BM&FBovespa buys CETIP
After several months of negotiations, BM&FBovespa announced on April 8 that it had succeeded in reaching an agreement to buy Cetip, Brazil's central depository for fixed income securities and derivatives.
Officials at BM&FBovespa, which runs Brazil’s stock and futures markets, said the integration of the two companies will benefit market participants by consolidating their back office and treasury systems and processes, significantly reducing operating costs and risks for the entire financial system. The officials also emphasized that the deal will provide greater capital efficiency by allowing customers to clear both OTC and exchange-traded derivatives with the same central counterparty. Cetip currently offers registration for over-the-counter derivatives, and as a separate organization had the potential to offer OTC clearing in competition with BM&FBovespa.
To finance the acquisition, BM&FBovespa sold the remainder of its stake in CME Group. The 13.6 million shares, equivalent to 4% of CME's equity, were worth roughly $1.2 billion. The Brazilian exchange acquired the shares in 2007 as part of a business partnership. Although BM&FBovespa no longer has any shares in CME, CME continues to own 4% of the Brazilian exchange and holds a seat on its board of directors.
In a separate transaction, the Brazilian exchange announced the purchase of a small stake in Bolsa Mexicana de Valores, the parent company of Mexico’s main stock and derivatives exchange. BM&FBovespa officials said the investment, estimated to have cost 640 million Mexican pesos ($37 million), was part of a strategy to build a network of relationships among Latin American exchanges.
BM&FBovespa chief executive officer Edemir Pinto said last year that the exchange seeks to purchase minority stakes in bourses in Argentina, Mexico, Colombia, Chile and Peru.
