BM&FBOVESPA is a Brazilian company formed in 2008 through the merger of the São Paulo Stock Exchange and the Brazilian Mercantile & Futures Exchange. It is the largest securities, commodities, and futures exchange in Brazil. The document discusses various types of direct market access available to BM&FBOVESPA, including connections through brokerages or direct technological connections. It also covers recent tax measures in Brazil affecting foreign investors and expectations that alternative trading platforms may emerge to challenge BM&FBOVESPA's dominance.

1. What is going on in Brazil?
Judy Misbin­May
August 1, 2011
BM&FBOVESPA is a Brazilian company, created in 2008, through the combination of the SãoPaulo
Stock Exchange (Bolsa de Valores de São Paulo) and the Brazilian Mercantile & Futures Exchange
(Bolsa de Mercadorias e Futuros). It is the most important Brazilian institution for intermediate
equity market transactions and the only securities, commodities and futures exchange in Brazil.
BM&FBOVESPA further acts as a driver for the Brazilian capital markets. The BM&FBOVESPA
volumes have more than quintupled in just six years anddaily trading volumes are expected to hit
6.5 billion per day by end of 2011.
Access
Types of Direct Market Access (DMA) available for BM&FBOVESPA
• DMA 1‐ Customer trades on the Mega Bolsa System via brokerage house
• DMA‐2 ‐ Customer connects directly to the technology structure partnering with an
authorized access provider or broker, such as CFN Services, GL‐Net or Marco Polo to access
the exchange, allowing them to trade through multiple brokers such as Link Investimentos
• DMA‐3 ‐ Client connects to the technology structure via a direct connection
• DMA‐4‐ Client proximity hosts their infrastructure within the exchanges data center and
connects to the exchange via a cross connect
The Brazilian regulatory landscape does not provide for naked access but instead there are
regulatory requirements that all clients have to go through pre‐trade credit controls. For the DMA 1
and DMA 2 models, the broker is responsible for checking orders against pre‐defined limits, whereas
with DMA 3 and DMA 4, the exchange provides the pre‐trade credit control tool for the brokers to
configure and control their customers’ limits
Tax Issues
In October 2009 a 2% tax to foreigners was introduced and the subsequent 1.5% tax added to
American Depository Receipts (ADRs). BM&F BOVESPA believes that the government is not mulling
further tax measures to kill the golden goose of capital markets. After all, it wants investors to pay for
the country’s huge infrastructure needs. They include the stadiums, airports, local transportion and
housing associated with the 2014 World Cup and 2016 Olympics as well as the $225 billion in pre‐
salt capitalization for Petrobras. In spite of tax implications of trading in Sao Paulo, BM&FBOVESPA
has been seeing unprecedented increase in trading volumes from International firms.
Competition
According to John Rumsey, who states "Investors expect to see alternative trading platforms emerge
to challenge BM&FBOVESPA and expect that their introduction will have a substantial impact on
pricing. The regulator, the Comissão de Valores Mobiliários, is seen as keen to encourage the
proliferation of new platforms and Brazilian legislation allows them.”
Brazil is a ripe market for investors looking to find new liquidity. With protections already in place
that meet the standards of the Frank‐Dodd Act, active lobbying to address tax issues for international
traders, and the upcoming World Cup and Olympics, Brazil is not a market to avoid.
Summary
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latency connectivity from any global trading venue. Take away concerns about customs clearing,
managing foreign country contracts, finding a broker or authorized access provider by letting the
Alpha Platform™ take care of as much or as little of those services that you require. Get in early to
take advantage of the technology refresh program, which will provide existing Alpha Platform™
clients, the ability to shave microseconds off the already lowest latency available.

2.
Link Investimentos Joins CFN Services’ Alpha Alliance ™ to provide lowest latency
market access to BM&FBovespa Exchange