Brazilian bourse will raise stake in CME Group

Sao Paulo: BM&FBovespa SA, the owner of Latin America's biggest bourse, plans to raise its stake in CME Group, which owns the world's largest futures market, as part of an agreement to create an electronic trading platform.

BM&FBovespa will spend about $620 million (Dh2.27 billion) to raise its stake in CME Group to 5 per cent from 1.8 per cent, the Sao Paulo-based company said in a regulatory filing on Friday. BM&FBovespa Chief Financial Officer Carlos Kawall said on Friday the company may consider selling bonds to finance the purchase.

BM&FBovespa is aiming to become the world's second-biggest exchange by market value by 2012, Chief Executive Officer Edemir Pinto told reporters in Sao Paulo on Friday. The platform for stocks, fixed income, currency and derivative contracts will help the exchange meet the increasing flow of orders resulting from the "expansion and development of Brazilian capital markets", according to the filing.

Global champions

"Today is a historic day for us and for Brazilian markets," Pinto said. The agreement with CME will help "transform Brazil's biggest companies into global champions".

Pinto said BM&FBovespa has enough cash to pay for the stake in Chicago-based CME Group. The Brazilian bourse may sell debt securities in the local or international markets to pay for the stake in order to increase its leverage, Kawall told reporters in Sao Paulo. CME Group already owns 5 per cent of BM&FBovespa, according to the filing.

BM&FBovespa declined 2.1 per cent to 12.04 reais (Dh23.75). The stock has risen 85 per cent in the past 12 months, while the benchmark Bovespa stock index has advanced 63 per cent.

"The effects of this won't be seen so much in the short term," said Aloisio Lemos, an analyst at Agora Corretora in Rio de Janeiro. "The value is much more in the structure of the partnership, with the possibility for generating new business, and the exchange gaining more status among global exchanges." CME Group controls the Chicago Mercantile Exchange, New York Mercantile Exchange, the Chicago Board of Trade and Commodity Exchange, the statement said. The platform is expected to begin operating by the start of 2011.

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