UPDATE 1-Brazil bourse BM&FBovespa to unveil new fee policy

Wed Feb 20, 2013 9:40am EST

* Plan to change fees in cash equities market

* CEO Pinto says does not fear competition

By Aluísio Alves

SAO PAULO, Feb 20 (Reuters) - BM&FBovespa SA, Brazil's sole financial bourse, is likely to reduce trading fees in the cash equities market to share efficiency gains with customers, months before competitors enter the buoyant exchange.

A new pricing policy in the segment will be announced on March 5, Chief Executive Edemir Pinto told analysts at an event to discuss fourth-quarter earnings on Wednesday. The aim of the new policy is to "divide the gains in scale with all market participants," Pinto said.

Pinto said BM&FBovespa is "not worried" about facing growing competition. Direct Edge Holdings LLC, the fourth-largest U.S. stock exchange operator, is seeking a license to operate a Brazilian bourse.

Under current rules, BM&FBovespa enjoys a near monopoly on all trading, clearing and settlement services for most locally-traded shares. While depositary receipts in New York or other global financial hubs provide a possible alternative to trading on BM&FBovespa, many investors cannot trade them due to legal or tax restrictions.

Net income at the São Paulo-based company fell 22 percent on a quarter-on-quarter basis to 217.18 million reais ($111 million), well below the 255.6 million reais estimated in a Thomson Reuters poll of five analysts. Profit rose almost 14 percent on a year-on-year basis, BM&FBovespa said in a securities filing late on Tuesday.

Shares fell on Wednesday, after fourth-quarter expenses surged and revenue from derivatives and equities trading came in below expectations. BM&FBovespa fell for a third day, shedding 1.4 percent to 13.34 reais, the lowest level in more than two months.

The company's decision not to report earnings before interest, tax, depreciation and amortization for the quarter or the full year was not motivated by the risk of future competition, Pinto said. The company is waiting for instructions by securities regulator CVM on the reporting of the indicator, known as EBITDA.

EBITDA, which is a widely followed gauge of operational profitability, is not reported by most global rivals in the bourse industry, Pinto said.

He said that as many as ten companies could list their shares in the Bovespa Mais segment of the market for small and mid-sized firms. Currently there is only one company listed in that part of the market.

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