Exclusive: BM&FBovespa eyes India, China expansion

SAO PAULO Mon Feb 14, 2011 3:14pm EST

SAO PAULO (Reuters) - Brazil's BM&FBovespa (BVMF3.SA), the world's fourth-largest financial exchange operator, is closely watching for tie-up opportunities amid a global wave of consolidation in the industry, Chief Executive Edemir Pinto said on Monday.

BM&FBovespa is interested in China and India as markets where it could pursue expansion because of their growth potential and similarities in terms of products, Pinto told Reuters in an interview. He declined to say whether the exchange is currently engaged in any merger talks.

Pinto said the exchange's strategy is focused on expanding in markets and instruments with sizable trading volumes and ample liquidity, as financial markets grow in complexity and specialization.

"Our objective isn't making a profitable financial investment that makes you a shareholder or a partner, but one that forces you to think of the best value-added fit in terms of liquidity and products," he said.

His remarks comes as rivals globally are vying for a greater share of stock, bond and derivatives markets. Last week, Deutsche Boerse (DB1Gn.DE) and NYSE Euronext NYX.N said they are in advanced talks to merge, and the London Stock Exchange Group (LSE.L) agreed to buy Canada's TMX Group (X.TO).

Hong Kong Exchanges and Clearing Ltd (0388.HK), the world's biggest exchange operator by market value, said on Thursday it is open to international alliances and partnerships, although the exchange added that it had not identified any opportunities.

Pinto said a partnership with CME Group (CME.O) has "room to grow," without elaborating. As part of a growth plan that was devised after the merger of rivals BM&F and Bovespa in 2007, CME and BM&FBovespa bought stakes in each other, to share and build up trading platforms to lure investors.

Shares of BM&FBovespa gained 1.3 percent on Monday to 12.02 reais, the fifth straight daily increase. The stock has shed 8.5 percent this year.

(Writing and additional reporting by Guillermo Parra-Bernal; Editing by Todd Benson, Dave Zimmerman)

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