BM&FBovespa Study Group Considering Ibovespa Methodology Changes

BM&FBovespa SA (BVMF3), the Brazilian exchange operator, is considering changing the way it determines the relative importance of individual stocks in its benchmark index, Chief Executive Officer Edemir Pinto said.

A group that began studying potential changes to the Ibovespa (IBOV) eight months ago is scheduled to present a report on July 31, Pinto told reporters in Rio de Janeiro today. Any adjustments to the measure would be made in two to three years, he said.

“Right now, there is no expectation of changing the index.” Pinto said.

The country’s benchmark stock gauge, which is partially weighted by volume, has been whipsawed by price swings in companies owned by billionaire Eike Batista, including oil producer OGX Petroleo & Gas Participacoes SA, the most volatile stock in the 823-member MSCI Emerging Markets Index.

Even after OGX’s market cap tumbled in the past year as it failed to meet output targets, it has become one of the heaviest stocks on the Ibovespa as average daily volume soared to 179.1 million shares over the past three months from 34.5 million a year ago.

“We don’t have to worry about that,” Pinto said when asked about the influence of Batista’s companies in the gauge. “We need to worry about having clear rules,”

BM&FBovespa says on its website that it hasn’t made changes to the index’s methodology since its inception in 1968.

To contact the reporters on this story: Adriana Chiarini in Rio de Janeiro at achiarini4@bloomberg.net; Julia Leite in New York at jleite3@bloomberg.net

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

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