BM&FBovespa Tumbles as Direct Edge Seeks Brazil Equity Venue

BM&FBovespa SA (BVMF3), the operator of Latin America’s biggest exchange, fell the most in two months after industry publication The Trade reported that U.S.-based Direct Edge Holdings LLC is poised to apply to start a stock trading venue in Brazil.

BM&FBovespa’s shares declined 2.5 percent to 13.55 reais at the close of trading in Sao Paulo, the steepest drop since Nov. 8. The benchmark Bovespa index slid 0.6 percent.

Direct Edge is “very close” to requesting authorization from Brazil’s regulator to operate as an exchange in the South American country, The Trade reported today. The financial news website cited Chief Executive Officer William O’Brien. Jim Gorman, a spokesman for the Jersey City, New Jersey-based company, confirmed the report, saying by e-mail that it is “looking to file the application in the next few weeks.”

Knight Capital Group Inc. (KCG), Goldman Sachs Group Inc. (GS) and Citadel LLC each hold about 20 percent of Direct Edge, the fourth-largest owner of U.S. stock exchanges. A group of other financial firms also owns a stake in the exchange operator.

BM&FBovespa is facing a loss in equities market share estimated at as much as 30 percent by HSBC Holdings Plc and Banco Itau BBA SA as the government considers boosting competition for stock trading.

BM&FBovespa declined to comment in an e-mailed statement to Bloomberg News. The Brazilian exchange operator’s shares climbed 43 percent in 2012 while the benchmark index rose 7.4 percent.

To contact the reporters on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net; Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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