| NEW YORK
NEW YORK Nov 14 Americas Trading System Brasil
(ATS Brasil) plans to open as a stock exchange in Brazil next
November with partner firms to be announced within weeks, the
CEO of the upstart said on Thursday.
ATS Brasil will be the first competitor to Brazil's sole
stock-exchange operator, BM&F Bovespa, and aims to
secure a 15 percent market share in Brazilian equities trading
within two years of operating, said Alan Gandelman, ATS Brasil's
chief executive. Within three years, the exchange aims to enter
the corporate listings business and may even go public itself,
The joint-venture between Rio de Janeiro-based trading
systems operator Americas Trading Group (ATG) and NYSE Euronext,
now owned by IntercontinentalExchange (ICE), filed to
become an exchange with Brazilian regulator CVM in June. It
expects regulatory approval to be granted in February.
The launch of the exchange is planned for November 2014, and
will coincide with the opening of a new Brazil-based clearing
house being formed by ATG. ATG has an 80 percent stake in ATS
ATS Brasil may move into derivatives trading in the future,
but right now it is solely focused on cash equities, where it
plans to be "very aggressive" on lowering trading costs, which
are on average 15 times higher in Brazil than in other major
markets, Gandelman said.
Within weeks, ATS Brasil will announce deals it has signed
with five partner firms that will give the new exchange trading
business in return for equity stakes of up to 6 percent each.
Gandelman said the partner firms are made up of two global
banks, one Brazilian bank, one European asset manager, and one
U.S.-based broker that specializes in technology.
One of the things that has prevented new exchanges from
entering Brazil has been a lack of access to central
counterparty clearing, which is a capital-intensive venture that
ensures trades go ahead even if one of the parties defaults.
BM&F Bovespa has said it would allow other firms to rent out
its post-trading facilities - the only current clearing option
available - once the bourse has finished integrating its four
clearing houses. That could be as late as 2015, Gandelman said.
ATS Brasil had initially planned on using BM&F Bovespa's
services, Gandelman said, but after doing its homework, ATG saw
an opportunity to create a plain vanilla facility that only
clears cash equities and exchange-traded products.
With no margining involved, the clearing house will cost
just 150 million Brazilian reals ($65 million), including
mandatory capital, spending on systems, and the starting of the
business, Gandelman said.
ATG expects to file the application for the new
clearinghouse, and to announce a consortium of backers for the
project, before Dec. 15, Gandelman said.
The consortium will include ATG, Brazilian risk consultant
Risk Office, as well as one major Brazilian commercial bank, and
one clearing house operator - either ICE, LCH.Clearnet, which
is majority-owned by the London Stock Exchange Group, or
Clearstream, owned by Deutsche Boerse.
ATS Brasil will not be a direct owner of the clearinghouse,
which aims to attract other customers, such as U.S.-based Direct
Edge, which has said it would like to set up shop in Brazil, but
has been faced with lengthy delays in gaining access to BM&F
NYSE Euronext, which has a 20 percent stake in ATS Brasil,
is providing technology for the new exchange. The New York Stock
Exchange parent was bought by Atlanta-based ICE for $11 billion
in a deal that closed on Wednesday. ICE's CEO, Jeff Sprecher,
said he will announce which parts of NYSE will be integrated
into ICE next week.
Gandelman said that while he has not yet met Sprecher, he is
confident that ICE, which owns a stake of around 12 percent in
Cetip S.A., a Brazil-based over-the-counter fixed income
depository, will make a good partner for ATS Brasil.
"The new owner is known for being aggressive, he is known
for investing a lot in what he believes, and he wants to be
global. And Brazil, because of Cetip, has been on his radar
screen. So for us, that sounds great," he said.