BATS Global Markets, a stock exchange operator, has signed a memorandum of understanding with Claritas, a Brazilian asset management firm, for the potential creation of a new stock exchange in Brazil.
Under the agreement, the organisations will collaborate to explore the possibility of creating a new market that has clearing and depository services in Brazil. Freitas e Leite Advogados (FreitasLeite), a Brazilian law firm specialising in financial and capital markets, has been retained for local legal expertise.
BM&F Bovespa currently operates the only equities and derivatives markets in Brazil. It has set out plans to modernise its equities markets including the opening up of the market to high frequency trading (HFT) firms. Its co-location direct market access service, which was developed for HFT users, saw B$2.5 billion (US$1.5 billion) in volume traded in January 2011, up from B$1.5 billion (US$900 million) in December 2010.
“Today's announcement serves as an important initial step in exploring the unique opportunity that exists in the Brazilian market, which has many of the same frictions we've witnessed and overcome in the US and Europe,” said Ken Conklin, senior vice president of business development and marketing at BATS Global Markets. “We're pleased to partner with Claritas and FreitasLeite, two leading organisations that understand the needs of the Brazilian marketplace, to further investigate the opportunity.” ”¨”¨
Carlos AmbrÃ³sio, senior partner at Claritas, said, “After thoroughly analysing the benefits of competition in exchange, clearing and depository services, we are very pleased to have identified BATS as the perfect partner for this challenge. The Brazilian capital markets are ready for access to the best technology in the world, and there is certainly no one better than BATS for the job.”
BATS Global Markets is hoping to expand its presence in Europe with the purchase of multilateral trading facility Chi-X Europe. On 11 February, both firms said that they had extended exclusive negotiations concerning a potential merger.