Cetip Declines in Sao Paulo as HSBC Cuts to Hold on Competition

Cetip SA Mercados Organizados fell the most in three weeks after HSBC Holdings Plc cut the securities depository to the equivalent of hold, citing increasing competition from exchange operator BM&FBovespa SA.

Cetip dropped 1.3 percent to 25.70 reais, the steepest decline since Dec. 12. BM&FBovespa, which runs Latin America’s biggest securities exchange, slid 0.9 percent to 13.78 reais. The benchmark Bovespa index retreated 0.9 percent.

BM&FBovespa will begin to register fixed-income securities as soon as the central bank gives its authorization, Valor Economico reported on Dec. 19, citing BM&FBovespa director Fabio Dutra, who didn’t specify a date for the new operation to start. HSBC cut Cetip from the equivalent of buy and reduced its 12-month target price 24 percent to 29 reais, saying the company may lose as much as 50 percent of market share in some segments by 2016.

“We believe that competition from BM&FBovespa in the registry segment should pressure both prices and volumes for Cetip,” Victor Galliano, an analyst at HSBC, wrote in a note to clients dated today.

Cetip and BM&FBovespa didn’t immediately respond to requests for comment when contacted by Bloomberg News.

Shares of Cetip have gained 5.3 percent since Dec. 19. BM&FBovespa fell 3.6 percent during the period, while the benchmark index rose 1.5 percent.

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