SAO PAULO Dec 20 Bourses and clearinghouses will have 18 months to adapt to new rules in Brazil's financial exchange industry that will be implemented in June, securities industry watchdog CVM said on Friday, in a step aimed at fostering competition and transparency in domestic financial markets.
The new regulatory framework for the so-called market structure segment, which encompasses exchanges, clearinghouses, depositary companies and financial information providers, should "ensure conditions for the safe development of Brazilian markets, in line with the global standards widely viewed as adequate to prevent financial crises," CVM said in a statement.
Rio de Janeiro-based CVM edited four different sets of rules dealing with registration, custody, central counterparty and clearinghouse services, after discussing them for months with BM&FBovespa SA, the nation's sole listed bourse, securities clearinghouse Cetip SA Mercados Organizados and other industry players.
The rules are likely to have an impact on the way exchanges and financial information providers conduct business in Latin America's largest economy. Under current rules, BM&FBovespa enjoys a near-monopoly on all trading, clearing and settlement services for most locally traded shares.
Likewise, trading transactions in Brazil are settled through a central counterparty clearinghouse, a complex and capital-intensive venture that has for years helped drive potential newcomers away from BM&FBovespa's turf. There are no rules in place requiring BM&FBovespa to sell or rent clearing services.
BM&FBovespa is unlikely to share clearing, custody and settlement facilities with potential rivals until at least the start of 2015, when the integration of its four separate post-trading facilities would be ready.
An independent study on competition in the market structure industry, commissioned by the CVM last year, found that lack of competition is unlikely to cause harm in the medium term. It proposed a self-imposed regime of price monitoring and benchmarking by BM&FBovespa, incentives to improve access to BM&FBovespa's clearing, and ways to enhance market supervision and regulation.
Of the items, registration-related issues will take effect immediately.