BVMF Presentation - January 2014
Transcript of BVMF Presentation - January 2014
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BM&FBOVESPA
Investor Relations Department
January 2014
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Forward Looking Statements
This presentation may contain certain statements that express the managements 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 industriesBM&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 thatcould cause actual results to differ materially from those projected in this presentation and do not guarantee anyfuture BM&FBOVESPA performance.
The factors that might affect performance include, but are not limited to: (i) market acceptance of BM&FBOVESPAservices; (ii) volatility related to (a) the Brazilian economy and securities markets and (b) the highly-competitiveindustries BM&FBOVESPA operates in; (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 entrantsto the Brazilian markets; (v) ability to keep up with rapid changes in technological environment, including theimplementation of enhanced functionality demanded by BM&FBOVESPA customers; (vi) ability to maintain anongoing process for introducing competitive new products and services, while maintaining the competitiveness ofexisting 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 datethey were made, and BM&FBOVESPA undertakes no obligation to update them in light of new information orfuture development.This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shallthere be any sale of securities where such offer or sale would be unlawful prior to registration or qualificationunder the securities law. No offering shall be made except by means of a prospectus meeting the requirements ofthe Brazilian Securities Commission CVM Instruction 400 of 2003, as amended.
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HISTORY, BUSINESS MODEL AND CORPORATE GOVERNANCE
BRAZILIAN MARKET OPPORTUNITIES
MAIN GROWTH INITIATIVES
OPERATIONAL PERFORMANCE
FINANCIAL HIGHLIGHTS
APPENDIX (includes results for 3Q13)
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HISTORY, BUSINESS MODEL AND CORPORATE
GOVERNANCESafety, resilience and transparency
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1890:Foundation of Bolsa
Livre (BOVESPA's
predecessor)
1986:Start of
BM&F
activities
Aug 2007:BOVESPA Hld
demutualization
Sep 2007: BM&Fdemutualization
Oct 2007:BOVESPA Hld
IPO (BOVH3)
Nov 2007:BM&F IPO
(BMEF3)
May 2008:integration between BM&F and
BOVESPA Hld and creation of
BM&FBOVESPA (BVMF3)
1967:BOVESPAs
Mutualization
MARKET CAPITALIZATION (US$ billion) AND OPERATING MARGIN (%)
12M to Jun. 28, 2012; 12M to Mar 31, 2012 (Mar 31, 2013 for JPX); 9M to Sep. 30, 2012. Source: Bloomberg (Dec. 30 ,2013).
History of BM&FBOVESPAImportant global exchange
26.3 25.719.5 16.0
9.3 7.8 7.7 6.7 6.4 6.1 4.73.2 2.6
58% 61%71%
57%63%
28%
54%
41%
72%
56% 56%67%
35%
CME ICE-NYSE HKEx DeutscheBoerse
BVMF JPX LSE Nasdaq ASX SGX Moscow BME TMX
Oper. Margin (2012)Diversi fied and integrated Integrated (Derivatives) Diversif iedbut not integrated
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PRE-TRADING TRADING POST-TRADE
Access TradeAllocation
Transfer
Clearing/risk
analysis
Position/
CollateralDepository
Auxiliary
Services
VALUE CHAIN
Vertically integrated
Trading Platform: equities, derivatives, government and
corporate bonds, funds, spot FX, among others
Post-Trade Platform:
Central Counterparty (CCP) : An entity that interposes itself
between operations or contracts, becoming the guarantor of all
business
Settlement System (SSS): system that allows the transfer of
securities or assets from investors, in which the transfer may be
free or against payment
Central Depository (CSD): performs centralized asset custody and
treatment of corporate actions (dividends, stock splits, etc.)
Services for issuers and brokers Listing (stocks, funds, corporate bonds,
securitization, among other)
Trading access (brokers)
Securities Lending
Custody for clubs and foreign investors
(2.689 account)
Market Data (vendors)
Indices Licensing
Software Licensing
OTC (derivatives and fixed income)
Commodities certification
Vertical model as a differentialValue gained across most of the chain
SettlementRisk Analysis
(DMA)Risk Analysis
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DTCC
BRAZIL(Internalization of orders is forbidden)
US(Internalization of orders is allowed)
Post tradeCCP
SSS
CSD
Trading
Brokers
A and B
Investors Investors
Brokers A and B
Investors Investors
Broker
A
Broker
B
Model 100% vertical: clearing, settlementand central depository at the final beneficial
owner level
Brokers settle positions and control theirclients portfolios through BM&FBOVESPAs
infrastructure (impact on post-trade fees)
Clearing, settlement and custody occur at thebrokerage houses
Each prime broker has its own structure tocontrol its customers portfolios and settle
positions (impact on the prime brokerscosts)
Trading Venues
Vertical model as a differentialBM&FBOVESPA present at all post-trade stages
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Brokerage
houses &
investors
Trading
Post-Trade
Regulations prohibitinternalization of orders, dark poolsand ATS/MTFs and simultaneous exchange/OTC equities
trading
Settlement and clearing of equities trading must be donethrough a CCP
Settlement and clearing at the final beneficial owner level
make the Brazilian market safer and more resilient
Under the prevailing regulations, potential competitorsmust provide an integrated solution with the same statusregarding rules and transparency
In Brazil the final investor pays the exchange: compared to
other markets we have a competitive all-in-cost, as
BM&FBOVESPA provides more services than other
exchanges
Naked access is not allowed
Naked short selling is not possible
Brazilian market regulatory frameworkResilience and safety as priorities
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EXECUTIVE OFFICERSBOARD OF DIRECTORS
COMMITTEES
Edemir PintoCEO
Luis FurtadoCIO
Ccero VieiraCOO
Daniel SonderCFO
Eduardo GuardiaChief Product / IRO
Audit Committee
Risk Committee
Nominations and Corporate Governance Committee
Compensation Committee
Corporate GovernanceMultidisciplinary knowledge in conducting business
Charles CareyIndependent Director, Director of CME Group
Jos Roberto Mendona de BarrosIndependent Director, economist and professor
Pedro Parente (Chairman)Independent Director, CEO of Bunge Brasil
Marcelo Trindade (Vice Chairman)Independent Director, lawyer
Claudio HaddadIndependent Director, engineer and professor
Andr EstevesNon Executive Director, CEO of BTG Pactual
Alfredo Antnio Lima de MenezesNon Executive Director, Executive Officer of Bradesco
Luiz Fernando FigueiredoIndependent Director, Co-Founder of Mau Investments
Luiz Nelson Guedes De CarvalhoIndependent Director, professor
Candido BracherNon Executive Director, CEO of Ita BBA
Jos Berenguer Neto
Non Executive Director, CEO of JP Morgan Brazil
Advisory Committee For The Securities Intermediation Industry
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GM of Apr. 15, 2013
Number of individual shareholders 55,108
Number of institutional shareholders 3,580
Total number of shareholders 58,688
Free float (ON) 1,929,265,010 (97.4%)
Ownership structureWidely-held shareholder base
5.3%8.4%
5.1%
6.6%
70.3%
4.4%
Funds managed by BlackRock, Inc.
Funds managed by OppenheimerFunds, Inc.
CMEG Brasil I Participaes Ltda.
Funds managed by Vontobel Asset Management Inc.
Other
Treasury stock
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BM&FBOVESPAs Sustainability PolicyApproved by the Board of Director
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BRAZILIAN MARKET OPPORTUNITIES
Main growth drivers
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13.2511.25
13.75
8.7510.75 11.00
7.2510.00
2007 2008 2009 2010 2011 2012 2013
Opportunities in the Brazilian marketBM&FBOVESPA prepared to capture future growth
Source : Central Bank of Brazil. * For Brazil, considers only bank credit.
GROWTH DRIVES
EQUITIES MARKET
Porfolio diversification => opportunity for diversification of investmentsof institutional investors in equities
more resources being directed into equities
more listed companies
DERIVATIVES MARKET
more credit and more in fixed-rate government debt => more demand
for hedging from financial institutions
more foreign trade=> higher volumes in FX contracts
stock market growth, the launch and development of ETFs and moreexposure to equity among institutional investors =>growth in Index-basedcontracts
CAPITAL MARKETS WILL HAVECENTRAL ROLE IN THE COMING YEARS
Investmentneeded topromotegrowth
Nationalsavings still
highlyconcentrated
in fixedincome
Fall ofinterest ratesin real terms
Total Credit/GDP Evolution in Brazil (%) Selic Interest Rate (% p.a.).Jan-07 to Nov-13
27.4%
55.4%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
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168216 256
295352
436 419492
538 574642
630
28%29% 30%
31%33% 37% 28%
33%33%
30%29% 29%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Fixed Income and Others
Equity
Capital MarketGreat opportunities in the equities and derivatives segments
Funds AUM evolution (in BRL billion). Global average of 40% for
equities
LISTED COMPANIES
Source : BM&FBOVESPA, ANBIMA , WFE (Dec-12) and ABRAPP. *Updated to Jun/13
INVESTMENT FUNDSNUMBER OF CUSTODY ACCOUNTS (thousand)
PENSION FUNDS
Number of retail investors represents only 0.3% of the
population (lower than global average)
Lower number of listed companies in comparison withother countries
Participation of equities in the portfolio of pension funds
6,856
4,916
4,041 3,9723,481 3,200
2,7672,056 1,784
364
India USA China/HK Canada Japan Spain UK Australia Korea Brazil
657861 899
1,0701,301
1,5131,375
1,703 1,7871,925
2,189 2,344
11%
10% 11%11%
15%22% 14%
18% 18%15%
14% 13%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2Q13
Equities
Fixed Income
*
Jan'05
128.6
Dec'13
617.6
Jan-0
5
Jul-05
Jan-0
6
Jul-06
Jan-0
7
Jul-07
Jan-0
8
Jul-08
Jan-0
9
Jul-09
Jan-1
0
Jul-10
Jan-1
1
Jul-11
Jan-1
2
Jul-12
Jan-1
3
Jul-13
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MAIN GROWTH INITIATIVES
Investments, new products and focus on thecustomer
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Update of strategic projects
*IPN/CORE implementation requires the authorization of the regulators.
PUMA Trading System - Multi-Asset Trading Platform A high-performance, high-speed and high-capacity electronic trading platform
RTT (Round Trip Time) of less than one millisecond
Derivatives and FX module: implemented in Oct/11
Equities module: implemented in Apr/13
Clearinghouses integration The integration of BM&FBOVESPAs clearinghouses will enhance the Companys competitive position
Development of the new risk architecture (CloseOut Risk Evaluation - CORE)* will increase allocation
efficiency for clients
Tests for derivatives started in Jul/13, with conclusion scheduled for Mar/14
iBalcoOTC Registration Platform Registration of OTC derivatives and fixed income securities
Deployment in Jul/13 (for FX non-deliverable forward no central counterparty)
Pricing Policy Changes for Cash Equities First phase (Apr/13): reduction from 0.7 bps to 0.5 bps in trading fees and a realignment between the
trading fees and post-trade fees of institutional investors and day traders
Second phase (Dec/13): increased discounts per tier of volume for day traders and a progressive reductionof trading fees per tier of global volume
Initiatives for Small and Medium Enterprises (SMEs) Establishment of the Technical Committee for Smaller Offerings composed of private sector and
government agencies
Developing proposals to facilitate capital raising through issuance of shares (incentives to SMEs, investors
and intermediaries)
Project was presented to the Ministry of Finance in Jul/13
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BM&FBOVESPA IT DevelopmentsBuilding a world-class IT platform
Increasing competitive differentiation for derivative andcash equity markets
LATENCY
BM&F Segment (derivatives) BOVESPA Segment (equities)
70
2520
10-15~1 ~1
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Clearinghouses IntegrationFurther differentiation in BM&FBOVESPA post-trade
Equities and corporate
debt (BRL 76.5 bn*)
Equities, ETFs andcorporate fixed incomecash market
Equity and indicesderivatives (options andforward)
Securities lending
Derivatives
(BRL 119.3 bn*)
Financial andcommodities derivatives(futures, options andforwards)
OTC derivatives
FX(BRL 4.9 bn*)
FX spot market
(US$ vs. BRL )
Securities(BRL 0.8 bn*)
Cash market andforward market forgovernment bonds
INTEGRATED CLEARINGHOUSE**=
Capital efficiency
* Aggregate of pledged collateral at our clearinghouses totaled BRL 201.4 billion in Sep 30, 2013. **IPN/CORE implementation requires the authorization of the regulators.
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Product and Market DevelopmentListed products, OTC and fixed income
LISTED PRODUCTS
iBALCO PROJECT
ETFs(exchange traded funds):Equities, fixed
income, international and real estate funds
Market maker:cash equities, options,commodities, futures
Ibovespa:methodology review
SMEs (small and medium enterprises):BOVESPA Mais
Incentive programs: retail investors
Selic derivatives: Selic futures (OC1), FX
spread (DCO), FX swap (SCS)
Options on single stocks: New fee policy forHFTs/day traders
Futures Contracts: Ethanol
BDRs: To Exchange from OTC
Securities Lending: BTC platform
Derivatives Registration:
NDFs: deployed in Jul/13
Flexible options on single stocks
COE: Structured Notes
Swaps
Fixed Income Registration:
LCAs (Agribusiness Credit Bill): improvements
LCIs (Real Estate Credit Bill) and CDBs (timedeposits): adaptation of the platform (pendingregulatory approval)
Corporate bonds and LFs (financial bills): changes tolisting rules and procedures
Trade of Fixed Income:
Trading platform for government and corporatebonds and changes to the fee policy
h h
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18.6 28.548.7
115.999.3
2009 2010 2011 2012 2013*
48.870.1
ADTV beforeMarket Maker
ADTV afterMarket Maker*
12.720.5
30.2 31.940.8
2009 2010 2011 2012 2013*
2.9 3.96.1
9.0 9.7
2009 2010 2011 2012 2013*
Securities LendingReal Estate Funds (FIIs)Options with Market Maker
(Open Interest - average for the period - in BRL billion)
Initiatives to develop and prompt higher volume in certain products;
Performance shows that the initiatives are being well received by the market.
ETFs Brazilian Treasury Direct - Tesouro Direto Agribusiness Credit Bills
(ADTV in BRL million)
+43.8%
(ADTV in BRL million)
(ADTV in BRL million) (Custody in BRL billion)
High growth productsGrowing sophistication of market participants
BM&FBOVESPA has a 74% marketshare of the registered AUM (Sep-13).
CAGR(09-13):
+141.5%
CAGR (09-13):
+33.8%
CAGR (09-13):
+52.0%
CAGR (09-13):
+35.2%
*Updated to Dec. 30, 2013. **Updated to Sep. 30, 2013
(AUM in BRL billion)
*
3.6 20.0
52.0
2011 2012 Sep-13
0.9 1.53.7
14.6
31.7
2009 2010 2011 2012 2013*
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OPERATIONAL PERFORMANCE
Records in 2013
BOVESPA S
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BOVESPA SegmentOperational highlights
*Updated to Dec 30, 2013. **Ratio of cash market trading volume to the market cap of the exchange.
AVERAGE DAILY TRADING VOLUMEADTV (BRL billion)*
AVERAGE ANNUAL MARKET CAP(BRL trillion) TURNOVER VELOCITY** (12 months average*)
*
*
1.2 1.6 2.4
4.9 5.5 5.36.5 6.5 7.3 7.4
7.9 7.3 7.8 7.4 8.2 7.78.9
6.08.5
7.2 6.6 7.0 6.2
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13
30.8%
29.4%
36.8%37.6%38.7%42.3%
56.4%
63.2%
66.6%
63.8%
64.2%
70.0%72.9%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
T di i ADR f B ili i
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Trading in ADRs of Brazilian companiesLiquidity migration process interrupted
Dec13
Source: Bloomberg (in USD
traded value of 35 companies
with ADRs programs )
Sarbanes-Oxley Act
(Jul. 2002)
*Updated to Dec. 30, 2013.
Novo MercadoLaunch
(Dec. 2000)
PUBLIC OFFERINGS IN NUMBER OF COMPANIES
End of IOF Tax (2%) forforeign investors
(Dec. 2011)
End of CPMF(Financial
Transaction Tax)
30.9%
22.6%
19.7%
26.8%
46.5%
53.5%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total
IPOs - 1 - 7 9 26 64 4 6 11 11 3 10 152
Follow ons 14 5 8 8 10 16 12 8 18 11 11 9 7 137
Total 14 6 8 15 19 42 76 12 24 22 22 12 17 289
Dual Listings - - - 2 1 1 - - 1 - - - - 5
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Jan-1
3
Feb-1
3
Mar-13
Apr-13
May-1
3
Jun-1
3
Jul-13
Aug-1
3
Sep-1
3
Oct-13
Nov-1
3
Dec-1
3
Other USA Venues - Brazilian ADRs NYSE - Brazilian ADRsBM&FBOVESPA - companies with ADRs BM&FBOVESPA (except companies with ADRs)
BM&F S t
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BM&F SegmentOperational highlights
AVERAGE DAILY TRADED VOLUMEADV (thousands of contracts)
REVENUE PER CONTRACT - RPC (BRL)
*Updated to Dec. 30, 2013.
2006 2007 2008 2009 2010 2011 2012 2013* D-12 J-13 F-13 M-13 A-13 M-13 J-13 J-13 A-13 S-13 O-13 N-13 D-13
Interest rates in BRL 0.906 0.950 1.141 0.979 0.889 0.918 1.004 1.046 1.037 1.032 1.013 1.037 0.945 0.843 1.099 1.067 1.112 1.222 1.203 1.115 1.266
FX rates 2.244 1.859 2.065 2.161 1.928 1.894 2.205 2.535 2.453 2.368 2.305 2.273 2.292 2.347 2.590 2.691 2.731 2.720 2.624 2.611 2.832
Stock Indices 1.419 1.501 2.145 1.620 1.564 1.614 1.524 1.761 1.981 1.547 1.974 1.413 1.846 1.408 1.867 1.590 1.938 1.656 1.816 1.664 2.122
Interest rates in USD 1.094 0.965 1.283 1.357 1.142 0.941 1.015 1.231 1.152 1.073 1.140 1.121 1.093 0.928 1.280 1.370 1.309 1.412 1.246 1.359 1.340
Commodities 4.749 3.195 3.587 2.307 2.168 2.029 2.239 2.534 3.360 2.449 2.415 2.382 2.349 2.550 2.595 2.632 2.385 2.766 2.613 2.430 2.760
Mini contracts 0.034 0.054 0.162 0.176 0.128 0.129 0.116 0.119 0.112 0.120 0.122 0.119 0.118 0.116 0.119 0.114 0.117 0.126 0.120 0.120 0.128
OTC 1.571 2.111 2.355 1.655 1.610 1.635 1.769 1.409 2.475 1.988 2.868 1.642 1.460 1.428 1.418 1.839 1.160 1.477 1.118 1.266 0.978
Total RPC 1.247 1.224 1.527 1.365 1.134 1.106 1.191 1.282 1.303 1.266 1.191 1.190 1.114 1.020 1.361 1.320 1.397 1.511 1.418 1.367 1.575
422 501 711988 789 843
1,684 1,797 1,926 1,857 1,856
1,561
2,6302,235
2,694 2,944
1,977
1,5191,713
1,239 1,209 1,457 1,179110 168266
473535 447
541 496494 494 547
474
494491
468507
635
435541
502 420481
497
86 74
68
112 88 80
89 123143 114 113
84
126
100
145105
183
99146
90 10275
106
187109
124
167162 150
191 285336 383 340
290
341
341
352424
495
389434
351 385405
392
805 8521,167
1,740 1,573 1,521
2,505 2,7012,899 2,848 2,856
2,410
3,5913,166
3,6583,980
3,290
2,4432,835
2,1822,116 2,418
2,174
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013* Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13
BRL Int. Rate (Thousands) FX (Thousands) Index (Thousands) Others (Thousands)
I t ti i ti i l
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Investor participation in volumesEquities and derivatives segments
BM&F SEGMENT (DERIVATIVES)
BOVESPA SEGMENT (EQUITIES)
25% 25% 23% 27% 31% 26% 21% 18% 15% 17% 16% 18% 15% 16% 13% 16% 14% 15% 15% 15% 13%
27% 27% 30% 27%26% 33%
33% 32% 33% 35% 33% 32% 32% 32% 33% 32% 34% 32% 33% 32% 32%
33% 36% 35% 35% 34%30% 35% 40% 44% 40% 41% 43% 42% 44% 44% 45% 42% 46% 44% 47% 46%
12% 10% 10% 8% 7% 8% 9% 8% 7% 8% 9% 7% 9% 7% 8%6% 9% 6% 6% 5% 7%
2005 2006 2007 2008 2009 2010 2011 2012 2013 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13
Individuals Institutional Investors Foreign Investors Financial Institutions Companies Others
56% 51% 49% 48% 45% 42% 38% 34% 32% 33% 29% 31% 32%37% 32% 34% 30% 32% 33% 34% 30%
12% 15% 17% 19% 20% 22% 23% 25% 25% 23% 25% 26% 26%26%
25% 23% 25% 26% 25% 25% 28%
24% 25% 23% 23% 24% 30% 33% 34% 36% 38% 41% 38% 37% 32% 36% 35% 37% 33% 34% 34% 35%
7% 7% 9% 8% 8% 4% 4% 5% 5% 4% 3% 4% 4% 4% 5% 6% 6% 6% 7% 5% 5%
2005 2006 2007 2008 2009 2010 2011 2012 2013 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13
Individuals Institutional Investors Foreign Investors Financial Institutions Companies Central Bank
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FINANCIAL HIGHLIGHTS
Reduction in expenses. Return to shareholders
Income Statement
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Income StatementHistory
SUMMARY OF INCOME STATEMENT (CONSOLIDATED)
(in BRL thousand) 2009 2010 2011 2012
Net revenue 1,510,569 1,898,742 1,904,684 2,064,750
Expenses (569,832) (633,504) (816,664) (763,080)Adjusted expenses (446,677) (543,881) (584,521) (563,487)
Operating income 940,737 1,265,238 1,088,020 1,301,670Operating margin 62.3% 66.6% 57.1% 63.0%
Equity method result - 38,238 219,461 149,270
Financial result 245,837 289,039 280,729 208,851
Income before taxation of profit 1,186,574 1,592,515 1,588,210 1,659,791
Income tax and social contribution (304,505) (448,029) (539,681) (585,535)
Net income* 881,050 1,144,561 1,047,999 1,074,290
Adjusted net income 1,223,761 1,586,374 1,545,627 1,612,136
Adjusted EPS (BRL ) 0.6104 0.7929 0.7932 0.8351
*Attributable to shareholders of BM&FBOVESPA.
Revenue and Expense breakdowns
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REVENUE BREAKDOWN (3Q13)
Gross Revenue:BRL 596.8MM
Revenue and Expense breakdownsDiversified revenue sources as a differential, costs under control
EXPENSE BREAKDOWN (3Q13)
Expense:BRL 194.1MM
Adjusted Opex* Budget
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Adjusted expenses increase below inflation Focus on expenses control offset most of the inflationary adjustments over the past years
Considers the mid-point of 2013 and 2014 budgets; IPCA in 2014 based on market expectations released by the Central Bank in Dec. 13, 2013;
Considers the mid-point of 2014 budget.
2013 budget reaffirmed
2013e vs 2012: 1.2%
IPCA 2013e: 5.70%
2014e vs. 2013e: 6.1%
IPCA 2014e: 5.95%
CAGR 2010-14e: 2.7%
IPCA 2010-14e: 6.0%
Adjusted Opex* BudgetFocus on cost control
*Adjusted to Company s depreciation, stock options plan, tax on dividends from the CME Group and provisions.
Capex Budget
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Review of the 2014 Capex budget Impacted by some projects that were revisited and FX rate
2013 budget reaffirmed
Review of 2014 budget: to R$230260 million from R$170200
million FX rate exposure of ~25%
Update of the clearinghousesintegration project
Deepening initiatives (securitieslending, market makers, pre-trade risk
controls, among others)
Capex is expected to decline from2015
2015e: R$190220 million
Capex BudgetInvestments phase
Growth Path
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(in BRL million)
(in BRL)
GROWTH IN ADJUSTED EARNINGS PER SHARE
GROWTH IN REVENUES AND RESULTS
Growth PathGrowth in business and results
Financial Highlights
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7051,145 912 1,074
75
435 606 16780
1,579 1,518
1,091
2009 2010 2011 2012
Total payout Buyback
Financial HighlightsFocus on cash generation and total shareholder return
HISTORY OF PROCEEDS
SHARE BUYBACK: MAXIMIZING RETURN
(in BRL millon)
(in BRL million)
*Dividend Yield is the result of the sum of earnings per share distributed during the year divided by the average share price during the year. ROIC: Return on Invested Capital.
1,612Adj. Netincome
1,5461,5861,224
1,074 Net income1,0481,145881
432841 762 984
274
304150
90705
1,145912
1,0743.4%
4.5%4.5%
4.8%80%
100%87%
100%
2009 2010 2011 2012
Dividends Interest on capital Dividend Yield* Payout ratio (%)
8.9% ROIC8.4%9.4%8.3%
Financial Soundness
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Sound financial position - an important factor for the Company, given itsrole as CCP, guaranteeing the settlement of trades executed by global
and Brazilian investors
Standard & Poor sBBB+ (counterparty credit rating)
A-2 (issuer)
Moody sA3 (global scale issuer)A3 (Brazilian local currency issuer)
Baa1 (global notes)
R$ million Dec/10 Dec/11 Dec/12 Sep/13
Available funds 1,677 1,582 1,964 1,960
Indebtedness 1,043 1,172 1,279 1,375
R$ million
CASH POSITIONSOUND FINANCIAL POSITION
*Includes collateral pledged by participants in the form of cash, receivables and rights in securities under custody, as well as payouts still undisbursed.
**Includes third party collateral and restricted funds at BM&FBOVESPA Settlement Bank (Banco BM&FBOVESPA).
Financial SoundnessHigh liquidity and low indebtedness
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Financial Highlights
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Different earnings impact the P/E calculation and distort comparisons and market consensus
The reported adjusted net income reflects better the companys cash generation
1 Excludes the investment in associate (CME Group) accounted under the equity-method. 2Simulates the Interest on Capital amount that would be approved if there was no goodwill tax
benefit; 3Stock at R$13.79 (March 12th, 2013).
EPS 2012 P/E3
Estimated GAAP EPS (A) 0.56 24.8
Earnings without goodwill = (A) x :1,142 0.64 21.7
Stock price discounted by goodwill NPV(R$1.00 per share) / Earnings without
goodwill0.64 20.1
Adjusted Earnings 0.84 16.5
15-20% impact on P/E multiple
Difference between GAAP EPS andthe EPS adjusted to non existence of
goodwill simulation
GAAP Book in 2012Current
Simulation withoutgoodwillR$ millions
EBT 1,511 1,511
Deferred Tax 539 -
Other taxes /credits (14) -
Total taxes 525 282
GAAP Net income 1,074 1,228 : 14.2%
Tax Book in 2012Current
Simulationwithout goodwill
R$ millions
EBT 1,511 1,511
(-) Goodwill amortization 1,586 -
(-) Interest on capital 90 680(2)
(=) Taxable earnings (165) 831
Tax (34%) (56) 282
Since 2009, the goodwill tax benefit has been recognized as deferred liability (being cashneutral), reducing the GAAP earnings
Financial HighlightsP/E analysis
BOVESPA Segment
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4.3 8.5 15.1 14.526.8 22.2
63.2
10.8 9.3 5.74.55.4
15.4
55.67.5 23.8
11.2
7.2 3.917.38.8
13.9
30.4
70.1
34.3
46.0
74.4
18.0 13.2
23.0
2004 2005 2006 2007 2008 2009 2010* 2011 2012 2013
Follow-On
IPO
PUBLIC OFFERINGS (BRL billion)
PIPELINE: OFFERINGS ANNOUNCED SO FAR TO THE MARKET
Updated to Dec. 30, 2013.
BOVESPA SegmentRaising Capital
There are 3 offerings in the pipeline
IPOs (2): Ouro Verde Locao e Servio; Unidas;
Follow-ons (1): Fras-le;
Additionally, there are 12 Real Estate Funds filed with CVM: estimated value of R$ 2.8 billion
* Excludes the portion acquired by the Brazilian government in the Petrobras offering, via the transfer of rights in barrels (BRL 74.8 billion).
BOVESPA Segment
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BOVESPA SegmentForeign investment flow
MONTHLY NET FLOW OF FOREGIN INVESTMENTS (in BRL billon)
Includes public offering (primary market) and regular trades (secondary market).
*Updated to Dec 30, 2013.
BOVESPA Segment
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177%
126% 121%
109%100%
136%
67%75%
87%72%
129%
100%
39%
174%
137%
158%
119%107%
129%
75% 76%
96%
72%
138%
80%
44%
129%
110% 109% 104%
89% 87%
60% 57% 55% 50% 49% 46%35%
151%
111% 117% 119%105%
85%
62%70% 69%
55%
124%
44% 45%
Cingapura Canad Chile EUA Coria Austrlia Japo Frana ndia Brasil Inglaterra China Mxico
2009 2010 2011 2012
11.2%
14.3%
2.2%
5.1%
20.4%
5.4%
0.4%5.5%
8.8%
26.8%
Oil, Gas and Biofuels Basic Materials Capital Goods and Servic es Construction and TransportationConsumer Non Cyclical Consumer Cyclical Information Technology Telecommunic ationsPublic Utilities Financial
15.7%
21.6%
2.5%
3.6%
8.6%
2.6%
0.3%11.1%
11.5%
22.4%
BOVESPA SegmentPotencial to increase the number of listed companies
MARKET CAPITALIZATION TO GDP (%)*
MARKET CAPITALIZATION BY ECONOMIC SECTOR * Source: World Bank
Dec05 Dec12
Hong Kong : 438% 481% 365% 421%
l k
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CLEARINGHOUSES ACTIVITIES
Law 10.214 of Mar. 27, 2001 Clearinghouses considered systemically important by
the BCB should ensure settlement (i.e., act as CCPs)
BCB Resolution 2.882 of Aug. 30, 2001
Clearinghouses shall guarantee, at least, settlement
of the highest net amount owed
Access criteria must be public and allow wide
participation
Circular BCB 3.057 of Aug. 31, 2001
Rules, manuals and safeguard mechanisms must be
approved by BCB
Maintenance of a secondary data center and
contingency procedures
Supervision by BCB
CVM Instruction 441 of Nov. 10, 2006
Securities lending with guaranteed settlement - final
beneficiary model
STOCK EXCHANGE ACTIVITY
CVM Instruction 461 of Oct. 23, 2007
Regulates the security markets and
decides on the formation, organization,
operation and dissolution of stock
exchanges, futures and commodities
exchanges and OTC markets
Establishes the organization and
minimal corporate governance
structure of organized market
management bodies
Establishes self-regulation activities ofthe in the organized market
management bodies
Regulatory Framework
BM&FBOVESPA Market Supervision (BSM)
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AuditMarket
supervision
Analysisand
strategyLegal dept.
Selfregulation
Officer
Supervision Board(12 members*)
StrategicCommittee
Atribuies da BSM estabelecidas na
Instruo CVM 461/2007:
Monitor and supervise transactions in
the organized markets
Determine deficient compliance with
the rules and norms
Monitor the activities of the Stock
Exchange
Initiate and prosecute disciplinary
administrative legal proceedings
Apply penalities
Main activities of BSM Organizational chart
Monitor 100% of the participants
transactions
Assess 100% of intermediaries
Enforcement Education
BSM duties established in CVM Instruction461/2007
BSM is is a not-for-profit association organized as a self-regulatory and market surveillanceorganization, responsible for regulatory and oversight activities relative to the markets we operate.
* 9 independent
BM&FBOVESPA Market Supervision (BSM)Self-Regulation Entity
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RESULTS FOR 3Q13
3Q13 vs. 3Q12 Highlights
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Total revenue:R$596.8 million, +2.7%
BOVESPA seg.: R$257.1 million, -2.4% BM&F seg.: R$228.6 million, +4.3%
Other revenue: R$111.0 million, +12.5%
Net revenue:R$535.4 million, +2.6%
Adjusted expenses:R$150.2 million, +10.4%
Operating income: R$341.3 million, -1.6%
Adjusted net income:R$403.7 million, +0.8%
Adjusted EPS:R$0.211,+1.7%
Dividends:payment of R$225.3 millionin 3Q13, R$0.118per share (80% of GAAP net income)
EBITDA: R$417.1 million, +2.2% and margin of 77.9%(according to CVM Rule 527/12 that does not exclude equity methodaccounting).
BOVESPA segment:
ADTV: R$7.2 billion, +0.8% Margin: 5.361 bps, -6.4%
BM&F segment:
ADV: 2.5 million contracts, -7.5%
RPC: R$1.404, +10.6%
High growth products and market segment:
Securities Lending: +26.0% average of open interest LCAs (agribusiness credit bills): assets registered
+190.6% (R$73.8 billion in Sep/13)
HFTs: volumes increased 32.8% in the Bovespa Segmentand 19.6% in the BM&F segment
MAIN PROJECTS AND UPDATES
3Q13 vs. 3Q12 HighlightsSolid results despite the challenging environment
FINANCIAL HIGHLIGHTS OPERATIONAL HIGHLIGHTS
1Expenses adjusted to Companys depreciation, stock options plan, tax on dividends from the CME
Group and provisions.2Net income adjusted by: i) the e ffect of deferred liability recognition in connection with temporary
differences from amortization of goodwill for tax purposes; ii) the impact of the stock options plan;iii) investment in affiliates (CME Group) accounted for under the equity method, net of taxes; and
iv) taxes paid overseas to be compensated.
Ibovespa: new methodology announced in Sept/13
Changes in options fee policy: volume discounts for all daytrade transactions in the options on single stock market, inline with the change announced for cash equity in Mar/13
Fixed income fee policy: changes regarding new issuancesanalysis, custody, account maintenance and trading
SMEs: proposals for developing the access market
BOVESPA Segment Performance
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3Q13 vs. 3Q12:
ADTV: R$7.2 bn (+0.8%): Increased turnover velocity, which reached 73.7%
32.8% increase in HFTs volumes
2.2% decrease of average market capitalization
Margin: 5.361 bps vs. 5.728 (-6.4%):
Lower fees from options on single stocks, reflectinghigher volumes of market makers
Higher participation of HFTs in the overall ADTV
AVERAGE DAILY TRADING VALUE (ADTV) AND TRADING MARGIN
BOVESPA Segment PerformanceFlat ADTV despite the challenging environment
AVERAGE MARKET CAP. AND TURNOVER VELOCITY
7.2 7.0 7.5 8.3 7.2
5.728 5.573 5.706 5.314 5.361
3Q12 4Q12 1Q13 2Q13 3Q13
ADTV (R$ billions) Margin (bps)
TRADING MARGIN (in basis point - bps)
Market 3Q13 3Q12
Cash market 4.989 5.308
Derivatives on single stocks 13.007 13.788
Options Market 13.010 14.091
Forward Market 12.998 12.999
Total BOVESPA 5.361 5.728
BM&F Segment Performance
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3Q13 vs. 3Q12:
ADV: 2.5 million contracts (-7.5%): -15.4% ADV of Brazilian Real interest rate contracts,
+8.8% ADV of FX contracts and +22.3% ADV of mini-sized contracts
RPC: +10.6% (mix effect and FX rate appreciation):
Brazilian Real interest rate: lower participation inoverall volume; and higher RPC (+4.8%) due to
lengthening of contracts
FX and USD Interest rate contracts (+12.4% and+25.0%, respectively): FX rate appreciation (USD/R$)
AVERAGE DAILY VOLUME (ADV) AND AVERAGE REVENUE PER CONTRACT (RPC)
& Seg e t e o a ceHigher RPC offsets volumes fall
INTEREST RATES IN R$ - ADV BY MATURITY
(in millions of contracts)
(in millions of contracts)
REVENUE PER CONTRACT AND FX RATE
(in R$) ~45% of derivatives revenue was priced in USD in 3Q13
*Average FX rate (R$/US$) in the quarter, considering the closing price for each month.
Revenue Breakdown in 3Q13
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6.2%
31.4%
4.6%
18.1%
14.4%
2.3%
2.8%
20.2%
37.6%: Financial/Commodity Derivatives2
37.6%: Cash Market
6.2%: Trading
31.4%: Post-Trade
4.6%: Stock and Indices Derivatives2
Total RevenueR$596.8 million
4.3%: Securities Lending
5.1%: Depository, Custody and Back-Office
3.0%: Vendors
1.9%: Trading Access
2.0%: Listing
20.2%: Other Revenues
QDiversified revenue sources as a differential
REVENUE BREAKDOWN
Revenue breakdown for the cash market (trading + post-trade) reflects the pricing policy
changes which came into force in Apr/13.
i) Reduction of trading fee to 0.5 bps from 0.7 bps for all investors
ii) Post-trade increase to 2.0 bps from 1.8 bps for institutional investors and day trades2Trading and Post-trade
CASH MARKET TRADING REVENUE
ACCOUNTED FOR6.2% OF TOTAL
DERIVATIVES REVENUES
(BM&F + BOVESPA) ACCOUNTED FOR42.2% OF THE TOTAL
18.1%: Brazilian Real interest rate contracts
14.4%: FX Contracts
2.3%: USD interest rate contracts
2.8%: Other Financial/Commodity Derivatives
The Business Model Strengthens
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The Business Model StrengthensResilience from diversified revenue sources
Bovespa Segmentnew clients, products development and higher market sophistication
BM&F Segmentcredit expansion, volatility, FX rate changes and market sophistication
Other revenuedevelopment of markets and new products and services
CAGR2009-13
8.7%
Revenuesin R$ millions
Revenuesin R$ millions
CAGR2009-13
15.5%
CAGR2009-13
9.6%
Revenuesin R$ millions Revenues have been supported bya higher turnover velocity
- HFTs
- Options on single stocks
- Securities lending activity
- Strategies
Revenues from the two mostsignificant groups of contracts aregrowing consistently
- Market sophistication, volatilityand the recent currencydepreciation
Revenues from selected productsgrowing consistently
- Sec. lending also complementscash, option and future markets
- Tesouro Direto and LCAs as partof the Companys strategy in
the fixed income market
3Q13 Expenses
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Expense:R$194.1million
Q pContinuous focus on cost control and operational efficiency
ADJUSTED EXPENSETOTAL EXPENSE BREAKDOWN
(in R$ millions)
*Includes expenses with maintenance in general, marketing, communication, taxesadjusted by the dividends from CME Group, board and committee members
compensation and others (excluding provisions).
ADJUSTED EXPENSE INCREASED 10.4% OVER 3Q12 IN LINEWITH THE 2013 BUDGET (R$560-580 MILLION)
Adjusted Personnel: +16.9%, basically due to the effects of annual
union bargain in Aug/13 and decrease in capitalized personnelcosts related to ongoing projects.
Data processing: +31.8%, due to higher expenses for services andmaintenance of software and hardware that support IT platformsrecently deployed.
Third Party: -34.8%, due to lower costs with consulting and legaladvisors.
Financial Highlights
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48*Includes collateral pledged by participants in the form of cash, receivables and rights in securities under custody, as well as payouts still undisbursed.
**Includes third party collateral and restricted funds at BM&FBOVESPA Settlement Bank (Banco BM&FBOVESPA).
g gReturning cash to shareholders
(In R$ millions)
CASH AND FINANCIAL INVESTMENTS RETURN TO SHAREHOLDERS
FINANCIAL RESULTS
Financial result of R$49.6million, up 8.9% YoY
Financial income up 16.9%, reflecting, basically higherinterest rates
Financial expenses rose 33.4%, reflecting the currencydepreciations impact on the interest of notes issuedoverseas
CAPEX
In 3Q13, investments amounted to R$82.1 million,totaling R$202.5 million in 9M13
CAPEX budget ranges:
2013:between R$260290 million
2014:between R$170200 million (under review)
BUYBACK PROGRAM
From Jul/13 to Oct/13, 13.1 million shares wererepurchased, totaling R$158.9 million (more than0.6% of the Companys capital stock)
The current buyback program allows BM&FBOVESPAto repurchase up to 60 million shares until Jun/14.
PAYOUT
Payment of R$225.3 million in dividends, equivalentto R$0.118 per share and 80% of GAAP net income
Payment on Nov. 27, 2013 based on shareholdersposition dated Nov. 11, 2013
Market participant cash collateral includes R$0.7 billionpledged in the FX Clearinghouse that was settled onOct 1st, 2013.
High growth products
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g g pIncreasing revenue diversification
CAGR: +39%
OPERATIONAL FIGURES REVENUE
CAGR: +181% CAGR: +27%
CAGR: +56% CAGR: +35%
CAGR: +280% CAGR: +37%
Strong revenue growth of selected
products
In 9M13, representing 7.6%of totalrevenue, or R$141.4 million
Products well received by clients
Continuous developments to maintainstrong growth trend
Summary of Balance Sheet (Consolidated)
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Summary of Balance Sheet (Consolidated)
LIABILITIES AND SHAREHOLDERS EQUITYASSETS
(in R$ millions) 9/30/2013 12/31/2012 (in R$ millions) 9/30/2013 12/31/2012
Current assets 3,940.9 3,536.3 Current liabilities 2,287.1 1,660.6
Cash and cash equivalents 754.7 43.6 Collateral for transactions 1,617.9 1,134.2
Financial investments 2,978.6 3,233.4 Others 669.2 526.4
Others 207.6 259.3 Non-current liabilities 3,667.3 3,072.6
Non-current assets 21,351.2 20,610.8 Debt issued abroad 1,357.0 1,242.2
Long-term receivables 1,040.3 808.9 Deferred inc. tax and social contrib. 2,156.6 1,739.6
Financial investments 764.5 573.6 Others 153.7 90.7
Others 275.8 235.2 Shareholders' equity 19,337.6 19,413.9
Investments 3,270.0 2,928.8 Capital 2,540.2 2,540.2
Property and equipment, net 391.8 361.0 Capital reserve 16,051.5 16,037.4
Intangible assets 16,649.1 16,512.2 Others 730.1 820.3
Goodwill 16,064.3 16,064.3 Non-controlling interests 15.8 16.0
Total Assets 25,292.1 24,147.1 Liabilities and Shareholders' Equity 25,292.1 24,147.1
Reconciliation 3Q13
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Reconciliation 3Q13
ADJUSTED NET INCOME RECONCILIATION
ADJUSTED EXPENSES RECONCILIATION
* Attributable to BM&FBOVESPA shareholders.
(in R$ millions, unlessotherwise indicated) 3Q13 3Q12 Change
3Q13/3Q122Q13 Change
3Q13/2Q13
GAAP net income* 281.6 276.5 1.8% 350.8 -19.7%
Stock options plan 5.6 7.8 -28.0% 7.8 -28.1%
Deferred tax liabilities 138.9 134.8 3.1% 138.9 0.0%
Equity in income of investees (net of taxes) 38.2 32.6 17.4% 46.3 -17.4%
Recoverable taxes paid overseas 15.8 14.1 11.7% 18.3 -13.7%
Adjusted net income 403.7 400.6 0.8% 469.6 -14.0%
(in R$ millions, unless
otherwise indicated) 3Q13 3Q12Change
3Q13/3Q12 2Q13Change
3Q13/2Q13Total Expenses 194.1 174.8 11.1% 176.8 9.8%
Depreciation (32.5) (24.1) 35.0% (28.8) 12.8%
Stock options plan (5.6) (7.8) -28.0% (7.8) -28.1%
Tax on dividends from the CME Group (5.1) (4.7) 9.5% (5.1) 0.2%
Provisions (0.6) (2.1) -70.5% (1.9) -66.5%
Adjusted Expenses 150.2 136.0 10.4% 133.2 12.8%
Summary of Income Statement (consolidated)
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Summary of Income Statement (consolidated)
* Attributable to BM&FBOVESPA shareholders.
3Q13 3Q12 Change3Q13/3Q12
2Q13 Change3Q13/2Q13
Net Revenues 535.4 521.6 2.6% 599.8 -10.7%
Expenses (194.1) (174.8) 11.1% (176.8) 9.8%
Operating Income 341.3 346.8 -1.6% 423.0 -19.3%
Operating margin 63.7% 66.5% -275 bps 70.5% -678 bps
Equity in Income of Investees 43.3 37.2 16.4% 51.4 -15.7%
Financial Result 49.6 45.5 8.9% 43.1 15.1%
EBT 434.2 429.6 1.1% 517.5 -16.1%
Net Income* 281.6 276.5 1.8% 350.8 -19.7%
Adjusted Net Income 403.7 400.6 0.8% 469.6 -14.0%
Adjusted EPS (in R$) 0.211 0.208 1.7% 0.244 -13.5%
Adjusted Expenses (150.2) (136.0) 10.4% (133.2) 12.8%
Final Remarks
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REVENUES AND RESULTS Resilient revenues and results in a challenging market environment
Growing diversification of products and revenues
INVESTMENTS
Commitment with the maintenance of market integrity
Strengthening the competitive edge by delivering efficiency to the market
FOSTERING CLIENTS AND MARKET
Strengthening ties with market participants and clients
Becoming a one-stop-shop by increasing the diversity of products for clients
COMMITMENT TO CAPITAL RETURN FOR SHAREHOLDERS
Maintained focus on cost control
High payout ratio combined with share buyback
Final Remarks
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BM&FBOVESPAINVESTOR RELATIONS
+55 (11) 2565 4729 / 4418 / 4834 / 7073 / 4007
ir.bmfbovespa.com.br