA s shareholders. ³ Excluding the impacts from the sale of CME Group share in Apr 16 (see Appendix slide 16). 4 Depending on test results and regulatory approval. 34

35 2Q16 extraordinary items Extraordinary items that impacted the IFRS net income 2Q16 RESULTS WERE IMPACTED BY EXTRAORDINARY ITEMS MAINLY RELATED TO THE DIVESTMENT FROM CME GROUP SHARES AND THE PROPOSED TRANSACTION WITH CETIP (in R$ millions) Line impacted in the income statement Before tax After tax Extraordinary stock grant expenses Expenses Transaction with Cetip expenses¹ ; ² Expenses Divestment from CME Group shares³ Financial result IOF on proceeds from CME Group shares sale Financial expenses ¹ Pending regulatory approvals from CVM, Central Bank and Antitrust Authority CADE. ² Includes expenses with legal reports, auditors, appraisers, and lawyers, among other professionals engaged as advisors for the transaction as well as the planning of the integration. ³ The net impact from the divestment from CME Group shares, which totaled R$557.3 million (R$572.8 million before taxes), takes into account amounts that impacted the results in previous periods as a base to calculate taxes. Additionally, this divestment has led to a reversal of tax assets in the amount of R$99.2 million related to accumulated taxes paid abroad, since this tax asset can only be offset against gains obtained abroad (see the financial statements note 4.c). 35

36 Products and services updates Developing products in partnership with the market Greater liquidity for listed products Expanding market maker programs for options on single stocks and financial and commodities derivatives (35 programs in 2Q16 versus 19 in 2Q15) Marketing the securities lending platform to foreign investors New products Inflation-linked derivatives (DAP): market makers; marketing; incentives (significant increase in ADV and open interest) ETFs: new Ibovespa ETF and discussions with market participants regarding the fixed income ETFs (waiting for the first listing) Non-sponsored BDRs: 16 new programs in Jul 16 (total of 122) Special listing segments Public hearing process to discuss enhancements to the rules of Novo Mercado and Level 2 listing segments 36

37 2Q16 revenue breakdown¹ Revenue diversification and business model resilience REVENUE (in R$ millions / % growth YoY) USD-linked revenue represented 25.0% of the total revenue Total revenue R$637.9 mn 1 The revenue breakdown considers the revenue lines others of the Bovespa Segment and foreign exchange and securities of BM&F Segment, as reported in the financial statements note 20, within the other revenues not tied to volumes. ² Trading and post-trading. 37

38 Derivatives market¹ Revenue growth as a result of higher ADV from Mini contracts REVENUE (in R$ millions) ADV (in millions of contracts) REVENUE PER CONTRACT (RPC) RPC: R$1.420 per contract, -1.3% year-over-year Contracts 2Q15 2Q16 YoY Interest Rates in BRL % FX Rates % Interest Rates in USD % Commodities % Mini contracts % Stock Indices % TOTAL % Contracts priced in USD² represented 22.7% of derivatives ADV and 50.7% of derivatives revenue in 2Q16 Mix effect, with higher participation of Mini contracts, for which RPC is significantly lower than average ¹ Revenue does not consider the revenue lines foreign exchange and securities of the BM&F Segment, as reported in the financial statements note 20, which totaled R$5.4 million in 2Q16. ² Most of the fees charged on FX rate, Interest rates in USD and Commodities contracts are referred in USD. The average BRL/USD exchange rate decreased 11.5% from 2Q15 to 2Q16. 38

39 Equities market¹ Increase in turnover velocity was offset by lower average market cap REVENUE² (in R$ millions) ADTV² (in R$ millions) MARKET CAPITALIZATION (in R$ trillions) AND TURNOVER VELOCITY (%) Markets 2Q15 2Q16 YoY Cash equities 6, , % Equities derivatives % TOTAL 7, , % TRADE AND POST-TRADE MARGINS Trade and post-trade margins: bps, -1.9% over 2Q15 Greater participation of day traders in ADTV Higher volumes tied to the expiration of options on indices Turnover velocity reached 79.4% in 2Q16 versus 70.5% in 2Q15 Average market capitalization drop 10.0% in 2Q16 versus 2Q15 ¹ Revenue does not consider line others of Bovespa Segment, as reported in the financial statements note 20, which totaled R$4.6 million in the 2Q16. ² Excludes fixed income line. 39

40 Business lines not tied to volumes Growth in revenue not tied to volumes 2Q16 REVENUE BREAKDOWN¹ (in R$ millions) +8.1% YoY ¹ Revenue as reported in the financial statements note

41 2Q16 expenses Continued focus on expense management ADJUSTED EXPENSES¹ (in R$ millions) 2Q16 adjusted expenses grew by 3.5% YoY, significantly below the average inflation rate of 8.8%² Adjusted personnel³ (+4.5%): grew below annual wage adjustment of ~9% Data processing (+11.6%): inflation/fx rate adjustments to IT maintenance contracts Third-party services (-13.3%): lower expenses with consulting and legal advisory services Others 4 (-4.7%) (in R$ millions and % of total adjusted expenses) 2Q (58%) 34.3 (23%) 8.6 (6%) 19.0 (13%) 2Q (57%) 30.8 (22%) 9.9 (7%) 19.9 (14%) IFRS EXPENSES 2Q16 expenses grew 35.7% YoY, mainly impacted by: Extraordinary expenses connected to the proposed business combination with Cetip of R$47.8 million Higher stock grant expenses, which were impacted by (i) extraordinary severance expense of R$17.6 million; and (ii) increase in the amount of provisions for payroll taxes, reflecting higher BM&FBOVESPA s stock price ¹ Adjusted to (i) depreciation and amortization; (ii) stock grant plan costs principal and payroll taxes and stock option plan; (iii) transaction costs and planning of the business combination with Cetip that is still pending regulatory approval; and (iv) transfer of fines, provisions and incentive programs to market participants. ² 12 months accumulated Consumer Price Index (IPCA) between Jul 15 and Jun 16; (source: IBGE ³ Excluding the impact of stock grant/option expenses. 4 Include expenses with communication, marketing, maintenance, taxes, board and committee members compensation and other. 41

42 Financial highlights Higher cash position to fund proposed combination with Cetip CASH AND FINANCIAL INVESTMENTS (in R$ millions) 2Q16 10,463 1Q16 5,660 4Q15 5,202 3Q15 8,165 BM&FBOVESPA s cash position totaled R$8.2 bn in 2Q16 R$2.0 - R$2.5 bn to run the business R$1.1 bn in clearinghouses required safeguards The remaining supports the activity of the central counter-party and general corporate needs ~R$6.0 bn to fund the proposed combination with Cetip Includes R$5.5 bn in gross proceeds from the total divestment from CME Group shares 2Q15 4,033 Third-party cash Third-party Total Restricted and unrestricted Not considered as BM&FBOVESPA s cash The Company earns interest on most of this cash balance ¹ Includes earnings and rights on securities in custody. ² Includes BM&FBOVESPA Bank clients deposits. ³ Does not include investments in Bolsa Mexicana de Valores, Bolsa de Comercio de Santiago and Bolsa de Valores de Colombia amounting R$150.0 million at 2Q16 and booked as financial investments. See note 4 to the financial statements. 42

43 Financial highlights (cont.) Divestment from CME Group shares impacted the financial result EXCLUDING EXTRAORDINARY AND MAINLY NON-CASH IMPACTS FROM THE DIVESTMENT FROM CME GROUP SHARES, RECURRING FINANCIAL RESULT WOULD HAVE TOTALED R$170.9 MILLION IN 2Q16 (in R$ millions) Extraordinary impacts from the divestment from CME Group shares Recurring 2Q16 financial result Other financial revenue² Includes floating on proceeds from CME Group shares sale Other financial expenses³ 2020 Notes coupon 2020 Notes principal amount hedging cost ¹ Reflects changes to the CME Group share price, changes in the exchange rate of Brazilian Real versus US Dollar and hedge instruments from Sep 15 to April 7, 2016 (date of the sale). ² Includes gains from changes in the exchange rate as well as other financial revenue. ³ Includes maintenance of stand-by facilities, available but not drawn, in connection with the transaction with Cetip and excludes IOF of R$16.4 million related to internalization of proceeds from the divestment from CME Group shares, which is treated as an extraordinary item. 43

44 Financial highlights (cont.) Strong cash generation CASH GENERATION¹ (in R$ millions) Adjusted net cash from operating activities² 2Q15 2Q Net cash from investment activities Net cash from financing activities before distributions³ Cash generation (before distributions)¹ Cash generation¹ reached R$444.7 million in 2Q16, flat YoY Net cash from operating activities was impacted by R$128.7 million cash tax payment (PIS and Cofins of R$112.3 million and IOF of R$16.4 million) Net cash from investment activities was impacted by the settlement of NDF in 2Q16 Does not include R$4,286.4 million in proceeds from the divestment from CME Group shares on April 7, 2016 ¹ Cash generation before dividends/ioc payments and share buybacks. ² Considers the cash flow from operating activities, adjusted by the variation of financial investments and guarantees and cash deposits and REPO transactions of the BM&FBOVESPA bank, as described in the note 13 to the financial statements. ³Considers the cash flow from financing activities before the payment of dividends/ioc and share buyback. 44

45 Adjusted expenses Reconciliation of the adjusted expenses ADJUSTED EXPENSES RECONCILIATION (in R$ millions) 2Q16 2Q15 Change 2Q16/2Q15 Total expenses % (-) Depreciation (23.8) (28.1) -15.4% (-) Stock grant/option (41.2) (22.1) 86.3% (-) Proposed business combination with Cetip¹ (46.3) - - (-) Planning of the business integration with Cetip² (1.5) - - (-) Provisions and others (9.4) (6.1) 53.6% Adjusted expenses % ¹ Includes expenses with legal reports, auditors, appraisers, and lawyers, among other professionals engaged as advisors for the transaction. In 1Q16, these expenses amounted to R$1.0 million and were recognized under expenses incurred with third-party services. ² Includes expenses with consulting services hired to help the integration planning of the proposed combination with Cetip which is subject to regulatory approvals 45

46 Adjusted net income and payout basis Reconciliation of the net income and payout basis ADJUSTED NET INCOME RECONCILIATION (in R$ millions) 2Q16 2Q15 Change 2Q16/2Q15 IFRS net income (loss)* (114.4) % (+) Stock grant/option (net of tax) % (+) Deferred liability (goodwill fiscal benefit) % (-) Equity in results of investees (net of tax) - (31.4) - (+) Expenses related to Cetip s transaction (net of tax) (+) Divestment from CME Group shares (net of tax) (+) IOF on proceeds from CME Group shares sale (net of tax) Adjusted net income % 2Q16 PAYOUT BASIS RECONCILIATION (in R$ millions) 2Q16 IFRS net income (loss)* (114.4) (+) Divestment from CME Group shares (net of tax) (+) IOF on proceeds from CME Group shares sale (net of tax) 10.8 (-) FX variation on the unhedged position of the 2020 note (net of tax)¹ (22.5) Net income (basis for payout ratio) Payout ratio (50%) ¹Changes in the BRL vs USD exchange rate of the unhedged position on part of the principal amount between March 29 and 31, 2016 created a positive impact of R$34.1 million in the financial revenue line, with no cash impact. 46

47 Financial Statements Summary of balance sheet (consolidated) ASSETS (in R$ millions) LIABILITIES AND SHAREHOLDERS EQUITY (in R$ millions) 06/30/ /31/ /30/ /31/2015 Current assets 8, ,673.8 Current liabilities 3, ,096.8 Cash and cash equivalents Collateral for transactions 1, ,338.0 Financial investments 7, ,798.5 Others 1, Others Non-current liabilities 5, ,859.9 Non-current assets 18, ,635.1 Foreign debt issues 1, ,384.0 Long-term receivables 2, ,961.4 Deferred Inc. Tax and Social Contrib. 2, ,272.3 Financial investments 2, ,815.6 Others Others Shareholders equity 18, ,352.2 Investments Capital stock 2, ,540.2 Property and equipment Capital reserve 14, ,300.3 Intangible assets 15, ,190.0 Others 1, ,501.6 Goodwill 14, ,401.6 Minority shareholdings Total Assets 26, ,308.9 Liabilities and Shareholders eq. 26, ,

48 Financial Statements Summary of income statement (consolidated) SUMMARY OF INCOME STATEMENT (in R$ millions) 2Q16 2Q15 Change 2Q16/2Q15 1Q16 Change 2Q16/1Q16 Net revenues % % Expenses (268.8) (198.0) 35.7% (202.0) 33.0% Operating income % % Operating margin 53.2% 64.3% -1,109 bps 64.1% -1,093 bps Financial result (418.3) % % Net Income (loss)* (114.4) % % Adjusted expenses (146.7) (141.7) 3.5% (144.3) 1.6% 48

49 REGULATION, HISTORY, BUSINESS MODEL AND CORPORATE GOVERNANCE Safety, resilience and transparency BRAZILIAN MARKET OPPORTUNITIES Main growth drivers MAIN GROWTH INITIATIVES Building an State-of-the-art platform MAIN GROWTH INITIATIVES Investments, new products and focus on the customer OPERATIONAL PERFORMANCE Notable global exchange FINANCIAL HIGHLIGHTS Cost discipline and capital return to shareholders 2Q16 RESULTS APPENDIX 49

50 High growth products Growing sophistication of market participants Initiatives to develop and prompt higher volume in certain products Performance shows that the initiatives are being well received by the market Options with Market Maker Real Estate Funds (FIIs) Securities Lending (ADTV in BRL million) (ADTV in BRL million) (Open Interest - average for the period - in BRL billion) % CAGR(10-16): % CAGR (10-16): +10.5% ETFs Brazilian Treasury Direct - Tesouro Direto Agribusiness Credit Bills (ADTV in BRL million) (Custody in BRL billion) (AUM in BRL billion) CAGR (10-16): 31.7% CAGR (10-16): +40.5% ¹Updated to July 31,

51 Bovespa Segment Raising Capital PUBLIC OFFERINGS (BRL billion) ¹Updated to July 31, 2016 ¹Excludes the portion acquired by the Brazilian government in the Petrobras offering, via the transfer of rights in barrels (BRL 74.8 billion). 51

52 Trading in ADRs of Brazilian companies Liquidity migration process interrupted Novo Mercado Launch (Dec. 2000) End of CPMF (Financial Transaction Tax) Sarbanes-Oxley Act (Jul. 2002) End of IOF Tax (2%) for foreign investors (Dec. 2011) Jul % 8.2% 30.1% 31.4% 38.5% 69.9% PUBLIC OFFERINGS IN NUMBER OF COMPANIES Source: Bloomberg (in USD traded value of 35 companies with ADRs programs ) Total IPOs Follow ons Total Dual Listings

53 Bovespa Segment Foreign investment flow MONTHLY NET FLOW OF FOREGIN INVESTMENTS (in BRL billons) Includes public offering (primary market) and regular trades (secondary market). ¹Updated to July 31,

54 Products and Markets Development Creation of value and stimulus for the development of products and markets Enhancement of Price and Incentives Policies Readjustment of Issuers annual fee Prices p/ volume Tiers in Derivatives Rebalancing Trading/post-trade Equities Market Fee Structure OTC derivatives fee structure Transfers fee structure at CSD Charge (BPs) on amount in depository Price policy for Mkt Data Organizational Structure for Fee Structure Fee Structure of OTC Products Fee structure of interest rate derivatives Review of prices and incentives: BTC, DMA, Market Data, Issuers and Depository 54

55 Clearinghouses Integration and New Risk Model (CORE) Benefits from Clearinghouse integration OVERVIEW: CLOSEOUT RISK CALCULATION IN THREE STEPS 1. DETERMINING THE CLOSEOUT STRATEGY T+0 T+1 T+2 T+3 T+4... T+N Defines the portfolio closeout strategy which, respecting the settlement restrictions of the portfolio of assets/markets, should minimize the risk of a loss associated with the closeout process, preserving existing hedge strategies 2. RISK EVALUATION T+0 T+1 T+2 T+3 T+4... T+N Defines the (stress) scenarios associated with the dynamics of each risk factor relevant to the portfolio. All assets and contracts are reevaluated considering the scenarios defined in this step (full valuation). 3. POTENTIAL P&L CALCULATION T+0 T+1 T+2 T+3 T+4... T+N Calculates and aggregates intertemporally P&L associated with each scenario, considering the defined closeout strategy CLOSEOUT RISK PERMANENT LOSS TRANSIENT LOSS Result: Two risk measures market and liquidity that are estimated both jointly and consistently 55

56 Contato / 4418 / 4207/4834/7938 ri@bmfbovespa.com.br 56