BM&F Bovespa (Bolsa de Valores, Mercadorias & Futuros de São Paulo, or the São Paulo Stock, Mercantile and Futures Exchange, ticker code BM&FBOVESPA) is the one of world’s biggest and most strategically important stock and commodity exchanges. Based in São Paolo, Brazil, since its recent formation it has increased trading volumes year on year. Given the increasing importance of the commodities it offers contracts for, it promises to be one of the primary commodity exchanges of this century.
BM&F Bovespa is a relatively new exchange, being formed in 2008 by the merger of the São Paulo Stock Exchange and the Brazilian Mercantile and Futures Exchange. Both its precursor organisations, however, have a longer history.
The first incarnation of the São Paulo Stock Exchange occurred when the Bolsa Livre was founded in 1891. This was closed a year later, but in 1895 the Bolsa de Fundos Públicos de São Paulo was founded. This exchange not only survived but prospered: in 1934 it transferred to larger premises and was renamed Bolsa Oficial de Valores de São Paulo. After this, economic liberalisation in the 1960s meant the Brazilian state took less of a role in the running of stock and commodity exchanges. A reorganisation meant the floor traders and brokerage houses now conducted business on the São Paulo exchange, which was now renamed de Bolsa de Valores de São Paulo BOVESPA. From the 1970s to the 1990s an number of enhancements were made to the trading system of the exchange, including the implementation of electronic and telephone trading. 1997 was notable for the impementation of the Mega Bolsa electronic trading system, and the Home Broker system, allowing traders to remotely execute buy or sell orders, was instituted in 1999.
The Brazilian Mercantile and Futures Exchange (or the Bolsa Mercantile & de Futuros, ticker code BM&F), on the other hand, was formed more recently, commencing trading in 1986. It grew quickly, and in 1991 merged with the Bolsa de Mercadorias de São Paulo, the new exchange being called Bolsa de Mercadorias & Futuros. Its electronic trading platform, GTS, was launched in 2000.
Finally, in 2006, both exchanges were demutualized, with their merger to create BM&F Bovespa coming in 2008. In the same year, a 5% stock swap with the CME Group meant a deeper working relationship with that exchange.
Brazilian institutions and private individuals are allowed to trade on BM&F Bovespa as per the conditions set down in CMN (Brazilian Monetary Council) Resolution 2689. However, since only persons or institutions resident in Brazil are allowed to participate in BM&F Bovespa’s full range of trading activities, international commodity traders or institutions wishing to trade on the exchange are required to hire Brazilian counterparts to act in their stead.
BM&F Bovespa mainly deals in agricultural commodities, but also includes energy commodities and metal commodities. This mix of available contracts is a reflection of Brazil’s wider economy: its main strength is in its vast agricultural areas, adapted to grow a variety of basic foodstuffs and products that are essential to lifestyles in both the developed and developing worlds, including the increasingly important fuel Ethanol. The list of commodities traded on BM&F Bovespa is:
- agricultural Commodities: Arabica Coffee, Corn, Crystal Sugar, Live Cattle, Soybeans
- Energy commodities: Ethanol
- Environmental commodities: Carbon Credits, via the Brazilian Carbon Market (MBRE).
- Metal commodities: Gold
Mini contracts are also offered in Arabica Coffee and Live Cattle.
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