Brazilian exchange operator not in talks with CME

By Reuters
Posted Feb. 18 at 9:32 a.m.

Brazilian exchange operator BM&FBovespa is not in merger talks with Chicago-based exchange operator CME Group but expects their partnership to expand in the near future, BM&FBovespa Chief Executive Edemir Pinto said on Friday.

His remarks followed a frenzied week of merger announcements by exchanges around the world as bourses move to strengthen ties in the face of tough competition at home.

Pinto told analysts at a seminar in Sao Paulo, where the Brazilian exchange is based, that CME Group. and BM&FBovespa are focused on the delivery of joint trading platforms between June 2011 and the second half of 2012.

“The partnership with CME is strengthening and has room to get even stronger,” Pinto said. “But answering objectively to any questions about this, no, there are no current talks leading to a merger.”

CME operates the Chicago Mercantile Exchange and the Chicago Board of Trade.

BM&FBovespa said on Thursday that it would sign an agreement with China’s state-owned Shanghai Stock Exchange that could open the door for future partnerships between two of the world’s largest exchange operators. The deal is to be signed on Monday.

U.S. exchange BATS Global Markets said on Tuesday that it had teamed up with Brazilian fund manager Claritas to explore setting up a new stock exchange in Brazil with clearing and settlement services.

Pinto, who told Reuters on Monday that BM&FBovespa is on the lookout for expansion opportunities in China and India, stressed on Friday that the exchange is not interested in making acquisitions in South America.

Instead, BM&FBovespa wants partnerships that will help it boost liquidity, he said, without elaborating. He added that BM&FBovespa is not interested in acquiring Brazil’s largest clearing house, CETIP (CTIP3.SA).

Pinto also said recent government efforts in Brazil to curb excess short-term investment inflows — such as tax increases on trading — are hampering the performance of BM&FBovespa’s share price.

“The company has this sword over our head, all this regulatory risk — we know this issue is being watched closely by foreign investors,” Pinto said when asked by an investor about BM&FBovespa’s stock price.

At some point, that could also hurt efforts to open the financial exchange and clearing markets, he said. “Everyone is looking at this regulatory risk,” he added.

The exchange is prepared to face increased competition in Brazil from BATS, Pinto said.

“It is in our DNA, competing. We welcome competition because it means that more global investors are watching Brazil seriously,” he said.

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