Bolsa De Mercadorias & Futuros-BM&F SA (BOVESPA: BMEF3) informs that, in a joint initiative with the Brazilian Federation of Banks (FEBRABAN) and the Central Bank of Brazil, BM&F will present, on January 16, 2008, the main features of the project to introduce electronic trading for the spot US Dollar market to the institutions authorized to trade in the foreign exchange market.
Currently, BM&F is responsible for the registration and settlement of about 95 of the total volume of transactions in the interbank US Dollar market (averaging around USD2.5 billion a day). These transactions can be executed on the OTC market or on the BM&F trading floor, with the former accounting approximately for 85% of the total traded volume.
BM&F believes that implementing this initiative for the trading of both the spot US Dollar and the currency-based derivatives in a single environment, guaranteed by central counterparty systems managed by the same institution, will improve efficiency and facilitate the execution of arbitrage and hedge transactions by investors, thereby contributing to the further consolidation of BM&F's dominant position in these markets.
The highlights from among the main characteristics of the new BM&F electronic trading platform and the trading of the spot US Dollar through this system, are as follows:
- Direct access to the trading system by banks, with no mandatory intermediation, according to the Direct Market Access (DMA) model;
- High degree of connectivity between the electronic trading platform (utilization of the FIX protocol) and the other systems utilized by investors, thereby allowing for the development of trading strategies based on computer programs (algorithmic trading);
- Blind screen, which allows for the full anonymity of buyers and sellers when trading;
- Automatic registration of transactions in the systems of the Central Bank of Brazil and the BM&F Foreign Exchange Clearinghouse;
- Role of BM&F as a central counterparty responsible for the settlement of transactions through multilateral netting and the management of counterparty risk.
Trading of the spot US Dollar market on the new BM&F electronic platform will begin in the second quarter of 2008.