NYSE Euronext Headed to Rio, With Brazilian Partner
November 6, 2012
In tandem with Rio de Janeiro-based Americas Trading Group, exchange operator NYSE Euronext, is seeking a share of the rapidly growing Brazilian market.
ATG and the commercial arm of NYSE Euronext, NYSE Technologies, have formed a new company, ATS Brasil. The company intends to create a new equities trading platform.
ATS Brasil is scheduled to begin operations next year, contingent upon approval of Central Bank of Brazil and the Brazilian Securities Commission (CVM). To date, CVM has opposed creation of new clearing house in Brazil, citing concerns of introducing 'unnecessary system risk.’
Brazil’s equity and derivatives trading are dominated by BM&FBBOVESPA which has refused to let third parties use its technology. Both Direct Edge and BATS Global Markets previously had said they were going to compete in the Brazilian market but had to shelve these plans because they had no way of clearing trades.
Fernando Cohen, ATG´s President, believes that the entry of ATS Brasil will have a positive effect on the local stock market as it will contribute to expanding the range of products and services offered to investors in the region. Cohen also emphasized the importance of NYSE Technologies’ decision to expand into the Brazilian market by becoming a partner of ATS Brasil.
Cohen stated that initially ATS Brasil, intends to operate in a model known as "the organized OTC market" based on computerization and transparency in order registration and execution. He further noted that ATS Brasil was not created to compete with BM&FBovespa, but rather to complement it by improving liquidity and price formation for Brazilian stocks.
"The entry of ATS Brasil starts a new cycle in the Brazilian exchange market. Our innovative, high-performance order execution platform will generate more liquidity for the capital markets. This initiative should stimulate cost reduction by offering efficiency gains for investors and create the real possibility of placing the Brazilian market within international standards," saidCohen.
Dominique Cerruti, President and Deputy CEO, NYSE Euronext said, the Brazlian platform will give the same "high-quality trading experience, performance and reliability" as "NYSE Euronext’s own exchanges.”
ATS Brasil will employ the Universal Trading Platform (UTP) developed by NYSE Technologies and used by NYSE Euronext’s global markets. UTP has the capacity to process high volumes of messages with very low latency, giving market participants the opportunity to submit thousands of orders per second while also improving market transparency and liquidity.
Additionally, ATS Brasil is expected to attract new investors to the Brazilian market, including local and international high frequency traders. ATG will also utilize NYSE Technologies’ Secure Financial Transaction Infrastructure (SFTI) network to provide global access and direct market data distribution for customers trading outside Brazil.
ATS will have controlling interest in the new firm as well as operational management. Brazil’s Estado de S. Paulo newspaper said ATS planned to make an initial investment of $100 million with a goal of taking over 15 percent of the country’s capital markets within a year of becoming operational.