MercoPress. South Atlantic News Agency

Brazil’s Bovespa and Shanghai Stock Exchange sign link agreement

BM&FBovespa Chief Executive Officer Edemir Pinto

The Shanghai Stock Exchange and Brazil's BM&F Bovespa signed this week an agreement that could lead to closer ties between the two. Bovespa said it was looking for cross-listing across both exchanges, although this would not happen immediately.

The bourse, which is the world's fourth largest, could be facing increased competition in its domestic market. The agreement is the latest in a series of tie-ups between the world's leading stock exchanges.

Bovespa said the objective of the deal was “to initiate a common discussion about business opportunities and exchange information”.

“We are looking for growth opportunities in countries such as Japan and China and wants to make partnerships rather than acquisitions” said BM&FBovespa Chief Executive Officer Edemir Pinto, adding that “any possible future competition from another exchange won’t take away volume from the Sao Paulo bourse”.

When I see competition, I don’t stop to think about how much volume I’ll lose,” Pinto told reporters in Sao Paulo. “For someone to want to come here, it means they’ve also worked out that the market is going to grow.”

Bats Global Markets and Claritas Investments are discussing plans to build a new equities exchange in Brazil, Ken Conklin, senior vice president of business development and marketing at Bats, said February 15.

The established global exchanges see consolidation as a way to fend off increased competition from new platforms that have eaten into their trading volume.

Last week NYSE Euronext and Deutsche Boerse formally announced plans to merge a deal that would create the world's largest stock exchange operator.

Earlier this month, the London Stock Exchange and TMX Group, which operates the Toronto Stock Exchange, also agreed a merger deal.

Bovespa also announced that fourth-quarter profit rose 19% after derivatives trading increased. Net income excluding minority interests climbed to 261.5 million Real (156.6 million USD), from 220.2 million Real a year earlier. Adjusted net income was 368 million Real, while net revenue climbed 11% to 470.1 million Real.

Income from derivatives trading rose 41% from a year earlier to 175.9 million Real. Trading fees, which account for most of the exchange’s profit, declined 1.2% to 258.7 million Real. Net income from the previous quarter fell 11%.