A planned merger between Argentina’s Rosario Futures Exchange (ROFEX) and Rosario Stock Exchange will pave the way for competition with the Buenos Aires Stock Exchange in equity derivatives products.
ROFEX is currently unable to offer equity derivatives, since the Buenos Aires bourse, which also operates a derivatives exchange, controls the relevant indices. However, the merger with Rosario Stock Exchange now means the combined entity will have the firepower to produce indices of its own.
ROFEX has been looking for ways to increase its international visibility in recent months and recently announced plans to introduce a multi-asset class trading platform in Q1 2012 that will enable the merged entity to present itself as a ‘one-stop shop’ for Argentinean products.
The exchange also recently joined trading technology provider SunGard’s global network in November 2011, enhancing its international connectivity, order routing and market data capabilities.
In part due to restrictions imposed on international flows by the government, Argentine equity trading volumes are generally low, with only US$20 million traded on some days, which compares with average daily volumes of US$300 million in US dollar futures at ROFEX.
Already, the exchange is planning new products and marketing the opportunities for cash-futures arbitrage, as well as margin efficiencies from clearing on a single platform. It has also laid out plans to introduce co-location facilities for high-frequency traders, early next year.
In addition, ROFEX told theTRADEnews.com that it is now considering the benefits of integrating with the other regional stock exchanges of Argentina in Córdoba, Mendoza and Litoral, providing even greater consolidation of equity and derivatives liquidity in a single pool. ROFEX is also considering the potential benefits of internalisation and matching the order flow for equity and bond products. Currently, the Rosario Stock Exchange does this by routing to the Buenos Aires Stock Exchange.
Ultimately, the exchange hopes to emulate the success of Brazil’s BM&F Bovespa, which formed from a combination of equities and derivatives bourses in 2008 and has established a strong regional and international franchise. Furthermore, ROFEX CEO Diego Fernandez said in November that joining Mercado Integrado Latino Americano, the market integration project between the stock exchanges in Colombia, Chile and Peru, could also be on the cards – though no formal discussions have begun as yet.
The ROFEX–Rosario Stock Exchange deal currently remains subject to shareholder approval on both sides, which is expected in Q1 2012.