COVER STORY: Poised for a Secondary Boom
A CME-BM&FBovespa trading link could inject colossal liquidity into Brazil. The anticipated onslaught of new investors promises to take local markets to the next level.
by Dan Shirai
A tectonic shift is happening in Brazil that should help crack
open still immature capital markets. Barriers that have kept
global investors away from LatAms biggest derivatives
marketplace are being bashed down by a high-tech initiative to
link Brazils BM&FBovespa with the worlds
largest exchange by market cap, the Chicago Mercantile Exchange
Both exchanges are working to bring investors around the globe
unprecedented access to Brazils domestic futures,
options, equity and fixed income markets. The pact, which
involves cross-listing contracts and direct order routing
across a shared network, could unleash a wave of trading.
Some large US funds that employ quantitative models for
high-volume trading are already waiting to pounce, and
investors predict that the CME-BM&FBovespa agreement will
triple or even quadruple BM&F trading volume
in the coming year. The Brazilian exchange traded 426 million
futures and options contracts with a notional value of...
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