Bovespa
Encyclopedia
The BM&FBOVESPA is a stock exchange
located at São Paulo
, Brazil
. As of December 31, 2010 it had a market capitalization of US $1.54 Trillion, making it one of the largest in the world. On May 8, 2008, the São Paulo Stock Exchange (Bovespa) and the Brazilian Mercantile and Futures Exchange (BM&F) merged, creating BM&FBOVESPA. The benchmark indicator of BM&FBOVESPA is the Índice Bovespa
. There were 381 companies traded at Bovespa as of April 30, 2008.
On May 20, 2008 the Ibovespa index reached its 10th consecutive record mark closing at 73,516 points, with a traded volume of USD
4.2 billion or R$
7.4 billion, and in August 17, 2011 the Ibovespa made its biggest traded volume in its history, with a volume of USD
14.8 billion or R$
23.7 billion.
BM&FBOVESPA has offices in New York
, Shanghai
and London
.
Founded on August 23, 1890 by Emilio Rangel Pestana, the "Bolsa de Valores de São Paulo" (São Paulo Stock Exchange, in English) has had a long history of services provided to the stock market and the Brazilian economy. Until the mid-1960s, Bovespa and the other Brazilian stock markets were state-owned companies, tied with the Secretary of Finances of the states they belonged to, and brokers were appointed by the government.
After the reforms of the national financial system and the stock market implemented in 1965/1966, Brazilian stock markets assumed a more institutional role. In 2007, the Exchange demutualized and become a for-profit company.
Through self-regulation, Bovespa operates under the supervision of the Comissão de Valores Mobiliários (CVM), analogous to the American SEC
. Since the 1960s, it has constantly evolved with the help of technology
such as the introduction of computer-based systems, mobile phones and the internet. In 1972, Bovespa was the first Brazilian stock market to implement an automated system for the dissemination of information online and in real-time, through an ample network of computer terminals.
At the end of the 1970s, Bovespa also introduced a telephone
trading system in Brazil
; the "Sistema Privado de Operações por Telefone" or "SPOT" (Private System of Telephone Trading, in English). At the same time, Bovespa developed a system of fungible safekeeping and online services for brokerage firms.
In 1990, the negotiations through the Sistema de Negociação Electrônica - CATS (Computer Assisted Trading System)
was simultaneously operated with the traditional system of "Pregão Viva Voz" (open outcry
). Currently, BM&FBOVESPA is a fully electronic exchange.
In 1997, a new system of electronic trading, known as the Mega Bolsa, was implemented successfully. The Mega Bolsa extends the potential volume of processing of information and allows the Exchange to increase its overall volume of activities.
With the goal to increase popular access to the stock markets, Bovespa introduced in 1999 the "Home Broker", an internet-based trading systems that allows individual investors to trade stocks. The system enables users to execute buy and sell orders online.
In 2000, Bovespa created three new listing segments, the Novo Mercado (New Market), Level 2 and Level 1 of Corporate Governance Standards, allowing companies to accede voluntarily to more demanding disclosure, governance and compliance obligations. The new listing segments mostly languished until 2004, when a growing number of newly public companies began to list on the Novo Mercado and other segments as part of a capital-raising effort. From 2004 to 2010, the vast majority of new listings on the Bovespa were made by Novo Mercado, Level 2 and Level 1 companies. The Novo Mercado, Level 2 and Level 1 segments are based on a contractual agreement of the listed company, its controlling shareholder, and its management to comply with specified regulations. In addition, listed companies must submit to arbitration as a method of resolving disputes. The set of protections entailed by a Novo Mercado listing is apparently deemed by market participants to increase the attractiveness of companies. The stock market index of Novo Mercado listed companies (the IGC) has consistently outperformed the broader Ibovespa index since its launch.
The recent success of the Brazilian equity capital markets is attributed to a significant extent to the credibility engendered by the Novo Mercado regulations. In 2007, only the United States and China equity markets had a greater number of initial public offerings. The availabiltity of a "market exit" has also encouraged the development of a private equity industry, a growing Brazilian investment banking market and a thriving asset management industry. Another side benefit of a thriving equity market has been access to equity financing for the international expansion of Brazilian business. Brazilian multinational companies have used the proceeds of equity offerings to fund a growing number of international acquisitions. Vale, Embraer, Gerdau, Brazil Foods, Marfrig Alimentos and JBS have acquired businesses outside Brazil using the proceeds from equity offerings. Attractive valuations of Brazilian subsidiaries have led international companies to list their Brazilian subsidiaries, as was the case of Banco Santander Brasil.
On May 8, 2008, Bovespa Holding announced the merger of the São Paulo Stock Exchange (Bovespa) and the Brazilian Mercantile and Futures Exchange (BM&F), creating the world's third largest stock exchange.
As a result of an early 2008 stock swap, Chicago's CME Group
owns a 5% stake in BM&FBovespa, and in turn, BM&FBovespa owns a 5% stake in CME Group
. The agreement has also created an order routing trading system between both exchanges. http://cmegroup.mediaroom.com/index.php?s=43&item=2799
Stock exchange
A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...
located at São Paulo
São Paulo
São Paulo is the largest city in Brazil, the largest city in the southern hemisphere and South America, and the world's seventh largest city by population. The metropolis is anchor to the São Paulo metropolitan area, ranked as the second-most populous metropolitan area in the Americas and among...
, Brazil
Brazil
Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
. As of December 31, 2010 it had a market capitalization of US $1.54 Trillion, making it one of the largest in the world. On May 8, 2008, the São Paulo Stock Exchange (Bovespa) and the Brazilian Mercantile and Futures Exchange (BM&F) merged, creating BM&FBOVESPA. The benchmark indicator of BM&FBOVESPA is the Índice Bovespa
Índice Bovespa
The Bovespa Index is an index of about 50 stocks that are traded on the São Paulo Stock, Mercantile & Futures Exchange ....
. There were 381 companies traded at Bovespa as of April 30, 2008.
On May 20, 2008 the Ibovespa index reached its 10th consecutive record mark closing at 73,516 points, with a traded volume of USD
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
4.2 billion or R$
Brazilian real
The real is the present-day currency of Brazil. Its sign is R$ and its ISO code is BRL. It is subdivided into 100 centavos ....
7.4 billion, and in August 17, 2011 the Ibovespa made its biggest traded volume in its history, with a volume of USD
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
14.8 billion or R$
Brazilian real
The real is the present-day currency of Brazil. Its sign is R$ and its ISO code is BRL. It is subdivided into 100 centavos ....
23.7 billion.
BM&FBOVESPA has offices in New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
, Shanghai
Shanghai
Shanghai is the largest city by population in China and the largest city proper in the world. It is one of the four province-level municipalities in the People's Republic of China, with a total population of over 23 million as of 2010...
and London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
.
History
After the reforms of the national financial system and the stock market implemented in 1965/1966, Brazilian stock markets assumed a more institutional role. In 2007, the Exchange demutualized and become a for-profit company.
Through self-regulation, Bovespa operates under the supervision of the Comissão de Valores Mobiliários (CVM), analogous to the American SEC
United States Securities and Exchange Commission
The U.S. Securities and Exchange Commission is a federal agency which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets in the United States...
. Since the 1960s, it has constantly evolved with the help of technology
Technology
Technology is the making, usage, and knowledge of tools, machines, techniques, crafts, systems or methods of organization in order to solve a problem or perform a specific function. It can also refer to the collection of such tools, machinery, and procedures. The word technology comes ;...
such as the introduction of computer-based systems, mobile phones and the internet. In 1972, Bovespa was the first Brazilian stock market to implement an automated system for the dissemination of information online and in real-time, through an ample network of computer terminals.
At the end of the 1970s, Bovespa also introduced a telephone
Telephone
The telephone , colloquially referred to as a phone, is a telecommunications device that transmits and receives sounds, usually the human voice. Telephones are a point-to-point communication system whose most basic function is to allow two people separated by large distances to talk to each other...
trading system in Brazil
Brazil
Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
; the "Sistema Privado de Operações por Telefone" or "SPOT" (Private System of Telephone Trading, in English). At the same time, Bovespa developed a system of fungible safekeeping and online services for brokerage firms.
In 1990, the negotiations through the Sistema de Negociação Electrônica - CATS (Computer Assisted Trading System)
CATS (trading system)
CATS is an automated exchange system developed for the Toronto Stock Exchange in 1977. CATS was one of the first technologies allowing for a full automation of the price-setting process in a stock exchange. This technology was implemented in several other stock exchanges in the 1980s...
was simultaneously operated with the traditional system of "Pregão Viva Voz" (open outcry
Open outcry
Open outcry is the name of a method of communication between professionals on a stock exchange or futures exchange. It involves shouting and the use of hand signals to transfer information primarily about buy and sell orders...
). Currently, BM&FBOVESPA is a fully electronic exchange.
In 1997, a new system of electronic trading, known as the Mega Bolsa, was implemented successfully. The Mega Bolsa extends the potential volume of processing of information and allows the Exchange to increase its overall volume of activities.
With the goal to increase popular access to the stock markets, Bovespa introduced in 1999 the "Home Broker", an internet-based trading systems that allows individual investors to trade stocks. The system enables users to execute buy and sell orders online.
In 2000, Bovespa created three new listing segments, the Novo Mercado (New Market), Level 2 and Level 1 of Corporate Governance Standards, allowing companies to accede voluntarily to more demanding disclosure, governance and compliance obligations. The new listing segments mostly languished until 2004, when a growing number of newly public companies began to list on the Novo Mercado and other segments as part of a capital-raising effort. From 2004 to 2010, the vast majority of new listings on the Bovespa were made by Novo Mercado, Level 2 and Level 1 companies. The Novo Mercado, Level 2 and Level 1 segments are based on a contractual agreement of the listed company, its controlling shareholder, and its management to comply with specified regulations. In addition, listed companies must submit to arbitration as a method of resolving disputes. The set of protections entailed by a Novo Mercado listing is apparently deemed by market participants to increase the attractiveness of companies. The stock market index of Novo Mercado listed companies (the IGC) has consistently outperformed the broader Ibovespa index since its launch.
The recent success of the Brazilian equity capital markets is attributed to a significant extent to the credibility engendered by the Novo Mercado regulations. In 2007, only the United States and China equity markets had a greater number of initial public offerings. The availabiltity of a "market exit" has also encouraged the development of a private equity industry, a growing Brazilian investment banking market and a thriving asset management industry. Another side benefit of a thriving equity market has been access to equity financing for the international expansion of Brazilian business. Brazilian multinational companies have used the proceeds of equity offerings to fund a growing number of international acquisitions. Vale, Embraer, Gerdau, Brazil Foods, Marfrig Alimentos and JBS have acquired businesses outside Brazil using the proceeds from equity offerings. Attractive valuations of Brazilian subsidiaries have led international companies to list their Brazilian subsidiaries, as was the case of Banco Santander Brasil.
On May 8, 2008, Bovespa Holding announced the merger of the São Paulo Stock Exchange (Bovespa) and the Brazilian Mercantile and Futures Exchange (BM&F), creating the world's third largest stock exchange.
As a result of an early 2008 stock swap, Chicago's CME Group
CME Group
The CME Group bases prices for US gasoline on Brent Crude rather than West Texas Intermediate Crude , which many believe is responsible for artificially high gas prices for US consumers...
owns a 5% stake in BM&FBovespa, and in turn, BM&FBovespa owns a 5% stake in CME Group
CME Group
The CME Group bases prices for US gasoline on Brent Crude rather than West Texas Intermediate Crude , which many believe is responsible for artificially high gas prices for US consumers...
. The agreement has also created an order routing trading system between both exchanges. http://cmegroup.mediaroom.com/index.php?s=43&item=2799