BM&FBOVESPA Analyst Day
São Paulo, SP
PLANEJAMENTO ESTRATÉGICO
SEP/2014
Confidencial Restrita
Confidencial
Uso Interno
X
1
Público
Forward Looking Statements
This presentation may contain certain statements that express the management’s expectations, beliefs and
assumptions about future events or results. Such statements are not historical fact, being based on currently
available competitive, financial and economic data, and on current projections about the industries BM&FBOVESPA
works in.
The verbs “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “plan,” “predict,” “project,” “target” and other
similar verbs are intended to identify these forward-looking statements, which involve risks and uncertainties that
could cause actual results to differ materially from those projected in this presentation and do not guarantee any
future BM&FBOVESPA performance.
The factors that might affect performance include, but are not limited to: (i) market acceptance of BM&FBOVESPA
services; (ii) volatility related to (a) the Brazilian economy and securities markets and (b) the highly-competitive
industries in which BM&FBOVESPA operates; (iii) changes in (a) domestic and foreign legislation and taxation and
(b) government policies related to the financial and securities markets; (iv) increasing competition from new
entrants to the Brazilian markets; (v) ability to keep up with rapid changes in technological environment, including
the implementation of enhanced functionality demanded by BM&FBOVESPA customers; (vi) ability to maintain an
ongoing process for introducing competitive new products and services, while maintaining the competitiveness of
existing ones; (vii) ability to attract new customers in domestic and foreign jurisdictions; (viii) ability to expand the
offer of BM&FBOVESPA products in foreign jurisdictions.
All forward-looking statements in this presentation are based on information and data available as of the date they
were made, and BM&FBOVESPA undertakes no obligation to update them in light of new information or future
development.
This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall
there be any sale of securities where such offer or sale would be unlawful prior to registration or qualification
under the securities law. No offering shall be made except by means of a prospectus meeting the requirements of
the Brazilian Securities Commission CVM Instruction 400 of 2003, as amended.
BM&FBOVESPA Analyst Day – SEP/14
2
BM&FBOVESPA Analyst Day
Schedule
OPENING
Edemir Pinto, Chief Executive Officer
PRODUCTS, CLIENTS AND PRICING POLICY
Eduardo Guardia, Chief Product and Investors Relations Officer
CLEARING BM&FBOVESPA AND CORE RISK MODEL
Cícero Vieira, Chief Operations Officer
TECHNOLOGICAL INFRASTRUCTURE DEVELOPMENT
Luís Furtado, Chief Technology Officer
FINANCIAL HIGHLIGHTS
Daniel Sonder, Chief Financial and Corporate Affairs Officer
Q&A SESSION
BM&FBOVESPA Analyst Day – SEP/14
3
BM&FBOVESPA Analyst Day
Schedule
OPENING
Edemir Pinto, Chief Executive Officer
PRODUCTS, CLIENTS AND PRICING POLICY
Eduardo Guardia, Chief Product and Investors Relations Officer
CLEARING BM&FBOVESPA AND CORE RISK MODEL
Cícero Vieira, Chief Operations Officer
TECHNOLOGICAL INFRASTRUCTURE DEVELOPMENT
Luís Furtado, Chief Technology Officer
FINANCIAL HIGHLIGHTS
Daniel Sonder, Chief Financial and Corporate Affairs Officer
Q&A SESSION
BM&FBOVESPA Analyst Day – SEP/14
4
Strategic Drivers
REVENUE
GROWTH AND
DIVERSIFICATION
OPERATING
EXCELLENCE
BM&FBOVESPA Analyst Day – SEP/14
FOCUS ON THE
CUSTOMER
INSTITUTIONAL
STRENGTHENING
5
Markets and Products Development
Searching opportunities to accelerate growth
Pursuit of excellence in customer
service and in developing
products and markets
Main goals
 Customer segmentation and
relationship strengthening
 To identify market demands and
trends
 To link internal and external efforts
(regulators and partners)
 To increase efficiency and
assertiveness in addressing market
needs
 To execute the company’s
commercial and pricing policies
BM&FBOVESPA Analyst Day – SEP/14
6
Products and Services Development
Commercial and development areas
Active stance in relationship with customers and in identifying
trends and demands
Examples of demands and discussions
Segmentation:
regulation, distinct
needs and demands
Local
Institutional
Investors
Banks
Insurers
Agribusiness
Securities lending
 Treatment of corporate actions; control improvements for the
participants, and tax treatment
Fixed income / OTC derivatives
 Strengthening the CCP service and gains from the optimization of
deposited margin due to CORE; new securities on the registration
platform
New products
 Fixed income ETFs
 Derivatives: inflation, foreign index and agribusiness futures
New listings
Foreign
Investors
Companies
Listed and
Unlisted
 Small and medium enterprises (SMEs) and unsponsored BDRs
Attracting new foreign customers
 Conversations with MMs and HFTs that do not operate in Brazil yet
 Dissemination of the securities lending platform
 Regulatory discussions
 ICVM 409 reform (qualified investor) and ICVM 476 (restricted
distribution)
BM&FBOVESPA Analyst Day – SEP/14
7
Products and Services Development
Focus on the customers’ demands and needs
Long-term development of products, markets and services
Greater liquidity for listed products
 Development of infrastructure for expansion of MM and HFT activity
 Capital efficiency generated by CORE enables/encourages the realization of new strategies
 Development of the securities lending platform
 Marketing listed products and attracting new customers
Expanding the retail investor base
 Incentive program with market participants
 Expanding the portfolio to attend to the investment profile of individuals (Tesouro Direto, Fixed
Income ETFs, FIIs ...)
 Discussion about tax treatment simplification in the equities market
Capture of institutional investors’ diversification into foreign securities
 Listing of foreign securities (non-sponsored BDRs and Foreign Index ETF)
 Cross-listing of futures contracts
BM&FBOVESPA Analyst Day – SEP/14
8
Products and Services Development
Focus on the customers’ demands and needs
Long-term development of products, markets and services
Greater number of listed companies
 Discussions with the Government to encourage and facilitate IPOs by SMEs
 Financial education for entrepreneurs and support in the company’s planning
Fixed Income and OTC markets (product, market and revenue diversification)
 Securities registration: (i) marketing of already-available products (CDB, LCA, LCI and COE); ii) new
products (CDB - new types, Financial Bills, COE - physical delivery and repos)
 OTC Derivatives: (i) benefits of CORE; (ii) SWAPs and Flexible Options migration to the new
platform (flexibility and operational efficiency); and (iii) development of SWAPs with cash flow
 Corporate bonds: (i) acceptance of securities with restricted distribution efforts (ICVM 476); and
(ii) migration of trading to PUMA
Constant fee structure and incentive improvements
 Use of pricing policies and incentives as important tools for the development of products,
markets and services, as well as alignment with market participants
 Review and monitoring of existing pricing and incentives policies
BM&FBOVESPA Analyst Day – SEP/14
9
Products and Services Development
Evolution and governance of pricing policy structure
Honing of
BM&FBOVESPA’s
pricing policy and
incentives
 Markets and products development
 Models review
Main drivers
 Price recomposition
 Pricing new products
Annual fee adjustment
for issuers
BM&F seg. (disc. over
exchange fees for
HFTs)
2008
BOVESPA seg. (volume
discount for HFTs)
BM&F seg. (prices
per volume tiers)
2009
Charges on
Depository amount in
balance
 Discounts review
OTC Products
BOVESPA seg. (disc.
per volume day-trade
and rebalancing)
Rebalancing
trading/pos- trade
2010
2011
Incentive program
for Tesouro Direto
Market Data Pricing
Policy
BM&FBOVESPA Analyst Day – SEP/14
2012
Creation of an
organizational
structure for fees
2013
2014
2015...
Incentive program for
retail base
Announc. pricing
revision for
Market Data,
Issuers, DMA
(BM&F seg.) and
Sec. Lending
10
Products and Services Development
Recent changes in pricing policy and incentives
Products / Market
Main changes
SECURITIES LENDING
Elimination of 0.05% incentive for national lenders (settlement rate for
voluntary loan maintained at 0.25% p.a.)
DMA
Elimination of 10% discount for trades via DMA in Derivatives Market
(BM&F Segment)
MARKET DATA
Price recomposition and pricing of new products and services
Elimination of analysis fee discount on the annual fee
ISSUERS
Creation of analysis fee for Public Tender Offers, IPOs and Follow-ons
BM&FBOVESPA Analyst Day – SEP/14
11
Development Discussions with the Government
Creating incentives and addressing important issues
Addressing important issues to foster the long-term development of the
Brazilian capital market
Tax treatment for Retail Investors
BM&FBOVESPA and the Brazilian IRS are developing a
proposal to simplify tax treatment for individual investors
in equities market
Fixed income ETFs
 Tax treatment definition
Incentives for SMEs
Tax exemption on capital gains; reduction of maintenance
costs of publicly-held companies; restricted distribution
offering, and entrepreneurial and management
qualification programs
Securities Lending
 Tax treatment clarification on payouts(dividends and
interest on capital)
BM&FBOVESPA Analyst Day – SEP/14
12
BM&FBOVESPA Analyst Day
Schedule
OPENING
Edemir Pinto, Chief Executive Officer
PRODUCTS, CLIENTS AND PRICING POLICY
Eduardo Guardia, Chief Product and Investors Relations Officer
CLEARING BM&FBOVESPA AND CORE RISK MODEL
Cícero Vieira, Chief Operations Officer
TECHNOLOGICAL INFRASTRUCTURE DEVELOPMENT
Luís Furtado, Chief Technology Officer
FINANCIAL HIGHLIGHTS
Daniel Sonder, Chief Financial and Corporate Affairs Officer
Q&A SESSION
BM&FBOVESPA Analyst Day – SEP/14
13
Clearinghouses’ Integration and the New Risk Model (CORE)
Post-trade environment after Bovespa-BM&F merger
The BM&FBOVESPA post-trade environment results from the
historical evolution and merger of Bovespa and BM&F
Markets
CCP for the following products
 Cash equities market, ETFs and BDRs
Equities, Equity
Derivatives, Corporate
Bonds
 Corporate bond cash market
 Options on single stocks and forwards
 Securities Lending (BTC)
Derivatives
 Options and futures on BRL Interest Rates, FX, Inflation Indices, Equity Indices and
agribusiness, energy and metal commodities
 OTC derivatives (swaps and flexible options)
Foreign Exchange
Government Bonds
 FX spot market (BRL vs. USD)
 Cash market & forward market for government bonds and Repos
BM&FBOVESPA Analyst Day – SEP/14
14
Clearinghouses’ Integration and New Risk Model (CORE)
Post-trade environment evolution
Organization of the post-trade
environment by types of assets/products
Organization of the post-trade
environment by process
Equities, ETFs,
BDRs
4 rulebooks and
4 manuals.
Other products
and assets
4 participant
structures
4 distinct
environments /
IT architectures
4 settlement
windows and 4
multilateral
balances
4 systems /
back-office
processes
Government
Bonds
Rules and Manuals
Structure of market participants
Participants and customer registration
OTC
derivatives
Allocation and transfer
Corporate
fixed income
Position control
Clearing and settlement
4 systems /
processes for risk
management
4 registration
systems for
participants and
clients.
4 pools of
collateral
Risk management
Pool of collateral
Securities
lending
Interbank spot
foreign
exchange
Futures, options,
forwards
Exchange and market
participation cost
reduction
Liquidity management
improvement
BM&FBOVESPA Analyst Day – SEP/14
More efficient
allocation of capital by
investors
Operational and
technological risk
reduction
15
Clearinghouses’ Integration and New Risk Model (CORE)
Benefits from Clearinghouse integration
OVERVIEW: CLOSEOUT RISK CALCULATION IN THREE STEPS
1. DETERMINING
THE CLOSEOUT
STRATEGY
T+0
T+1
T+2
T+3
T+4
...
T+N
2. RISK EVALUATION
T+0
T+1
T+2
T+3
T+4
...
T+N
T+1
T+2
T+3
T+4
CLOSEOUT RISK
PERMANENT LOSS
BM&FBOVESPA Analyst Day – SEP/14
TRANSIENT LOSS
...
Defines the (stress) scenarios associated with
the dynamics of each risk factor relevant to
the portfolio. All assets and contracts are
reevaluated considering the scenarios defined
in this step (full valuation).
Calculates and aggregates intertemporally P&L
associated with each scenario, considering the
defined closeout strategy
3. POTENTIAL P&L
CALCULATION
T+0
Defines the portfolio closeout strategy which,
respecting the settlement restrictions of the
portfolio of assets/markets, should minimize
the risk of a loss associated with the closeout
process, preserving existing hedge strategies
T+N
Result: Two risk measures—market and
liquidity—that are estimated both jointly and
consistently
16
Clearinghouses’ Integration and New Risk Model (CORE)
Timeline project evolution
2010
2011
2012
2013
2014
 Publication of a White Paper proposing the unification of BM&FBOVESPA’s Clearinghouses
 BM&FBOVESPA and IBM: survey into international trends in clearing processes and
technology and the drawing up of a benchmark clearing house model
 Visit by international clearing houses and vendors:
 DTCC, CME, Nasdaq-OMX, Deutsche Börse, Euroclear, LCH.Clearnet
 Atos Origin, Sungard, Chi-Tech, Calypso, Markit, Fortis, Millenium and Cinnober
 Analysis of the degree of adherence of each vendor/Clearinghouse to the created
benchmark and the assessment of commercial and strategic aspects
 Short-list of vendors: Cinnober, Calypso and Millenium
BM&FBOVESPA Analyst Day – SEP/14
17
Clearinghouses’ Integration and New Risk Model (CORE)
Timeline project evolution
2010
2011
2012
2013
2014
 Development of a concept test for the Cinnober systems and other candidates at the
BM&FBOVESPA Data Center
 Mini prototype of a Clearinghouse
 Implementation of selected products
 Functional and non-functional testing
 Contracting of Cinnober
 Transfer of source code
 Transfer of know-how
 Exclusivity in Brazil
 Other exchanges’ commercialization rights of the system
 Start of the development of systems of (Oct/2011)
 Registration of participants, registration of instruments
 Capture, allocation, give-up, position control, fee structure, settlement
 Price calculator, margin calculation, intraday risk, collateral, back-test
 Information services, legacy systems
BM&FBOVESPA Analyst Day – SEP/14
18
Clearinghouses’ Integration and New Risk Model (CORE)
Timeline project evolution
2010
2011
2012
2013
2014
 Continuation of IT development
 Contracting of the Finance Concepts consulting firm to aid the risk system’s
development
 Marco Avellaneda – NYU (Quant of the Year in Risk Magazine)
 Rama Comt – Columbia University
 Official presentation of the project to the board and president of BACEN
 Official launch of the project at an event with the participation of BACEN, CVM,
FEBRABAN, ANBIMA and 400 guests
BM&FBOVESPA Analyst Day – SEP/14
19
Clearinghouses’ Integration and New Risk Model (CORE)
Timeline project evolution
2010
2011
2012
2013
2014
 Continuation of IT development
 Submission to BACEN of the rules and manual of the new Clearinghouse
 Access Rules
 Access Manual
 BM&FBOVESPA Clearinghouse Rules
 BM&FBOVESPA Clearinghouse Operating Procedures Manual
 BM&FBOVESPA Clearinghouse Risk Management Manual
 Start of participant certification
 Starts in July 2013
 Staggered opening to the market of the system’s modules
 Complete integrated tests as of November 2013
 Execution of the mandatory testing script as of December 2013
BM&FBOVESPA Analyst Day – SEP/14
20
Clearinghouses’ Integration and New Risk Model (CORE)
Timeline project evolution
2010
2011
2012
2013
2014
 Continuation of the certification of participants
 Start of parallel production in April





11 parallel production cycles
Data migration at the weekend
Old and new Clearinghouses running in parallel on Monday, Tuesday and Wednesday
Checking of trades, positions and settlement prices
Checking of risk calculation through an independent prototype
 Disaster recovery test
 Approval by BACEN of the New Clearinghouse’s rules and systems
 Implementation of the new Clearinghouse on August 18, 2014
BM&FBOVESPA Analyst Day – SEP/14
21
Clearinghouses’ Integration and New Risk Model (CORE)
Derivatives clearinghouse migration results
 Roughly R$20 billon released in collateral
 R$15 billion reduction in required collateral
 R$5 billion increase to the value of deposited
collateral
 R$12 billion withdrawn in the early days of
activity
 More than 5,000 margin simulation exercises
per day
BM&FBOVESPA Analyst Day – SEP/14
22
New Risk Model (CORE) – derivatives market
Simulations of positions and required collateral
FX DERIVATIVES POSITIONS
Position 2
Position 1
Collateral
(R$)
Position 2
Collateral
(R$)
Collateral
Sum (R$)
Collateral
Strategy
(R$)
Efficiency
(%)
Buy 1 FX future 1
1
month maturity
Sell 2 USD calls at the
money 1 month
maturity
14,392.24
52,117.39
66,509.63
40,260.78
-39%
Sell 1 FX future 1
2
month maturity
Sell 2 USD puts at the
money 1 month
maturity
14,372.09
30,457.36
44,829.46
25,805.53
-42%
Buy 1 FX future 1
month maturity
Sell DI X DOL swap 1
month maturity
14,392.24
28,965.85
43,358.09
27,604.17
-36%
Buy 1 USD call at
4 the money 1 month
maturity
Sell 1 USD call at the
money 2 months
maturities
0.00
26,107.45
26,107.45
1,125.75
-96%
12,927.47
26,058.69
38,986.16
26,058.70
-33%
#
3
5
Position 1
Sell 1 USD call at the
Buy DI X DOL swap 1
money 1 month
month maturity
maturity
BM&FBOVESPA Analyst Day – SEP/14
23
New Risk Model (CORE) – derivatives market
Simulations of positions and required collateral
IBOVESPA (INDICE) DERIVATIVES POSITION
#
Position 1
Position 2
Position 1
Collateral
(R$)
Position 2
Collateral
(R$)
Collateral
Sum (R$)
Collateral
Strategy
(R$)
Efficiency
(%)
Buy 1 IBV future 1
1
month maturity
Sell 2 IBV calls at
the money 1
month maturity
9,978.51
21,866.37
31,844.89
22,898.02
-28%
Sell 1 IBV future 1
2
month maturity
Sell 2 IBV puts at
the money 1
month maturity
9,965.79
28,686.52
38,652.31
27,298.53
-29%
Sell DI X IBV swap
1 month maturity
9,978.51
13,897.11
23,875.62
19,014.06
-20%
Buy 1 IBV call at the
4 money 1 month
maturity
Sell 1 IBV call at
the money 2
month maturities
0.00
11,938.80
11,938.80
2,321.21
-81%
Buy DI X IBV swap 1
5
month maturity
Sell 1 IBV call at
the money 1
month maturity
18,989.09
11,906.08
30,895.17
19.957.02
-35%
IBV ETF deposited
as collateral
9,886.34
2,477.20
12,363.54
8,874.32
-28%
3
6
Buy 1 IBV future 1
month maturity
Sell 1 IBV future 1
month maturity
BM&FBOVESPA Analyst Day – SEP/14
24
New Risk Model (CORE) – derivatives market
Simulations of positions and required collateral
BRL INTEREST RATES (DI) DERIVATIVES POSITION
#
Position 1
Position 2
Position 1
Collateral
(R$)
Position 2
Collateral
(R$)
Collateral
Sum (R$)
Collateral
Strategy
(R$)
Efficiency
(%)
Sell 1 DI future 1
1
year maturity
Sell 2 IDI call at the
money 1 year
maturity
1,352.44
8,199.29
9,551.73
8,254.90
-14%
Buy 1 DI future 1
2
year maturity
Sell 2 IDI put at the
money 1 year
maturity
1,462.51
5,973.76
7,436.27
5,059.93
-32%
Buy 1 DI future 1
year maturity
Sell DI X PRE swap 1
year maturity
1,462.51
2,818.85
4,281.36
3,286.75
-23%
0.00
4,950.55
4,950.55
2,475.91
-50%
Sell 1 IDI call at the
money 1 year
maturity
2,818.85
4,099.65
6,918.50
4,099.65
-41%
LTN deposited 1 year
maturity as collateral
1,348.03
13.46
1,361.49
1,333.93
-2%
3
Buy 1 IDI call at the Sell 1 IDI call at the
4 money 1 year
money 1.5 year
maturity
maturity
Buy DI X PRE swap
5
1 year maturity
6
Sell 1 DI future 1
year maturity
BM&FBOVESPA Analyst Day – SEP/14
25
New Risk Model (CORE) – derivatives market
Simulations of positions and required collateral
AGRIBUSINESS DERIVATIVES POSITION – LIVE CATTLE
#
Position 1
Position 2
Sell 2 live cattle call at
the money 1 month
maturity
Sell 2 live cattle put at
Sell 1 live cattle future 1
2
the money 1 month
month maturity
maturity
Buy 1 live cattle call at
Sell 1 live cattle call at
3 the money 1 month
the money 2 month
maturity
maturities
Buy 1 live cattle future
1
1 month maturity
Position 1
Collateral (R$)
Position 2
Collateral
(R$)
Collateral
Sum (R$)
Collateral
Strategy
(R$)
Efficiency
(%)
1,513.22
5,122.21
6,635.42
6,264.55
-6%
1,459.98
4,119.83
5,579.81
5,067.12
-9%
0.00
2,566.52
2,566.52
693.91
-73%
AGRIBUSINESS DERIVATIVES POSITION - COFFEE
#
Position 1
Position 2
Position 1
Collateral
(R$)
Position 2
Collateral
(R$)
Collateral
Sum (R$)
Collateral
Strategy
(R$)
Efficiency
(%)
1
Buy 1 coffee future
1 month maturity
Sell 2 coffee call at the
money 1 month maturity
5,056.81
16,169.32
21,226.13
15,218.66
-28%
2
Sell 1 coffee future
1 month maturity
Sell 2 coffee put at the
money 1 month maturity
4,988.16
23,750.46
28,738.61
22,093.67
-23%
0.00
10,413.74
10,413.74
2,387.78
-77%
Buy 1 coffee call 1
3
month maturity
Sell 1 coffee call at the
money 2 month
maturities
BM&FBOVESPA Analyst Day – SEP/14
26
New Risk Model (CORE) – derivatives market
Simulations of positions and required collateral
AGRIBUSINESS DERIVATIVES POSITION - CORN
#
Position 1
Position 2
Position 1
Collateral
(R$)
Position 2
Collateral
(R$)
Collateral
Sum (R$)
Collateral
Strategy
(R$)
Efficiency
(%)
Buy 1 corn future 1
1
month maturity
Sell 2 corn call at the
money 1 month
maturity
759.39
1,847.66
2,607.05
1,859.93
-29%
Sell 1 corn future 1
2
month maturity
Sell 2 corn put at the
money 1 month
maturity
704.20
2,275.20
2,979.40
2,348.57
-21%
Buy 1 corn call at
3 the money 1 month
maturity
Sell 1 corn call at the
money 2 month
maturities
0.00
1,188.86
1,188.86
543.54
-54%
BM&FBOVESPA Analyst Day – SEP/14
27
BM&FBOVESPA Analyst Day
Schedule
OPENING
Edemir Pinto, Chief Executive Officer
PRODUCTS, CLIENTS AND PRICING POLICY
Eduardo Guardia, Chief Product and Investors Relations Officer
CLEARING BM&FBOVESPA AND CORE RISK MODEL
Cícero Vieira, Chief Operations Officer
TECHNOLOGICAL INFRASTRUCTURE DEVELOPMENT
Luís Furtado, Chief Technology Officer
FINANCIAL HIGHLIGHTS
Daniel Sonder, Chief Financial and Corporate Affairs Officer
Q&A SESSION
BM&FBOVESPA Analyst Day – SEP/14
28
BM&FBOVESPA Clearinghouse
Challenges in the implementation of the derivatives phase
Highlights of the first phase of Clearinghouse’s Integration
PUM
A
TRS
SDM
MF
RGT
P
A
R
T
I
C
I
P
A
N
T
E
S
XML
NEG
C
O
R
P
CORP
ADAP
TER
/
MQ
BMFI
NFRA
P
MUM
B
A
C
E
N
MQ
MUM
R
T
XML
ESP
EC
ARQ
FIX
SPE
ML
C
BMF
SER
TR/T
VIÇ
A
OS
SITE
B
A
C
E
N
Fee/B
RM
LNR
TAX
LFC
SI
SI
C
A
BM
FC
A
PUM
A
TRS
RTC
SDM
MF
RGT
XML
NEG
C
O
R
P
CORP
ADAP
TER
SITE
R
T
XML
ESP
EC
ARQ
FIX
SPE
ML
C
BMF
SER
VIÇO
TR/T
S
A
MQ
MQ
RRT
CAU
LNR
TAX
LFC
CED
CEI
 Low occurrence of incidents
LFC
Fee/B
RM
MUM
SI
C
A
 Multiple records of trades in the BM&F segment
SI
TF
BM
FC
A
STB
Blc
SINC
AD
DFSC
ORPA
STB
CONTR
OL-M
 11 parallel production cycles
PLF
CLF
SMP
CIP
Consistent and safe migration
LNR
PD
 Sept 09 – 261,314 trades
CAC
CA
S
CAU
BM&FBOVESPA Analyst Day – SEP/14
RRT
 6 months of certification tests
MUM
NEA
R
MU
M
 +20 workshops
 Partnership with regulators (BACEN and CVM)
COR
E
SLF
RISC
O
DIN
IPN
Ra
da
r
NGA
GA
BMFI
NFRA
P
MUM
 +65 market participants (the majority adopts SINACOR)
CLS
S
G
G
LI
G
MF
MTA/
XFB
Multiple stakeholders
CAC
CA
S
SG
G
LIG
 State-of-the-art technology; Trade technology applied to PostTrade
STB
Blc
SINC
AD
DFSC
ORPA
TF
CEI
/
PD
STB
CONTR
OL-M
 Almost 1,000 new servers (physical and virtual)
LNR
LFC
CED
P
A
R
T
I
C
I
P
A
N
T
E
S
PLF
MU
M
CLF
SMP
CIP
 46 legacy systems were deprecated and 31 new other were
installed
SLF
RISC
O
DIN
IPN
MUM
NEA
R
GA
Project
 +400 employees involved; 23 simultaneous projects
NGA
COR
E
SG
G
LIG
S
G
G
LI
G
MF
MTA/
XFB
Ra
da
r
RTC
CLS
 Sept 12 – 292,669 trades
29
BM&FBOVESPA Clearinghouse and CORE
New services for the market
Deepening the relationship with participants





The risk systems (CORE and NEAR) demand complex development
Require robust and sophisticated infrastructure
As an example, calculate and process +1.3bn instrument prices
We have built a dedicated Simulation environment, meeting demands from market participants
The simulator can be used by screen or by messages and files
Production
# of transactions simulated (in thousands)
Simulation
BM&FBOVESPA Analyst Day – SEP/14
30
BM&FBOVESPA Clearinghouse
Challenges in the implementation of the equities phase
The derivatives phase represented an important step and now we
have a new and complex challenge ahead
Examples of new developments needed for the equities
phase
 Integration with the CSD
 Settlement of securities (restrictions, failures, integration
with securities lending system)
 Securities lending
 Covered options and forward transactions
 Corporate actions (split, reverse split, dividends / interest
on capital and others)
 Unification of registration system procedures
 Settlement window unification
 Higher volumes
 Risk – more risk factors, higher volume of calculations
BM&FBOVESPA Analyst Day – SEP/14
31
New Data Center
Expanding capacity and greater operational efficiency
New data center will allow IT infrastructure consolidation and the
expansion of services provided to customers
2Q14: Conclusion of commissioning
 2H14: Infrastructure (installation of racks and telecoms infrastructure, cabling)
 1H15: Connectivity with participants and with other Data Centers; NPROD environments’ migration
 2H15: Certification and parallel production environment for the equities phase of the BM&FBOVESPA
Clearinghouse

Feb/13
BM&FBOVESPA Analyst Day – SEP/14
Jun/13
Oct/13
32
Continuous Development of the PUMA Platform
High availability and constant evolution
RESILIENCE AND AVAILABILITY
438 uninterrupted trading days*
PROJECTS SUCCESSFULLY COMPLETED
 Migration of corporate fixed-income trading
(BovespaFIX / SOMA FIX) to PUMA
 Volatility bands for the BOVESPA segment,
preventing distortions generated by sudden price
changes in a very short timeframe
 Changes to the Ibovespa methodology
 Beginning of the migration to the new trading screen
Estação ePUMA in the BOVESPA segment
(elimination of performance bottlenecks of the
current screen)
 Conclusion of the migration to the new trading
screen in BM&F segment (eliminating performance
bottlenecks)
ONGOING MAINTENANCE
 Volatility bands for the BM&F segment
 New system for indice calculation (replacing the
current system licensed from Euronext)
 MM Structure: new monitoring system, allowing the
expansion and protections of MM programs (avoids
undue executions of orders at times of high volatility)
 New market data system (for low investment
customers)
 Evolution of the LiNe pre-trade risk system (new
features; lower latency and standard deviation)
 New contingency FIX session for orders cancellation
* Until Sep. 26, 2014
BM&FBOVESPA Analyst Day – SEP/14
33
PUMA Platform
High availability and performance
Capacity and resilience of the system tested in times of high
volatility and message peaks
The entire trading infrastructure must be
adequately sized for peak message traffic:
BOVESPA segment
 BOVESPA Segment– Apr. 29th
 Peak of msgs/min: 619,063
 Average msgs/min: 60,000 - 70,000
 BM&F Segment – Aug. 13th
 Peak of msgs/min: 85,388
 Average msgs/min: 7,000 - 8,000
BM&FBOVESPA Analyst Day – SEP/14
BM&F segment
34
BM&FBOVESPA Analyst Day
Schedule
OPENING
Edemir Pinto, Chief Executive Officer
PRODUCTS, CLIENTS AND PRICING POLICY
Eduardo Guardia, Chief Product and Investors Relations Officer
CLEARING BM&FBOVESPA AND CORE RISK MODEL
Cícero Vieira, Chief Operations Officer
TECHNOLOGICAL INFRASTRUCTURE DEVELOPMENT
Luís Furtado, Chief Technology Officer
FINANCIAL HIGHLIGHTS
Daniel Sonder, Chief Financial and Corporate Affairs Officer
Q&A SESSION
BM&FBOVESPA Analyst Day – SEP/14
35
Financial Highlights
Expenses control discipline without sacrificing business development
The CAPEX program initiated in 2010 renewed the Company's IT,
operations and service platform
Capex – R$ MM
230-260
190-220
268
258
289
204
NEW
DATA CENTER
2010
Property and
equipment
+
Intangibles
(R$ MM)¹
2011
2012
2013
2014E
2015E
BTC
519
647
809
1,031
Market
Maker
SINACOR
...
1,079¹
¹ Intangibles value disregards goodwill; 2014 data related to June, 2014.
BM&FBOVESPA Analyst Day – SEP/14
36
Financial Highlights
Expenses discipline without sacrificing business development
Expenses control provides efficiency gains for the company
Adjusted expenses – R$ MM
Budget review
585 - 595
585
563
576
2011
2012
2013
 Adjusted OPEX 2014 budget reduced to
R$585-595 MM (from R$595-615 MM )
 Expenses are expected to grow significantly
below inflation based on the new budget
2014E
Half year adjusted expenses – R$ MM
Adj. Expenses corrected by inflation¹
Adj. expenses
306
363
332
284
253
257
271
1H11
1H12
1H13
1H14
Consistent reduction to expenses
 Enhancement in management tools and
budget practices within the company
 Review of contracts and prioritization of
activities
 Headcount management
¹ Consider the IPCA of services variation from July, 2011 to June, 2014.
BM&FBOVESPA Analyst Day – SEP/14
37
Financial Highlights
Pursuit of greater efficiency and an active stance in controlling expenses
Prioritization of activities, review of contracts and enhancement of
processes has resulted in greater efficiency
55.4
1H11
21.1
Marketing
1H11
Communicat.
1H14
-3.3%
18.8%
-12.0%
-15.9%
-37.7%
-78.4%
-84.0%
Strategic review of marketing activities
-41.9%
-57.0%
Reduced costs from the posting of trading and custody
statements, as a result of changes to the submission process
Diligent process of managing resources and headcount sizing
Average annual wage increase of 7.2% and recognition of
individual talents
Higher expenses with maintenance of new IT platforms
17.7
1H14
1H14
19.0%
46.7
1H11
1H11
Real Var. ²
154.4
1H14
1H14
Nominal Var.
129.8
1H11
Third party
services
Data
Personnel
processing expenditure¹
R$ MM
Expenses reduction with service providers and deprecation of
legacy IT platforms
Prioritization of activities and projects
Review of contracts
24.1
5.2
12.3
7.1
¹ Includes personnel capitalization and excludes stock option and bonus expenses, ² Calculated based on the annual wage increase between 2011 and 2013 for
personnel expenditure and the IPCA of services accumulated from July, 2011 to June, 2014 for the other lines of expenses
BM&FBOVESPA Analyst Day – SEP/14
38
Financial Highlights
Stock Granting – accounting
Honing of the Company’s long-term remuneration practices
Alignment of interests and
retaining executives
 Link executives’ remuneration
to the performance of the
stocks
 Increase the perceived value of
the stock of securities granted
 Ensure that the Company’s
incurred expenditure is
effective
BM&FBOVESPA Analyst Day – SEP/14
Main changes and impacts
 Executives begin to receive stocks
 Payment of 60.3% in social charges will result
in increased expenses and have an impact on
cash
 Expenses from charges vary according to the
price of the stock on delivery date (volatility
of expenses)
 100% of expenses are deductible (principal +
social charges), which neutralizes most of the
impact on the net income
 Expenses impacted from 2015 onwards,
which will have grown during the transition
period (4 years)
39
Financial Highlights
Financial solidity combined with return of excess capital to shareholders
Distribution of most of the cash generation, reaffirming the
commitment to return capital to shareholders
Payout
(% of GAAP earnings)
2009: 80%
2010: 100%
2011: 87%
2012: 100%
2013: 80%
1H14: 80%
Cash Generation after Investments and Interest Payments
(Accumulated ¹ between January, 2009 and June, 2014, in R$ million)
+
Buyback
Almost 12% of free
float repurchased in
almost 6 years (2H081H14)
Cash Position²
R$1,962 MM
Indebtedness
R$1,381 MM
Rating
Moody’s
Baa1 (issuer global scale)
Baa2 (issuer BR scale)
Baa1 (global notes)
S&P
BBB+ (counterparty cred.)
A-2 (issuer)
¹Data of BM&FBOVESPA (not consolidated): excludes variation in financial transactions and collateral pledged by participants, proceeds raised in connection with the
acquisition of CME Group shares in 2010. ²Data from June, 2014 and excludes third party resources (investors‘ collateral, resources deposited in the BM&FBOVESPA Bank
and others).
BM&FBOVESPA Analyst Day – SEP/14
40
Strategic Drivers
REVENUE
GROWTH AND
DIVERSIFICATION
OPERATING
EXCELLENCE
BM&FBOVESPA Analyst Day – SEP/14
FOCUS ON THE
CUSTOMER
INSTITUTIONAL
STRENGTHENING
41
BM&FBOVESPA Analyst Day
Schedule
OPENING
Edemir Pinto, Chief Executive Officer
PRODUCTS, CLIENTS AND PRICING POLICY
Eduardo Guardia, Chief Product and Investors Relations Officer
CLEARING BM&FBOVESPA AND CORE RISK MODEL
Cícero Vieira, Chief Operations Officer
TECHNOLOGICAL INFRASTRUCTURE DEVELOPMENT
Luís Furtado, Chief Technology Officer
FINANCIAL HIGHLIGHTS
Daniel Sonder, Chief Financial and Corporate Affairs Officer
Q&A SESSION
BM&FBOVESPA Analyst Day – SEP/14
42
www.bmfbovespa.com.br
Departamento de Relações com Investidores
55 11 2565-4729 / 4418 / 4207/4834
[email protected]
BM&FBOVESPA Analyst Day – SEP/14
43