3Q16 earnings presentation November 14, 2016 X Public 1
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. 2
3Q16 vs. 3Q15 highlights Bottom line impacted by extraordinary and mainly non-cash items Operating highlights 3Q16 (vs. 3Q15) BM&F Segment: ADV: 2.9 mn contracts, -11.7% RPC: R$1.247, -12.9% Bovespa Segment: ADTV: R$6.93 bn, +5.9% Margin: 5.268 bps, 0.02 bps Others growth products: Tesouro Direto: 86.4% increase in average assets under custody ETFs: 20.1% increase in ADTV Financial highlights 3Q16 (vs. 3Q15) Total revenue: R$621.3 mn, -6.3%, BM&F Seg.: R$240.6 mn, -21.6% Bovespa Seg.: R$241.8 mn, +9.0% Other revenues: R$138.9 mn, +3.5% Adj. expenses 1 : R$155.5 mn, -5.0% Operat. income: R$113.0mn, -70.3% Excluding extraordinary items that impacted 3Q16, operating income would have reached R$351.5 mn IFRS net income²: R$293.5 mn Excluding extraordinary items that impacted 3Q16, net income would have reached R$453.2 mn Payout: R$146.7 mn (R$0.082 per share); equivalent to 50% of the 3Q16 net income Strategic updates Proposed business combination with Cetip Pending regulatory approval: CVM, Central Bank and CADE (filed with CADE on June 28, 2016) Efforts on planning the integration Equities phase of BM&FBOVESPA Clearinghouse Integrated test and certification with market participants were concluded Beginning of the parallel production phase in Jul 16 Deployment planned for 1Q17 3 1 Adjusted to (i) depreciation and amortization; (ii) stock grant plan costs principal and payroll taxes and stock option plan; (iii) transaction cost and planning of the proposed business combination with Cetip that is still pending regulatory approval; and (iv) transfer of fines, provisions and incentive programs to market participants. ²Attributable to BM&FBOVESPA s shareholders. 3 Depending on test results and regulatory approval. 3
3Q16 revenue breakdown¹ Revenue hurt by BM&F segment weak performance REVENUE (in R$ millions / % growth YoY) USD-linked revenue represented 22.3% of the total revenue Total revenue R$621.3 mn 1 The revenue breakdown considers the revenue lines others of the Bovespa Segment and foreign exchange and securities of BM&F Segment, as reported in the financial statements note 20, within the other revenues not tied to volumes. ² Trading and post-trading. 4
Derivatives market¹ Revenue impacted by lower ADV and RPC REVENUE (in R$ millions) ADV (in thousands of contracts) CONTRACTS 3Q15 3Q16 YoY Interest rates in BRL 1,791 1,206-32.7% FX rates 473 386-18.3% Stock indices 101 79-22.2% Interest rates in USD 321 229-28.7% Commodities 9 9-2.2% Mini contracts 597 997 66.9% TOTAL 3,293 2,906-11.7% MINI CONTRACTS (in thousands of contracts) REVENUE PER CONTRACT (RPC) RPC: R$1.247 per contract, -12.9% YoY Mix effect: Lower participation of Interest rates in BRL contracts Higher participation of Mini contracts (RPC is significantly lower than average) Appreciation of the BRL against USD (in 3Q16: 51.9% of derivatives revenue were linked to USD) % tot. BM&F rev. 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$4.6 million in 3Q16. ² Most of the fees charged on FX rate, Interest rates in USD and Commodities contracts are referred in USD. The average BRL/USD exchange rate appreciated 4.7% from 3Q15 to 3Q16. 5
Equities market¹ Higher volumes contributed to the revenue increase REVENUE² (in R$ millions) ADTV (in R$ millions) AND MARGIN (in bps) 3Q15 3Q16 YoY ADTV 6.545,1 6.930,9 5,9% Margin 5,246 5,268 0.02 bps 3Q16 HIGHLIGHTS MARKET CAPITALIZATION (in R$ trillions) AND TURNOVER VELOCITY (%) ADTV growth was driven by the increase in the market capitalization, mostly concentrated in the end of the quarter Trading and post-trading margins: 5.268bps, stable ¹ Revenue does not consider the revenue line others of Bovespa Segment, as reported in the financial statements note 20, which totaled R$4.5 million in the 3Q16. ² Excludes fixed income line. 6
Business lines not tied to volumes Growth in revenue not tied to volumes 3Q16 REVENUE BREAKDOWN¹ (in R$ millions / %) Other lines of business 3Q16 YoY Depository 47.4 31.1% Securities lending 30.2 6.8% Market data (vendors) 24.6-19.2% 22.4% Listing 13.1-0.7% Bank - financial intermediation and bank fees 9.9-1.3% Market participant access 8.7-12.6% Other 5.1-18.9% Total 138.9 3.5% ¹ Revenue as reported in the financial statements note 20. 7
3Q16 expenses Continued focus on expense management ADJUSTED EXPENSES¹ (in R$ millions) 3Q16 adjusted expenses decreased 5.0% YoY Adjusted personnel² (-3.3%): annual wage adjustment of ~9% offset mainly by higher capitalization Data processing (+21.3%): inflation/fx rate adjustments to IT maintenance contracts Third party (+14.2%): higher expenses with consultancy services Marketing (-64.1%): in 3Q15, expenses connected to the organization of the Financial Markets Conference Others³ (-21.0%): in 3Q15, nonrecurring writeoff of R$6.4 mn (in R$ millions and % of total adjusted expenses) 3Q16 84.1 (54%) 36.9 (24%) 14.4 (9%) 1.7 (1%) 18.4 (12%) 3Q15 87.0 (53%) 30.4 (19%) 12.6 (8%) 4.7 (3%) 28.9 (18%) 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 Excluding the impact of stock grant/option expenses. ³ Include expenses with communication, maintenance, taxes, board and committee members compensation and other. 8
3Q16 extraordinary expenses Extraordinary items that impacted the IFRS expenses IFRS EXPENSES OF R$446.1 MILLION, +104.8% YoY, IMPACTED BY EXTRAORDINARY ITEMS (in R$ millions) Line impacted in the income statement Before tax After tax Provision on judicial decision Spread Corretora Expenses 183.9 121.4 Provisions on success fees to legal advisors Expenses 47.4 33.6 Transaction with Cetip expenses¹ ; ² Expenses 7.2 4.7 Total 238.5 159.7 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. 9
Financial highlights Increase in financial revenue reflecting higher cash balance FINANCIAL RESULT (in R$ millions) FINANCIAL RESULT OF R$221.5 MILLION, +157.5% YoY Other financial revenue¹ Higher cash balance which includes R$5.5 bn in proceeds from CME Group shares sale Other financial expense² 2020 Notes payment of semiannual coupon of 5.5%³ per year 2020 Notes hedging cost: Principal: R$62.0mn (79.1% of the CDI) Coupon: R$0.8mn (hedge set up in Sep 16) ¹ Includes gains from changes in the exchange rate as well as other financial revenue. ² Includes maintenance of stand-by facilities, available but not drawn, in connection with the transaction with Cetip. ³Effective rate 6.47% per year, after withholding income tax. 10
Financial highlights (cont.) Higher cash position to fund proposed combination with Cetip CASH AND FINANCIAL INVESTMENTS (in R$ millions) 3Q16 10,718 2Q16 10,463 1Q16 5,661 4Q15 5,202 BM&FBOVESPA s cash position totaled R$8.5 bn in 3Q16 R$2.0 - R$2.5 bn to run the business R$1.0 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 4 Includes R$5.5 bn in gross proceeds from the total divestment from CME Group shares 3Q15 8,164 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$203.1 million at 3Q16 and booked as financial investments. See note 4 to the financial statements. 4 Pending regulatory approvals from CVM, Central Bank and Antitrust Authority CADE. 11
Financial highlights (cont.) Strong cash generation CASH GENERATION¹ (in R$ millions) CASH DESTINATION (in R$ millions) CASH GENERATION REACHED R$566.9 MILLION IN 3Q16, +37.1% YOY 3Q15 3Q16 CASH RETENTION OF R$310.8 MILLION TO FUND THE PROPOSED COMBINATION WITH CETIP 4 Adjusted net cash from operating activities² 513.1 672.3 Net cash from investment activities -37.7-40.6 Net cash from financing activities before distributions³ Cash generation (before distributions)¹ -61.8-64.8 413.6 566.9 Net cash from operating activities was positively impacted by higher financial revenue 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. ³ Considers the cash flow from financing activities before the payment of dividends/ioc and share buyback. 4 Pending regulatory approvals from CVM, Central Bank and Antitrust Authority CADE. 12
Business combination with Cetip¹ Timeline: where we are and next phases of the process 2016 2017 April, 8 th May, 20 th Jun, 28 th Oct, 13 th Nov, 14 th Feb, 23 th May, 24 th BVMF and Cetip s Boards approved the financial terms for the transaction Request to analyze the act of concentration was filed in CADE BVMF and Cetip s shareholders approved the transaction in the shareholders meetings CADE considered complex the concentration act of the combination We are here Review of the transaction by the regulators: Central Bank of Brazil (BACEN) Brazilian Securities Commission (CVM) The Antitrust Authority (CADE) CADE deadline (240-day) This measure allows CADE to extend the deadline for more 90 days The final deadline for CADE approvals (if extended) Counted from the day of the last regulatory approval: Cetip shares will be converted in BM&FBOVESPA shares (BVMF3) in T+5 The cash portion will be settled in up to 40 days Efforts on planning the integration² ¹ Pending regulatory approvals from CVM, Central Bank and Antitrust Authority CADE. ² The Company has dedicated efforts to plan the business combination, respecting the ground rules set by the antitrust authorities. 13
APPENDIX 14
Financial Statements Summary of balance sheet (consolidated) ASSETS (in R$ millions) LIABILITIES AND SHAREHOLDERS EQUITY (in R$ millions) 09/30/2016 12/31/2015 09/30/2016 12/31/2015 Current assets 9,067.6 8,673.8 Current liabilities 3,497.5 2,096.8 Cash and cash equivalents 546.8 440.8 Collateral for transactions 1,605.6 1,338.0 Financial investments 8,210.9 7,798.5 Others 1,891.9 758.8 Others 310.0 434.4 Non-current liabilities 5,038.3 5,859.9 Non-current assets 18,085.0 17,635.1 Foreign debt issues 1,993.7 2,384.1 Long-term receivables 2,335.9 1,961.4 Deferred Inc. Tax and Social Contrib. 2,617.1 3,272.3 Financial investments 2,162.8 1,815.6 Others 427.5 203.5 Others 173.2 145.8 Shareholders equity 18,616.8 18,352.2 Investments 29.5 30.6 Capital stock 2,540.2 2,540.2 Property and equipment 455.2 453.1 Capital reserve 14,284.7 14,300.3 Intangible assets 15,264.3 15,190.0 Others 1,782.1 1,501.6 Goodwill 14,401.6 14,401.6 Minority shareholdings 9.7 10.1 Total Assets 27,152.6 26,308.9 Liabilities and Shareholders eq. 27,152.6 26,308.9 15
Financial Statements Net income and adjusted expenses reconciliations ADJUSTED NET INCOME RECONCILIATION (in R$ millions) 3Q16 3Q15 Change Change Change 2Q16 9M16 9M15 3Q16/3Q15 3Q16/2Q16 9M16/9M15 IRFS net income* 293.5 2,012.5-85.4% (114.4) -356.5% 518.4 2,610.0-80.1% Stock grant/option (recurring net of tax) 13.9 12.8 8.6% 27.2-48.8% 57.9 37.6 53.9% Deferred tax liabilities 135.3 137.5-1.6% 135.3 0.0% 405.9 412.6-1.6% Equity in Income of Investees (net of taxes) 0.0 (37.6) - 0.0 - (19.6) (106.8) -81.7% Expenses related to Cetip s transaction (net of tax) 4.7 0.0-31.5-85.0% 36.9 0.0 - Divestment in CME Group shares (net of tax) 0.0 0.0-557.3-557.3 0.0 - IOF on proceeds from CME Group shares sale (net of tax) 0.0 0.0-10.8-10.8 0.0 - IoC Adjustments 0.0 (49.0) - 0.0-0.0 (49.0) - Discontinuity of the equity method (net of taxes) 0.0 (1,145.0) - 0.0-0.0 (1,145.0) - Results from the selling of the CME Group (net of taxes) 0.0 (474.2) - 0.0-0.0 (474.2) - Non-recurring expenses with provisions (net of tax) 155.0 0.0-0.0-155.0 0.0 - Adjusted net income 602.4 457.0 31.8% 647.7-7.0% 1,722.5 1,285.1 34.0% *Attributable to BM&FBOVESPA shareholders. ADJUSTED EXPENSES RECONCILIATION (in R$ millions) 3Q16 3Q15 Change Change Change 2Q16 9M16 9M15 3Q16/3Q15 3Q16/2Q16 9M16/9M15 Total expenses 446.1 217.8 104.8% 268.8 66.0% 917.0 637.3 43.9% Depreciation (25.1) (26.1) -3.8% (23.8) 5.8% (72.7) (84.8) -14.3% Stock grant/option (21.1) (19.4) 8.6% (41.2) -48.8% (87.7) (84.9) 3.3% Proposed business combination with Cetip¹ (0.7) 0.0 - (46.3) -98.5% (48.0) 0.0 - Planning of the business integration with Cetip² (6.5) 0.0 - (1.5) 324.4% (8.0) 0.0 - Provisions and others (237.3) (8.7) 2634.8% (9.4) 2431.8% (254.1) (23.6) 975.6% Adjusted expenses 155.5 163.6-5.0% 146.7 6.0% 446.5 443.9 0.6% ¹ Includes expenses with legal reports. auditors. appraisers. and lawyers. among other professionals engaged as advisors for the transaction. ² Includes expenses with consulting services hired to help the integration planning of the proposed combination with Cetip which is subject to regulatory approvals 16
Financial Statements Summary of the income statement (consolidated) SUMMARY OF THE INCOME STATEMENT (in R$ millions) 3Q16 3Q15 Change 3Q16/3Q15 2Q16 Change 3Q16/2Q16 9M16 9M15 Change 9M16/9M15 Net revenues 559.1 598.3-6.5% 574.5-2.7% 1,697.1 1,673.4 1.4% Expenses (446.1) (217.8) 104.8% (268.8) 66.0% (917.0) (637.3) 43.9% Operating income 113.0 380.5-70.3% 305.7-63.0% 780.2 1,036.1-24.7% Operating margin 20.2% 63.6% -4,338 bps 53.2% -3,300 bps 46.0% 61.9% -1,595 bps Financial result 221.5 86.0 157.5% (418.3) -153.0% (36.2) 219.0-116.5% IFRS net income (loss)* 293.5 2,012.5-85.4% (114.4) -356.5% 518.4 2,610.0-80.1% Adjusted expenses (155.5) (163.6) -5.0% (146.7) 6.0% (446.5) (443.9) 0.6% *Attributable to BM&FBOVESPA shareholders. 17
Contact Investor Relations Department Phone: 55 11 2565-4729 / 4418 / 4207 / 4834 / 7938 ri@bmfbovespa.com.br 18