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CME teams up with South American exchange

by Hollis Templeton
Oct 01, 2008

Well established in Europe and Asia, Chicago-based CME Group Inc. now has expanded its trading platform to Latin America. Order routing of derivatives products from Brazil’s BM&FBOVESPA exchange to the CME Globex electronic trading system began Tuesday.

The agreement between the two exchanges enables CME Globex customers in more than 80 countries to electronically trade BM&F products, which include futures and options on One Day Inter-Bank Deposits, the Bovespa Stock Index and commodities such as Arabica coffee, live cattle and corn.

“With Brazil’s position as the world’s tenth largest economy and with BM&FBOVESPA offering some of the most successful and liquid Latin American futures and options products, we are pleased to expand our customers’ access to these important markets,” stated Craig Donohue, CME Group’s chief executive officer and a member of the BM&FBOVESPA board of directors, in a news release. “We also look forward to establishing the next phase of our strategic partnership when CME Group products will be directly accessible to customers trading on the BM&FBOVESPA platform.”

By the end of the year, BM&F customers will have the opportunity to trade CME Group futures and options on interest rates, equity indexes, foreign exchange, commodities, and energy and metal products.

CME Group’s Mary Haffenberg, associate director of commodity and equity products, said this is the first alliance between an exchange in the United States or Europe and one in Latin America.

According to a statement by Gilberto Mifano, chairman of the BM&FBOVESPA board of directors, Brazil’s financial and capital markets have been growing steadily in the last few years, offering complex products to attract both domestic and international investors. “This is evidenced by the impressive capital inflows that were registered during the last IPOs,” he said in the release.

CME Group has technological or product-line agreements with around a dozen Asian exchanges, including those in Singapore, Korea, China, Taiwan and Japan, said Haffenberg. Order routing technology is, however, unique to the CME-BM&FBOVESPA agreement, she said.

CME Group will establish a high speed and high capacity international connection between the exchanges' respective data processing centers. Through this connection, the Brazilian exchange's order book will be transmitted in real time to CME Globex users, and the CME Globex order book will be transmitted in like manner to Brazilian users.

Trading volume for CME Group surged to 289.9 million contracts in September, up more than 30 percent from the same month last year and up 48 percent from August 2008.

CME stock rose to $397.75, up $26.24 or 7 percent.