BM&F Bovespa raises CME stake; plans new e-trading platform

BM&F Bovespa raises CME stake; plans new e-trading platform

Brazil's BM&F Bovespa is increasing its stake in Chicago's CME Group to five per cent, at a cost of $620 million as part of an agreement between the two exchanges that will also see them jointly develop a multi-asset class electronic trading platform.

The pair, who already have an alliance, say they will become "global preferred strategic partners", with the Brazilian outfit paying $275.12 per share to increase its stake and put a representative on the CME Group board.

CME Group, which already holds a stake of about five per cent in BM&F Bovespa, will also repurchase up to 2.35 million shares of its common stock to offset the dilution from the issuance of shares to its partner.

In addition, the two will build an electronic trading platform that will be deployed by BM&F Bovespa for use in its cash equities and derivatives markets. Slated to launch early next year, it will be based on technology derived from the CME Globex trading system and able to process transactions in less than one millisecond.

BM&F Bovespa says it expects to spend around $175 million on the related underlying technology and intellectual rights for the system over the next 10 years.

The agreement will also see both given the opportunity to license the platform to other exchanges internationally and they will work together on strategic investments and commercial opportunities.

Edemir Pinto, CEO, BM&F Bovespa, says: "I have no doubt that, after this partnership and based on technology derived from the CME Globex trading system, as well as on new technology to be jointly created by the parties, this new BM&F Bovespa technological standard will produce a system to meet the high performance requirements of the world's most demanding traders in multiple products."

Craig Donohue, CEO, CME Group, adds: "Our proposed transaction with BM&F Bovespa will further expand the breadth of our technology and distribution capabilities into the global cash equities and options markets, while strengthening our strategic partnership and enhance our mutual opportunities to invest in and partner with the world's leading multi-asset class exchanges."

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