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8/13/2019 BVMF Presentation - February 2014
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BM&FBOVESPA
Investor Relations Department
February 2014
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Forward Looking Statements
This presentation may contain certain statements that express the managements expectations, beliefs andassumptions about future events or results. Such statements are not historical fact, being based on currently
available competitive, financial and economic data, and on current projections about the industriesBM&FBOVESPA works in.The verbs anticipate, believe, estimate, expect, forecast, plan, predict, project, target and othersimilar verbs are intended to identify these forward-looking statements, which involve risks and uncertainties thatcould cause actual results to differ materially from those projected in this presentation and do not guarantee anyfuture BM&FBOVESPA performance.
The factors that might affect performance include, but are not limited to: (i) market acceptance of BM&FBOVESPAservices; (ii) volatility related to (a) the Brazilian economy and securities markets and (b) the highly-competitiveindustries BM&FBOVESPA operates in; (iii) changes in (a) domestic and foreign legislation and taxation and (b)government policies related to the financial and securities markets; (iv) increasing competition from new entrantsto the Brazilian markets; (v) ability to keep up with rapid changes in technological environment, including theimplementation of enhanced functionality demanded by BM&FBOVESPA customers; (vi) ability to maintain anongoing process for introducing competitive new products and services, while maintaining the competitiveness ofexisting ones; (vii) ability to attract new customers in domestic and foreign jurisdictions; (viii) ability to expand the
offer of BM&FBOVESPA products in foreign jurisdictions.All forward-looking statements in this presentation are based on information and data available as of the datethey were made, and BM&FBOVESPA undertakes no obligation to update them in light of new information orfuture development.This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shallthere be any sale of securities where such offer or sale would be unlawful prior to registration or qualificationunder the securities law. No offering shall be made except by means of a prospectus meeting the requirements ofthe Brazilian Securities Commission CVM Instruction 400 of 2003, as amended.
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HISTORY, BUSINESS MODEL AND CORPORATE GOVERNANCE
BRAZILIAN MARKET OPPORTUNITIES
MAIN GROWTH INITIATIVES
OPERATIONAL PERFORMANCE
FINANCIAL HIGHLIGHTS
APPENDIX (includes results for 3Q13)
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HISTORY, BUSINESS MODEL AND CORPORATE
GOVERNANCESafety, resilience and transparency
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1890:Foundation of Bolsa
Livre (BOVESPA'spredecessor)
1986:Start ofBM&F
activities
Aug 2007:BOVESPA Hld
demutualization
Sep 2007: BM&Fdemutualization
Oct 2007:BOVESPA Hld
IPO (BOVH3)
Nov 2007:BM&F IPO(BMEF3)
May 2008:integration between BM&F and
BOVESPA Hld and creation ofBM&FBOVESPA (BVMF3)
1967:BOVESPAs
Mutualization
MARKET CAPITALIZATION(US$ billion) AND OPERATING MARGIN(%)
12M to Jun. 28, 2012; 12M to Mar 31, 2012 (Mar 31, 2013 for JPX); 9M to Sep. 30, 2012. Source: Bloomberg (Jan 31 ,2014).
History of BM&FBOVESPAImportant global exchange
25.2 24.1 18.2 14.9 8.2 7.9 6.8 6.4 6.0 5.7 4.23.3 2.5
58% 61%71%
57% 54%63%
28%
41%
72%
56% 56%67%
35%
CME ICE-NYSE HKEx DeutscheBoerse
LSE BVMF JPX Nasdaq ASX SGX Moscow BME TM
Oper. Margin (2012)Diversif ied and integra ted Integrated (Derivatives) Diversified but not in tegrated
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DTCC
BRAZIL(Internalization of orders is forbidden )
US(Internalization of orders is allowed)
Post tradeCCPSSSCSD
Trading
BrokersA and B
Investors Investors
Brokers A and B
Investors Investors
BrokerA
BrokerB
Model 100% vertical: clearing, settlementand central depository at the final beneficial
owner levelBrokers settle positions and control their
clients portfolios through BM&FBOVESPAs
infrastructure (impact on post-trade fees)
Clearing, settlement and custody occur at thebrokerage houses
Each prime broker has its own structure tocontrol its customers portfolios and settle
positions (impact on the prime brokers costs)
Trading Venues
Vertical model as a differentialBM&FBOVESPA present at all post-trade stages
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Brokeragehouses &investors
Trading
Post-Trade
Regulations prohibit internalization of orders, dark poolsand ATS/MTFs and simultaneous exchange/OTC equities
trading
Settlement and clearing of equities trading must be donethrough a CCP
Settlement and clearing at the final beneficial owner level
make the Brazilian market safer and more resilientUnder the prevailing regulations, potential competitorsmust provide an integrated solution with the same statusregarding rules and transparency
In Brazil the final investor pays the exchange: compared toother markets we have a competitive all-in-cost, asBM&FBOVESPA provides more services than otherexchanges
Naked access is not allowed
Naked short selling is not possible
Brazilian market regulatory frameworkResilience and safety as priorities
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EXECUTIVE OFFICERSBOARD OF DIRECTORS
COMMITTEES
Edemir PintoCEO
Luis FurtadoCIO
Ccero VieiraCOO
Daniel SonderCFO
Eduardo GuardiaChief Product / IRO
Audit Committee
Risk Committee
Nominations and Corporate Governance Committee
Compensation Committee
Corporate GovernanceMultidisciplinary knowledge in conducting business
Charles CareyIndependent Director, Director of CME Group
Jos Roberto Mendona de BarrosIndependent Director, economist and professor
Pedro Parente (Chairman)Independent Director, CEO of Bunge Brasil
Marcelo Trindade (Vice Chairman)Independent Director, lawyer
Claudio HaddadIndependent Director, engineer and professor
Andr EstevesNon Executive Director, CEO of BTG Pactual
Alfredo Antnio Lima de MenezesNon Executive Director, Executive Officer of Bradesco
Luiz Fernando FigueiredoIndependent Director, Co-Founder of Mau Investments
Luiz Nelson Guedes De CarvalhoIndependent Director, professor
Candido BracherNon Executive Director, CEO of Ita BBA
Jos Berenguer Neto
Non Executive Director, CEO of JP Morgan Brazil
Advisory Committee For The Securities Intermediation Industry
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GM of Apr. 15, 2013
Number of individual shareholders 55,108 Number of institutional shareholders 3,580
Total number of shareholders 58,688
Free float (ON) 1,929,265,010 (97.4%)
Ownership structureWidely-held shareholder base
8.4%6.6%
5.1%
5.7%
74.2%
Funds managed by OppenheimerFunds, Inc.
Funds managed by Vontobel Asset Management Inc.
CMEG Brasil I Participaes Ltda.
Treasury stock
Other
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BM&FBOVESPAs Sustainability PolicyApproved by the Board of Director
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BRAZILIAN MARKET OPPORTUNITIESMain growth drivers
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Opportunities in the Brazilian marketBM&FBOVESPA is ready to capture future growth
Growth opportunities in the Brazilian equities
and derivatives markets
EQUITIES MARKETPortfolio diversification : diversification of institutional investorsportfolios with a higher participation of equities
Retail investors : small number of retail investors and growth of themiddle class
Listed companies : low number of listed companies, while importantsectors are not adequately represented on the exchange
DERIVATIVES MARKETGrowth of credit and fixed-rate government debt : higher demand forhedging from financial institutions and institutional investors
Growth of foreign trade : higher demand for hedging through FXcontractsEquities market development : growth in demand for index-basedcontractsOTC derivatives: capital requirements (Basel) should benefit OTCtransactions through a CCP
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168 216256 295
352436 419
492 538574
642630
28% 29%30% 31%
33% 37% 28%33% 33%
30% 29% 29%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Fixed Income and Others
Equity
Capital MarketGreat opportunities in the equities and derivatives segments
Funds AUM evolution (in BRL billion). Global average of 40% for
equities
LISTED COMPANIES
Source : BM&FBOVESPA, ANBIMA , WFE (Dec-12) and ABRAPP. *Updated to Jun/13
INVESTMENT FUNDSNUMBER OF CUSTODY ACCOUNTS(thousand)
PENSION FUNDS
Number of retail investors represents only 0.3% of the
population (lower than global average)
Lower number of listed companies in comparison withother countries
Participation of equities in the portfolio of pension funds
6,856
4,9164,041 3,972
3,481 3,2002,767
2,056 1,784
364
India USA China/HK Canada Japan Spain UK Australia Korea Brazil
657861 899
1,0701,301
1,5131,375
1,703 1,7871,925
2,189 2,344
11%10% 11%
11%15%
22% 14%18% 18%
15%14% 13%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2Q13
Equities
Fixed Income
*
Jan'05128.6
Jan'14614.2
J a n - 0
5
J u l - 0 5
J a n - 0
6
J u l - 0 6
J a n - 0
7
J u l - 0 7
J a n - 0
8
J u l - 0 8
J a n - 0
9
J u l - 0 9
J a n - 1
0
J u l - 1 0
J a n - 1
1
J u l - 1 1
J a n - 1
2
J u l - 1 2
J a n - 1
3
J u l - 1 3
J a n - 1
4
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MAIN GROWTH INITIATIVES
Investments, new products and focus on thecustomer
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Update of strategic projects
*IPN/CORE implementation requires the authorization of the regulators.
PUMA Trading System - Multi-Asset Trading PlatformA high-performance, high-speed and high-capacity electronic trading platformRTT (Round Trip Time ) of less than one millisecondDerivatives and FX module: implemented in Oct/11Equities module: implemented in Apr/13
Clearinghouses integrationThe integration of BM&FBOVESPAs clearinghouses will enhance the Companys competitive position Development of the new risk architecture (CloseOut Risk Evaluation - CORE)* will increase allocationefficiency for clientsTests for derivatives started in Jul/13 , with conclusion scheduled for Mar/14
iBalco OTC Registration PlatformRegistration of OTC derivatives and fixed income securitiesDeployment in Jul/13 (for FX non-deliverable forward no central counterparty)
Pricing Policy Changes for Cash EquitiesFirst phase (Apr/13): reduction from 0.7 bps to 0.5 bps in trading fees and a realignment between thetrading fees and post-trade fees of institutional investors and day traders
Second phase (Dec/13): increased discounts per tier of volume for day traders and a progressive reductionof trading fees per tier of global volume
Initiatives for Small and Medium Enterprises (SMEs)Establishment of the Technical Committee for Smaller Offerings composed of private sector andgovernment agenciesDeveloping proposals to facilitate capital raising through issuance of shares (incentives to SMEs, investorsand intermediaries)
Project was presented to the Ministry of Finance in Jul/13
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BM&FBOVESPA IT DevelopmentsBuilding a world-class IT platform
Increasing competitive differentiation for derivative andcash equity markets
LATENCY BM&F Segment (derivatives) BOVESPA Segment (equities)
70
25 2010-15
~1 ~1
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Clearinghouses Integration Further differentiation in BM&FBOVESPA post-trade
Equities and corporatedebt (BRL 76.5 bn*)Equities, ETFs andcorporate fixed incomecash market
Equity and indicesderivatives (options andforward)
Securities lending
Derivatives(BRL 119.3 bn*)
Financial andcommodities derivatives(futures, options andforwards)
OTC derivatives
FX(BRL 4.9 bn*)
FX spot market
(US$ vs. BRL )
Securities(BRL 0.8 bn*)
Cash market andforward market forgovernment bonds
INTEGRATED CLEARINGHOUSE**=
Capital efficiency
* Aggregate of pledged collateral at our clearinghouses totaled BRL 201.4 billion in Sep 30, 2013. **IPN/CORE implementation requires the authorization of the regulators.
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Product and Market DevelopmentListed products, OTC and fixed income
LISTED PRODUCTS
iBALCO PROJECT
ETFs (exchange traded funds): Equities, fixedincome, international and real estate fundsMarket maker: cash equities, options,commodities, futures
Ibovespa: methodology reviewSMEs (small and medium enterprises):BOVESPA Mais
Incentive programs: retail investors
Selic derivatives: Selic futures (OC1), FXspread (DCO), FX swap (SCS)Options on single stocks: New fee policy forHFTs/day traders
Futures Contracts: EthanolBDRs:To Exchange from OTC
Securities Lending: BTC platform
Derivatives Registration:NDFs:deployed in Jul/13
Flexible options on single stocks
COE:Structured NotesSwaps
Fixed Income Registration:LCAs (Agribusiness Credit Bill):improvements
LCIs (Real Estate Credit Bill) and CDBs (timedeposits): adaptation of the platform (pendingregulatory approval)
Corporate bonds and LFs (financial bills): changes tolisting rules and procedures
Trade of Fixed Income:Trading platform for government and corporatebonds and changes to the fee policy
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2.9 3.96.1
9.0 9.8
2009 2010 2011 2012 2013
28.548.7
115.999.3
66.7
2010 2011 2012 2013 2014*
12.720.5 30.2
31.933.1
2010 2011 2012 2013 2014*
48.8 71.8
ADTV beforeMarket Maker
ADTV afterMarket Maker*
Securities Lending Real Estate Funds (FIIs)Options with Market Maker (Open Interest - average for the period - in BRL billion)
Initiatives to develop and prompt higher volume in certain productsPerformance shows that the initiatives are being well received by the market
ETFs Brazilian Treasury Direct - Tesouro Direto Agribusiness Credit Bills
(ADTV in BRL million)
+47.2%
(ADTV in BRL million)
(ADTV in BRL million) (Custody in BRL billion)
High growth productsGrowing sophistication of market participants
BM&FBOVESPA has a74% marketshare of the registered AUM (Sep-13).
CAGR(09-13):
+141.5%
CAGR (10-14):
+12.7%
CAGR (10-14):
+23.7%
CAGR (09-13):
+35.5%
*Updated to Dec. 30, 2013. **Updated to Dec. 31, 2013
(AUM in BRL billion)
0.9 1.5 3.714.6
31.7
2009 2010 2011 2012 2013*
3.6 20.0
60.3
2011 2012 2013
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OPERATIONAL PERFORMANCERecords in 2013
BOVESPA S
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30.8%
29.4%
36.8% 37.6%38.7%42.3%
56.4%
63.2%66.6%
63.8%
64.2%70.0%
72.9%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
BOVESPA SegmentOperational highlights
*Updated to Jan 31, 2013. **Ratio of cash market trading volume to the market cap of the exchange.
AVERAGE DAILY TRADING VOLUME ADTV(BRL billion)*
AVERAGE ANNUAL MARKET CAP (BRL trillion) TURNOVER VELOCITY**(12 months average*)
*
1.2 1.6 2.4
4.9 5.5 5.36.5 6.5 7.3 7.4 6.2 7.3
7.8 7.4 8.2 7.78.9
6.08.5 7.2 6.6 7.0 6.2 6.2
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14
0.720.94
1.31
1.98 2.031.83
2.33 2.37 2.41 2.41 2.29
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*
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BM&F S
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BM&F SegmentOperational highlights
AVERAGE DAILY TRADED VOLUME ADV(thousands of contracts)
REVENUE PER CONTRACT - RPC(BRL)
*Updated to Jan 31, 2014.
422 501 711988 789 843
1,684 1,797 1,926 1,857 1,851 1,5612,630 2,235 2,694 2,944 1,977
1,519 1,713 1,239 1,209 1,457 1,1791,851
110 168266
473 535 447
541 496494 494 500
474
494491
468507
635
435541
502 420481
497
500
86 7468
112 88 80
89 123143 114 73
84
126100
145105
183
99146
90 10275
106
73
187 109124
167162 150
191 285336 383 428
290
341341
352424
495
389434
351 385405
392
428
805 8521,167
1,740 1,573 1,521
2,505 2,7012,899 2,848 2,852
2,410
3,5913,166
3,6583,980
3,290
2,4432,835
2,182 2,116 2,418 2,174
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14
BRL Int. Rate (Thousands) FX (Thousands ) Index (Thousands) Others (Thous ands)
2,852
2006 2007 2008 2009 2010 2011 2012 2013 2014* J-13 F-13 M-13 A-13 M-13 J-13 J-13 A-13 S-13 O-13 N-13 D-13 J-14
Interest rates in BRL 0,906 0,950 1,141 0,979 0,889 0,918 1,004 1,046 1,049 1,037 1,013 1,037 0,945 0,843 1,099 1,067 1,112 1,222 1,203 1,115 1,266 1,049FX rates 2,244 1,859 2,065 2,161 1,928 1,894 2,205 2,535 2,629 2,453 2,305 2,273 2,292 2,347 2,590 2,691 2,731 2,720 2,624 2,611 2,832 2,629Stock Indices 1,419 1,501 2,145 1,620 1,564 1,614 1,524 1,761 1,695 1,981 1,974 1,413 1,846 1,408 1,867 1,590 1,938 1,656 1,816 1,664 2,122 1,695Inte rest rate s i n USD 1,094 0,965 1,283 1,357 1,142 0,941 1,015 1,231 1,325 1,152 1,140 1,121 1,093 0,928 1,280 1,370 1,309 1,412 1,246 1,359 1,340 1,325Commodities 4,749 3,195 3,587 2,307 2,168 2,029 2,239 2,534 2,401 3,360 2,415 2,382 2,349 2,550 2,595 2,632 2,385 2,766 2,613 2,430 2,760 2,401Mini contracts 0,034 0,054 0,162 0,176 0,128 0,129 0,116 0,119 0,122 0,112 0,122 0,119 0,118 0,116 0,119 0,114 0,117 0,126 0,120 0,120 0,128 0,122OTC 1,571 2,111 2,355 1,655 1,610 1,635 1,769 1,409 1,077 2,475 2,868 1,642 1,460 1,428 1,418 1,839 1,160 1,477 1,118 1,266 0,978 1,077
Total RPC 1,247 1,224 1,527 1,365 1,134 1,106 1,191 1,282 1,294 1,303 1,191 1,190 1,114 1,020 1,361 1,320 1,397 1,511 1,418 1,367 1,575 1,294
I t ti i ti i l
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Investor participation in volumesEquities and derivatives segments
BM&F SEGMENT (DERIVATIVES)
BOVESPA SEGMENT (EQUITIES)
25% 25% 23% 27% 31% 26% 21% 18% 15% 13% 17% 16% 18% 15% 16% 13% 16% 14% 15% 15% 15% 13% 13%
27% 27% 30% 27% 26% 33% 33% 32% 33% 33% 35% 33% 32% 32% 32% 33% 32% 34% 32% 33% 32% 32% 33%
33% 36% 35% 35% 34% 30% 35% 40% 44% 47% 40% 41% 43% 42% 44% 44% 45% 42% 46% 44% 47% 46% 47%
12% 10% 10% 8% 7% 8% 9% 8% 7% 5% 8% 9% 7% 9% 7% 8% 6% 9% 6% 6% 5% 7% 5%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Jan-13 Feb-13 Mar-13 Apr-13 May-13
Jun-13 Jul-13 Aug-13Sep-13 Oct-13 Nov-13Dec-13 Jan-14
Individuals Institutional Investors Foreign Investors Financial Institutions Companies Others
56% 51% 49% 48% 45% 42% 38% 34% 32% 32% 33% 29% 31% 32% 37% 32% 34% 30% 32% 33% 34% 30% 32%
12% 15% 17% 19% 20% 22% 23% 25% 25% 29% 23% 25% 26% 26%26% 25% 23% 25% 26% 25% 25% 28% 29%
24% 25% 23% 23% 24% 30% 33% 34%36%
33%38% 41%
38% 37% 32%36% 35% 37%
33%34%
34%35%
33%
7% 7% 9% 8% 8% 4% 4% 5% 5% 5% 4% 3% 4% 4% 4% 5% 6% 6% 6% 7% 5% 5% 5%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Jan-13 Feb-13 Mar-13
Apr-13 May-13
Jun-13 Jul-13 Aug-13Sep-13 Oct-13Nov-13Dec-13Jan-14
Individuals Institutional Investors Foreign Investors Financial Institutions Companies Central Bank
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FINANCIAL HIGHLIGHTSReduction in expenses. Return to shareholders
I St t t
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Income StatementHistory
SUMMARY OF INCOME STATEMENT (CONSOLIDATED)
(in BRL thousand) 2009 2010 2011 2012
Net revenue 1,510,569 1,898,742 1,904,684 2,064,750
Expenses (569,832) (633,504) (816,664) (763,080) Adjusted expenses (446,677) (543,881) (584,521) (563,487)
Operating income 940,737 1,265,238 1,088,020 1,301,670Operating margin 62.3% 66.6% 57.1% 63.0%
Equity method result - 38,238 219,461 149,270
Financial result 245,837 289,039 280,729 208,851
Income before taxation of profit 1,186,574 1,592,515 1,588,210 1,659,791
Income tax and social contribution (304,505) (448,029) (539,681) (585,535) Net income* 881,050 1,144,561 1,047,999 1,074,290Adjusted net income 1,223,761 1,586,374 1,545,627 1,612,136
Adjusted EPS (BRL ) 0.6104 0.7929 0.7932 0.8351
*Attributable to shareholders of BM&FBOVESPA.
R d E b kd
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REVENUE BREAKDOWN (3Q13)
Gross Revenue:BRL 596.8MM
Revenue and Expense breakdownsDiversified revenue sources as a differential, costs under control
EXPENSE BREAKDOWN (3Q13)
Expense:BRL 194.1MM
Adjusted Opex* Budget
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Adjusted expenses increase below inflation Focus on expenses control offset most of the inflationary adjustments over the past years
Considers the mid-point of 2013 and 2014 budgets; IPCA in 2014 based on market expectations released by the Central Bank in Dec. 13, 2013; Considers the mid-point of 2014 budget.
2013 budget reaffirmed
2013e vs 2012: 1.2%
IPCA 2013e: 5.70%
2014e vs. 2013e: 6.1%IPCA 2014e: 5.95%
CAGR 2010-14e: 2.7% IPCA 2010-14e: 6.0%
Adjusted Opex* BudgetFocus on cost control
* Adjusted to Company s depreciation, stock options plan, tax on dividends from the CME Group and provisions.
Opex- millions R$
Capex Budget
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Review of the 2014 Capex budget Impacted by some projects that were revisited and FX rate
2013 budget reaffirmed
Review of 2014 budget: to R$230 260 million from R$170 200
million FX rate exposure of ~25% Update of the clearinghouses
integration project Deepening initiatives (securities
lending, market makers, pre-trade risk
controls, among others)
Capex is expected to decline from2015 2015e: R$190 220 million
Capex BudgetInvestments phase
Capex- millions R$
Growth Path
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(in BRL million)
(in BRL)
GROWTH IN ADJUSTED EARNINGS PER SHARE
GROWTH IN REVENUES AND RESULTS
Growth PathGrowth in business and results
Financial Highlights
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705 1,145 912 1,07475
435 606 16780
1,579 1,5181,091
2009 2010 2011 2012
Total payout Buyback
Financial HighlightsFocus on cash generation and total shareholder return
HISTORY OF PROCEEDS
SHARE BUYBACK: MAXIMIZING RETURN(in BRL millon)
(in BRL million)
*Dividend Yield is the result of the sum of earnings per share distributed during the year divided by the average share price during the year. ROIC: Return on Invested Capital.
1,612 Adj. Netincome1,5461,5861,224
1,074 Net income1,0481,145881
432841 762 984
274
304 15090705
1,145912
1,0743.4%4.5% 4.5%
4.8%80%
100%87%
100%
2009 2010 2011 2012
Dividends Interest on capital Dividend Yield* Payout ratio (%)
8.9% ROIC8.4%9.4%8.3%
Financial Soundness
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Sound financial position - an important factor for the Company, given itsrole as CCP, guaranteeing the settlement of trades executed by global
and Brazilian investors
Standard & Poor sBBB+ (counterparty credit rating)A-2 (issuer)
Moody sA3 (global scale issuer)A3 (Brazilian local currency issuer)Baa1 (global notes)
R$ million Dec/10 Dec/11 Dec/12 Sep/13
Available funds 1,677 1,582 1,964 1,960
Indebtedness 1,043 1,172 1,279 1,375
R$ million
CASH POSITIONSOUND FINANCIAL POSITION
*Includes collateral pledged by participants in the fo rm of cash, receivables and rights in securities under custody, as well as payouts still undisbursed.**Includes third party collateral and restricted funds at BM&FBOVESPA Settlement Bank (Banco BM&FBOVESPA).
Financial SoundnessHigh liquidity and low indebtedness
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APPENDIX
Financial Highlights
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Different earnings impact the P/E calculation and distort comparisons and market consensus The reported adjusted net income reflects better the companys cash generation
1 Excludes the investment in associate (CME Group) accounted under the equity-method. 2 Simulates the Interest on Capital amount that would be approved if there was no goodwill taxbenefit; 3 Stock at R$13.79 (March 12 th , 2013).
EPS 2012 P/E3
Estimated GAAP EPS (A) 0.56 24.8Earnings without goodwill = (A) x :1,142 0.64 21.7
Stock price discounted by goodwill NPV(R$1.00 per share) / Earnings without
goodwill0.64 20.1
Adjusted Earnings 0.84 16.5
15-20% impact on P/E multipleDifference between GAAP EPS and
the EPS adjusted to non existence ofgoodwill simulation
GAAP Book in 2012 Current Simulation withoutgoodwillR$ millionsEBT 1,511 1,511Deferred Tax 539 -Other taxes /credits (14) -Total taxes 525 282GAAP Net income 1,074 1,228 : 14.2%
Tax Book in 2012Current Simulationwithout goodwillR$ millions
EBT 1,511 1,511(-) Goodwill amortization 1,586 -(-) Interest on capital 90 680 (2) (=) Taxable earnings (165) 831Tax (34%) (56) 282
Since 2009, the goodwill tax benefit has been recognized as deferred liability (being cashneutral), reducing the GAAP earnings
Financial HighlightsP/E analysis
BOVESPA Segment
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PUBLIC OFFERINGS(BRL billion)
PIPELINE: OFFERINGS ANNOUNCED SO FAR TO THE MARKET
Updated to Jan. 31, 2013.
BOVESPA SegmentRaising Capital
There are 2 offerings in the pipelineIPOs (1): Ouro Verde Locao e Servio;
Follow-ons (1): Fras-le;
Additionally, there are 11 Real Estate Funds filed with CVM: estimated value of R$ 2.3 billion
* Excludes the portion acquired by the Brazilian government in the Petrobras offering, via the transfer of rights in barrels (BRL 74.8 billion).
4.3 8.5 15.1 14.526.8 22.2
63.2
10.8 9.3 6.14.5 5.415.4
55.67.5 23.8
11.2
7.2 3.917.38.8
13.9
30.4
70.1
34.346.0
74.4
18.0 13.223.4
2004 2005 2006 2007 2008 2009 2010* 2011 2012 2013
Follow-On
IPO
BOVESPA Segment
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BOVESPA SegmentForeign investment flow
MONTHLY NET FLOW OF FOREGIN INVESTMENTS(in BRL billon)
Includes public offering (primary market) and regular trades (secondary market).
*Updated to Jan 31, 2013.
0.4
1.7
(1.3)
1.8
3.4
1.9 2.2
(0.4)(0.2)
0.8 1.0
(2.4)
7.2
(1.1)(1.3)
2.9
(2.3)
(0.3)
0.61.1
(4.2)
(1.2)
0.7
4.9 4.9
2.61.6
7.6
(1.2)
(3.8)
0.1 0.3
4.2
1.60.5
1.3
(0.9)
BOVESPA Segment
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177%
126% 121%109%
100%
136%
67%75%
87%72%
129%
100%
39%
174%
137%158%
119%107%
129%
75% 76%96%
72%
138%
80%
44%
129%
110% 109% 104%89% 87%
60% 57% 55% 50% 49% 46%35%
151%
111% 117% 119%105%
85%
62%70% 69%
55%
124%
44% 45%
Cingapura Canad Chile EUA Coria Austrlia Japo Frana ndia Brasil Inglaterra China Mxico
2009 2010 2011 2012
11.2%
14.3%
2.2%
5.1%
20.4%
5.4%0.4%
5.5%
8.8%
26.8%
Oil, Gas and Biofuels Basic Materials Capital Goods and Services Construction and TransportationConsumer Non Cyclical Consumer Cyclical Information Technology TelecommunicationsPublic Utilities Financial
15.7%
21.6%
2.5%3.6%
8.6%
2.6%0.3%
11.1%
11.5%
22.4%
BOVESPA SegmentPotencial to increase the number of listed companies
MARKET CAPITALIZATION TO GDP(%)*
MARKET CAPITALIZATION BY ECONOMIC SECTOR * Source: World Bank
Dec05 Dec12
Hong Kong : 438% 481% 365% 421%
l k
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CLEARINGHOUSES ACTIVITIES
Law 10.214 of Mar. 27, 2001Clearinghouses considered systemically important bythe BCB should ensure settlement (i.e., act as CCPs)
BCB Resolution 2.882 of Aug. 30, 2001Clearinghouses shall guarantee, at least, settlementof the highest net amount owed
Access criteria must be public and allow wideparticipation
Circular BCB 3.057 of Aug. 31, 2001Rules, manuals and safeguard mechanisms must beapproved by BCB
Maintenance of a secondary data center andcontingency procedures
Supervision by BCB
CVM Instruction 441 of Nov. 10, 2006Securities lending with guaranteed settlement - finalbeneficiary model
STOCK EXCHANGE ACTIVITY
CVM Instruction 461 of Oct. 23, 2007
Regulates the security markets anddecides on the formation, organization,operation and dissolution of stockexchanges, futures and commoditiesexchanges and OTC markets
Establishes the organization andminimal corporate governancestructure of organized marketmanagement bodies
Establishes self-regulation activities ofthe in the organized marketmanagement bodies
Regulatory Framework
BM&FBOVESPA Market Supervision (BSM)
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Audit Marketsupervision
Analysisand
strategyLegal dept.
Self regulation
Officer
Supervision Board(12 members*)
StrategicCommittee
Atribuies da BSM estabelecidas naInstruo CVM 461/2007:
Monitor and supervise transactions inthe organized marketsDetermine deficient compliance withthe rules and normsMonitor the activities of the StockExchangeInitiate and prosecute disciplinaryadministrative legal proceedings
Apply penalities
Main activities of BSM Organizational chart
Monitor 100% of the participants transactionsAssess 100% of intermediaries
EnforcementEducation
BSM duties established in CVM Instruction461/2007
BSM is is a not-for-profit association organized as a self-regulatory and market surveillanceorganization, responsible for regulatory and oversight activities relative to the markets we operate.
* 9 independent
BM&FBOVESPA Market Supervision (BSM)Self-Regulation Entity
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RESULTS FOR 3Q13
3Q13 vs. 3Q12 Highlights
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Total revenue: R$596.8 million, +2.7%
BOVESPA seg.: R$257.1 million, -2.4%BM&F seg.: R$228.6 million, +4.3%
Other revenue: R$111.0 million, +12.5%
Net revenue: R$535.4 million, +2.6%
Adjusted expenses : R$150.2 million, +10.4%
Operating income: R$341.3 million, -1.6%
Adjusted net income : R$403.7 million, +0.8%
Adjusted EPS: R$0.211, +1.7%
Dividends: payment of R$225.3 million in 3Q13, R$0.118per share (80% of GAAP net income)
EBITDA: R$417.1 million, +2.2% and margin of 77.9%(according to CVM Rule 527/12 that does not exclude equity methodaccounting).
BOVESPA segment:
ADTV: R$7.2 billion, +0.8%Margin: 5.361 bps, -6.4%
BM&F segment: ADV: 2.5 million contracts, -7.5%
RPC: R$1.404, +10.6%High growth products and market segment:
Securities Lending: +26.0% average of open interestLCAs (agribusiness credit bills): assets registered+190.6% (R$73.8 billion in Sep/13)
HFTs: volumes increased 32.8% in the Bovespa Segmentand 19.6% in the BM&F segment
MAIN PROJECTS AND UPDATES
3Q13 vs. 3Q12 HighlightsSolid results despite the challenging environment
FINANCIAL HIGHLIGHTS OPERATIONAL HIGHLIGHTS
1Expenses adjusted to Companys depreciation, stock options plan, tax on dividends from the CMEGroup and provisions.2Net income adjusted by: i) the e ffect of deferred liability recognition in connection with temporary
differences from amortization of goodwill for tax purposes; ii) the impact of the stock options plan;iii) investment in affiliates (CME Group) accounted for under the equity method, net of taxes; andiv) taxes paid overseas to be compensated.
Ibovespa: new methodology announced in Sept/13Changes in options fee policy: volume discounts for all daytrade transactions in the options on single stock market, inline with the change announced for cash equity in Mar/13Fixed income fee policy: changes regarding new issuancesanalysis, custody, account maintenance and tradingSMEs:proposals for developing the access market
BOVESPA Segment Performance
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3Q13 vs. 3Q12:
ADTV: R$7.2 bn (+0.8%):Increased turnover velocity, which reached 73.7%
32.8% increase in HFTs volumes
2.2% decrease of average market capitalization
Margin: 5.361 bps vs. 5.728 (-6.4%):
Lower fees from options on single stocks, reflectinghigher volumes of market makers
Higher participation of HFTs in the overall ADTV
AVERAGE DAILY TRADING VALUE (ADTV) AND TRADING MARGIN
BOVESPA Segment PerformanceFlat ADTV despite the challenging environment
AVERAGE MARKET CAP. AND TURNOVER VELOCIT
7.2 7.0 7.5 8.3 7.2
5.728 5.573 5.706 5.314 5.361
3Q12 4Q12 1Q13 2Q13 3Q13
ADTV (R$ billions) Margin (bps)
TRADING MARGIN (in basis point - bps)
Market 3Q13 3Q12Cash market 4.989 5.308Derivatives on single stocks 13.007 13.788
Options Market 13.010 14.091Forward Market 12.998 12.999
Total BOVESPA 5.361 5.728
BM&F Segment Performance
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3Q13 vs. 3Q12:
ADV: 2.5 million contracts (-7.5%):-15.4% ADV of Brazilian Real interest rate contracts,
+8.8% ADV of FX contracts and +22.3% ADV of mini-sized contracts
RPC: +10.6% (mix effect and FX rate appreciation):Brazilian Real interest rate: lower participation inoverall volume; and higher RPC (+4.8%) due tolengthening of contractsFX and USD Interest rate contracts (+12.4% and+25.0%, respectively): FX rate appreciation (USD/R$)
AVERAGE DAILY VOLUME (ADV) AND AVERAGE REVENUE PER CONTRACT (RPC)
BM&F Segment PerformanceHigher RPC offsets volumes fall
INTEREST RATES IN R$ - ADV BY MATURITY
(in millions of contracts)
(in millions of contracts)
REVENUE PER CONTRACT AND FX RATE(in R$) ~45% of derivatives revenue was priced in USD in 3Q13
*Average FX rate (R$/US$) in the quarter, considering the closing price for each month.
Revenue Breakdown in 3Q13
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6.2%
31.4%
4.6%
18.1%
14.4%
2.3%2.8%
20.2%
37.6%: Financial/Commodity Derivatives 2
37.6%: Cash Market
6.2%: Trading31.4%: Post-Trade
4.6%: Stock and Indices Derivatives2
Total RevenueR$596.8 million
4.3%: Securities Lending 5.1%: Depository, Custody and Back-Office3.0%: Vendors1.9%: Trading Access2.0%: Listing
20.2%: Other Revenues
QDiversified revenue sources as a differential
REVENUE BREAKDOWN
Revenue breakdown for the cash market (trading + post-trade) reflects the pricing policychanges which came into force in Apr/13.
i) Reduction of trading fee to 0.5 bps from 0.7 bps for all investors
ii) Post-trade increase to 2.0 bps from 1.8 bps for institutional investors and day trades2Trading and Post-trade
CASH MARKET TRADING REVENUEACCOUNTED FOR6.2% OF TOTAL
DERIVATIVES REVENUES(BM&F + BOVESPA) ACCOUNTED FOR
42.2% OF THE TOTAL
18.1%: Brazilian Real interest rate contracts 14.4%: FX Contracts2.3%: USD interest rate contracts
2.8%: Other Financial/Commodity Derivatives
The Business Model Strengthens
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The Business Model StrengthensResilience from diversified revenue sources
Bovespa Segment new clients, products development and higher market sophistication
BM&F Segment credit expansion, volatility, FX rate changes and market sophistication
Other revenue development of markets and new products and services
CAGR2009-13
8.7%
Revenues in R$ millions
Revenues in R$ millions
CAGR2009-1315.5%
CAGR2009-13
9.6%
Revenues in R$ millions Revenues have been supported bya higher turnover velocity
- HFTs
- Options on single stocks
- Securities lending activity
- Strategies
Revenues from the two mostsignificant groups of contracts aregrowing consistently
- Market sophistication, volatilityand the recent currencydepreciation
Revenues from selected productsgrowing consistently
- Sec. lending also complementscash, option and future markets
- Tesouro Direto and LCAs as partof the Companys strategy in
the fixed income market
3Q13 Expenses
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Expense:R$194.1million
Q pContinuous focus on cost control and operational efficiency
ADJUSTED EXPENSETOTAL EXPENSE BREAKDOWN(in R$ millions)
*Includes expenses with maintenance in general, marketing, communication, taxesadjusted by the dividends from CME Group, board and committee memberscompensation and others (excluding provisions).
ADJUSTED EXPENSE INCREASED 10.4% OVER 3Q12 IN LINEWITH THE 2013 BUDGET (R$560-580 MILLION)
Adjusted Personnel : +16.9%, basically due to the effects of annual
union bargain in Aug/13 and decrease in capitalized personnelcosts related to ongoing projects.
Data processing : +31.8%, due to higher expenses for services andmaintenance of software and hardware that support IT platformsrecently deployed.
Third Party: -34.8%, due to lower costs with consulting and legaladvisors.
Financial Highlights
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48*Includes collateral pledged by participants in the fo rm of cash, receivables and rights in securities under custody, as well as payouts still undisbursed.**Includes third party collateral and restricted funds at BM&FBOVESPA Settlement Bank (Banco BM&FBOVESPA).
g gReturning cash to shareholders
(In R$ millions)
CASH AND FINANCIAL INVESTMENTS RETURN TO SHAREHOLDERS
FINANCIAL RESULTS
Financial result of R$49.6 million, up 8.9% YoYFinancial income up 16.9%, reflecting, basically higherinterest rates
Financial expenses rose 33.4%, reflecting the currencydepreciations impact on the interest of notes issuedoverseas
CAPEX
In 3Q13, investments amounted to R$82.1 million,totaling R$202.5 million in 9M13
CAPEX budget ranges:2013: between R$260 290 million2014: between R$170 200 million (under review)
BUYBACK PROGRAM
From Jul/13 to Oct/13, 13.1 million shares wererepurchased, totaling R$158.9 million (more than0.6% of the Companys capital stock )The current buyback program allows BM&FBOVESPAto repurchase up to 60 million shares until Jun/14.
PAYOUTPayment of R$225.3 million in dividends, equivalentto R$0.118 per share and 80% of GAAP net incomePayment on Nov. 27, 2013 based on shareholdersposition dated Nov. 11, 2013
Market participant cash collateral includes R$0.7 billionpledged in the FX Clearinghouse that was settled onOct 1st, 2013.
High growth products
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g g pIncreasing revenue diversification
CAGR:+39%
OPERATIONAL FIGURES REVENUE
CAGR:+181% CAGR:+27%
CAGR:+56% CAGR:+35%
CAGR:+280% CAGR:+37%
Strong revenue growth of selectedproductsIn 9M13, representing 7.6% of totalrevenue, or R$141.4 millionProducts well received by clientsContinuous developments to maintainstrong growth trend
Summary of Balance Sheet (Consolidated)
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Summary of Balance Sheet (Consolidated)
LIABILITIES AND SHAREHOLDERS EQUITY ASSETS
(in R$ millions) 9/30/2013 12/31/2012 (in R$ millions) 9/30/2013 12/31/2012
Current assets 3,940.9 3,536.3 Current liabilities 2,287.1 1,660.6
Cash and cash equivalents 754.7 43.6 Collateral for transactions 1,617.9 1,134.2
Financial investments 2,978.6 3,233.4 Others 669.2 526.4
Others 207.6 259.3 Non-current liabilities 3,667.3 3,072.6
Non-current assets 21,351.2 20,610.8 Debt issued abroad 1,357.0 1,242.2
Long-term receivables 1,040.3 808.9 Deferred inc. tax and social contrib. 2,156.6 1,739.6
Financial investments 764.5 573.6 Others 153.7 90.7
Others 275.8 235.2 Shareholders' equity 19,337.6 19,413.9
Investments 3,270.0 2,928.8 Capital 2,540.2 2,540.2
Property and equipment, net 391.8 361.0 Capital reserve 16,051.5 16,037.4
Intangible assets 16,649.1 16,512.2 Others 730.1 820.3
Goodwill 16,064.3 16,064.3 Non-controlling interests 15.8 16.0
Total Assets 25,292.1 24,147.1 Liabilities and Shareholders' Equity 25,292.1 24,147.1
Reconciliation 3Q13
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Reconciliation 3Q13
ADJUSTED NET INCOME RECONCILIATION
ADJUSTED EXPENSES RECONCILIATION
* Attributable to BM&FBOVESPA shareholders.
(in R$ millions, unlessotherwise indicated) 3Q13 3Q12 Change3Q13/3Q12 2Q13Change
3Q13/2Q13
GAAP net income* 281.6 276.5 1.8% 350.8 -19.7%Stock options plan 5.6 7.8 -28.0% 7.8 -28.1%Deferred tax liabilities 138.9 134.8 3.1% 138.9 0.0%Equity in income of investees (net of taxes) 38.2 32.6 17.4% 46.3 -17.4%Recoverable taxes paid overseas 15.8 14.1 11.7% 18.3 -13.7%
Adjusted net income 403.7 400.6 0.8% 469.6 -14.0%
(in R$ millions, unlessotherwise indicated) 3Q13 3Q12
Change3Q13/3Q12 2Q13
Change3Q13/2Q13
Total Expenses 194.1 174.8 11.1% 176.8 9.8%Depreciation (32.5) (24.1) 35.0% (28.8) 12.8%Stock options plan (5.6) (7.8) -28.0% (7.8) -28.1%Tax on dividends from the CME Group (5.1) (4.7) 9.5% (5.1) 0.2%Provisions (0.6) (2.1) -70.5% (1.9) -66.5%
Adjusted Expenses 150.2 136.0 10.4% 133.2 12.8%
Summary of Income Statement (consolidated)
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Summary of Income Statement (consolidated)
* Attributable to BM&FBOVESPA shareholders.
3Q13 3Q12 Change3Q13/3Q12 2Q13 Change3Q13/2Q13
Net Revenues 535.4 521.6 2.6% 599.8 -10.7%
Expenses (194.1) (174.8) 11.1% (176.8) 9.8%
Operating Income 341.3 346.8 -1.6% 423.0 -19.3%
Operating margin 63.7% 66.5% -275 bps 70.5% -678 bps
Equity in Income of Investees 43.3 37.2 16.4% 51.4 -15.7%
Financial Result 49.6 45.5 8.9% 43.1 15.1%
EBT 434.2 429.6 1.1% 517.5 -16.1%
Net Income* 281.6 276.5 1.8% 350.8 -19.7%
Adjusted Net Income 403.7 400.6 0.8% 469.6 -14.0%
Adjusted EPS (in R$) 0.211 0.208 1.7% 0.244 -13.5%
Adjusted Expenses (150.2) (136.0) 10.4% (133.2) 12.8%
Final Remarks
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REVENUES AND RESULTSResilient revenues and results in a challenging market environmentGrowing diversification of products and revenues
INVESTMENTSCommitment with the maintenance of market integrityStrengthening the competitive edge by delivering efficiency to the market
FOSTERING CLIENTS AND MARKETStrengthening ties with market participants and clientsBecoming a one-stop-shop by increasing the diversity of products for clients
COMMITMENT TO CAPITAL RETURN FOR SHAREHOLDERSMaintained focus on cost controlHigh payout ratio combined with share buyback
Final Remarks
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BM&FBOVESPA INVESTOR RELATIONS
+55 (11) 2565 4729 / 4418 / 4834 / 7073 / [email protected]
ir.bmfbovespa.com.br