January 2013January 2013
Forward Looking Statements
This presentation may contain certain statements that express the management’s expectations, beliefs and assumptions 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 industries BM&FBovespa works in.The verbs “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “plan,” “predict,” “project,” “target” and other similarverbs are intended to identify these forward‐looking statements, which involve risks and uncertainties that could cause actual results to differ materially from those projected in this presentation and do not guarantee any future BM&FBovespa performanceperformance.
The factors that might affect performance include, but are not limited to: (i) market acceptance of BM&FBOVESPA services; (ii) volatility related to (a) the Brazilian economy and securities markets and (b) the highly‐competitive industries BM&FBovespa operates in; (iii) changes in (a) domestic and foreign legislation and taxation and (b) government policies p p ; ( ) g ( ) g g ( ) g prelated to the financial and securities markets; (iv) increasing competition from new entrants to the Brazilian markets; (v) ability to keep up with rapid changes in technological environment, including the implementation of enhanced functionality demanded by BM&FBovespa customers; (vi) ability to maintain an ongoing process for introducing competitive new products and services, while maintaining the competitiveness of existing 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 date they were made, and BM&FBovespa undertakes no obligation to update them in light of new information or future development.This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities nor shall there beThis presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there beany sale of securities where such offer or sale would be unlawful prior to registration or qualification under the securitieslaw. No offering shall be made except by means of a prospectus meeting the requirements of the Brazilian Securities Commission CVM Instruction 400 of 2003, as amended.
2
BVMF STOCK PRICERecent PerformanceRecent Performance
3
BVMF3 – Recent performance
BM&FBOVESPA IBOVESPABVMF3 YTD: +42.9%Ibovespa YTD: +7.4%
IOFs10/17R$14.97
Goodwill
p
Goodwill11/30R$13.01
CompetitionNews01/05R$13.10
Red ctions of Vol mes
Change of IOF on foreign
Rumorsabout IOF
Reductions of Volumes Estimates by the Market Removal of
IOF on Equities12/01R$10,54
exchange transactions
06/14
Exchanges Mergers02/08R$11.18
BATs02/15R$11.43
New IOF onNew IOF on Derivatives
07/26R$9.55
Direct Edge11/21R$10.11
Oxera's Report Release06/18
Aug‐10
Sep‐10
Oct‐10
Nov‐10
Dec‐10
Jan‐11
Feb‐11
Mar‐11
Apr‐11
May‐11
Jun‐11
Jul‐11
Aug‐11
Sep‐11
Oct‐11
Nov‐11
Dec‐11
Jan‐12
Feb‐12
Mar‐12
Apr‐12
May‐12
Jun‐12
Jul‐12
Aug‐12
Sep‐12
Oct‐12
Nov‐12
Dec‐12
Updated until 12/31/2012. 4
BRAZILIAN MARKET OPPORTUNITIES
5
Equity Market (BOVESPA Segment)Low penetration in the Brazilian market
Clients base: huge potential in retail and pension funds segmentsClients base: huge potential in retail and pension funds segments
Number of custody accounts (thousands) Pension funds portfolioLow penetration of equity and derivatives in the main R$574 billion
Dec´12 613 9 and derivatives in the main
investors’ portfolios
Stable and “low” interest rate environment encourage
i iti
Equity
Fixed Income and Others
$
69.9%
613.9
more exposure in equities
Recent growth in the number of retail investors, but still low compared to other
R$168 billion
30.1%27.7%
72.3%
Jan'05 128.6
5 6 6 7 8 8 9 0 0 1 2 markets
Listed Companies
Dec’11 Listed Companies (27th in the World)
2002 2011
Jan‐05
Jul‐05
Jan‐06
Jul‐06
Jan‐07
Jul‐07
Jan‐08
Jul‐08
Jan‐09
Jul‐09
Jan‐10
Jul‐10
Jan‐11
Jul‐11
Jan‐12
Jul‐12
Low number of listed companies compared to other countries
Lack of important economic sectors in the exchange for instance: oil & gas infrastructure
Dec’11 Listed Companies (27th in the World)
6.752
4.988 exchange, for instance: oil & gas, infrastructure, retail, IT and pharmaceutical,
Investment cycle may bring new companies and sectors to the exchange
3.945 3.838 3.520 3.276 2.886 2.079 1.816
373
Source: ABRAPP, WFE and BM&FBOVESPA6
Currently, SMEs are not able to raise money through equity easilyIndia USA Canada China/HK Japan Spain UK Australia Korea Brazil
Derivatives Market (BM&F Segment)Growth in the credit level will favor volumes
Credit: very low credit level and even lower in the case of mortgage transactionsCredit: very low credit level and even lower in the case of mortgage transactions
Credit to GDP Trade Flow (total Imports + Exports in USD billions)
51.0%Mortgage
229281
371
281
384
482
27.4%
g g
Total Credit
229
4.5% 5.8%
Interest Rate in BRL contracts: growth in credit levels, specially in fixed rates, support the increase the activity of financial institutions
2006 2007 2008 2009 2010 2011
financial institutions
FX contracts: growth in the amount of foreign trading and change in the culture of the Brazilian entrepreneurs can push up volumes in this group of contracts, mainly in currencies other than US$
Index‐based contracts: growth in cash equity market, the launching and development of ETFs and the growth of exposure to equity by institutional investors can drive the growth of these contracts
7
Commodities contracts: cash settled contracts and the change in the behavior of farmers that are becoming more sophisticated
MAIN INITIATIVES
8
Consistent GrowthHistoric record of volumes keeping long term growth trend
ADTV(in R$ millions)
ETFs – Exchange Traded Funds Tesouro Direto
Average Number of Investors – Retail Investors
(in thousands)
23.8 27.5 36.3 42.364.4
82.7 78.9 83.0 86.0 88.4 89.4
18.6 28.5 48.7
115.9 97.6
155.8
102.3 107.5
2009 2010 2011 2012 1Q12 2Q12 3Q12 4Q12
Average Assets under Management*
$
Average Assets under Custody
(in R$ billions)(in R$ millions) (in R$ billions)
6.18.6 7.9 8.8 9.3 9.9 9.9
1 032
1,974
1,322 1,696
2,336 2,541
1.3 1.8 2.9 3.9271 579
1,032 ,
2009 2010 2011 2012 1Q12 2Q12 3Q12 4Q12
*Excluded PIBB11. 9
High Growth ProductsReal Estate Funds (FII) and Agribusiness Credit Bills (LCA)
FIXED INCOME AND REAL ESTATE PRODUCTS
Agribusiness Credit Bills (LCAs)Real Estate Funds (FIIs)
25.4 23.8 22 5
25
30
22.5
10
15
20
0.1
Jan‐11
Feb‐11
Mar‐11
Apr‐11
May‐11
Jun‐11
Jul‐1
1
Aug
‐11
Sep‐11
Oct‐11
Nov
‐11
Dec
‐11
Jan‐12
Feb‐12
Mar‐12
Apr‐12
May‐12
Jun‐12
Jul‐1
2
Aug
‐12
Sep‐12
0
5
( $ ) ( $ )Assets under custody (R$ billions)
96.2
ADTV (R$ MM) Mkt Cap (R$ BN)
60%40%19.7
Mkt. Share BVMF Other10
# of investors
High Growth ProductsIncreased sophistication of market participants
Focus on product and market development, supporting higher sophistication of market participants
HIGH GROWTH PRODUCTS
Ibovespa index‐related products (options on Ibovespa stock indices futures and ETFs) werehigher sophistication of market participants
Selected fast‐growth products accounted for 7.6% of total revenues in 3Q12 (7.3% in 3Q11)
Ibovespa, stock indices futures and ETFs) were negatively impacted by reduced volatility when compared to 3Q11
Options on stocks/indices (ADTV ‐ R$ MM) Stock index futures (ADV – thd contracts) Securities Lending (Open Interest)
+68.9%‐17.3%CAGR: +24.1%
‐6.5%(R$ billion)
CAGR: +34.5%
213.0 210.7
53.1 89.7
9M11 9M12
80 89 123 153 143 119
2009 2010 2011 9M12 3Q11 3Q12
‐1.1%12.7
20.5 30.2 30.9 31.6 29.5
2009 2010 2011 9M12 3Q11 3Q129M11 9M12PETR + VALE Others
2009 2010 2011 9M12 3Q11 3Q12
ETFs (ADTV ‐ R$ MM) Tesouro Direto (custody ‐ R$ Bn)
2009 2010 2011 9M12 3Q11 3Q12
+45.6%CAGR: +43.8%+90.2%CAGR: +85.3%
2.9 3.96.1
8.6 6.4
9.3
2009 2010 2011 9M12 3Q11 3Q12
18.6 28.5 48.7
118.5
53.8
102.3
2009 2010 2011 9M12 3Q11 3Q12 11
Strategic Projects
Multi‐asset trading platform (PUMA Trading System)
State of the art in trading technology and technological independency
Derivates module successfully implemented in 2H11
Licensing TRADExpress Real Time Clearing system
Equities market to be concluded in 2H12
Objective: integrating and modernizing our existing clearing facilities should proceed over 2012.
Integrated tests with the market and implementation of the systems scheduled to take place in 2013/2014
Partnership advantages:
Li t th ftLicense to use the software
Access to the source code
Selling rights over our new clearing platform
Registration systems for OTC derivatives
Objective:modernize, improve and expand the range of our registration services for OTC derivatives, while offering our customers a streamlined, quality solution and thorough regulatory reporting toolregulatory reporting tool
One of the most flexible and complete engines for registration, price discovery, risk assessment, capture and lifecycle processing of these transactions
Three‐module implementation: the first one is schedule to 2H12, the second one for 1H13 and third module of the platform will be announced in due course
12
Clearing Houses IntegrationBuilding a state of the art platform
Equity and Corporate Debt (R$ 70 bn*)
Derivatives (R$ 107 bn*)
FX (R$ 4 b *)
Securities (R$ 1 b *)Debt (R$ 70 bn )
Equity, ETFs and fixedincome cash market
Equity and indices
(R$ 107 bn*)
Financial andditi d i ti
(R$ 4 bn*)
FX spot market
(R$ 1 bn*)
Cash market and forwardk t f tEquity and indices
derivatives (options andforward)
Securities lending
commodities derivatives(futures, options andforward)
OTC derivatives
(US$ vs. R$)market for governmentbonds
INTEGRATED CLEARING HOUSEINTEGRATED CLEARING HOUSE=
Capital efficiency
* Aggregate of pledged collaterals at our clearinghouses totaled R$181.3 billion in September 30, 2012. 13
Main ProjectsDeliveries already implemented and programmed
INTENSE DELIVERY PHASE STARTING IN 4Q12
4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 (...)Migration of
PUMA Trading
S t ™System™ (equities)
Fixed incometrading
platform
Fixed incomeregistration
platform
OTC DerivativesPlatform (Calypso)
Cross
New integrated clearing house/ CORE*
Construction of the New Data Center
listing
Fee structure redesigning and introduction of incentive programs(...) (...)
( ) ( )
*CORE, Close-out Risk Evaluation.
Development of new products / markets: ETFs, market making programs for the options market; dual listings…(...) (...)
14
BUSINESS MODEL AND REGULATORYFRAMEWORKFRAMEWORK
15
Possible CompetitionImportant considerations
EASING REGULATION IS NOT EXPECTED
Main requirements: pre‐trade controls, self‐regulatory (SRO), off exchange trades are not permitted (internalization of orders and OTC), CCP for stocks trading, post‐trading at the beneficial owner level
Competition in other exchanges was intensified after easing regulation
THE EXCHANGE FEES (TRADING AND POST‐TRADING) ARE PAID BY THE FINAL INVESTOR
Differently from USA and Europe, the final investors is the one who pays the exchange fees
Brokers couldn’t increase their share in the all‐in trading cost pie in case of reduction on the exchange fees
STOCKS TRADING ALL‐IN COST IN BVMF IS COMPETITIVE
Despite the misleading perception, all‐in cost in BVMF is competitive compared to other markets
Comparing only the trading fees among exchanges is misleading. BVMF provides higher portion of services than the peerspeers
IT INFRASTRUCTURE MOVING TO STATE OF THE ART
There is no gap of IT infrastructureThere is no gap of IT infrastructure
Increasing participation of HFT via Co‐location (moving to sub millisecond latency)
RECENT BM&FBOVESPA INITIATIVES (REBALANCING OF FEES STRUCTURE)RECENT BM&FBOVESPA INITIATIVES (REBALANCING OF FEES STRUCTURE)
Shift between trading and post‐trading fees
16
Panel sponsored by CVMMain points
On June 29, CVM sponsored a discussion with stakeholders
Regulator: the study shows that competition in exchange industry is not urgent
Participants view
Regulator: market integrity and transparency are priorities
Brokers: most of them have doubts about the benefits and showed concerns related to cost rising gand risks
Investors: in general have a perception that prices are in line with international benchmarks and are concerned with market integrity
Infrastructure providers (exchanges): non consensus regarding the necessity of opening the clearing house or not in order to create the conditions for competition
BVMF main considerations:
Understates regulatory and IT/infrastructure cost for brokers
Disregards implicit costs of liquidity fragmentation and does not assess qualitatively the price formation impacts
Compares inadequately the other market costs when does not use the All in cost
Market size is not big enough to embrace new exchangesg g g
Recognizes the importance of clearing houses integration
17
Equity Market Settlement Structure Brazil Compared with USA
BRAZIL(All the trades must be matched on an
exchange environment)
USA(Brokers can internalize orders)
BVMFTradingTrading Venues
DTCCBVMF
Brokers
A and B
Brokers
A and B
Post trading
Broker
A
Broker
B
Post tradingClearing (CCP)Settlement
Central Depository
Investors InvestorsInvestors Investors
100% vertically integrated: clearing, settlement and central depository at the beneficial owner level
Brokers control their clients’ portfolios and settle
DTCC does the clearing, settlement and central depository of securities at the brokers’ level
Each broker (prime broker) has its own structure to positions through BVMF’s infrastructure (this impacts the post‐trade fees charged by BVMF)
control their clients’ portfolios and settle positions (this impact the prime broker’s costs)
18
Business Model
Listed Exchange Business ModelDiversified and Integrated Integrated Derivatives Diversified but Not Integrated*
Updated until: 12/28/2012
Market Capitalization (US$ billions) and EBITDA Margin (%)
* Do not provide post‐trading services for the equity market
Source: Bloomberg p / /
77.9%65.5% 61.6% 58.6%
69.7%
42.3%
62.2%
76.9%
49.1% 47.6%59.4%
72.0%
21.0 17.0 13.7 11.9 9.0 7.7 6.2 5.8 4.9 4.2 2.82.1
HKEx CME BVMF Deutsche ICE Nyse SGX ASX* LSE Nasdaq TMX BME
19* 12 mths to 30 June 2012.
Boersey
Euronextq
EBITDA MarginDiversified and integrated Derivatives Diversified but not integrated
Brazilian Market Regulatory FrameworkLegal requirements: resilience, transparence, clear rules….
Brokers & investors Regulation prohibits internalization of orders, dark pools
and ATS/MTFs, stocks trading in both exchange and OTC simultaneously
Settlement and clearing of stocks trading must be done through a CCPthrough a CCP
Settlement and clearing at the beneficial owner level make the Brazilian market safer and more resilient
Trading Under the regulation in place, potential competitors would be obliged to provide the same integrated solution, with the same rules and transparency
Pos‐Trading
solution, with the same rules and transparency
The final investor pays the exchange fee
Other exchanges have been seeking integrated models g g g(self clearing models)
Naked access is not allowed
Naked short selling is not possible
20
End of CPMF
Brazilian´s stock trading breakdown
D ´12
(Financial Transaction Tax)
Sarbanes‐Oxley Act(Jul. 2002)
Novo MercadoLaunching(Dec. 2000)
End of IOF Tax (2%) for foreign investors
(Dec. 2011)
24.6%
Dec´12
34.6%
38.8%
10.0%
65.4%
26.6%
6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2
Source: Bloomberg (in USD traded value of 35 companies with ADRs programs )
199
199
199
199
2000
200
200
200
200 4
200
200
200
200
200
2010
201
Apr‐1
May‐1
Jun‐1
Jul‐1
Aug
‐1
Sep‐1
Oct‐1
Nov‐1
Dec‐1
Jan‐1
Feb‐1
Mar‐1
Apr‐1
May‐1
Jun‐1
Jul‐1
Aug
‐1
Sep‐1
Oct‐1
Nov‐1
Dec‐1
Other USA Venues ‐ Brazilian ADRs NYSE ‐ Brazilian ADRsBM&FBOVESPA ‐ companies with ADRs BM&FBOVESPA (except companies with ADRs)
Public Offerings in Number of Companies*2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total
IPOs ‐ 1 ‐ 7 9 26 64 4 6 11 11 3 142 Follow ons 14 5 8 8 10 16 12 8 18 11 11 9 130
*Updated until 12/31/2012 21
Total 14 6 8 15 19 42 76 12 24 22 22 12 272
Dual Listings ‐ ‐ ‐ 2 1 1 ‐ ‐ 1 ‐ ‐ ‐ 5
OPERATIONAL HIGHLIGHTS
22
BOVESPA Segment: operational highlights
Average Daily Traded Value ADTV (BRL billions)Average Daily Traded Value – ADTV (BRL billions)
1.2 1.6 2.4 4.9 5.5 5.3
6.5 6.5 7.3 6.2 6.38.3
7.0 7.3 7.4 8.26.0
7.28.4
6.7 6.67.9
Average annual market cap (R$ trillion) Turnover Velocity** (12 months average)
2004 2005 2006 2007 2008 2009 2010 2011 2012* Dec‐11 Jan‐12 Feb‐12 Mar‐12 Apr‐12 May‐12 Jun‐12 Jul‐12 Aug‐12 Sep‐12 Oct‐12 Nov‐12 Dec‐12
38 %42.3%
56.4%63.2%
66.6%
63.8%
64.2%70.3%
2.0 2.0 1.8
2.3 2.4 2.4
30.8%
29.4%
36.8% 37.6%38.7%
0.7 0.9
1.3
*Updated until 12/31/2012. / **Relation of the trading value in the cash market and the market cap of the exchange. 23
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20122004 2005 2006 2007 2008 2009 2010 2011 2012* *
BOVESPA Segment: capital raising activity
Public Offerings (BRL billions)
Updated until 12/31/2012.
55 6
11.2 70.1
34 346.0
74.4 Follow‐On
IPO
4.3 8.5 15.1 14.5 26.8 22.2
63.2
10.8 9.24.5 5.4 15.4
55.6 7.5 23.8
7.2 3.98.8 13.9
30.4 34.3
18.0 13.2
Th 8 ff i i th i li
Pipeline: already announced to the market
2004 2005 2006 2007 2008 2009 2010* 2011 2012
There are 8 offerings in the pipeline:
IPO (6): VIX Logística; AutoBrasil Participações; Cia. Estadual de Águas Esgotos – CEDAE; Lynx; Senior Solution; Alupar Investimentos
Follow on (2): IdeiasNet; Estácio Participações
24* Excludes the capitalization with barrels reserves by federal government ‐ BRL74.8 billion – in Petrobras offering.
Follow‐on (2): IdeiasNet; Estácio Participações
Additionaly, there are 16 Real Estate Funds filed in CVM: estimated value of R$3.0 billion
Market Capitalization to GDP (%)*
BOVESPA SegmentPotential to increase the number of listed companies
177%
126% 121%
136%129%
174%
137%
158%
129%
138%129%
2009 2010 2011
Market Capitalization to GDP (%)*
Hong Kong : 438% 481% 365%
126% 121%
109%100%
67%75%
87%
72%
100%
39%
119%107%
129%
75% 76%
96%
72%80%
44%
110% 109% 104%
89% 87%
60% 57% 55% 50% 49% 46%39% 35%
Singapore Canada Chile USA Korea Australia Japan France India Brazil UK China Mexico
Market Capitalization by Economic Sector * Source: World Bank
15.2%
26 4%
15.7%22.4%
Market Capitalization by Economic Sector
Dec’11 Dec’05
14.1%
1.8%10.4%
26.4%
21.6%11.5%
4.7%
16.2%
3.9%0.6%
6.8%
2.5%
3.6%
8.6%
2 6%
0.3%11.1%
%
Oil, Gas and Biofuels Basic Materials Capital Goods and Services Construction and Transportation
Consumer Non Cyclical Consumer Cyclical Information Technology Telecommunications
Public Utilities Financial
2.6%
25
BM&F Segment: operational highlights
Average Daily Traded Volume ADTV (Thousands of contracts)Average Daily Traded Volume – ADTV (Thousands of contracts)
509 593
123205
245
123285 336 285
308 385
362 322 3402,505 2,701
2,899
2 0652,615 2,497
2,9943,518
3,904
2,590 2,819 2,630 2,6262,971
2,653 2,856
422 501 711 988 789 843 1.684 1.797 1.926
1,234 1,636 1,452
2,061 2,497 2,681
1,561 1,866 1,723 1,710 2,199
1,747 1,856 110 168
266 473 535 447
541 496 494
438 541 545
524 509
520 485 425 451
327 476 547
86 74 68
112 88 80
89 123 143
148
123 166
123
158 106 137 111
123 99 113
187 109 124
167 162 150
191 285 336
245
315 334 350 362 345 355 331
340
805 852 1,167
1,740 1,573 1,521 2,065
R t C t t RPC (BRL)
2004 2005 2006 2007 2008 2009 2010 2011 2012* Dec‐11 Jan‐12 Feb‐12 Mar‐12 Apr‐12 May‐12 Jun‐12 Jul‐12 Aug‐12 Sep‐12 Oct‐12 Nov‐12 Dec‐12
BRL Int. Rate (Thousands) FX (Thousands) Index (Thousands) Others (Thousands)
Rate per Contract ‐ RPC (BRL)
2006 2007 2008 2009 2010 2011 2012* D‐11 J‐12 F‐12 M‐12 A‐12 M‐12 J‐12 J‐12 A‐12 S‐12 O‐12 N‐12 D‐12*
Interest rates in BRL 0.906 0.950 1.141 0.979 0.889 0.918 1.004 1.086 1.045 1.064 0.926 0.948 0.922 1.059 1.026 1.076 1.130 0.924 1.044 1.037
FX t 2 244 1 859 2 065 2 161 1 928 1 894 2 205 2 082 2 106 1 929 1 876 1 991 2 015 2 237 2 325 2 453 2 481 2 506 2 370 2 453FX rates 2.244 1.859 2.065 2.161 1.928 1.894 2.205 2.082 2.106 1.929 1.876 1.991 2.015 2.237 2.325 2.453 2.481 2.506 2.370 2.453
Stock Indices 1.419 1.501 2.145 1.620 1.564 1.614 1.524 1.719 1.316 1.674 1.328 1.502 1.233 1.708 1.403 1.750 1.407 1.752 1.400 1.981
Interest rates in USD 1.094 0.965 1.283 1.357 1.142 0.941 1.015 0.930 0.958 0.804 0.911 0.991 1.021 0.955 1.143 1.027 1.086 1.024 1.164 1.152
Commodities 4.749 3.195 3.587 2.307 2.168 2.029 2.239 2.385 1.688 2.033 2.183 2.228 1.945 2.099 2.014 2.270 2.840 2.680 2.485 3.360
Mini contracts 0.034 0.054 0.162 0.176 0.128 0.129 0.116 0.132 0.131 0.130 0.130 0.122 0.113 0.116 0.111 0.110 0.109 0.112 0.107 0.112
26
OTC 1.571 2.111 2.355 1.655 1.610 1.635 1.769 2.444 2.438 1.515 1.822 1.880 1.203 1.321 1.523 2.693 1.139 1.738 1.711 2.475
Total RPC 1.247 1.224 1.527 1.365 1.134 1.106 1.191 1.293 1.236 1.227 1.079 1.100 1.074 1.272 1.222 1.277 1.314 1.098 1.242 1.303
*Updated until 12/31/2012.
Interest Rate in BRL ContractsStructural changes behind the growth in volumes
BRL INT. RATE: ADV PER MATURITY (MILLIONS OF CONTRACTS)
1.7 1.8 1.8
CAGR: +3%Growth in interest rate contracts with longer maturity
0.8 0.8 0.6 0 4
0.8 1.0
1.2
0.7 0.8 CAGR: +19%
CAGR: +3%with longer maturity
0.2 0.3 0.5 0.4
3Q08 3Q09 3Q10 3Q11 3Q12
CAGR: ‐16%
Fixed Rate Credit – in BRL billions Public Debt / Fixed Rate ‐ in BRL billions
1st‐4th Maturity 5th Maturity Total
Sep'12:BRL 820.8
Sep'12:BRL 725.0 bn
Jan'05:BRL 180.0
Jan'05:BRL 151.4 bn
27Source: Brazilian Central Bank
Jan‐05 Jan‐06 Jan‐07 Jan‐08 Jan‐09 Jan‐10 Jan‐11 Jan‐12 Jan‐05 Jan‐06 Jan‐07 Jan‐08 Jan‐09 Jan‐10 Jan‐11 Jan‐12
High Frequency Trading (HFT)
BM&F Segment: HFT (ADTV in thousands of contracts) and mkt. share
6 7% 7 5% 7 3% 8.7% 8.5%6 6% 6 9%
8.9% 9.1%7 5% 6 4% 7 2% 6 3% 6 7%
162 155 14449
88 66 61
50 50 49 59 73
62 56 63 56 58 46
79 191
179222 233 239 274 239
300
481 474 419
343 268 288
417
528
403 442 365 347 358 317 283
339 304
3.5% 4.2% 3.9% 3.6%6.7% 5.4%
7.5% 7.3% 6.6% 6.9% 5.8% 5.9% 5.8%7.5% 6.4% 7.2% 6.3% 5.0%
6.7% 5.6%
68 90 93 90 102 92 113 203 219 177 142 120 131 146 128 163 225 186 202 223 201 197 227 204 65 65 71 82 118 101 126
162 155 153
124 85 88
141 159 150 144
116 89 71 61 31 53 55
29 51 50 49 45 42
49 50 42 41
56 55 46 179 222
Bovespa Segment: HFT (ADTV in BRL million) and mkt. share
Mini FX Equities Other % in overall volume
380 372 296
278 230 263
205
165164
166245
366 269387
963 996 974
1,683
1,296 1,460
1,339 1,145 1,088
1,367 1,160
1,366 1,517 1,473
1,268 1,332 1,526
1,363 1,344 1,517
5.7% 6.6% 5.9% 5.9%8.7% 7.6% 8.6%
11.4% 10.4% 10.3% 11.5%9.3% 8.7% 8.4% 8.4% 9.0% 10.3% 8.8% 10.3% 10.0% 9.1% 10.2% 10.1% 9.4%
258 352 344 321 511 495 561
1,099 821 1,016 913 826 785
995 854 1,070 1,238 1,243
1,041 1,069 1,016 785 831 884 267
346 261 254 293 253 262
311 281
259 210 303
372 306
296 227 263 265
212 243 246
206 272
140 210 192 152 151
165 166 110 366 269
730 963
746 785 996 899 974 ,
28
ADTV (Foreigners) ADTV (Individuals) ADTV (Institutionals) % of overall market
FINANCIAL HIGHLIGHTS
29
Highlights 3Q12 vs. 3Q11 Growth in all business lines and costs under control
FINANCIAL HIGHLIGHTS
Gross Revenue: R$581.3 million, +6.2%
Bo espa Seg R$263 4 million +5 9%
OPERATING HIGHLIGHTS
Bovespa Segment:
ADTV +8 7%Bovespa Seg.: R$263.4 million, +5.9%
BM&F Seg.: R$219.3 million, +6.8%
Other revenues: R$98.7 million, +5.8%
ADTV: +8.7%
Margin: flat
BM&F Segment:
RPC: +14 7%
Net Revenue: R$521.6 million, +5.7%
Adjusted Expenses¹: R$136.0 million, ‐0.2%
RPC: +14.7%
ADV: ‐4.0%
High growth products:
ETFs: +90.2% ADTVj p ,
Operating Income: R$346.8 million, +7.0%
Tesouro Direto: +45.6% AUM
FII : strong growth in market capitalization and number of investors
f lEBITDA: R$375.6 million, +8.1%
EBITDA Margin: 72.0%
Adj. Net Income²: R$400.6 million, +0.3%,
LCA: consistent increase of register volume
MAIN PROJECTS FOR 4Q12l l f
Adj. EPS: R$0.208, +1.7%
P t R$221 2 illi i di id d d i t t
Cross listing: listing of S&P 500 mini contracts at BVMF and Ibovespa at CME
PUMA Trading System™: equities module
Registration PlatformsPayout: R$221.2 million in dividends and interest on capital, 80% of GAAP net income in 3Q12
g
1 Excludes stock options plan, depreciation, provisions and tax on dividends from CME Group. 2 Excludes deferred liability recognized in correlation with temporary differences from amortization of goodwill for tax purposes, the impact of the stock options plan, the investment in associate (CME Group) accounted for under the equity method of accounting, net of taxes related to dividends and recoverable taxes paid overseas to be compensated. 30
Financial HighlightsFocus on cash generation and shareholders return
OPERATING CASH GENERATION CASH AND FINANCIAL INVESTMENTS
(R$ million) (R$ million)
+6.9%
340.5 364.1 1 207
1,443
1,166
383
340
343
354
363
390
1 714
1,979
2,100
3 658
4,125
3,999
1Q12
2Q12
3Q12
1,270
1,551
1,207
468
380
383
284
270
354
1,487
1,582
1,714
3,508
3,782
3,658
3Q11
4Q11
1Q12
3Q11 3Q12
, , ,
Market participants cash collateral and others* Restricted funds
Subsidiaries** Available funds
Payout: R$221.2 million, R$131.2 million in dividends and R$90 0 million in interest on capital 80% of
RETURNING CAPITAL TO SHAREHOLDERS
Budget range : R$230‐260 million
CAPEX BUDGET FOR 2012
and R$90.0 million in interest on capital, 80% of GAAP net income in 3Q12.
Share buyback program: up to 60 million shares authorized for repurchase until June 28, 2013
Actual 3Q12: R$52.3 million
Actual 9M12: R$124.2 million
*Includes collaterals pledged by participants in the form of cash, receivables and rights in securities under custody, as well as payouts still undisbursed.** Includes third party collaterals and restricted funds at BM&F Settlement Bank (Banco BM&F). 31
Revenue Breakdown in 3Q12Diversified revenue sources as a differential
REVENUE BREAKDOWN (3Q12)
9 2%
39.3%: Cash Equities
9.2%: Trading
30.1%: Post‐trading
9.2%18.5% 5.2%: Derivatives on Stocks and Indices
1.4%: Trading
3.8%: Post‐trading
30.1%37.0%: Financial/Commodities Derivatives
14.3%: Trading
22.7%: Post‐trading
Gross Revenue:R$581.3 million
1.4%
22.7%
4.5%: Depository, Custody and back‐office3 2%: Securities Lending
18.5%: Other revenues
3.8%14.3%
3.2%: Securities Lending
3.1%: Vendors
2.2%: Trading Access (brokers)1.9%: Listing3 6%: Others3.6%: Others
32
Expenses in 3Q12Focus on cost control and higher operating efficiency
Other-0.2%
ADJUSTED EXPENSESTOTAL EXPENSES BREAKDOWN (3Q12)(R$ million)
47%8%
2%
15%
PersonnelThird Party
Marketing
Expenses:
136.3
163.9
125.4 127.9 136.0
47%
14%
14%
Personnel
Depr./Amort.
Expenses:R$174.8 MM
14%
Data. Proc.3Q11 4Q11 1Q12 2Q12 3Q12
ADJUSTED EXPENSES: 3Q11 vs. 3Q12(R$ million)
ADJUSTED EXPENSES: 2Q12 vs. 3Q12
(R$ million)
4.8 0.1 1.71.5 2.4 0.1
127.9
136.0
2.5
(0.3)(0.8)
136.3 136.0
(0.7) (1.1)(2.5)
0.1
2Q12 Adj. Exp.
Personnel Data proc. Third Party Commun. Marketing Others 3Q12 Adj. Exp.
3Q11 Adj. Exp.
Personnel Data proc. Third Party Commun. Marketing Others 3Q12 Adj. Exp.
33
ADJUSTED OPEX¹ BUDGET
2013 Budget: R$560‐580 million, the same range of 2012Focus on cost control: in 2013, inflationary growth will be neutralized by higher , y g y gefficiency
(in R$ millions)
Expenses CAGR (2010‐13):1.6% pa
Inflation CAGR (2010‐2013) 5.8% pa<
560‐580 560‐580
544 5852013 budget in the same range
2010A 2011A 2012E 2013E
of 2012
1 Adjusted by depreciation, stock option program, tax on dividends from CME Group and provisions.Expenses growth considering the mid‐point budget for 2013 (R$570 million) and estimated IPCA from BCB Focus Bulletin (November 30, 2012).
34
CAPEX BUDGET
2013 Budget: R$260‐290 million2014 Budget: R$170‐200 million2014 Budget: R$170‐200 millionInvestments close to R$1.2 billion between 2010 and 2014 in projects below:
(in R$ millions)230 260 260‐290
Capex reduction starting from 2014
268 204
230‐260 170‐200
2010A 2011A 2012E 2013E 2014E
3Q10‐1Q13: PUMA Trading System™
2011‐2014: Clearing houses integration / CORE
4Q12‐4Q14: Data Center
2Q12‐3Q13: OTC
2010‐2014: Improvements in infrastructure
35
Appendix
3636
Fully integrated Business ModelDiversified sources of revenues
Services for issuers brokers and
ListingT di
Custody
Services for issuers, brokers and
commodities trading Trading, Clearing and Depository Activities Others Services
g(stocks, bonds, funds, asset‐backed securities,
Among others )
Trading(stocks, derivatives, corporate and governmentBonds, funds, spot US Dollar, among others)
y(services provided for funds
and other marketparticipants)
Commodities Certification
Central Counterparty (CCP)Clearing and Settlement
(for all products)
Market Data
Central Depository(stocks and corporate bonds)
Indices Licensing
Software LicensingTrading Access
(Brokers) ( p )
Securities Lending
(used by brokerageHouses and other
market participants)
( )
g(stocks and corporate bonds OTC Derivatives
(registration and collateralmanagement)
37
New Products PipelineHigh Frequency Trading ‐ HFTNew pricing policy (both segments)
Main Characteristics
Differentiated fees by tier only for day trades transactions executed by a registered HFT
A HFT Committee created to approve and monitor the HFTs
The new pricing policy was implemented in Nov’10
Bovespa Segment
In the Bovespa Segment, different tiers were created for individuals and non‐individuals HFT investors
Individuals
ADTV tier (BRL millions)Trading Fee
(bps) SettlementFee (bps) Total
U t 4 (i l i ) 0 70 1 80 2 50
Non‐individuals
ADTV tier (BRL millions)Trading Fee
(bps) SettlementFee (bps) Total
Up to 20 (inclusive) 0.70 1.80 2.50Up to 4 (inclusive) 0.70 1.80 2.50
From 4 to 12.5 (inclusive) 0.50 1.80 2.30From 12.5 to 25 (inclusive) 0.20 1.80 2.00
Up to 20 (inclusive) 0.70 1.80 2.50
From 20 to 50 (inclusive) 0.50 1.80 2.30From 50 to 250 (inclusive) 0.20 1.80 2.00From 250 to 500
BM&F Segment
From 25 to 50 (inclusive) 0.05 1.75 1.80
Above 50 0.05 1.55 1.60
(inclusive) 0.05 1.75 1.80
Above 500 0.05 1.55 1.60
38
In the BM&F Segment, the 70% flat discount was replaced by a volume tiered based discount, only for day trades, divided into trading and registration fees
BOVESPA Segment: foreign investment flow
Monthly Net Flow of Foreign Investments* (in BRL billions)
6.5
10.0
7.2
0.3 1.5
3.7 3.54.4
2.1 0.7 0.4
1.70.3
3.41.9 2.2
0.8 1.0
3.9
0.3 0.71.1 0.5
4.9
(1.6) (1.5)(0.6) (1.3)
(0.4)(0.2)
(2.4)(1.1) (1.3)
(2.3)(4.2)
(1.2)
*Includes regular trades and public offering. Updated until Dec. 31, 2012.39
Operational highlights: investor´s participation in Total Volume
BM&F Segment (Investor’s Participation in Total Volume)
7% 7% 9% 8% 8% 4% 4% 5% 4% 4% 4% 4% 4% 4%
12% 15% 17% 19% 20% 22% 23% 25% 25% 25% 27% 23% 28% 25%
24% 25% 23% 23% 24% 30% 33% 34% 34% 36% 34% 36% 34% 37%
7% 7% 9% 8% 8% 4% 4% 5% 4% 4% 4% 4% 4% 4%
56% 51% 49% 48% 45% 42% 38% 34% 36% 33% 34% 36% 33% 33%
2005 2006 2007 2008 2009 2010 2011 2012 Jul‐12 Aug‐12 Sep‐12 Oct‐12 Nov‐12 Dec‐12
Individuals Institutional Investors Foreign Investors Financial Institutions Companies CentralBank
Bovespa Segment (Investor’s Participation in Total Value)
Individuals Institutional Investors Foreign Investors Financial Institutions Companies Central Bank
33% 36% 35% 35% 34% 30% 35% 40% 40% 40% 41% 42% 42% 40%
12% 10% 10% 8% 7% 8% 9% 8% 7% 8% 7% 9% 8% 9%
25% 25% 23% 27% 31% 26% 21% 18% 20% 19% 17% 17% 17% 15%
27% 27% 30% 27% 26% 33% 33% 32% 31% 32% 31% 32% 32% 35%
40
2005 2006 2007 2008 2009 2010 2011 2012 Jul‐12 Aug‐12 Sep‐12 Oct‐12 Nov‐12 Dec‐12
Individuals Institutional Investors Foreign Investors Financial Institutions Companies Others
Investment Funds
AUM Evolution (in BRL billions)
1 9252,180
Equities
861 8991,070
1,301 1,513
1,375
1,703 1,787 1,925
15%22% 14%
18% 18%15%
14%Equities
Fixed Income
657 861 899
11%
10% 11%11%
Percent of Equity Fund Assets
W ld id Brazil
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Nov‐12
Worldwide Brazil
Equity funds14%Equity
funds40%
41Source: ANBlMA (Jul‐12) and Investment Company Institute – ICI (2Q12).
3Q12 EARNINGS
42
Bovespa SegmentADTV growth and flat margins
OPERATING HIGHLIGHTS
ADTV and margin in basis‐points
3Q12 3Q113Q12 x 3Q11: +8.7% ADTV => 9.8% growth of cash equities ADTV
foreign investors ADTV went up 26.2% => foreign6.6 6.4 7.2 7.6 7.2
5.71 5.58 5.91 5.50 5.73
Average market cap and turnover velocity
foreign investors ADTV went up 26.2% > foreign HFTs ADTV rose 24.9%
all‐time‐high monthly ADTV of R$8.4 billion in Sep‐12
record of 1 5 million trades in 9/14
3Q11 4Q11 1Q12 2Q12 3Q12ADTV (R$ billions) Margin (bps)
record of 1.5 million trades in 9/14
stable trading margins at 5.7 bps
higher turnover velocity of 70.4%
6 6% growth in the average market capitalization2 2 2 2 2 5 2 4 2 4
69.3% 66.6% 66.2% 75.0% 70.4%
HFTs: ADTV (R$ millions) and participation of volume (%)
6.6% growth in the average market capitalization
3Q12 x 2Q12: ADTV 6.1% down compared to the previous
2.2 2.2 2.5 2.4 2.4 ‐
3Q11 4Q11 1Q12 2Q12 3Q12
Average Stock Market Capitalization (BRL trillions) Turnover Velocity (%)
( $ ) p p ( ) ADTV 6.1% down compared to the previous record of R$7.6 billion in 2Q12
margins 4.2% higher => lower participation of institutional investors and day trades, which pay lower fee rates319.3 249.2 325.3
268.3 251.6 174.6 146.0 ‐
0,2 73,8
1,329.1 1,311.9 1,199.1 1,454.1 1,368.9
10.3% 10.3%8.5% 9.4% 9.8%
lower fee rates835.1 916.7 873.9
1,185.6 1,043.5
3Q11 4Q11 1Q12 2Q12 3Q12Foreigners Individuals Institutionals % of overall market 43
BM&F SegmentAverage RPC growth
OPERATING HIGHLIGHTS
ADV (millions of contracts) and RPC (R$)
3Q 2 3Q1 269 3Q12 x 3Q11: +14.7% RPC
=> depreciation of R$/US$ rate impacting RPC of FX (+36 2%) and USD int rates (+25 3%)1.8 1 5 1.7 2.3 1.8
0.5 0.5 0.50.5
0.50.3 0.3 0.3
0.30.4
2.8 2.5 2.7 3.4
2.7
1.106 1.157 1.172 1.133
1.269
BRL Int. Rates ‐ volumes by maturities (%)
of FX (+36.2%) and USD int. rates (+25.3%) contracts;
=> 10.1% increase in RPC for BRL int. rate due to concentration of trading in longer maturities contracts (4th and 5th)
1.8 1.5 1.7 1.8
3Q11 4Q11 1Q12 2Q12 3Q12
Int. Rate BRL FX Indices Others RPC (BRL)
16%4%
4%
8%
7% 22%
57%79% 68%
contracts (4th and 5th)
‐4.0% ADV => drop in ADV of BRL int. rate (‐2.4%), indices (‐17.3%) and FX (‐13.8%) went down
Lower participation of HFTs due mainly to a
65% 86% 90%
15% 3% 6%7% 2%4% 2%7%
3Q11 2Q12 3Q121st Maturity 2nd Maturity 3rd Maturity 4th Maturity 5th Maturity
HFTs: ADV (thd contracts) and participation of volume (%)
Lower participation of HFTs, due mainly to a reduction in ADV of FX and indices contracts
3Q12 x 2Q12:3Q12 x 2Q12: +12.0% RPC => reflecting the depreciation of R$/US$ rate (‐6.5%) and reduction of day trade operations of BRL int. rates
19 8% ADV d t th i d f178.7
139.6 134.8224.0
209 1
24.4 24.8
101.4 9.8
0.9
7.8% 7.2% 8.0% 6.3% 6.7%
419.5 335.2
412.2 442.5 342.2
300,0
400,0
500,0
‐19.8% ADV compared to the previous record of R$3.4 million contracts in 2Q12
68.2 50.9 46.5 68.7 58.3
148.3 119.9 129.5 140.0 73.8
139.6 134.8 209.1
‐
100,0
200,0
3Q11 4Q11 1Q12 2Q12 3Q12Equities FX Mini contracts Others % in Overall Volume 44
Net incomeNet income impacted by a fall in financial income
Adjusted net income did not fully capture the revenue growth due to a plunge in interest income
EBITDA growth in line with operating income growth
ADJUSTED NET INCOME EBITDA
27.9
(3.9)
(37 1)
14.1 375.6347.5 +8.1%
(R$ million)(R$ million)
399.6 (37.1)
400.6
3Q11 N t E * Fi i l I t 3Q123Q11Adjusted net
income
Net revenues Expenses* Financial Income
Income tax 3Q12Adjusted net
income3Q123Q11
OPERATING INCOME
324 1 346 8
Financial Income: 3Q12 vs. 3Q11
R$45.5 million, down 44.9%
Financial Revenue: R$67.6 million, down 33.7% due mainly
OPERATING INCOME
(R$ million)
+7.0%324.1 346.8 , y
to lower interest rates
Financial Expenses: R$22.1 million, a 14.0% growth due to depreciation of 24.0% in R$/US$
3Q11 3Q12* Excludes stock options plan and tax on dividends from CME Group.
45
Final RemarksBVMF better prepared to capture opportunities
OPPORTUNITIES IN BRAZILIAN MARKETS
New reality of lower interest rates
MAINTAINING MARKET INTEGRITY
Control, governance, transparency and market security
Capital markets set to become a more important alternative for long‐term funding
market security
Strengthening the integrity of Brazilian capital markets targeting growth
WHAT IS BVMF DOING?
l d d d l fInvesting intensively in trading and post‐trading platforms
Increasing focus on customers (brokers and investors): revisiting the fee structure, investing in product development
Stringent cost controlsStringent cost controls
Ensuring market integrity by establishing efficient controls and strengthening BSM
WHAT IS ALREADY HAPPENING!
Operating leverage materialization
R th d it l i th i d i t ti l i t bilitRevenue growth, despite slow economic growth scenario and international instability
High potential products have been showing strong growth
46