CME Group and Bm&fBovespa intend to advance their mutual interests in globalizing their respective businesses through jointly identifying and pursuing opportunities for strategic investments and partnerships with other international exchanges.
As part of the expanded partnership, Bm&fBovespa will increase its ownership interest in CME Group to 5%, the same approximate stake CME Group currently has in Bm&fBovespa.
The development of a new multi-asset class trading platform between CME Group and Bm&fBovespa include: Bm&fBovespa will replace its existing trading systems with the new platform in early 2011; The firms will join efforts to develop a multi-asset electronic trading platform to process orders and trades across a number of financial products, including but not limited to: cash equities; equity derivatives; futures on stock indices, interest rates, exchange rates and commodities; spot exchange rates; government bonds and private issuers’ bonds (fixed-income securities).
Following completion of the transactions, CME Group will nominate a senior representative of Bm&fBovespa to the CME Group board of directors. CME Group already holds a seat on the Bm&fBovespa board of directors. Each party will have the right to maintain its board seat during the term of the strategic partnership subject to certain minimum requirements.
Terry Duffy, executive chairman of CME Group, said: “Our decision to become global preferred strategic partners and to develop a new multi-asset class technology provides additional opportunities to further expand our businesses. The development of this new platform will combine the best of our technology expertise and further solidify our commitment to working together to bring innovative and new trading solutions to the global marketplace.”
Craig Donohue, CEO of CME Group, said: “Our proposed transaction with Bm&fBovespa will further expand the breadth of our technology and distribution capabilities into the global cash equities and options markets, while strengthening our strategic partnership and enhance our mutual opportunities to invest in and partner with the world’s leading multi-asset class exchanges.
“Building on our already successful partnership with Bm&fBovespa, we intend to work together to deploy the new platform for the cash and derivatives business segments of Bm&fBovespa, one of the world’s leading stock and futures exchanges. This enhances CME Group’s opportunities to selectively diversify into the cash equity and options segments in emerging markets, where we believe the growth and profit opportunities are most attractive.”
Arminio Fraga, chairman of the board at Bm&fBovespa, said: “With this agreement, the Brazilian exchange takes a decisive step towards the consolidation of its position as a trading hub, providing the capital, financial and commodity markets with liquidity.”
Edemir Pinto, CEO of Bm&fBovespa, said: ““I have no doubt that, after this partnership and based on technology derived from the CME Globex trading system, as well as on new technology to be jointly created by the parties, this new Bm&fBovespa technological standard will produce a system to meet the high performance requirements of the world’s most demanding traders in multiple products.”
However, the closing of the transaction is subject to the negotiation of definitive agreements, Bm&fBovespa shareholder approval and other customary closing conditions.
