Presentation - Analyst Day - September 2011

7/30/2019 Presentation - Analyst Day - September 2011

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Strategic Plan for Strengthening the

Business Model and Growth

September 2011


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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 industries BM&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 that could cause actual

results to differ materially from those projected in this presentation and do not guarantee any future BM&FBovespa

performance.

The factors that might affect performance include, but are not limited to: (i) market acceptance of BM&FBOVESPA services; (ii)

volatility related to (a) the Brazilian economy and securities markets and (b) the highly-competitive industries 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 entrants to the Brazilian markets; (v) ability to keep up

with rapid changes in technological environment, including the implementation of enhanced functionality demanded by

BM&FBovespa customers; (vi) ability to maintain an ongoing process for introducing competitive new products and services,

while maintaining the competitiveness of existing 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 date they were

made, and BM&FBovespa undertakes no obligation to update them in light of new information or future development.

This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any

sale of securities where such offer or sale would be unlawful prior to registration or qualification under the securities law. Nooffering shall be made except by means of a prospectus meeting the requirements of the Brazilian Securities Commission CVM

Instruction 400 of 2003, as amended.

Forward Looking Statements


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BM&FBOVESPA global playerStrategic initiatives: growth and competitive strengthening

Strategic movement- fee structure

The new fee structure eliminates the cross subsidies, strengthens competitive

position and increases the alignment with international markets

State-ofthe-art in IT

Derivative module of the new trading platform (PUMA Trading System) alreadyonline more capacity and efficiency / performance

Clearing Integration

Will bring more efficiency to the Exchange and mainly to the market

participants, which strengths our competitive position

Revenues Diversification

Development and conclusion of projects related to new products and markets,

new participants and volumes growth


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Bovespa Segment

New Fee StructureEliminates the cross subsidies and strengths competitive position

Basis

point

Current fee structure New fee structure

Lower Higher Lower Higher

Trading 1.90 2.85 0.70 0.70

Post

trading0.60 0.60 1.80 2.75

Total 2.50 3.45 2.50 3.45

(76%)

(24%)

(100%)

(83%)

(17%)

(100%)

(28%)

(72%)

(100%)

(20%)

(80%)

(100%)

Strategic Movement

Strengthens competitive position

Eliminates cross subsidies across trading and post-trading business lines

Increases the alignment with international markets

The fees rebalancing has neutral effect on investor costs and Companyrevenues/margins

BM&F Segment

Rebalancing the trading and post-trading(settlement and registration fees)

60% post-trading and 40% trading

All in cost keeps in line with internationalbenchmark

Note: the lower fee is paid by local institutional and investment clubs and day trades transaction, in this case for all investors


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The minimum fee is paid by local institution and investment clubs and day trading, in this case, for all type of investors.

Brokers fee (Brazil and USA) is the average price collected from four USA discount brokers and from four Brazilian retail brokers in June 2011. The R$2.59exchange fee per order results from: 3.45bps on a trade of R$7.5 thousand (average size of the Home Broker trading).

New Fee Structure Bovespa SegmentDemystifying: BVMF prices are competitive

The new fee structure shows better that the fees charged by BVMF arecompetitive

Lower Fee(Exchange)

Higher Fee(Exchange)

BpsCents of

US$Bps

Cents of

US$

Trading Fee 0.70 0.196 0.70 0.196

Settlement Fee 1.80 0.504 2.75 0.770

BVMF Total Fee 2.50 0.700 3.45 0.966

Broker fee(estimate)

(a) 1.50 0.420 1.50 0.420

(b) 5.00 1.400 5.00 1.400

(c) 10.00 2.800 10.00 2.800

All-in cost

(a) 4.00 1.120 4.95 1.386

(b) 7.50 2.100 8.45 2.366

(c) 12.50 3.500 13.45 3.766

Institutional Investors (stock price at US$28.00)

in the USA, the average all in trading costcould vary from US$0.02 to US$0.04 pershare, in line with the Brazilian market

+

=

BRL USA BRAZIL

Broker 13.80 9.06

Exchange - 2.59

All-in cost 13.80 11.65

In average, retail investors pay less totrade stocks in Brazil than they pay

in USA!

Retail Investors (retail brokers simulation)

In the USA the interface is only with the brokeragehouse (the exchange cost is embedded within thebroker fee), while in Brazil the interface is with bothbroker and exchange


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in USD

Holding Period - 3 months Holding Period - 12 months

BVMF Deutsche Brse BVMF Deutsche Brse

Local Foreigner100

Trades

25

TradesLocal Foreigner

100

Trades

25

Trades

Trading 2,100 2,100 1,512 1,241 2,100 2,100 1,512 1,241

Post trading 5,601 8,262 7,651 3,319 6,204 8,299 13,276 8,944

Clearing and Settlement 5,400 8,250 5,776 1,444 5,400 8,250 5,776 1,444

Depository 201 12 1,875 1,875 804 49 7,500 7,500

All-in cost 7,701 10,362 9,163 4,560 8,304 10,399 14,788 10,185

In Germany, the post trading costs, in special the depository cost, are higher

than the trading costs

The German fee structure shows that the BVMF new fee structure is betteraligned with international practices

Comparing trading and post trading costs: BVMF vs. Deutshe Brse

New Fee Structure Bovespa SegmentDemystifying: BVMF prices are competitive

Note: institutional investor simulation; 500 th stocks trading size; USD30.00 stock price; USD15 million under custody; Deutsche Brse / Clearstream

costs: trading: 0.00504%; clearing and settlement US$28.88 by settlement; trading and clearing/settlement are due in both in and out of each

transaction; custody: 0.05% aa

Source: Deutsche Brse fee schedule and search done by Rosenblatt Securities Inc.


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Equity Index-based Future Contracts (cost in USD)

BVMF HKEx NSE CME

Trade /Participant

Table MiniIbovespa

Ibovespa Hang Seng S&P CNXNifty

Particip. E-miniS&P 500

S&P 500

No Day TradeAverage 14.07 27.47

9.45 19.00

Customer

of a

Member

Firm

20.72 8.34Minimum 11.52 23.29

Day TradeAverage 4.22 8.70

Minimum 3.42 7.42

Member

Firm 6.27 2.61Day TradeHFT

Average 2.36 4.02Minimum 1.57 3.24

FX Future Contracts (cost in USD)

BVMF CME

Trade /

Particip.Table BRL/USD Particip. USD/EUR BRL/USD

No DayTrade

Average 22.20 Customerof a

Member

Firm

18.05 25.60Minimum 17.60

Day

Trade

Average 11.00

Minimum 8.80

Member

Firm3.61 5.12Day

Trade

HFT

Average 4.80

Minimum 3.60

Interest Rates (DI) Future Contracts (cost in USD)

BVMF CME

Trade /

Particip.Table DI Particip. Eurodollar

No DayTrade

Average 1.32 Customerof a

Member

Firm

1.19Minimum 1.00

Day TradeAverage 0.48

Minimum 0.40

Member

Firm0.18Day Trade

HFT

Average 0.24

Minimum 0.22

Doesnt include monthly membership fee.

Notes: in the case of Index-based contracts market size, HKEx market is 5x bigger than BVMF, NSE market is 1,1x and CME market is 48x.

New Fee Structure BM&F SegmentDemystifying: BVMF prices are competitive


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Regulatory EnvironmentSupports a more transparent and safe model

Efficiency and transparency in price discovery

Equity Trading in OTC off-exchange is forbiddenAuction rules based in several parameters (price changes and volume traded, as example)

Competition and market fragmentation only in the exchange environment no possibility ofalternative venues or easing the regulation

Risk Management - worldclass

Beneficial owner model: risk management, settlement and depository

Risk management: pre trade (credit check) and post trade (intraday surveillance - near time)

Self-Regulation

Strong self regulatory rule performed by exchange in its markets

Supervising and monitoring pre and post trade

Market participants monitoring (brokers, investors and companies)

These are the main strengths of the Brazilian model and theyhave high value for regulators


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Clearing IntegrationEfficiency, growth and strengthening of the business model

BVMF Clearing Model Strengths

Settlement, risk management and depository at beneficial owner levelunique model among the developed markets

Intra-day risk management (every 15 minutes for derivatives and near time forequity)

Offers a consolidated position of investors risk exposure to regulators

BVMF is one of the few exchanges that can put in place the integration ofdifferent markets efficiency and competitive edge

There is no available solution in world that suits easily in the

Brazilian market our model is not easily replicable

BVMF developed a new risk architecture (CORE CloseOut RiskEvaluation) and is analyzing technological solutions for its

new clearing


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DTCC

Clearings IntegrationEfficiency, growth and sthrengthening of the business model

BRAZIL USA

BVMF

Post tradingClearing (CCP)

Settlement

Central Depository

Trading

BVMFBrokers

A and B

Investors Investors

Brokers

A and B

Investors Investors

Broker

A

Broker

B

100% vertically integrated: clearing,settlement and central depository at the

beneficial owner level

Brokers control their clients portfolios andsettle positions through BVMFs

infrastructure (this impacts the post-tradefees charged by BVMF)

DTTC does the clearing, settlement andcentral depository of securities at the

brokers level

Each broker (prime broker) has its ownstructure to control their clients portfoliosand settle positions (this impacts the prime

brokers costs)

Trading Venues


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CORE framework and expected benefits

CONCEPTUAL FRAMEWORK BENEFITS

Realistic representation of

the CCP risk management

problem:

Robust and efficientassessment of a multi-asset

class and multimarket

portfolio risk;

Consistency with the

predefined default

procedures

More accuracy in the

backtesting due to explicit

closeout strategies

State-of-the-Art in ITEfficiency and innovation in the clearings integration


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Clearings IntegrationEfficiency, growth and sthrengthening of the business model

FINANCIAL

DERIVATIVES AND

COMMODITIESEQUITIES,

DERIVATIVES ON

SINGLE STOCKS

AND SEC. LENDING

FIXED INCOME

SPOT FX

Operational Efficiency

Integrated Systems

Capital Efficiency

Reducing costs via increase in possibilities of netting positions

Risk Management Efficiency

Capital allocation reduction

INCREASE IN THE SWITCHING COST

Efficiency gains

Operational: reduction of costs for the exchange and for the participants

Clearing: increase in efficiency

Risk Management: reduction of costs and/or allow growth in leverage forparticipants (BRL162 billion deposited as collaterals Jun/11)


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0,0

20,0

40,0

60,0

80,0

100,0

120,0

140,0

-

2,0

4,0

6,0

8,0

10,0

Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11

ADTV (BRL Billions) Ibovespa (Jan'08 = 100) Turnover Velocity (%)

Operational Performance Bovespa segmentGrowth of HFTs activity

Volumes in the stocks markets

HFTs Volumes (ADTV in BRL billions)

7.7

90.3

85.7%

0.14 0.17 0.260.35 0.34 0.32

0.51 0,49 0,56

1,15

0.22 0.160.27

0.35 0.26 0.250.29 0,25 0,26

0,40

0.20 0.170.21

0.270.14 0.21

0.19 0,15 0,15

0,21

4.5%4.0%

5.7%6.6%

5.9% 5.9%

8.7%

7.6% 8.6%

11.4%

0,0%

2,0%

4,0%

6,0%

8,0%

10,0%

12,0%

-

0,20

0,40

0,60

0,80

1,00

1,201,40

1,60

1,80

2,00

Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11

Foreigners Individuals Institutionals % of overall market

0.56 0.50

0.73

0.96

0.75 0.78

1.000.90 0.97

0.97

* HFTs volumes updated until 08/30/2011.


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Operational Performance BM&F segmentDerivatives volumes keep in high levels

ADTV (thousands of contracts) and RPC (BRL)

HFTs traded volumes* share per contract

-

0,400

0,800

1,200

1,600

2,000

0,0

1,0

2,0

3,0

4,0

Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11

Interest rates in BRL contracts FX contracts Other contracts RPC (BRL)

4 2041 50 69

155

74 77 66 101 65 65 67 82118 101 126

162

518

4441

50

43 38 4345

29 51 4849

4542

49

88

47

22

5377

93

9093

82

95

6890 88

90

10292

113

203

4217

10

17

16 1818

84

11

28

0.3%1.0%

2.8%

4.8%

3.8%

6.0%

4.9%

4.8%

3.6%4.7%

3.5%4.2% 3.9% 3.6%

6.7%5.4%

7.5%

7.3%

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11

FX Equities Mini contracts Interest Rates in BRL % in Overall Volume

8 32

81

151

188

301

207 208

251

179

222 222 239

274

239251

300

481

* HFTs volumes updated until 08/30/2011.


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State-of-the-Art in ITDevelopment and conclusion of strategic projects

The importance of BVMF IT investments

Turning the key business processes, so innovative and unique

Complete redesign of the IT systems and infrastructure

Competitive advantage

To support the market growth and sophistication

More capacity and performance

Increase the offering of services

Reliability and excellence in services

Processes and Information Security

Efficiency gains

Rationalization of the IT infrastructure and systems

IT OpEx efficiency

Appropriate strategy of sourcing


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State-of-the-Art in ITNew Trading System performance and capacity

First phase (BM&F segment) concluded

On-line since August 29: migration in tranches

Processing capacity of 200 million messages/day (33x the

BM&F segment all time high)

Latency of 0.5 millisecond (core); and 1.5 (border)

Allows new partnerships

Second phase (Bovespa segment)

Ongoing development

Integration of equity, derivatives and spot FX in the same

trading system

More capacity and lower latency

Tests of integration (internal and with the market) will

start in the beginning of 2012

Puma Trading System

Unified Multimarket

and Multiasset Class

Platform

Jointly developed with

CME Group


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State-of-the-Art in ITInnovation and efficiency in the clearings integration process

ClearingsIntegration

Current status

Each of the clearinghouses have their own systems

Opportunities

Integration of processes and systems

Unified risk system (CORE)

On going developmentA multiasset class, flexible and fast post trading platform

developed by a international provider was chosen

Term sheet signed and the final agreement under

discussion

Source code, IP rights and complete exclusivity in Brazil

Beginning of the sprints in October 2011

Timeline

Development to be concluded in 2012; certification and

migration to be finished in 2013


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State-of-the-Art in ITInfrastructure to the exchange and market participants

NewData Center

Current situation

5 data centers: 2 main e 3 back-ups (will be merged in 1 ongoing process)

New data center building replacing the two existent

Strategic importance

Scalability and safety

Relationship and loyalty of market participants

Brokers: low cost hosting of data centers

Investors: additional space for co-location

ISVs: data center infrastructure hosting

Timeline

Building Conclusion in 2012 and moving (migration)

during 2013


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New ProductsDeveloping products and attracting new investors

ADTV (BRL millions)

ETFs

BEI(Brazil Easy

Investing)

Still incipient in Brasil: 20-30% of USA exchangevolumes and 8-15% in Europe

Launching of new ETFs: 8 already trading

Operational improvements, regulatorydiscussions and educational process

Order book in foreign currency to attract foreignretail investors

Improvement in 2689 regulation to foreign retail

investors - omnibus account and tax ID

Derivatives

Cross Listing

Cross Listing with CME

Listing of Ibovespa Futures contracts in CME and cash-settled soybean futures

and mini S&P 500 futures in BVMF

Sharing revenue agreement and differentiated fees

COE(Structured

Notes)

Structured Notes

Infrastructure ready to register transactions

Pending additional regulation

18.6

28.536.4

2009 2010 YTD


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Market DevelopmentDeveloping the current participants and attracting new ones

Financial Education / Popularization

To intensify the ongoing financial educational activities through partnershipswith participants (brokers and banks)

Products distribution

To strength the partnership with brokers in

the distribution of BVMF products (Treasury

Direct is a successful example)

To intensify the partnerships with banks in

the distribution

Direct Treasury Growth

-

10,0

20,0

30,0

40,0

50,0

60,0

70,0

-

1,0

2,0

3,0

4,0

5,0

6,0

7,0

Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11

Value under Custody (BRL billions) # of investors (thousands)

M k d l


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Market developmentPolicies to foster volume growth

New fee structure

Studies to implement a new fee structure that gives incentives to volumegrowth and increase the customers loyalty

Participants IT improvements

Development of services (IT and data center) to market participants (banks

and brokers)

Market maker for options on single stocks

Programs to be granted for 10 options on singles stocks (ex Petr and Vale) andIbovespa (OGX and ITUB will start in Sep/11)

Products development

Development of new products in partnership with banks and brokers, since itsconception

i i l i hli h


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Financial HighlightsFocus on OpEx Control and maximization of shareholders return

Adjusted Operating Expenses in line with 2011 guidance (from BRL615 to BRL635 million)

The strategic headcountgrowth was concludedin 2010. As of 2011, thenumber of employees

has been stabilized

CAPEX state-of-the-art in terms of technology

Dividends /

Interest on CapitalShare Buyback Cash

R$

(MM)

Payout

(%)

R$

(MM)

% of

capital

Total

(R$ MM)

Available

(R$ MM)

2009 705.0 80.0% 267.2 2.2% 3,931.8 2,316.62010 1,144.6 100.0% 434.5 1.6% 3,435.3 1,711.7

jul/11 451.9 80.0% 398.2 1.7% 3,355.3 1,538.3

Shareholder maximize value

2011 actual CAPEX is in line with the guidance(from BRL235 to BRL255 million); investments

should accelerate in 2H11

Maximize shareholders return throughhigh payout ratio and new buyback

program

Updated until Jun11

115.5 124.4

145.8159.0

140.6143.7

9.3 11.515.1

18.922.3 10.19.0 7.0

5.59.4 24.5

10.1

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11

Adjusted Operating Expenses Depreciation Stock option Others

133.8 143.5167.6

188.7 188.7

166.8

In million R$

In million R$

95.6

268.4

73.0

2009 2010 2011e

Actual Budget Var.

235.0

255.0

Fi i l Hi hli h


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Financial HighlightsGoodwill benefits

Deferred Liabilities impact goodwill

Since 2009, the goodwill tax benefit has been recognized as a deferred liability(being cash neutral), reducing the GAAP earnings

Different ways to consider it in the valuation impact the multiples (P/E),distorting the comparison with peers

BRL thousands

Considering

Goodwill

Simulation without

goodwillTax Book 1H11 1H11

EBT 777,960 777,960

(-) goodwill amortization 733,565 -

(-) Interest on capital 150,000 350,082

(=) Taxable earnings (105,605) 427,878

Tax - (145.479)

GAAP Book 1H11 1H11EBT 777,960 777,960

Deferred Tax (249,412) (145,479)

Other tax credits 36,379 -

Net Income GAAP 564,927 632,481

EPS 0.289 0.323

EPS Variation 12.0%

EPS 2011e P/E

GAAP Earnings 0.577 16.6x

Earnings without

goodwill0.646 14.8x

Adjusted Earnings 0.810 11.8x

Different earnings impact the P/Ecalculation and distort comparisons and

market consensus

The reported adjusted net income shows ina better way the companys cash generation

Simulates the IOC amount that would be recommended if there was no goodwill tax benefit

Actual data and simulation for annualized 1H11; Stock at BRL9.07 (fAugust 30, 2011).

R E h i d BVMF3


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0,0X

5,0X

10,0X

15,0X

20,0X

25,0X

30,0X

35,0X

40,0X

Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11

BVMF

SGX

HK

Recent Events that impacted BVMF3External factors and what BVMF has been done

Competition

New fee structure

IT investments

Market participants

services

Goodwill

Ongoing Process (there is notdeadline)

BVMF continues to get the tax

benefit of the goodwill

Volumes reduction

High volumes in BM&F segment,

while it has decreased in

BOVESPA Segment

HFTs have not been impacted

Macropudential measures (IOF)

Until now, there is no impact on volumes

Meetings with the government to discuss

the operational issues and the measures

impacts

BVMF is trading with a historical discount in the comparison with its Asian peers... Does it make sense?

Note: chart of 12 months forward P/E multiple.

BM&FBOVESPA t t i l


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BM&FBOVESPA strategic planCreating value to shareholders and market

Capturing the economic growth opportunities

Despite the challenging short-term macro conditions, Brazilan capital andderivatives markets offer excellent opportunities from which BVMF canbenefit in the long-term

Consistent growth

of revenues andearnings

New multiasset class trading platform (state of the art in IT)

Derivatives module online in August 2011

Increase in capital efficiency with clearing integration Fee structure rebalancing

Strengthening thecompetitive

position

Establish diversified product mix to drive long-term revenue (market makerfor options on single stocks; ETFs; Fixed Income; HFT and cross listing)

Partnership with CME offers opportunities for innovation

Investments inproducts andpartnerships

Focus on cost control adjusted expenses within budget range

Strategically return cash to maximize shareholder value

High payout ration ongoing, coupled with buyback program

Consistent resultsdelivering


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www.bmfbovespa.com.br

Investor Relations Department55 11 2565-4729 / 4418 / 4834 / 4728 / [email protected]

Presentation - Analyst Day - September 2011

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