BM&FBovespa Will Lower Stock Trading Fees to Increase Volume

BM&FBovespa SA, the operator of Latin America’s biggest securities exchange, is lowering fees for stock transactions to boost volume as Brazil’s benchmark stock index posts the world’s second-worst performance.

Equity trading fees will be cut by 28.5 percent starting April 1, Chief Executive Officer Edemir Pinto told reporters in Sao Paulo today. The reduction will be as much as 71 percent in December based on the average monthly volume of transactions. Day traders will get discounts similar to those enjoyed by high-frequency traders starting at year-end, he said.

“These measures are intended to boost trading,” Pinto said. “We’re betting on volumes.”

The push for higher volumes comes as Brazil’s benchmark index records an 8.2 percent drop this year, the worst return among 94 major stock benchmarks after Cyprus, according to data compiled by Bloomberg. Brazil’s exchange operator may also face new competition as Americas Trading Group and Direct Edge Holdings LLC signal plans to enter the Brazilian market.

BM&FBovespa’s shares rallied 1.4 percent to 13.36 reais at the close of trading in Sao Paulo, the biggest gain since Feb. 22.

Daily stock trading volume in Sao Paulo has averaged 7.56 billion reais ($3.85 billion) this year through March 1, according to data compiled by the exchange. Volume climbed 12 percent last year after being unchanged in 2011.

The fee changes are in line with those in global capital markets and are intended to lure international investors, according to Pinto.

Exchange’s Monopoly

Ending BM&FBovespa’s monopoly on stock trading in the country would lower fees and help spur economic growth, Oxera Consulting Ltd. said in a report commissioned by Brazil’s securities regulator and released last June.

Americas Trading Group, a provider of financial technology, said in November that it plans to create a platform with NYSE Euronext for buying and selling Brazilian stocks starting this year. In January, Direct Edge said it was ready to enter the Brazilian market.

The Brazilian exchange expects volumes to climb, offsetting reduced revenue from lower fees. If trading volume doesn’t increase, BM&FBovespa may lose 18 million reais to 20 million reais in annual revenue, Pinto said. The company plans to review trading fees on derivatives by December, Pinto said.

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