Financial Derivatives market of Brazil. OUTLINE – Derivative market in Brazil – Derivative users in Brazil – Factors Contributing to the growth of derivatives.

Financial Derivatives market of Brazil

OUTLINE

– Derivative market in Brazil– Derivative users in Brazil– Factors Contributing to the growth of derivatives – Instruments being used in derivative market– Concluding remarks on the derivative market

situation of Brazil– Recommendations

Derivative market in Brazil

• Back in 1970s, futures market traded only in agriculture and mineral commodities.

• In Brazil, BM&F (futures and Commodities exchange) is worth mentioning.

• From BM&F combination with the Sao Paulo stock Exchange(Bovespa), BM&FBOVESPA(Futures, Commodities and Stock Exchange) emerged as the world’s 3rd largest stock exchange.

• The BM&FBOVESPA(Bosla de Valores, Mercandorias & Futuros de Sao Paulo) is an exchange located at Sao Paulo, Brazil.

Structure of Brazil’s Derivative Markets

• Exchange traded derivatives• Over the counter markets

Derivative Users in Brazil

• Derivative Dealers• Customers or End Users in derivative Markets

Factors Contributing to the growth of derivatives

• Globalization• Technological Advancement• Price Volatility• Advances in Financial theory

Brazil’s Economic Indicators

• High Inflation• High Interest rates• Exchange rate Fluctuations

Instruments Used in Brazil Derivative Market

• Forward• Futures• Options Swaps

Types of Contracts

• Forward contracts• Foreign exchange forward• Non-deliveralble forwards• Futures• Options• Flex Options

Analysis of Some Research Findings

Concluding Remarks

Recommendations & Suggestions

• Improve transparency & surveillance of OTC derivative

• Use of new risk management models.• Government policies• Supervision, oversight and regulation of

counter parties• Low trading cost and risk distribution

Thank you