* NYSE teams up with Brazil's ATG for liquidity pool
* NYSE is a minority partner with 20 percent stake
* ATS Brasil not a rival to BM&FBovespa, company says
By Walter Brandimarte
RIO DE JANEIRO/SAO PAULO, Nov 5 NYSE Euronext
and Americas Trading Group will invest $100 million to
create a new over-the-counter trading platform for Brazilian
stocks, a venture that may boost trading volumes in Latin
America's biggest equity market by 15 percent within its first
year of operation.
The new company, which was unveiled on Monday under the name
ATS Brasil, will be 80-percent owned by Americas Trading Group,
a Rio de Janeiro-based trading systems operator known as ATG.
NYSE will own 20 percent of the venture and provide technology.
The deal comes nearly one year after exchange operator
DirectEdge announced plans to open a new bourse in Brazil to
challenge incumbent BM&FBovespa SA, which enjoys a
near-monopoly on all trading, clearing and settlement services
for most locally traded shares.
ATS Brasil, however, will not seek to compete with
BM&FBovespa, NYSE Euronext Deputy Chief Executive Dominique
Cerruti said in a news conference in Rio de Janeiro.
"It is not about introducing competition just for the sake
of competition. We think it is about attracting liquidity," he
Still, common shares of BM&FBovespa shed 2.2 percent to
13.20 reais, their steepest decline in almost two weeks. The
stock is up 42 percent this year as worries ease that potential
competition could erode the company's leading position.
The platform will improve pricing of Brazilian assets by
attracting high-frequency traders who require a system prepared
to receive an enormous amount of trading orders in ultra-high
speed, ATG Chief Executive Fernando Cohen said at the same news
Cohen added that, in principle, ATS Brasil would rent
BM&FBovespa's clearinghouse, even though the Sao Paulo-based
exchange has said it is unlikely to share its facilities until
at least 2014, when the integration of its post-trading
structure should be ready.
ATS will likely add pressure on Brazilian regulators to open
BM&FBovespa's clearinghouse to competitors.
"If Brazil wants to increase its international presence, it
needs to consider developing an alternative exchange," said
Cohen. "In the entire world, there is no economy the size of
Brazil's with only one exchange."
In Brazil, trading transactions are settled through a
central counterparty clearinghouse, a complex and
capital-intensive venture. Unlike in the United States,
exchanges in Brazil have to identify final buyers and sellers,
not brokers, on a given deal and cannot execute cross-country
While some details of the functioning of the platform are
still subject to regulatory approval, ATS Brasil will allow NYSE
Euronext clients and other investors to place cross orders,
Arthur Machado, an executive director at ATG, said at the same
news conference. ATS Brasil wants to become "a liquidity maker,"
The venture comes after BATS Trading gave up on plans to set
up an exchange in Brazil. Currently Direct Edge is considering
such plans too, but has fallen short of saying whether it plans
to build up a clearinghouse structure.