9th ACSDA Seminar October 1 st, 2010

Transcription

1 9th ACSDA Seminar October 1 st,

2 Agenda BM&FBOVESPA Business Model and New Developments Post-Trading Infrastructure - Integration Opportunities and Challenges Business Development - Market Popularization Program Operational Highlights - Appendix 2

3 Combining Strengths BOVESPA established (as independent exchange) BM&F established Creation of IBOVESPA Launch of the electronic trading system and the online trading (Home Broker) Decade of the 2000 s Launch of Novo Mercado Consolidation of the Brazilian Stock Exchanges Ending of the BOVESPA s Trading Floor CBLC was incorporated by BM&FBOVESPA 3Q07 4Q07 1Q08 2Q08 3Q08 1Q09 Demutualization of the Exchanges IPO Cross shareholding with CME Group and Order Routing Agreement Merger Approved Operational Reorganization and Beginning of the Synergy Process Integration Accomplished 3Q09 Agreement with Nasdaq OMX and Ending of BM&F`s Seg. Trading Floor 1Q10 Strategic Partnership with CME Group Shareholders BOVESPA HOLDING Shareholders BM&F BRASIL 50% 50% 3

4 Agenda BM&FBOVESPA Business Model and New Developments Post-trading Infrastructure - Integration Opportunities and Challenges Business Development - Market Popularization Program Operational Highlights - Appendix 4

5 Fully Integrated and Diversified Business Model Services for Issuers and Commodities Listing (stocks, bonds, funds, asset-backed securities, among others) Commodities Certification Trading, Clearing and Depository Activities Trading (stocks, derivatives, corporate and government bonds, funds, spot US Dollar, among others) Central Counterparty (CCP) Clearing and Settlement (for all the products) Other Services Custody (services provided for funds, and other market participants) Market Data Index Licensing Central Depository (stocks and corporate bonds) Software Licensing (used by brokerage houses and other market participants) Securities Lending (stocks and corporate bonds) OTC Derivatives Registration and Collateral Management 5

6 BVMF and CME Group Partnership New trading platform development Context and Goals BVMF will develop a multi-asset class trading platform based on Globex technology jointly with CME Group, and will own the intellectual property rights to the solution. The agreement also covers commercial rights on the new trading platform. The project implementation is planned to have 4 phases, which are: Derivatives without implied (structured transactions) 1Q11 Implied for derivatives 2Q11 Equities 4Q11 Fixed Income, Dark Pool, Multilateral Order Routing and Common Platform 1H12 Key drivers: Knowledge transfer and operational autonomy High performance (high capacity and low latency) Stability and operational cost reduction Technological harmonization and markets integration 6

7 Increase in the processing capacity Context The processing capacity of the equities clearinghouse is around 1.5 million of trades per day; The processing capacity of the derivatives clearinghouse is around 200 thousand of trades per day; The high frequency traders have increased their participation in the BVMF markets; DMA 2, 3 and 4 for the Bovespa segment (equity) Internationalization project (Chi-X) Popularization of the Brazilian capital market Goals To increase equities data processing capacity from 1.5 million trades per day to 3 million trades per day Derivatives data processing capacity from 200 thousand of trades per day to 400 thousand of trades per day 7

8 Agenda BM&FBOVESPA Business Model and New Developments Post-trading Infrastructure - Integration Opportunities and Challenges Business Development - Market Popularization Program Operational Highlights - Appendix 8

9 Post-trading Infrastructure Services Structure BM&FBOVESPA CLEARINGHOUSES, Post-Trading DEPOSITORY AND RISK MANAGEMENT RISK MANAGEMENT SETTLEMENT CENTRAL DEPOSITORY Risk Modeling Credit and Market Risk Management Intraday Risk Management Margin Calculation Collateral Administration BTC - Securities Lending Program Pricing Allocation Process Failures Multilateral Net Settlement Gross Settlement Commodities Settlement IPO and OPA Special Operation Settlement OTC Registration (swap / nonstandard derivative) Multi Asset Centralized Safekeeping Corporate Actions Daily Reconciliation International Programs Spain and Argentina Tesouro Direto Investor Electronic Channel CEI 9

10 BM&FBOVESPA Post-trading BM&FBOVESPA Clearinghouses Characteristics and Infrastructure BM&FBOVESPA operates 4 different clearinghouses Seamless integration with BM&FBOVESPA s trading systems Serve both listed and OTC markets Vertically integrated infrastructure: Central Securities Depository (CSD), Securities Settlement System (SSS) and Central Counterparty (CCP) services Full breadth of cleared products DERIVATIVES CLEARINGHOUSE EQUITIES CLEARINGHOUSE FX CLEARINGHOUSE GOVERNMENT BONDS CLEARINGHOUSE 10

11 BM&FBOVESPA Post-trading BM&FBOVESPA Clearinghouses Characteristics Financial BM&FBOVESPA futures and Post-Trading options Commodities futures and options OTC derivatives Equity spot market Equity derivatives Securities lending Private debt Spot FX market (BRL vs. USD) Government bonds spot market Money and repo markets Securities lending INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES CSD INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SSSERVICES INFRASTRUCTURE SERVICES SSS INFRASTRUCTURE SERVICES INFRASTRUCTURE SSS SERVICES INFRASTRUCTURE SSS SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE CCPSERVICES INFRASTRUCTURE SERVICES CCP INFRASTRUCTURE SERVICES INFRASTRUCTURE CCP SERVICES INFRASTRUCTURE CCP SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES INFRASTRUCTURE SERVICES I DERIVATIVES EQUITIES FX GOVERNMENT BONDS CLEARINGHOUSE CLEARINGHOUSE CLEARINGHOUSE CLEARINGHOUSE 11 11

12 Opportunities and Challenges from the Integration Overview In Mar 10, the BVMF released a white paper aiming to work as a guideline for discussions with its various stakeholders Besides releasing the white paper, many other initiatives and actions were taken to implement the project of posttrading infrastructure integration Context After the merger of both exchanges and the consolidation of governance, efforts have been made to increase the level of integration of different services, processes and products in the BM&FBOVESPA post-trading IT Systems Operational Procedures Settlement Risk Management Framework Central Depository Communications with Market Participants ECONOMIES OF SCALE HIGHER LEVEL OF STANDARDIZATION SWIFT DEVELOPMENT OF NEW PRODUCTS FRIENDLY ENVIRONMENT FOR NEW ENTRANTS REDUCED CAPITAL AND LIQUIDITY REQUIREMENTS CONSOLIDATION OF ONE OR MORE CLEARINGHOUSES 12

13 Opportunities and Challenges from the Integration Overview In Mar 10, the BVMF released a white paper aiming to work as a guideline for discussions with its various stakeholders Besides releasing the white paper, many other initiatives and actions were taken to implement the project of post-trading infrastructure integration Main opportunities indentified Creation of a unified view on the portfolio risk Adoption of a common management risk for all the systems, combining two or more central counterparties (CCPs) More efficient use of collaterals with the adoption of a pool of collaterals More efficiency in the management of the daily liquidity of the participants due to the unification of one or more settlement windows Diversification of products and services Improvements in the participants operational efficiency as a consequence of the standardization and harmonization of information and process from BM&FBOVESPA 13

14 Opportunities and Challenges from the Integration Overview In Mar 10, the BVMF released a white paper aiming to work as a guideline for discussions with its various stakeholders Besides releasing the white paper, many other initiatives and actions were taken to implement the project of post-trading infrastructure integration Important aspects that have been considered in the project: Consensus among the stakeholders is necessary Possible alternatives with respect to market segmentation should consider the differences among various markets and participants Different integration alternatives can result in different solutions for risk management and collateralization Changes in the participant s modus operandi may be necessary as a result of various integration opportunities The potential impacts on participants operational processes should be taken into account Considerations regarding regulatory frameworks and their risks, once the market segment managed by BM&FBOVESPA are under different rules 14

15 Opportunities and Challenges from the Integration Schedule 2008 BM&F AND BOVESPA MERGER 2008 FINANCIAL CRISIS GOVERNANCE INTEGRATION INTEGRATION AND INCORPORATION OF THE LEGAL ENTITIES 2009 INTEGRATION INITIAL STUDIES INITIAL STANDARDIZATION PROCESS WHITE PAPER RESEARCH AND DEVELOPMENT 2010 WHITE PAPER - PUBLISHED INTERNAL TASK FORCE WORKING GROUP WITH MARKET PARTICIPANTS INTEGRATION OPPORTUNITIES R&D IMPLEMENTATION OF OPPORTUNITIES INTEGRATION OPPORTUNITIES R&D CONCLUSION NEW IMPLEMENTATION 15

16 Opportunities and Challenges from the Integration Overview Agenda for the integration of the post-trading infrastructure: To spread the discussion released in the white paper Implementation of the various integration project initiatives Market participants adaptation to the new implementations 2010 and 1H11 deliveries: Investors Registration: Unification of the participants codes Unified model of master accounts for both Bovespa and BM&F segments FUSÃO BM&F AND BOVESPA CRISE FINANCEIRA DE 2008 INTEGRAÇÃO DA GOVERNANÇA INTEGRAÇÃO E INCORPORAÇÃO DAS ENTIDADES LEGAIS ESTUDOS INICIAIS DA INTEGRAÇÃO WHITE PAPER PESQUISA (ESTUDOS DE CASO) E ELABORAÇÃO INÍCIO DO PROCESSO DE PADRONIZAÇÃO WHITE PAPER DIVULGAÇÃO PARA O MERCADO IDENTIFICAÇÃO DE OPORTUNIDADES RÁPIDAS DE INTEGRAÇÃO GRUPO DE TRABALHO COM O MERCADO DIVULGAÇÃO DAS INICIATIVAS PARA 2010 IMPLEMENTAÇÕES DAS INICIATIVAS Settlement: Unified Clearings financial systems (derivatives, bonds and stocks) New integrated investors identification system for transactions carried out in BM&FBOVESPA OPORTUNIDADES DE INTEGRAÇÃO NOVAS IMPLEMENTAÇÕES 2011 CONCLUSÃO DO PROCESSO DE INTEGRAÇÃO 16

17 Opportunities and Challenges from the Integration Overview Agenda for the integration of the post-trading infrastructure: To spread the discussion released in the white paper Implementation of the various integration project initiatives Market participants adaptation to the new implementations 2010 and 1H11 deliverables: Risk Management: Unification of the criteria to accept stocks as collateral Unified system to manage the control of letters of credit and CDBs (Certificates of Bank Deposits) FUSÃO BM&F AND BOVESPA CRISE FINANCEIRA DE 2008 INTEGRAÇÃO DA GOVERNANÇA INTEGRAÇÃO E INCORPORAÇÃO DAS ENTIDADES LEGAIS ESTUDOS INICIAIS DA INTEGRAÇÃO WHITE PAPER PESQUISA (ESTUDOS DE CASO) E ELABORAÇÃO INÍCIO DO PROCESSO DE PADRONIZAÇÃO WHITE PAPER DIVULGAÇÃO PARA O MERCADO IDENTIFICAÇÃO DE OPORTUNIDADES RÁPIDAS DE INTEGRAÇÃO GRUPO DE TRABALHO COM O MERCADO DIVULGAÇÃO DAS INICIATIVAS PARA 2010 IMPLEMENTAÇÕES DAS INICIATIVAS OPORTUNIDADES DE INTEGRAÇÃO NOVAS IMPLEMENTAÇÕES 2011 CONCLUSÃO DO PROCESSO DE INTEGRAÇÃO The confirmation of the letter of credit issuance will be an automatic process Standardization of the acceptance process of collaterals in stocks Central Depository: New electronic access for investors (canal eletrônico do investidor CEI) which will consolidate the information for Bovespa and BM&F segments Consolidation of the information for regulatory entities and custodians 17

18 Opportunities and Challenges from the Integration Post-Trading Components Apart from ongoing development for 2010 and 1H11, we initiated a project with IBM to create a new paradigm in the BM&FBOVESPA post-trading structure As-is current state Scenarios CBLC Gov. Bonds FX Derivatives Scenario 1 Scenario 2 Scenario 3 Participant structure Account structure Allocation Netting Settlement Risk management Collateral management Combination Analysis Pros & cons Depository 18

19 Opportunities and Challenges from the Integration IT Post-trading Infrastructure Evolution The need for higher performance from the trading system is rapidly becoming a reality in the post trading systems as well ( Real-Time Clearing ) The trend is that a new generation of systems will process the Clearinghouse activities in real-time More efficient methods to transmit information and messages (BUS Messaging) System scalability Event-driven Architecture 19

20 Agenda BM&FBOVESPA Business Model and New Developments Post-trading Infrastructure - Integration Opportunities and Challenges Business Development - Market Popularization Program Operational Highlights - Appendix 20

21 Market Popularization Program Goals of Market Popularization Program Disseminate knowledge of equity, fixed-income and derivatives markets Educate public on the importance of the equity market in order to provide investment opportunities, finance companies and contribute to economic growth Foster an investment culture Show the significance of personal finance and equity markets Explain basic economic concepts Encourage long-term saving Target: attract 5 million new retail investors in five years 21

22 Market Popularization Program Initiatives Launch of Bolsa Vai (BM&FBOVESPA Goes Where You Are) Over 80,000 participants Launch of BM&FBOVESPA Visitors Center and BM&FBOVESPA Desafio (FEP for high school students) Reformulation of Folhainvest simulator, and development of plans for ENEF Launch of Mulheres em Ação Financial Education Program (FEP) for women Launch of Educar FEP in the classroom Launch of Desafio Especial Professores (FEP for teachers) and regional initiatives Reformulation of Mulheres em Ação ; launch of Financial Education on TV; launch of Treasury Direct course and simulator; launch of UOL Invest simulator Educar : more than 135,000 participants Lectures: more than 370,000 attendees Simulators ( SimulAção, Folhainvest, UOL Invest, Mercados Futuros ): more than 763,000 registered users BM&FBOVESPA Visitors Center: more than 495,000 visitors 22

23 Main Strategies to Attract Retail Investors 2010 Launch of SimulAção, a home broker simulator Launch of web version of BM&FBOVESPA Desafio, Financial Education Program (FEP) for high school students Launch of Turma da Bolsa, FEP website for children Start of second season of Financial Education on TV, with 42 episodes airing from March to December 2010 Launch of on-line classes on personal finance and equity market Development of content on financial education and investment for radio broadcasts ENEF printing and distribution of textbooks for schools participating in pilot project, and start of development of content for schools Fica Mais mileage points and member-get-member program for investors 23

24 Main Strategies to Attract Retail Investors 2010 Launch of mass media campaign Developed by DPZ ad agency, the mass media campaign under the slogan Quer ser Sócio? (Wanna be a Partner?) will focus on attracting new investors All creative pieces will refer to campaign website with content including: Video tutorials Information about how to invest in stocks Information on brokerage houses (search) Links to other popularization initiatives, such as simulators, courses, challenges, promotion of participation by women etc. Disclaimer stressing risk of investing in equities FAQ and help service Invitation to register for anyone interested in investing details will be sent to ANCOR (National Association of Brokerage Houses) 24

25 jan/07 apr/07 jul/07 oct/07 jan/08 apr/08 jul/08 oct/08 jan/09 apr/09 jul/09 oct/09 jan/10 apr/10 jul/10 Market Popularization Program Results Growth in No. of Retail Investors ( ) Retail Investors: Share of Volume Retail Investors: Breakdown by Age 35% 30% 25% 20% 15% 10% 5% 0% 26.2% 25.4% 23.0% 21.7% 27.5% 24.6% 15.9% 21.9% 20.2% 11.3% 10.4% 12.3% 9.7% 9.9% 30.5% 28.5% 26.8% up to over Accounts Amount (R$ billions) Jul/10 25

26 Agenda BM&FBOVESPA Business Model and New Developments Post-trading Infrastructure - Integration Opportunities and Challenges Business Development - Market Popularization Program Operational Highlights - Appendix 26

27 BOVESPA Segment: capital raised activity Public Offerings in 2009/ public offerings in 2009 (6 IPOs and 18 Follow-Ons), raised more than BRL 46.0 bi 15 public offerings in 2010 (8 IPOs and 7 Follow-Ons), raised BRL 23.5 bi* Pipeline Also, there are 12 additional offerings in the pipeline IPOs (9): WTORRE Empreendimentos Imobiliários, Sonae Sierra Brasil S/A, Norskan Offshore S.A, Multiner, Autometal, Brasil Insurance, HRT Participações em Petroleo SA, Karoon Pet&Gas and Repsol Brasil SA Follow-Ons (3): Petrobrás (R$115 bi), Estácio Participações and LPS Brasil Consultoria de Imóveis Public Offerings (BRL billions) IPO Follow-On * Preliminary Data Updated until Sep 17th 27

28 BOVESPA Segment: operational highlights 4.9 Average Daily Traded Value - ADTV (BRL Billions) YTD* Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10* Daily Average Number of Trades (Thousands) YTD* Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10* Number of Custody Accounts (Thousands) Turnover Velocity** (12 months average) % 29.4% 36.8% 37.6% 38.7% 42.3% 56.4% 66.6% 63.2% 65.4% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 Jul 10 Aug *Updated until: September 17th, 2010 **Relation of the trading value in the cash market and the market cap of the exchange 28

29 BM&F Segment: operational highlights Average Daily Traded Volume - ADTV (thousands of contracts) * jan-10 fev-10 mar-10 abr-10 mai-10 jun-10 jul-10 ago-10 set/10* Tx. de Juros em Reais (milhares) Câmbio (milhares) Índice (milhares) Outros (milhares) Rate per Contract - RPC (BRL) YTD* J-10 F-10 M-10 A-10 M-10 J-10 J-10 A-10 S-10* Interest rates in BRL 0,887 0,962 0,906 0,950 1,141 0,979 0,884 0,971 0,977 0,722 0,780 0,961 1,044 0,893 0,952 0,868 FX rates 4,002 2,858 2,244 1,859 2,065 2,161 1,895 1,968 2,005 1,837 1,872 1,752 1,908 1,983 1,954 1,728 Stock Indices 1,561 1,688 1,419 1,501 2,145 1,620 1,515 1,466 1,716 1,372 1,616 1,313 1,643 1,372 1,619 1,350 Interest rates in USD 1,999 1,385 1,094 0,965 1,283 1,357 1,161 1,104 1,319 1,239 1,203 1,145 1,137 1,086 1,072 1,061 Commodities 7,159 5,693 4,749 3,195 3,587 2,307 2,034 1,711 2,029 1,934 2,281 1,890 2,216 2,021 2,266 2,050 Mini contracts - 0,038 0,034 0,054 0,162 0,176 0,130 0,133 0,139 0,129 0,136 0,122 0,133 0,124 0,130 0,123 OTC 1,199 1,703 1,571 2,111 2,355 1,655 1,680 1,588 1,408 1,626 1,790 1,646 1,895 1,684 1,973 1,249 Total RPC 1,620 1,467 1,247 1,224 1,527 1,365 1,128 1,254 1,308 0,961 1,031 1,171 1,274 1,084 1,167 1,062 *Updated until: September 17th,

30 9th ACSDA Seminar October 1 st,