BM&FBOVESPA. May, 2009

Transcription

1 BM&FBOVESPA May,

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&F Bovespa 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&F Bovespa performance. The factors that might affect performance include, but are not limited to: (i) market acceptance of BM&F services; (ii) volatility related to (a) the Brazilian economy and securities markets and (b) the highlycompetitive industries BM&F Bovespa 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&F 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&F Bovespa 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&F Bovespa 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 BRAZILIAN AND INTERNATIONAL MARKET CONDITIONS 3

4 International Scenario Group of 30 (G30) GROUP OF 30: Financial Report A Framework for Financial Stability Chairman: Paul A. Volcker Vice chairmen: Arminio Fraga Neto (BM&FBOVESPA Chairman) and Tommaso Padoa Schioppa Main proposals derivatives markets be held to regulatory, disclosure, and transparency standards at least comparable to those that have historically been applied to the public securities markets. Financial markets and products must be made more transparent, with better aligned risk and prudential incentives. problems include trade confirmation backlogs, lack of transparency on transaction reporting and pricing, contract closeout procedures, valuation practices and collateral disputes, and direct and indirect counterparty credit issues. Prominent within that program are efforts to establish a central counterparty clearing (CCP) arrangement Given the global nature of the markets in which such managers and funds operate, it is imperative that a regulatory framework be applied on an internationally consistent basis. Countries should reevaluate their regulatory structures with a view to eliminating unnecessary overlaps and gaps in coverage and complexity, removing the potential for regulatory arbitrage, and improving regulatory coordination. 4

5 International Scenario What are the trends for the coming years? Enhancement of the clearing activity Some exchanges in both Europe and USA are investing and developing Clearing and CCP services Nasdaq OMX: will use EMCF created by Fortis (Nasdaq OMX bought 22% stake in EMCF) London Clearinghouse (Clearnet) and Liffe launched a Credit Derivative Clearing Service CME launched its Clearing service (CDMX) for CDSs Securities Lending Stock loan platforms race to offer CCP services in US (see Securities Industry News of February 2, 2009) BM&FBOVESPA in this Scenario Fully integrated business with Trading, clearing, settlement and depository services (including securities lending) Risk management at the beneficial owner level Transparency on the trading activity 5

6 BUSINESS MODEL 6

7 Fully Integrated Business Model Services for Issuers and Commodities trading Trading, Clearing and Depository Activities Other Services Listing (stocks, bonds, funds, asset backed securities, among others) Trading (stocks, derivatives, corporate and government bonds, funds, spot US Dollar, among others) Custody (services provided for funds, and other market participants) Commodities Certification Clearing and Settlement (for all the products) Market Data Indices Licensing Depository (stocks and corporate bonds) Securities Lending (stocks and corporate bonds) Software Licensing (used by brokerage houses and other market participants) 7

8 Brazilian Equity Market Regulatory Framework Equities Trading All trades must be matched at the beneficial owner level (depository, clearing and settlement) Trades through a brokerage house must be registered in the exchange (internalization of orders at the brokerage level is not allowed) In the equities market block trades are under the same trading rules as normal trades Settlement Clearinghouses settles directly with the Central Bank via an exclusive settlement account Securities Lending (stocks and corporate bonds) Securities lending (stocks and corporate bonds) Must be carried in a Clearinghouse (CCP) with collaterals requirement Settled at the beneficial owner level (the investor takes the decision of lending and is entitled to its returns) Naked short selling is not allowed 8

9 Equity Market Settlement Structure Brazil compared with USA BRAZIL US OTC Dark Pools Trading BVMF ATS ECN NYSE NASDAQ Clearing (CCP) BVMF DTCC BVMF DTCC Central Depository Broker Level Beneficial Owner Level 9

10 Risk Management At the beneficial owner level Four Clearinghouses: derivatives, stocks and corporate bonds, FX spot and government bonds All of our Clearinghouses acts as CCP and manage the risk at beneficial owner level Mark to market (margin variation calls) done on intraday basis (each 15 minutes for derivatives market and ongoing for equity market) The brokerage house (clearing agent) is responsible for monitoring their clients risk and know your customer policies During the day any Clearinghouse can call additional collateral and the clearing agent is responsible for depositing Clearing Agent Clearinghouse Clearing Agent Risk Management Clearing Deposited Required (BRL billions) (BRL billions) Derivatives 71,4 34,1 Cash Equities 26,7 16,6 FX 3,7 0,8 Fixed Income 1,0 0,0 Total in BRL 102,7 51,5 Total in USD 49,1 24,6 * On May 15, 2009 Investor Investor Investor Investor There is no cross margining among the Clearinghouses Clearinghouses integration process: project kick off in

11 Equity Trading in Brazil (Regulation) RULES RELATED TO BLOCK TRADING Shares listed in exchange markets can be traded only in exchange environment Absence of OTC market Absence of alternative trading system, including dark pools Relevant restrictions related to block trading (CVM Instruction No 168) Auction 1 hour advance announcement: quantity above 10 times the national average volume or in the 1% 2,99% range of common shares or in 3% 4,99% range of preferred shares Auction 24 hours advance announcement: quantity in the 3% 6% range of common shares or in the 5% 20% range of preferred shares Auction 48 hours advance announcement: quantity higher than 6% of common shares or 20% of preferred shares 11

12 Equity Trading in Brazil (Regulation) POSSIBLE CHANGES IN THE EXCHANGES REGULATORY FRAMEWORK On April 28th, 2009 CVM gave notice of public hearings of an instruction draft which, amongst other subjects, deals with best execution rule In the justifications section the CVM stated: That measure gains greater importance in an scenario where competition between environments or systems for trading the same security is established. The CVM regulation already allows for simultaneously trading of almost all securities, excepted shares listed in exchange markets, which can be simultaneously traded in another exchange only. Despite of that, it is CVM intention to analyze this last restriction to competition. SOME RULES SHOULD NOT CHANGE Obligation of a CCP in all trades at the beneficial owner level Prohibition of internalization of orders at the brokerage level 12

13 Equity Trading in Brazil (Regulation) BRAZILIAN SEC (CVM) RULE FOR EXCHANGE AND CLEARING COMPANIES CVM Instruction No 461 provides for the possibility of BVMF clearinghouse to settle trades matched outside BVMF trading systems Art The managing entities of organized markets of securities should agree upon themselves the following mechanisms and rules: I... II that render the clearing and settlement of transactions effected outside their environments and trading systems 13

14 Equity Trading in Brazil (Regulation) BVMF POSITIONING CONCERNING BLOCK TRADING REGULATION The Brazilian market has no efficient block trading mechanism, where quantity discovery is more important than price discovery Brazilian ADRs are traded in alternative systems and dark pools in US BVMF could launch a platform designed for block trading with post trading services and CCP at the beneficial owner level BVMF can offer post trading services to other possible block trading providers Block Trading frame: Minimization of the price impact due to large offers execution, making the large lot electronic trading viable and anonymous Development of large lot liquidity in the BVMF system instead of in the brokers and banks trading desks 14

15 Exchanges and Block Trading Systems Brazilian ADRs: Brazil vs. USA THERE ARE 37 BRAZILIAN COMPANIES WITH ADRs PROGRAMS (LEVEL 2 AND LEVEL 3). Increase on Block Tradings share since 2007 while the NYSE share has been decreasing In Traded Value Apr % 17.2% 27.9% 22.5% 15

16 OPERATIONAL FIGURES 16

17 ADTV (millions of contracts) Operational Highlights BM&F Segment RPC (BRL) 1Q07 2Q07 3Q07 4Q07 1Q08 A 08 M 08 J 08 J 08 A 08 S 08 O 08 N 08 D 08 J 09 F 09 M 09 A 09 M 09* Interest Rates in BRL 1,031 0,988 1,049 1,088 1,102 1,040 1,111 1,051 1,098 1,260 1,510 1,391 1,145 0,865 0,796 0,939 0,923 0,921 0,963 FX Rates 2,226 2,071 1,937 1,847 1,850 1,805 1,738 1,815 1,767 1,867 2,430 3,041 2,586 2,269 2,183 2,397 2,653 2,543 2,114 Stock Indices 1,279 1,521 1,668 2,013 2,132 2,336 2,104 2,801 2,156 2,288 2,039 2,138 1,398 1,630 1,323 1,792 1,564 1,901 1,527 Interest Rates in USD 1,108 0,964 0,891 1,032 1,078 1,111 1,178 0,894 0,773 0,844 1,250 2,037 1,501 1,678 1,417 1,469 1,790 1,859 2,050 Commodities 2,921 3,266 3,590 3,670 3,283 4,103 3,645 4,008 3,871 3,734 3,829 4,818 2,309 1,867 1,622 2,298 2,344 2,411 2,043 Web Trading 0,034 0,054 0,069 0,105 0,155 0,161 0,160 0,159 0,151 0,161 0,166 0,170 0,167 0,184 0,171 0,189 0,192 0,206 0,192 OTC 2,764 2,239 1,904 2,388 2,057 2,389 2,466 2,110 2,389 2,405 3,348 3,195 2,765 1,807 1,646 2,358 3,175 1,588 0,781 Total RPC 1,302 1,274 1,320 1,416 1,401 1,347 1,398 1,404 1,337 1,567 1,896 2,071 1,732 1,414 1,213 1,484 1,361 1,440 1,373 * Until May 8,

18 Operational Highlights Bovespa Segment ADTV (BRL Billions) Daily Average Number of Trades (Thousands) Number of Investors (Thousands) Turnover Velocity** (annualized) * Until May 11, 2009 **Relation of the trading value in the cash market and the market cap of the exchange 18

19 Operational Highlights BM&F Segment (Investor s Participation in Total Volume) Bovespa Segment (Investor s Participation in Total Value) 19

20 Bovespa Segment Foreign investment flow The 1Q09 net foreign investment flow was BRL 1.3 Billion, the best since the Brazil s Investment Grade (May 08) In Apr 09 the net foreign investment flow was BRL 5.7 Billion, the best month since Apr 08 * Until May 12,

21 IT DEVELOPMENTS 21

22 New IT Developments Schedule BOVESPA SEGMENT May July Starting in May we will have completed the implementation of the new version of the software on which the MegaBolsa electronic trading system runs, as developed by NYSE Euronext. The new version (V900) replaces the V837 version implemented in June It is estimated that the average internal processing time, known as RTT (round time trip), will decrease to 170 milliseconds, from the current 290 milliseconds. Subsequently, with the implementation of the new low latency multi level communication interface (the new Multi Gateway), scheduled for July 2009, the RTT will drop to 15 milliseconds and it is estimated that it will fall to 8 milliseconds until December 2009 Reduction in fees charged for orders entered in the MegaBolsa trading system, and not matched, which drove growth in algorithmic trading Authorization to DMA via provider implementation (DMA model 2) in the MegaBolsa trading system (to be approved by Brazilian Securities Exchange Commission CVM) August Completion of the project to increase the capacity of the equities clearinghouse (formerly, CBLC) to 1.5 million daily trades Offering of co location services (connectivity to the MegaBolsa system) Thomson Reuters connected to the Exchange s MegaBolsa system to provide customers with an international order routing system 22

23 Bovespa Segment Trading system development User Distribution Intermediary (CM/Broker) BVMF / HP BM&FBOVESPA Access Via Intermediary MEGABOLSA STATION GLWIN NETWOR K SCOM, SNEG, SCOT GL Trade NYSE Euronext Traditional DMA Homebroker NETWOR K Any ISV NETWOR K SLE Multi Gateway New Multi Gateway HUB NSC NSC V837 V900 Via DMA Provider NETWOR K DMA Provider Bloomberg TradeBook Thomsom Reuters Others Via DMA Co location NETWO RK Remote access tracking and maintenance Application of Co location (ATS) RTT Jan RTT Forecast

24 New IT Developments Schedule BM&F SEGMENT May June Bloomberg Tradebook connected to the Exchange s Global Trading System (GTS) to provide customers an international order routing system GL Trade (GL Net) connected to the Exchange s GTS to provide customers an international order routing system Offering of co location services (connectivity to the GTS System) Shutdown of the trading floor BOTH BM&F AND BOVESPA SEGMENTS November Implementation of the integrated external communication interface for both MegaBolsa and the GTS systems, which will permit market data transmission from either system via a single channel. 24

25 DMA and CME order routing evolution DMA EVOLUTION Trades through DMA represented 6.7% of total BM&F Segment ADTV in Apr 09 ORDER ROUTING AGREEMENT WITH CME Group (GLOBEX) Initial flow starting in Mar 09 with an ADTV of 13.6 thousand contracts in Apr 09 ALGOTRADERS IN BM&F SEGMENT First algotraders represented 0.45% of overall ADTV in Mar 09 and rose to 0.53% in Apr 09, regarding the FX Contracts the participation was 1.53% and 1.8%, respectively DMA Evolution * Until May 8,

26 CME Globex Order Routing Agreement Routing Order GLOBEX GTS Number of Contracts Traded Routing Order GLOBEX GTS Number of Trades mar 10 mar 13 mar 18 mar 23 mar 26 mar 31 mar 3 abr 8 abr 14 abr 17 abr 23 abr 28 abr 27 mar 30 abr 6 mai 26

27 CO LOCATION AREA RACKS IT Developments Co location infrastructure BM&FBOVESPA WILL BE PREPARED FOR THE CO LOCATION FOR BM&F SEGMENT IN JUN 09 AND FOR BOVESPA SEGMENT IN THE 3Q09 Rack (40Us) Half Rack (20Us) Unit Hosting Structure where are installed the switches and servers) Racks lay out at the co location s area 27

28 Globex Routing Agreement Globex to BM&FBOVESPA flow US BRAZIL FCM prop position Globex Network CME Group Globex BM&FBOVESPA GTS Network Investors Investors MATCHING Investors FCM Investors Investors 4Some FCMs (Futures Commodities Merchant) should offer DMA access to BVMF derivatives to their clients 4BM&FBOVESPA is helping the main back office system providers to adapt their systems 28

29 ALGORITHMIC TRADING PROFILE AND OPPORTUNITIES Arbitrage (determinist and statistic) high frequency Cash Market versus ETF (Exchange Traded Fund) Cash Market versus Futures on Stock Index Domestic Shares versus ADRs Futures versus Options Different s expirations of the same future contract Trading of interest rate slope curve IT Developments More suitability for Algotraders Trading with correlated instruments (soya bean BVMF x soya bean CME, coffee BVMF x coffee ICE etc) Mini contracts versus Standards contracts Order book s depth DETERMINANT FACTORS Liquidity e volatility Electronic Access and low risk of execution Prices charged by the Exchange 29

30 FINANCIAL HIGHLIGHTS 30

31 1Q09 Highlights versus 1Q08 Pro Forma 1Q09 EARNINGS Net Income / Adjusted Net Income* (BRL Millions) EPS: BRL 0.11 compared with BRL 0.11 in 1Q08 Net Revenues: decreased by 20.1% over the prior year EBITDA margin: 55.8% in 1Q09 (67.5% Adjusted EBITDA) vs. 68.5% in 1Q08 1.4% 12.2% Expense reduction: decreased by 17.4% between 1Q09 and 1Q08 (excluding depreciation, severance and Stock Option Plan costs) EBITDA / Adjusted EBITDA* (BRL Millions) HIGHLIGHTS DMA development in BM&F Segment: in Apr 09, trades through DMA rose to 6.7% of the total traded volume 68.5% 55.8% 34.8% 68.5% 21.3% 67.5% Globex and Algotraders: initial flow starting in Mar 09 with an ADTV of 13.6 thousand contracts in Apr 09; in 1Q09, Algo represented 0.3% of Total ADTV and 0.6% of FX contracts Total Expenses / Adjusted Expenses** (BRL Millions) Foreign Investors: positive flow in 1Q09 of R$ 1.3 billion and grew to R$ 5.7 billion in Apr 09, its highest level in one year MegaBolsa: new version (V900) launched on April 28 will reduce latency by 41% Interest on Shareholders Equity: BRL 112 million to be paid in May % 17.4% * Adjusted Net Income and Adjusted EBITDA exclude severance and stock option plan costs. ** Adjusted Expenses exclude depreciation, severance and stock option plan costs. 31

32 Summary of Income Statement BRL Million 1Q08 Variação 1Q09 (Pro Forma) 1T09/ 1T08 Gross Operational Revenues 351, , % Net Operational Revenues 316, , % Operational Expenses (148,760) (132,550) 12.2% Operating Income 167, , % Oper. Margin (variation in p.p) 53.0% 66.5% 13,5 p.p. Net Income 226, , % Net Margin (variation in p.p) 71.7% 58.1% 13,6 p.p. EBITDA 176, , % EBITDA Margin (variation in p.p) 55.8% 68.5% 12,7 p.p. Earnings per Share (EPS) % Adjusted Net Income 258, , % Adjusted Net Margin (variation in p.p.) 81.6% 58.1% 23.5 p.p. Adjusted EBITDA 213, , % Adjusted EBITDA Margin (variation in p.p.) 67.5% 68.5% 1.0 p.p. Revenues: 1Q09 versus 1Q08 comparison shows a 20.2% fall in Net Revenues, mainly due to lower volumes in both segments Adjusted Operating Expenses: reduction by 17.4% in 1Q09 versus 1Q08 due to cost savings from the integration process Adjusted Net Income: in 1Q09 the adjustments amounted to BRL 31.4 million due to stock option plan (BRL 18.8 million) and employee terminations (R$ 12.6 million, net of tax) Adjusted EBITDA: in 1Q09 the adjustments amounted to R$36.8 million due to stock option plan (BRL 18.8 million) and employee terminations (R$ 18 million) 32

33 Revenues Gross Revenues Composition 1Q09 1Q08 Variation 1Q09 (Pro Forma) 1Q09/ 1Q08 Gross Operational Revenues 351, , % BM&F Segment 130, , % Derivatives trad. / settlement 121, , % Foreign Exchange trad. / settlement 5,692 4, % Securities trad. / settlement % Brazilian Commodities Exchange 1, % BM&F Bank 1, % Bovespa Segment 200, , % Trading fees 113, , % Clearing fees 44,464 66, % Securities Lending 6,127 15, % Listing 10,621 7, % Depositary and custody 16,084 14, % Trading access (Brokers) 9,475 3, % Other Operational Revenues 20,868 15, % Vendors 11,521 9, % Commodities classification fees % Dividends 5,371 Others 3,761 5, % Net Operational Revenues 316, , % The revenues from other services (not tied to trading) increased by 16.5% over the prior year to BRL 66.5 million (BRL 57.1 million in 1Q08), mainly from: Depository: higher number of investors (mainly individuals): increased by 12.3% Listing: new pricing policy: increased by 49.1% Trading Access Services: implementation of a policy for brokerage house access in both segments: increased by 185.5% Vendors: higher number of users: increased by 18.9% The share of non trading sources increased to 18.9% of total revenues in 1Q09 versus 13% in 1Q08 33

34 Expenses Adjusted Operational Expenses* 1Q09 1Q09 1Q08 Variation (Pro Forma) 1Q09/ 1Q08 Operational Expenses (148,760) (132,550) 12.2% Personnel (85,462) (54,968) 55.5% Data processing (26,683) (35,567) 25.0% Deprec. and Amortization (8,951) (7,777) 15.1% Third Party Services (9,119) (9,228) 1.2% Maintenance (2,826) (3,243) 12.9% Communications (4,991) (4,224) 18.2% Leases (825) (972) 15.1% Supplies (477) (516) 7.6% Marketing (2,292) (7,153) 68.0% Taxes (495) (1,513) 67.3% Board Compensation (1,129) (2,036) 44.5% Other (5,510) (5,353) 2.9% Adjusted Operational Expenses* (103,009) (124,773) 17.4% Adjusted Personel** (48,662) (54,968) 11.5% The 1Q09 operating expenses (excluding depreciation, severance and stock option plan costs) decreased by 17.4% over the prior year to BRL million. The decrease reflects the achievement of planned merger synergies. The principal drivers of the decline in expenses were in the following cost components: Personnel (adjusted): decreased by 11.5% due to reduction in headcount Data processing: decreased by 25.0% Marketing: decreased by 68.0% * Excluding depreciation, severance and stock option plan costs. ** Excluding severance and stock option plan costs. 34

35 MAIN INITIATIVES FOR COST REDUCTION IN 2009 Open Outcry: closing in Jun 09 Infrastructure: reduction in the number of buildings in downtown São Paulo (from 5 to 2) Branches: realignment of the remaining branches Merger and Integration Process Evolution Headcount: through Mar 09, a reduction of almost 30% was achieved in the combined total of employees and outsourced personnel Adjusted Operational Expenses (excluding depreciation) in 1Q09 was BRL million Guidance of Operational Expenses of BRL 450 million in FY09 (excluding depreciation and stock option plan costs) * 2007 operating expenses adjusted by inflation. 35

36 Capital and Balance Sheet Highlights Cash and Cash Equivalent: BRL 3.15 billion held at end of 1Q09 (short + long term) Includes cash collateral of BRL 1.14 billion and restricted funds of BRL 610 million Goodwill Amortization: BRL million in 1Q09 (net tax impact of BRL 79.6 million) Effective tax rate of 3.6% in 1Q09 Payout: BRL 112 million in interest on shareholders equity, equivalent to R$ per share, which amounts to R$ net of withholding income tax To be paid on May 29, 2009, based on the position as of May 15, 2009 Buyback program: up to 71.3 million shares Program earlier terminated (Board Meeting on May 12, 2009) 64.1% (45.7 million shares) bought at the average price of BRL 5.85 Total of BRL million Stock Option and Leasing Expenses: non cash charge of BRL 19.0 million taken in 1Q09 to adjust our Financial Statements to the new accounting standards, moving towards IFRS 36

37 APPENDIX 37

38 Income Statement 1Q09 vs 1Q08 (Pro Forma) BRL Thousands 1Q09 1Q08 Variation (Pro Forma) 1Q09/ 1Q08 Gross Operational Revenues 351, , % Trading / Clearing Systems BM&F 130, , % Trading / Clearing Systems Bovespa 200, , % Other Operational Revenues 20,868 15, % Revenue deductions (35,370) (44,888) 21.2% Net Operational Revenues 316, , % Operational Expenses (148,760) (132,550) 12.2% Operating Income 167, , % Oper. Margin (variation in p.p) 53.0% 66.5% 13.5 p.p. Financial Income 67,859 77, % Income before Taxes 235, , % Income Tax and Social Contribution (8,372) (111,363) 92.5% Minority Interest (295) % Net Income 226, , % Net Margin (variation in p.p) 71.7% 58.1% 13.6 p.p. EBITDA 176, , % EBITDA Margin (variation in p.p) 55.8% 68.5% 12.7 p.p. Earnings per Share (EPS) % Adjusted Net Income 258, , % Adjusted Net Margin (variation in p.p.) 81.6% 58.1% 23.5 p.p. Adjusted EBITDA 213, , % Adjusted EBITDA Margin (variation in p.p.) 67.5% 68.5% 1.0 p.p. 38

39 Adjusted Income Reconciliation ADJUSTED INCOME RECONCILIATION R$ million Q109 EBITDA (Corporate) (+) Adjustments Severance expenses (18.0) Stock option expenses (2) (18.8) EBITDA (Adjusted) Net Income (Corporate) (+) Adjustments Severance expenses (1) (12.6) Stock option expenses (2) (18.8) Net Income (Adjusted) (1) This expense generated a tax effect of R$ 16MM in Q109, while the remaining R$ 2MM were recognized in April. Thus, for adjusted net income calculation purposes, the tax adjusted Q109's share is excluded plus the full portion of the subsequent period, according to the following: Amount recognized until March 31 th (16.0) Tax effect ( 34% discount) (10.6) Amount recognized after March 31 th (2.0) FULL ADJUSTMENT (12.6) (2) The stock option expense is considered as non deductible for tax purposes. For this reason, the adjusted net income is calculated by adding back the full expense. 39

40 Balance Sheet as of 03/31/2009 BRL Thousands ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY Current assets 2,814,573 Current liabilities 1,677,230 Cash and cash equivalents 2,592,074 Collateral for transactions 1,135,943 Other credits 222,499 Others 541,287 Long term receivables 730,230 Non current 47,538 Financial investments 553,643 Other credits 176,587 Minority interest in subsidiaries 15,632 Investments 1,318,279 Property and equipment 246,680 SHAREHOLDERS' EQUITY 19,463,879 Intangible assets 16,094,517 TOTAL ASSETS 21,204,279 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 21,204,279 40

41 Business Model Trading flow BM&FBOVESPA SYSTEMS 1. Order 1. Order 3. $ 1. $ 3. Stocks / Contracts 2. $ (via Central Bank) Buyer 3. $ (via Central Bank) Settlement Agent Clearinghouse and Depository Brokerage House Settlement Agent Seller Depository and risk management at the beneficial owner level Brokerage House 2. Stocks / Contracts Depository and risk management at the beneficial owner level Buyer Trading System Seller 41

42 CME Globex Order Routing Agreement USA BRAZI L Buy Order for S&P 500 Futures GLOBEX communication NETWORK network CME GROUP GLOBEX BM&FBOVES PA GTS Sell Order for ID1 Futures GTS NETWORK MATCHING MATCHING Sell Order for S&P 500 Futures Buy Order for ID1 Futures SETTLED IN USD BY CME S CLEARINGHOUSE SETTLED IN BRL BY BM&FBOVESPA S DERIVATIVES CLEARINGHOUSE 42

43 CME Globex Order Routing Agreement USA BRAZI L Buy Order for an ID1 futures contracts GLOBEX NETWORK CME GROUP GLOBEX High speed and high capacity international link BM&FBOVES PA GTS MATCHING GTS NETWORK Sell order for an ID1 futures contracts SETTLED IN BRL BY BM&FBOVESPA S DERIVATIVES CLEARINGHOUSE, WHICH CAN BE FACILITATED BY BM&F BANK 43

44 CME Globex Order Routing Agreement USA BRAZI L GLOBEX NETWORK CME GROUP GLOBEX MATCHING High speed and high capacity international high BM&FBOVES PA GTS Buy order for S&P 500 Futures GTS NETWORK Sell order for S&P 500 Futures SETTLED IN USD BY CME S CLEARINGHOUSE, WHICH CAN BE FACILITATED BY BM&F BANK 44

45 DMA Development DMA BM&F SEGMENT Number of Brokers that offer DMA Aug 08 Sep 08 Sep 08 Oct 08 Oct 08 Nov 08 Nov 08 Dec 08 Dec 08 Jan 09 Jan 09 Feb 09 Feb 09 Mar 09 Mar 09 Apr 09 Apr 09 May 09 45

46 DMA Development Trading via DMA in BM&F Segment Number of Contracts Traded Trading via DMA in BM&F Segment Number of Trades Aug 08 Sep 08 Sep 08 Oct 08 Oct 08 Nov 08 Nov 08 Dec 08 Dec 08 Jan 09 Jan 09 Feb 09 Feb 09 Mar 09 Mar 09 Apr 09 Apr 09 May 09 46

47 New Pricing Policy BM&F Trading: implementation of a new price grid for BM&F segment based on volumes aiming at neutrality when compared with Aug 08 framework: February 16th, 2009 BOVESPA Trading and Depository Service Trading: progressive reduction of clearing fees charged to retail investors and private and public companies in the cash market: beginning on May 4th, 2009 Progressive reduction: % until Oct 09; % until Jan 10; % from Feb 10 onwards Depository: progressive adoption of a percentage charge system based on value under custody with the depository: beginning on May 4th, 2009 Progressive discounts: 67% until Oct 09; 33% until Jan 10; full new depository fee from Feb 10 onwards Securities Lending: rebate (5 bps) to the lenders, except for non residents: beginning on May 4th, 2009 Market Data: since Apr 09 closer to international prices 47

48 Securities Lending (BTC) Specific regulation for securities lending activity Must be carried in a Clearinghouse (CCP) Trading systems offers registration Lending is a investors decision and it s done through a brokerage house Settlement agents are responsible by their clients settlement and collateral Full disclosure of the open interest positions by company on daily basis Corporate actions adjustments Risk management at the beneficial owner level with collateral requirement and daily mark to market Position Limit Investor: the totality of positions cannot exceed 3% of the free floating of the company Broker: the totality of positions cannot exceed 6.5% of the free floating of the company Market: the totality of positions cannot exceed 20% of the free floating of the company 48

49 BM&FBOVESPA One stop shop Trading, Clearing and Settlement Services Cash Market Derivatives Market Equities Equities International Companies (BDR) Closed End Funds Exchange Traded Fund (ETF) Real Estate Investment Trust (REIT) Corporate Governance Levels Novo Mercado Level 2 Level 1 BOVESPA MAIS (SMEs) Indexes (Benchmarks) IBOVESPA, IBrX100, IBrX50, IVBX 2 Sectorial: IEE (Energy), ITEL (Telecom), INDX (Industrial) Corporate Governance: IGX, ITAG Corporate Sustainability Index Fixed Income Federal Government Bonds Debentures Commercial Papers Mortgage Backed Securities Asset Backed Securities (FDIC) NEW: Corporate Governance Bonds Currencies US Dollar Commodities Gold Equities Stock Options Stock Index Futures, Options, and Options on Futures Futures on Stocks Forwards Warrants POP (Protected and Participative Investment) Structured Products Spread Strategies Volatility Trading (Stock Index, Interest Rate, Exchange Rate) Forward Rate Agreements OTC SWAPs (Interest Rate, Exchange Rate, Price Index, Stock Index, Gold) Flexible Options (Stock Index, Exchange Rate, Interest Rate) Metals Fixed Income (Options & Futures) Interest rate Dollar denominated domestic yield curve Interest rate x price index (PPI/CPI) spread Price index (PPI/CPI) Sovereign debt bond (Global Bond, A Bond, US Treasury) CDS (SPOT Market) Currencies US Dollar Euro Commodities (Options & Futures) Arabica Coffee Conillon Coffee Sugar Ethanol Cotton Corn Soybean Live cattle Feeder cattle Other Products and Services Listing Securities Lending Depository and Custody Settlement Bank Market Data Indices Licensing Software Licensing 49

50 Operational Highlights BM&F Segment Overall ADTV (Thousands) Interest Rates in BRL (Thousands) FX Rates (Thousands) Indices (Thousands) * Until May 8,

51 Operational Highlights BOVESPA Segment ADTV (BRL Millions) Average Number of Trades (Thousands) Number of Investors (Thousands) Turnover Velocity** (12 months) * Until May 11, ** Relation of the trading value in the cash market and the market cap of the exchange 51

52 Board Members ( ) BOARD MEMBERS Armínio Fraga (Chairman)* Gavea Investimentos Claudio Haddad* Ibmec Fabio de Oliveira Barbosa* Vale (CFO) José Roberto Mendonça de Barros* Economist and Consultant Marcelo Fernandes Trindade* Lawyer Rene Marc Kern* General Atlantic Renato Diniz Junqueira Intercap Candido Botelho Bracher Itau BBA Luis Stulhberger Credit Suisse Hedging Griffo Craig Donohue CME Group Julio Siqueira de Araújo Bradesco (Vice President) * Independents 52

53 BM&F Bovespa Investor Relations Web page: Phone numbers: / 3728 / 3729 / 3734 E mail: ri@bmfbovespa.com.br 53