bvmf presentation - march 2014
TRANSCRIPT
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BM&FBOVESPA
Investor Relations Department
March 2014
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Forward Looking Statements
This presentation may contain certain statements that express the managements expectations, beliefs and
assumptions about future events or results. Such statements are not historical fact, being based on currently
available competitive, financial and economic data, and on current projections about the industriesBM&FBOVESPA works in.The verbs anticipate, believe, estimate, expect, forecast, plan, predict, project, target and other
similar verbs are intended to identify these forward-looking statements, which involve risks and uncertainties thatcould cause actual results to differ materially from those projected in this presentation and do not guarantee anyfuture BM&FBOVESPA performance.
The factors that might affect performance include, but are not limited to: (i) market acceptance of BM&FBOVESPAservices; (ii) volatility related to (a) the Brazilian economy and securities markets and (b) the highly-competitiveindustries BM&FBOVESPA operates in; (iii) changes in (a) domestic and foreign legislation and taxation and (b)government policies related to the financial and securities markets; (iv) increasing competition from new entrantsto the Brazilian markets; (v) ability to keep up with rapid changes in technological environment, including theimplementation of enhanced functionality demanded by BM&FBOVESPA customers; (vi) ability to maintain anongoing process for introducing competitive new products and services, while maintaining the competitiveness ofexisting ones; (vii) ability to attract new customers in domestic and foreign jurisdictions; (viii) ability to expand the
offer of BM&FBOVESPA products in foreign jurisdictions.All forward-looking statements in this presentation are based on information and data available as of the datethey were made, and BM&FBOVESPA undertakes no obligation to update them in light of new information orfuture development.This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shallthere be any sale of securities where such offer or sale would be unlawful prior to registration or qualificationunder the securities law. No offering shall be made except by means of a prospectus meeting the requirements ofthe Brazilian Securities Commission CVM Instruction 400 of 2003, as amended.
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HISTORY, BUSINESS MODEL AND CORPORATE GOVERNANCE
BRAZILIAN MARKET OPPORTUNITIES
MAIN GROWTH INITIATIVES
OPERATIONAL PERFORMANCE
FINANCIAL HIGHLIGHTS
APPENDIX (includes results for 4Q13)
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HISTORY, BUSINESS MODEL AND CORPORATE
GOVERNANCESafety, resilience and transparency
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1890:Foundation of Bolsa
Livre (BOVESPA's
predecessor)
1986:Start of
BM&F
activities
Aug 2007:BOVESPA Hld
demutualization
Sep 2007: BM&Fdemutualization
Oct 2007:BOVESPA Hld
IPO (BOVH3)
Nov 2007:BM&F IPO
(BMEF3)
May 2008:integration between BM&F and
BOVESPA Hld and creation of
BM&FBOVESPA (BVMF3)
1967:BOVESPAs
Mutualization
MARKET CAPITALIZATION (US$ billion) AND OPERATING MARGIN (%)
12M to Jun. 28, 2012; 12M to Mar 31, 2012 (Mar 31, 2013 for JPX); 9M to Sep. 30, 2012. Source: Bloomberg (Fev 28 ,2014).
History of BM&FBOVESPAImportant global exchange
24.7 24.018.0 15.7
9.2 8.2 6.5 6.5 6.5 5.8 4.23.5 2.5
58% 61%71%
57% 54%63%
41%
28%
72%
56% 56%67%
35%
CME ICE-NYSE HKEx DeutscheBoerse
LSE BVMF Nasdaq JPX ASX SGX Moscow BME TMX
Oper. Margin (2012)Diversif ied and integrated Integrated (Derivatives) Diversified but not integrated
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PRE-TRADING TRADING POST-TRADE
Access TradeAllocation
Transfer
Clearing/risk
analysis
Position/
CollateralDepository
Auxiliary
Services
VALUE CHAIN
Vertically integrated
Trading Platform: equities, derivatives, government and
corporate bonds, funds, spot FX, among others
Post-Trade Platform:
Central Counterparty (CCP) : An entity that interposes itself
between operations or contracts, becoming the guarantor of all
business
Settlement System (SSS): system that allows the transfer of
securities or assets from investors, in which the transfer may be
free or against payment
Central Depository (CSD): performs centralized asset custody and
treatment of corporate actions (dividends, stock splits, etc.)
Services for issuers and brokers Listing (stocks, funds, corporate bonds,
securitization, among other)
Trading access (brokers)
Securities Lending
Custody for clubs and foreign investors
(2.689 account)
Market Data (vendors)
Indices Licensing
Software Licensing
OTC (derivatives and fixed income)
Commodities certification
Vertical model as a differentialValue gained across most of the chain
SettlementRisk Analysis
(DMA)Risk Analysis
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DTCC
BRAZIL(Internalization of orders is forbidden)
US(Internalization of orders is allowed)
Post tradeCCP
SSS
CSD
Trading
Brokers
A and B
Investors Investors
Brokers A and B
Investors Investors
Broker
A
Broker
B
Model 100% vertical: clearing, settlementand central depository at the final beneficial
owner level
Brokers settle positions and control theirclients portfolios through BM&FBOVESPAs
infrastructure (impact on post-trade fees)
Clearing, settlement and custody occur at thebrokerage houses
Each prime broker has its own structure tocontrol its customers portfolios and settle
positions (impact on the prime brokerscosts)
Trading Venues
Vertical model as a differentialBM&FBOVESPA present at all post-trade stages
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Brokerage
houses &
investors
Trading
Post-Trade
Regulations prohibitinternalization of orders, dark poolsand ATS/MTFs and simultaneous exchange/OTC equities
trading
Settlement and clearing of equities trading must be donethrough a CCP
Settlement and clearing at the final beneficial owner level
make the Brazilian market safer and more resilient
Under the prevailing regulations, potential competitorsmust provide an integrated solution with the same statusregarding rules and transparency
In Brazil the final investor pays the exchange: compared to
other markets we have a competitive all-in-cost, as
BM&FBOVESPA provides more services than other
exchanges
Naked access is not allowed
Naked short selling is not possible
Brazilian market regulatory frameworkResilience and safety as priorities
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EXECUTIVE OFFICERSBOARD OF DIRECTORS
COMMITTEES
Edemir PintoCEO
Luis FurtadoCIO
Ccero VieiraCOO
Daniel SonderCFO
Eduardo GuardiaChief Product / IRO
Audit Committee
Risk Committee
Nominations and Corporate Governance Committee
Compensation Committee
Corporate GovernanceMultidisciplinary knowledge in conducting business
Charles CareyIndependent Director, Director of CME Group
Jos Roberto Mendona de BarrosIndependent Director, economist and professor
Pedro Parente (Chairman)Independent Director, CEO of Bunge Brasil
Marcelo Trindade (Vice Chairman)Independent Director, lawyer
Claudio HaddadIndependent Director, engineer and professor
Andr EstevesNon Executive Director, CEO of BTG Pactual
Alfredo Antnio Lima de MenezesNon Executive Director, Executive Officer of Bradesco
Luiz Fernando FigueiredoIndependent Director, Co-Founder of Mau Investments
Luiz Nelson Guedes De CarvalhoIndependent Director, professor
Candido BracherNon Executive Director, CEO of Ita BBA
Jos Berenguer Neto
Non Executive Director, CEO of JP Morgan Brazil
Advisory Committee For The Securities Intermediation Industry
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GM of Apr. 15, 2013
Number of individual shareholders 55,108
Number of institutional shareholders 3,580
Total number of shareholders 58,688
Free float (ON) 1,853,567,260 (97.6%)
Ownership structureWidely-held shareholder base
Updated on February 13, 2014
10.4%
6.8%
5.3%
2.3%
75.1%
Funds managed by OppenheimerFunds, Inc.
Funds managed by Vontobel Asset Management Inc.
CMEG Brasil I Participaes Ltda.
Treasury stock
Other
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BM&FBOVESPAs Sustainability PolicyApproved by the Board of Director
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BRAZILIAN MARKET OPPORTUNITIES
Main growth drivers
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Opportunities in the Brazilian marketBM&FBOVESPA is ready to capture future growth
Growth opportunities in the Brazilian equities
and derivatives markets
EQUITIES MARKET
Portfolio diversification: diversification of institutional investorsportfolios with a higher participation of equities
Retail investors: small number of retail investors and growth of themiddle class
Listed companies: low number of listed companies, while importantsectors are not adequately represented on the exchange
DERIVATIVES MARKET
Growth of credit and fixed-rate government debt: higher demand forhedging from financial institutions and institutional investors
Growth of foreign trade: higher demand for hedging through FXcontracts
Equities market development:growth in demand for index-basedcontracts
OTC derivatives: capital requirements (Basel) should benefit OTCtransactions through a CCP
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168216 256
295352
436 419492
538 574642
630
28%29% 30%
31%33% 37% 28%
33%33%
30%29% 29%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Fixed Income and Others
Equity
Capital MarketGreat opportunities in the equities and derivatives segments
Funds AUM evolution (in BRL billion). Global average of 40% for
equities
LISTED COMPANIES
Source : BM&FBOVESPA, ANBIMA , WFE (Dec-12) and ABRAPP. *Updated to Jun/13
INVESTMENT FUNDSNUMBER OF CUSTODY ACCOUNTS (thousand)
PENSION FUNDS
Number of retail investors represents only 0.3% of the
population (lower than global average)
Lower number of listed companies in comparison withother countries
Participation of equities in the portfolio of pension funds
6,856
4,916
4,041 3,9723,481 3,200
2,7672,056 1,784
364
India USA China/HK Canada Japan Spain UK Australia Korea Brazil
657861 899
1,0701,301
1,5131,375
1,703 1,7871,925
2,189 2,344
11%
10% 11%11%
15%22% 14%
18% 18%15%
14% 13%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2Q13
Equities
Fixed Income
*
May have a partial overlap between investment funds and pension funds portfolios.
Jan'05
128.6
Feb'14
610.5
Jan-0
5
Jul-05
Jan-0
6
Jul-06
Jan-0
7
Jul-07
Jan-0
8
Jul-08
Jan-0
9
Jul-09
Jan-1
0
Jul-10
Jan-1
1
Jul-11
Jan-1
2
Jul-12
Jan-1
3
Jul-13
Jan-1
4
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MAIN GROWTH INITIATIVES
Investments, new products and focus on thecustomer
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Update of strategic projects
*IPN/CORE implementation requires the authorization of the regulators.
PUMA Trading System - Multi-Asset Trading Platform A high-performance, high-speed and high-capacity electronic trading platform
RTT (Round Trip Time) of less than one millisecond
Derivatives and FX module: implemented in Oct/11
Equities module: implemented in Apr/13
Clearinghouses integration The integration of BM&FBOVESPAs clearinghouses will enhance the Companys competitive position
Development of the new risk architecture (CloseOut Risk Evaluation - CORE)* will increase allocation
efficiency for clients
Tests for derivatives started in Jul/13, with conclusion scheduled for Jun/14
iBalcoOTC Registration Platform Registration of OTC derivatives and fixed income securities (CDB, LCA, LCI, COE)
Deployment in Jul/13 (for FX non-deliverable forward no central counterparty)
Pricing Policy Changes for Cash Equities First phase (Apr/13): reduction from 0.7 bps to 0.5 bps in trading fees and a realignment between the
trading fees and post-trade fees of institutional investors and day traders
Second phase (Dec/13): increased discounts per tier of volume for day traders and a progressive reductionof trading fees per tier of global volume
Initiatives for Small and Medium Enterprises (SMEs) Establishment of the Technical Committee for Smaller Offerings composed of private sector and
government agencies
Developing proposals to facilitate capital raising through issuance of shares (incentives to SMEs, investors
and intermediaries)
Project was presented to the Ministry of Finance in Jul/13
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BM&FBOVESPA IT DevelopmentsBuilding a world-class IT platform
Increasing competitive differentiation for derivative andcash equity markets
LATENCY
BM&F Segment (derivatives) BOVESPA Segment (equities)
70
2520
10-15~1 ~1
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Clearinghouses IntegrationFurther differentiation in BM&FBOVESPA post-trade
Equities and corporate
debt (BRL 80.3 bn*)
Equities, ETFs andcorporate fixed incomecash market
Equity and indicesderivatives (options andforward)
Securities lending
Derivatives
(BRL 127.4 bn*)
Financial andcommodities derivatives(futures, options andforwards)
OTC derivatives
FX(BRL 5.9 bn*)
FX spot market
(US$ vs. BRL )
Securities(BRL 0.8 bn*)
Cash market andforward market forgovernment bonds
INTEGRATED CLEARINGHOUSE**=
Capital efficiency
* Aggregate of pledged collateral at our clearinghouses totaled BRL 214.4 billion in Dec 31, 2013. **IPN/CORE implementation requires the authorization of the regulators.
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Product and Market DevelopmentListed products, OTC and fixed income
LISTED PRODUCTS
iBALCO PROJECT
ETFs(exchange traded funds):Equities, fixed
income, international and real estate funds
Market maker:cash equities, options,commodities, futures
Ibovespa:methodology review
SMEs (small and medium enterprises):BOVESPA Mais
Incentive programs: retail investors
Selic derivatives: Selic futures (OC1), FX
spread (DCO), FX swap (SCS)
Options on single stocks: New fee policy forHFTs/day traders
Futures Contracts: Ethanol
BDRs: To Exchange from OTC
Securities Lending: BTC platform
Derivatives Registration:
NDFs: deployed in Jul/13
Flexible options on single stocks
COE: Structured Notes
Swaps
Fixed Income Registration:
LCAs (Agribusiness Credit Bill): improvements
LCIs (Real Estate Credit Bill) and CDBs (timedeposits): adaptation of the platform (pendingregulatory approval)
Corporate bonds and LFs (financial bills): changes tolisting rules and procedures
Trade of Fixed Income:
Trading platform for government and corporatebonds and changes to the fee policy
h h
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28.548.7
115.999.3
75.4
2010 2011 2012 2013 2014*
48.868.2
ADTV beforeMarket Maker
ADTV afterMarket Maker*
2.9 3.96.1
9.0 9.8
2009 2010 2011 2012 2013
Securities LendingReal Estate Funds (FIIs)Options with Market Maker
(Open Interest - average for the period - in BRL billion)
Initiatives to develop and prompt higher volume in certain products
Performance shows that the initiatives are being well received by the market
ETFs Brazilian Treasury Direct - Tesouro Direto Agribusiness Credit Bills
(ADTV in BRL million)
+39.9%
(ADTV in BRL million)
(ADTV in BRL million) (Custody in BRL billion)
High growth productsGrowing sophistication of market participants
BM&FBOVESPA has a 74% marketshare of the registered AUM (Sep-13).
CAGR(09-14):
+95.2%
CAGR (10-14):
+12.9%
CAGR (10-14):
+27.5%
CAGR (09-13):
+35.5%
*Updated to Fev. 28 2013. **Updated to Dec. 31, 2013
(AUM in BRL billion)
3.6 20.0
60.3
2011 2012 2013
0.9 1.53.7
14.6
31.7 26.3
2009 2010 2011 2012 2013 2014
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OPERATIONAL PERFORMANCE
BOVESPA S
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BOVESPA SegmentOperational highlights
*Updated to Feb 28, 2013. **Ratio of cash market trading volume to the market cap of the exchange.
AVERAGE DAILY TRADING VOLUMEADTV (BRL billion)*
AVERAGE ANNUAL MARKET CAP(BRL trillion) TURNOVER VELOCITY** (12 months average*)
*
0.720.94
1.31
1.98 2.03
1.83
2.33 2.37 2.41 2.41 2.25
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*
30.8%
29.4%
36.8%37.6%38.7%42.3%
56.4%
63.2%
66.6%
63.8%
64.2%
70.0%73.2%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
1,2 1,6 2,44,9 5,5 5,3
6,5 6,5 7,3 7,4 6,47,8 7,4 8,2 7,7
8,96,0
8,57,2 6,6 7,0 6,2 6,2 6,6
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 fev/13 m ar/13 abr/13 mai/13 j un/13 jul/13 ago/13 s et/13 out/13 n ov/13 d ez/13 jan/14 fev/14
T di i ADR f B ili i
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Trading in ADRs of Brazilian companiesLiquidity migration process interrupted
Feb14
Source: Bloomberg (in USD
traded value of 35 companies
with ADRs programs )
Sarbanes-Oxley Act
(Jul. 2002)
*Updated to Feb. 28, 2013.
Novo MercadoLaunch
(Dec. 2000)
PUBLIC OFFERINGS IN NUMBER OF COMPANIES
End of IOF Tax (2%) forforeign investors
(Dec. 2011)
End of CPMF(Financial
Transaction Tax)
37.7%
27.4%
8.8%
26.1%
34.9%
65.1%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Total
IPOs - 1 - 7 9 26 64 4 6 11 11 3 10 152
Follow ons 14 5 8 8 10 16 12 8 18 11 11 9 7 137
Total 14 6 8 15 19 42 76 12 24 22 22 12 17 289
Dual Listings - - - 2 1 1 - - 1 - - - - 5
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Other USA Venues - Brazilian ADRs NYSE - Brazilian ADRs
BM&FBOVESPA - companies with ADRs BM&FBOVESPA (except companies with ADRs)
BM&F S t
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BM&F SegmentOperational highlights
AVERAGE DAILY TRADED VOLUMEADV (thousands of contracts)
REVENUE PER CONTRACT - RPC (BRL)
*Updated to Feb 28, 2014.
2006 2007 2008 2009 2010 2011 2012 2013 2014* F-13 M-13 A-13 M-13 J-13 J-13 A-13 S-13 O-13 N-13 D-13 J-14 F-14
Interest rates in BRL 0.906 0.950 1.141 0.979 0.889 0.918 1.004 1.046 1.015 1.013 1.037 0.945 0.843 1.099 1.067 1.112 1.222 1.203 1.115 1.266 1.049 0.980
FX rates 2.244 1.859 2.065 2.161 1.928 1.894 2.205 2.535 2.631 2.305 2.273 2.292 2.347 2.590 2.691 2.731 2.720 2.624 2.611 2.832 2.629 2.633
Stock Indices 1.419 1.501 2.145 1.620 1.564 1.614 1.524 1.761 1.854 1.974 1.413 1.846 1.408 1.867 1.590 1.938 1.656 1.816 1.664 2.122 1.695 1.958
Interest rates in USD 1.094 0.965 1.283 1.357 1.142 0.941 1.015 1.231 1.370 1.140 1.121 1.093 0.928 1.280 1.370 1.309 1.412 1.246 1.359 1.340 1.325 1.414
Commodities 4.749 3.195 3.587 2.307 2.168 2.029 2.239 2.534 2.285 2.415 2.382 2.349 2.550 2.595 2.632 2.385 2.766 2.613 2.430 2.760 2.401 2.199
Mini contracts 0.034 0.054 0.162 0.176 0.128 0.129 0.116 0.119 0.123 0.122 0.119 0.118 0.116 0.119 0.114 0.117 0.126 0.120 0.120 0.128 0.122 0.123
OTC 1.571 2.111 2.355 1.655 1.610 1.635 1.769 1.409 1.073 2.868 1.642 1.460 1.428 1.418 1.839 1.160 1.477 1.118 1.266 0.978 1.077 1.069
Total RPC 1.247 1.224 1.527 1.365 1.134 1.106 1.191 1.282 1.277 1.191 1.190 1.114 1.020 1.361 1.320 1.397 1.511 1.418 1.367 1.575 1.294 1.261
422 501 711988 789 843
1,684 1,797 1,926 1,857 1,9102,630
2,2352,694 2,944
1,977
1,5191,713
1,239 1,209 1,457 1,179
1,851 1,969
110 168266
473535 447
541 496494 494 516
494
491
468507
635
435541
502 420481
497
500 531
86 74
68
11288 80
89 123143 114 98
126
100
145105
183
99146
90 10275
106
73123
187 109
124
167162 150
191285
336 383 465
341
341
352424
495
389
434
351 385405
392
428501
805 8521,167
1,740 1,573 1,521
2,5052,701
2,899 2,848 2,988
3,5913,166
3,6583,980
3,290
2,4432,835
2,182 2,1162,418
2,174
2,8523,124
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14
BRL Int. Rate (Thousands) FX (Thousands) Index (Thousands) Others (Thousands)
I t ti i ti i l
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Investor participation in volumesEquities and derivatives segments
BM&F SEGMENT (DERIVATIVES)
BOVESPA SEGMENT (EQUITIES)
56% 51% 49% 48% 45% 42% 38% 34% 32% 32% 29% 31% 32%37% 32% 34% 30% 32% 33% 34% 30% 32% 32%
12% 15% 17% 19% 20% 22% 23% 25% 25% 30% 25% 26% 26%26%
25% 23% 25% 26% 25% 25% 28% 29%31%
24% 25% 23% 23% 24% 30% 33% 34% 36% 32% 41% 38% 37% 32% 36% 35% 37% 33% 34% 34% 35% 33% 30%
7% 7% 9% 8% 8% 4% 4% 5% 5% 5% 3% 4% 4% 4% 5% 6% 6% 6% 7% 5% 5% 5% 5%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Feb-13 Mar-13
Apr-13 May-13
Jun-13 Jul-13 Aug-13Sep-13 Oct-13Nov-13Dec-13Jan-14 Feb-14
Individuals Institutional Investors Foreign Investors Financial Institutions Companies Central Bank
25% 25% 23% 27% 31% 26% 21% 18% 15% 13% 16% 18% 15% 16% 13% 16% 14% 15% 15% 15% 13% 13% 14%
27% 27% 30% 27%26% 33%
33% 32% 33% 31% 33%32% 32% 32% 33% 32% 34% 32% 33% 32% 32% 33% 29%
33% 36% 35% 35% 34%30% 35% 40% 44% 49% 41% 43% 42% 44% 44% 45% 42% 46% 44% 47% 46% 47% 50%
12% 10% 10% 8% 7% 8% 9% 8% 7% 5% 9% 7% 9% 7% 8%6% 9% 6% 6% 5% 7% 5% 5%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13Sep-13 Oct-13 Nov-13Dec-13 Jan-14 Feb-14
Individuals Institutional Investors Foreign I nvestors Financial I nstitutions Companies Others
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FINANCIAL HIGHLIGHTS
Cost discipline and capital return to shareholders
Income Statement
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Income StatementHistory
SUMMARY OF INCOME STATEMENT (CONSOLIDATED)
(in BRL thousand) 2009 2010 2011 2012 2013
Net revenue 1,510,569 1,898,742 1,904,684 2,064,750 2,370,229
Expenses (569,832) (633,504) (816,664) (763,080) (797,160)
Adjusted expenses (446,677) (543,881) (584,521) (563,487) (575,764)
Operating income 940,737 1,265,238 1,088,020 1,301,670 1,334,635
Operating margin 62.3% 66.6% 57.1% 63.0% 62.6%
Equity method result - 38,238 219,461 149,270 171,365
Financial result 245,837 289,039 280,729 208,851 181,535
Income before taxation of profit 1,186,574 1,592,515 1,588,210 1,659,791 1,687,535
Income tax and social contribution (304,505) (448,029) (539,681) (585,535) (606,588)
Net income* 881,050 1,144,561 1,047,999 1,074,290 1,080,947
Adjusted net income 1,223,761 1,586,374 1,545,627 1,612,136 1,609,769
Adjusted EPS (BRL ) 0.6104 0.7929 0.7932 0.8351 0.8389
*Attributable to shareholders of BM&FBOVESPA.
Revenue and Expense breakdowns
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6.1%
30.6%
4.3%36.9%
22.1%
Cash Equities (Trade)
Cash Equities (Post-Trade)
Equities Derivatives
(Trade and post-trade)
Financial and Commodities Derivatives
(Trade and post-trade)
Other
REVENUE BREAKDOWN (4T13)
Gross Revenue:BRL 524.0MM
Revenue and Expense breakdownsDiversified revenue sources as a differential, costs under control
EXPENSE BREAKDOWN (2013)
Expense:BRL 797.2MM
44.7%
15.0%
14.0%
5.8%
20.5%
Personnel
Deprec. and Amortization
Data processing
Third Party Services
Others
Adjusted Opex* Budget
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Adjusted expenses increase below inflation Focus on expenses control offset most of the inflationary adjustments over the past years
Considers the mid-point of 2014 budget; IPCA in 2014 based on market expectations released by the Central Bank in Dec. 13, 2013;
2013e vs 2012: 2.18%
IPCA 2013e: 5.91%
2014e vs. 2013e: 5.08%
IPCA 2014e: 5.95%
CAGR 2010-14e: 2.7%
IPCA 2010-14e: 6.0%
Adjusted Opex* BudgetFocus on cost control
*Adjusted to Company s depreciation, stock options plan, tax on dividends from the CME Group and provisions.
Opex- millions R$
Capex Budget
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Review of the 2014 Capex budget Impacted by some projects that were revisited and FX rate
Review of 2014 budget: to R$230260 million from R$170200million
FX rate exposure of ~25%
Update of the clearinghousesintegration project
Deepening initiatives (securitieslending, market makers, pre-trade riskcontrols, among others)
Capex is expected to decline from2015
2015e: R$190220 million
Capex BudgetInvestments phase
Capex- millions R$
Growth Path
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1,511
941
1,224
1,899
1,265
1,5861,905
1,088
1,546
2,065
1,302
1,612
2,132
1,335
1,610
Net Revenues Operating Income Adjusted Net Income
2009 2010 2011 2012 2013
(in BRL million)
(in BRL)
GROWTH IN ADJUSTED EARNINGS PER SHARE
GROWTH IN REVENUES AND RESULTS
Growth PathGrowth in business and results
0.61
0.79 0.79 0.84 0.84
2009 2010 2011 2012 2013
Financial Soundness
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Sound financial position - an important factor for the Company, given itsrole as CCP, guaranteeing the settlement of trades executed by global
and Brazilian investors
Standard & Poor sBBB+ (counterparty credit rating)
A-2 (issuer)
Moody sA3 (global scale issuer)
A3 (Brazilian local currency issuer)
Baa1 (global notes)
R$ million Dec/10 Dec/11 Dec/12 Dec/13
Available funds 1,677 1,582 1,964 1,921
Indebtedness 1,043 1,172 1,279 1,469
R$ million
CASH POSITIONSOUND FINANCIAL POSITION
*Includes collateral pledged by participants in the form of cash, receivables and rights in securities under custody, as well as payouts still undisbursed.
**Includes third party collateral and restricted funds at BM&FBOVESPA Settlement Bank (Banco BM&FBOVESPA).
Financial SoundnessHigh liquidity and low indebtedness
993
1,551
1,191
2,134
496
380
346
359
269
270
350
457
1,677
1,582
1,964
1,921
3,435
3,782
3,851
4,871
4Q10
4Q11
4Q12
4Q13
Market participants cash collateral and others*
Restricted funds
Subsidiaries**
Available funds
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APPENDIX
BOVESPA Segment
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PUBLIC OFFERINGS (BRL billion)
PIPELINE: OFFERINGS ANNOUNCED SO FAR TO THE MARKET
Updated to Jan. 31, 2013.
BOVESPA SegmentRaising Capital
There are 2 offerings in the pipeline
IPOs (1): Aceco Ti S.A
Follow-ons (2): Cia. De Saneamento Do ParanSanepar; Oi S.A;
Additionally, there are 5 Real Estate Funds filed with CVM: estimated value of R$ 1.2 billion
* Excludes the portion acquired by the Brazilian government in the Petrobras offering, via the transfer of rights in barrels (BRL 74.8 billion).
4.3 8.5 15.1 14.526.8 22.2
63.2
10.8 9.3 6.14.55.4
15.4
55.6
7.5 23.8
11.2
7.2 3.917.38.8
13.9
30.4
70.1
34.346.0
74.4
18.0 13.2
23.4
2004 2005 2006 2007 2008 2009 2010* 2011 2012 2013
Follow-On
IPO
BOVESPA Segment
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BOVESPA SegmentForeign investment flow
MONTHLY NET FLOW OF FOREGIN INVESTMENTS (in BRL billon)
Includes public offering (primary market) and regular trades (secondary market).
*Updated to Feb 28, 2013.
0.4
1.7
(1.3)
1.8
3.4
1.9 2.2
(0.4)(0.2)
0.8 1.0
(2.4)
7.2
(1.1)(1.3)
2.9
(2.3)
(0.3)
0.61.1
(4.2)
(1.2)
0.7
4.9 4.9
2.6
1.6
7.6
(1.2)
(3.8)
0.1 0.3
4.2
1.6
0.51.3
(0.9)
1.3
BOVESPA Segment
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177%
126% 121%
109%100%
136%
67%75%
87%72%
129%
100%
39%
174%
137%
158%
119%107%
129%
75% 76%
96%
72%
138%
80%
44%
129%
110% 109% 104%
89% 87%
60% 57% 55% 50% 49% 46%35%
151%
111% 117% 119%105%
85%
62%70% 69%
55%
124%
44% 45%
Cingapura Canad Chile EUA Coria Austrlia Japo Frana ndia Brasil Inglaterra China Mxico
2009 2010 2011 2012
11.2%
14.3%
2.2%
5.1%
20.4%
5.4%
0.4%5.5%
8.8%
26.8%
Oil, Gas and Biofuels Basic Materials Capital Goods and Servic es Construction and TransportationConsumer Non Cyclical Consumer Cyclical Information Technology Telecommunic ationsPublic Utilities Financial
15.7%
21.6%
2.5%
3.6%
8.6%
2.6%
0.3%11.1%
11.5%
22.4%
BOVESPA SegmentPotencial to increase the number of listed companies
MARKET CAPITALIZATION TO GDP (%)*
MARKET CAPITALIZATION BY ECONOMIC SECTOR * Source: World Bank
Dec05 Dec12
Hong Kong : 438% 481% 365% 421%
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BM&FBOVESPA Market Supervision (BSM)
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AuditMarket
supervision
Analysisand
strategyLegal dept.
Selfregulation
Officer
Supervision Board(12 members*)
StrategicCommittee
Atribuies da BSM estabelecidas na
Instruo CVM 461/2007:
Monitor and supervise transactions in
the organized markets
Determine deficient compliance with
the rules and norms
Monitor the activities of the Stock
Exchange
Initiate and prosecute disciplinary
administrative legal proceedings
Apply penalities
Main activities of BSM Organizational chart
Monitor 100% of the participants
transactions
Assess 100% of intermediaries
Enforcement Education
BSM duties established in CVM Instruction461/2007
BSM is is a not-for-profit association organized as a self-regulatory and market surveillanceorganization, responsible for regulatory and oversight activities relative to the markets we operate.
* 9 independent
BM&FBOVESPA Market Supervision (BSM)Self-Regulation Entity
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4Q13 RESULTS
4Q13 and FY13 Highlights
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FY13 FINANCIAL HIGHLIGHTS
Total Revenue: R$2,370.2 MM (+3.5% over 2012)
BM&F Segment: R$916.5 MM (+5.9% over 2012)
Other Revenue: R$429.7 MM (+10.4% over 2012)
Adj. Opex:2.2% growth, significantly bellow inflation
COMMITMENT IN RETURNING CAPITAL TO SHAREHOLDER
FY13 Payout: R$865.2 MM (ratio of 80%)
Share buyback: R$530.6 MM in 2013
Jan-14: R$370.4 MM
2014:new program of 100.0 million shares approved
MAIN STRATEGIC ACHIEVEMENTS IN 2013
Clearinghouses integration (IPN): certification in 4Q13
PUMA Trading System: state-of-the-art platform
Ibovespa:new methodology announced in Sep-13
Changes in fee structure and introduction of incentive program
SMEs:proposals for developing the access market
4Q13 vs. 4Q12
Net Revenue: R$475.6 MM(-4.7% over 4Q12)
Adjusted Expenses1: R$168.4 MM(-3.3% over 4Q12)
Operational Income: R$222.1 MM(-8.6% over 4Q12)
Adjusted Net Income2: R$341.9 MM(-9.9% over 4Q12)
Adjusted EPS: R$0.180
(-8.6% over 4Q12)
EBITDA3: R$292.9 MM(-2.1% over 4Q12)
EBITDA margin: 61.6%
1
Expenses adjusted to Companys depreciation, stock options plan, tax on dividends from the CME Group and provisions.2
Net income adjusted by (i) the effect of deferred liability recognition in connectionwith temporary differences from amortization of goodwill for tax purposes; (ii) the impact of the stock options plan; (iii) investment in affiliates (CME Group) accounted for under the equity method, net of
taxes; (iv) taxes paid overseas to be compensated; and (v) provision related to health plan net of taxes in 4Q12. According to CVM Rule 527/12 that does not exclude equity method accounting.
R$1,766.2 MM
4Q13 and FY13 HighlightsFocus on returning capital to shareholders
BOVESPA Segment Performance
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4Q13 vs. 4Q12
ADTV: R$6.62 bn (-5.8%)
Turnover velocity:64.4% vs.68.0% in 4Q12
Average market capitalization:+1.1% over 4Q12
Margin: 5.322 bps vs. 5.573 bps in
4Q12 (-4.5%)
Higher discounts by volumes for
day traders
Higher participation of cash
market in the overall ADTV
FY13 vs. FY12
Flat market capitalization
Growth in turnover velocity
Lower trading margins
AVERAGE DAILY TRADING VALUE (ADTV) AND MARGIN
BOVESPA Segment PerformanceChallenging environment affected equity volumes
AVERAGE MARKET CAP. AND TURNOVER VELOCITY
BM&F Segment Performance
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4Q13 vs. 4Q12:
ADV: 2.23 million contracts (-21.4%)
Interest rates in BRL: -34.5%FX: +4.7%
Index-based:-15.5%
RPC: +20.3% (mix effect and FX rate appreciation)
Interest rates in BRL: +20.0% (lengthening of contracts)
FX and Interest rates in USD:+10.3% and +18.6%,respectively (FX rate appreciation USD/R$)
42
AVERAGE DAILY VOLUME (ADV) AND AVERAGE REVENUE PER CONTRACT (RPC)
BM&F Segment PerformanceHigher RPC partially offset volumes decrease
(ADV in millions of contracts)
FY13 vs. FY12
ADV: 2.85 million contracts (-1.8%)
Interest rates in BRL: -3.6%FX: flat
Index-based:-20.6%
RPC: +7.6% (mix effect and FX rate appreciation)
Interest rates in BRL: +4.2% (lengthening of contracts)
FX and Interest rates in USD:+15.0% and +21.3%,respectively (FX rate appreciation USD/R$)
Revenue Breakdown
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Revenue BreakdownDiversified revenue sources as a differential
CASH MARKET TRADING REVENUEACCOUNTED FOR 6.1% OF TOTAL
DERIVATIVES REVENUE (BM&F + BOVESPA)ACCOUNTED FOR 41.2% OF THE TOTAL
(in R$ millions)
4Q13 REVENUE BREAKDOWN
FY13 vs. FY12 REVENUE BREAKDOWN
Bovespa Segment: R$1,024.0 MM; -1.0%BM&F Segment: R$916.5 MM; +5.9%
Others Revenue: R$429.7 MM; +10.4%
Depository: R$116.3 MM; +13.2%
Securities Lending: R$102.2MM; +32.6%
Adjusted Expenses
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djusted pe sesContinuous focus on cost control and operational efficiency
ADJUSTED EXPENSES: 4Q13 vs. 4Q12: -3.3%
*Includes expenses with maintenance in general, communication, marketing, taxes adjusted by the dividends from CME Group, board/committee members compensation and others (excluding provisions).
Cost efficiency: reduction of marketing expenses and non-recurrence of R$15 MM transferred to BSM in 4Q12
Adj. Personnel: +12.9% (annual union bargain in Aug/13;lower personnel costs capitalized; and concentration ofseverance costs)
(in R$ millions)
FY13: within the budget range (R$560-580 MM)
Cost efficiency: reduction in third party services, marketingand communication expenses
Adj. Personnel: +11.5% (effects of annual union bargain inAug/13; lower capitalization of personnel costs)
Data processing: +8.7% (higher expenses for services andmaintenance of software and hardware)
FY14E (R$595-615 MM): growing in line with inflation
FY13 vs. FY12 ADJUSTED EXPENSES: GROWING BELOW THE 2.2% OFFICIAL INFLATION
(in R$ millions)(Y10-Y13 CAGR): +1.9%
174.2 168.4
10.1 1.9 0.3
(18.1)
4Q12 Adj. Exp. Adj. Per sonnel Data proc. Third Party Others* 4Q13 Adj. Exp.
Total Expenses
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pImpacted by non-recurring expenses
NON-RECURRING ITEMS IMPACTED TOTAL EXPENSES IN AQUARTERLY BASIS COMPARISON
Personnel
16.3% reduction, since in 4Q12 there was a R$27.5MM provision related to the health care plan
4Q13 includes R$5.9 MM in severance costs,
reflecting the continuous efforts to control costs,and a R$4.2 MM reduction in personnel capitalized
Third party
BVRJ, subsidiary of BM&FBOVESPA, won legaldispute of over R$300 MMagainst one of itsformer broker member, generating a one-offsuccess fee payment of R$8.0 MM for a legaladvisor
Taxes
Extraordinary dividends from CME Groupincreased the tax connected to that to R$36.2MMin the 4Q13
R$ millions 4Q13 3Q13 4Q12
Total Expense 253.5 194.1 256.0Personnel 95.5 92.1 114.1Health care plan provision - - 27.5Severances 5.9 2.8 1.3
Third Party 20.2 9.2 20.0Success fee 8.0 - -
Taxes 37.8 6.8 19.7Taxes on dividends from CME 36.2 5.1 18.2
Others 100.0 86.0 102.2Provisions 10.8 0.6 4.4Transfer to BSM - - 15.0
Financial Highlights
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46*Includes third party collaterals at BM&FBOVESPA Settlement Bank (Banco BM&FBOVESPA).
**Includes earnings and rights on securities in custody. 46
g gStrong balance sheet with liquidity
(In R$ millions)
FINANCIAL RESULTS
Financial result: R$51.7 MM, +20.0% over 4Q12
Financial income: +27.5% (higher interest rates)
Financial expenses:+41.9% (appreciation of USD/R$impacts the interest on notes issued overseas)
CAPEX
4Q13:R$86.7 MMFY13 within the budget:R$289.2 MM
Market participant cash collateral includes R$1.2billion pledged in the FX Clearinghouse that wassettled on Jan. 2, 2014.
Capex reflecting intensive investment phase
2014 Budget:R$230 MMR$260 MM
2015 Budget:R$190 MMR$220 MM
CASH AND FINANCIAL INVESTMENTS
VALUATION AND ASSETS
R$ MM
Net cash position (Dec. 31, 2013) 941.1
CME shares (Jan. 31, 2014) 3,100.6
BVMF market capitalization (Jan. 31, 2014) 18,928.8
(In R$ millions)
Returning Capital to Shareholders
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More than R$7.4 billion returned toshareholders since 2008 Most of the cash generated over the period
Healthy balance between payout andshare buyback
High dividend yield
New share buyback program of up to100.0 MM shares
Capital Stock (# of shares)
Total: 1.98 bn shares
Excluding treasury stocks*: 1.86 bn shares
Board recommendation to cancel: 80 MM shares
47
g pCommitment to returning capital to shareholders
CAPITAL RETURN TO SHAREHOLDERS
(In R$ millions)
*Jan. 31, 2014
High growth products
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g g pIncreasing revenue diversification
48
STRONG REVENUE GROWTH OF SELECTED PRODUCTS
Products well received by clients, with continuous developments to maintain stronggrowth trend
Securities lending (BTC)
Tesouro Direto
Market maker for options on single stocks
Exchange traded funds (ETF)
Agribusiness credit bills (LCA)
Real estate investment funds (FII)
Non sponsored Brazilian Depositary Receipts (BDRs N1 NP)
CAGR(2009-13):
+42.5%
(In R$ millions)
Strategic Plan Execution
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gDeploying a long term strategic plan
IPN/CORE implementation requires the authorization of the regulators.
2010 2012 2013 20142011
- Kick-off- Derivatives and spot FX
(conclusion)- Equities (conclusion)
- Kick-off - Derivatives (conclusion)
- New NDFs platforms
- Fee schedule review
- Other products deployment
(highlighting CDB, LCI and
COE)
- Land acquisition
- Construction conclusion
and beginning of the
moving process
PUMA TradingSystem
IntegratedClearinghouse
OTC and Fixed
Income Markets
New DataCenter
Fee Policies
ProductsDevelopment
Other StrategicDevelopment
- Kick-off
- Market markers for
options
- Cross listing with CME
- LCAs registration
- Trading/post-trade
fees rebalancing
- ETFs and BDRs
- Discount by volumes
for HFTs
- Construction
beginning
- Changes in the equities
market fees
- Incentive programs
- Selic futures
- Cross listing with CME
- Ibovespa methodology
review
- SMEs access market
development
- SMEs access market
development
Bovespa Mais
- ETFs, BDRs and market
markers for options on
single stocks
- Fixed income and OTC
products
- Securities lending
- ETFs and market maker
Summary of Income Statement
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y(Consolidated)
* Attributable to BM&FBOVESPA shareholders.
(in R$ millions, unless
otherwise indicated) 4Q13 4Q12
Change
4Q13/4Q12 3Q13
Change
4Q13/3Q13 2013 2012
Change
4Q13/3Q13
Total Expenses 253.5 256.0 -1.0% 194.1 30.6% 797.2 763.1 4.5%
Net Revenue 475.6 499.2 -4.7% 535.4 -11.2% 2,131.8 2,064.8 3.2%
Expenses (253.5) (256.0) -1.0% (194.1) 30.6% (797.2) (763.1) 4.5%
Operating Income 222.1 243.1 -8.6% 341.3 -34.9% 1,334.6 1,301.7 2.5%
Operating margin 46.7% 48.7% -200 bps 63.7% -1,704 bps 62.6% 63.0% -44 bps
Equity in Income of Investees 39.5 32.2 22.9% 43.3 -8.7% 171.4 149.3 14.8%
Financial Result 51.7 43.1 20.0% 49.6 4.4% 181.5 208.9 -13.1%
Net Income* 182.1 217.3 -16.2% 281.6 -35.3% 1,081.5 1,074.3 0.7%
Adjusted Net Income 341.9 379.4 -9.9% 403.7 -15.3% 1,609.8 1,612.1 -0.1%
Adjusted EPS (in R$) 0.180 0.196 -8.6% 0.211 -15.0% 0.839 0.835 0.5%
Reconciliations
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Reconciliations
ADJUSTED NET INCOME RECONCILIATION
ADJUSTED EXPENSES RECONCILIATION
* Attributable to BM&FBOVESPA shareholders.
(in R$ millions, unless
otherwise indicated) 4Q13 4Q12Change
4Q13/4Q12 3Q13Change
4Q13/3Q13 2013 2012Change
4Q13/3Q13
GAAP net income* 182.1 217.3 -16.2% 281.6 -35.3% 1,081.5 1,074.3 0.7%
Stock options plan 6.8 7.9 -14.5% 5.6 20.2% 28.1 32.3 -12.9%
Deferred tax liabilities 138.9 134.8 3.1% 138.9 0.0% 555.6 539.1 3.1%
Equity in income of investees (net of taxes) 3.3 14.0 -76.1% 38.2 -91.3% 120.4 111.9 7.6%
Recoverable taxes paid overseas 17.4 15.2 14.9% 15.8 10.3% 64.8 60.2 7.7%
Provision - health plan (net of taxes) 0.0 18.2 - 0.0 - 0.0 18.2 -
Adjusted net income 341.9 379.4 -9.9% 403.7 -15.3% 1,609.8 1,612.1 -0.1%
(in R$ millions, unless
otherwise indicated)
4Q13 4Q12Change
4Q13/4Q12
3Q13Change
4Q13/3Q13
2013 2012Change
4Q13/3Q13Total Expenses 253.5 256.0 -1.0% 194.1 30.6% 797.2 763.1 4.5%
Depreciation (31.3) (23.8) 31.5% (32.5) -3.8% (119.7) (93.7) 27.6%
Stock options plan (6.8) (7.9) -14.5% (5.6) 20.2% (28.1) (32.3) -12.9%
Tax on dividends from the CME Group (36.2) (18.2) 98.8% (5.1) 610.5% (51.0) (37.4) 36.4%
Provisions (10.8) (31.9) -66.1% (0.6) 1611.2% (22.6) (36.2) -37.5%
Adjusted Expenses 168.4 174.2 -3.3% 150.2 12.1% 575.8 563.5 2.2%
Summary of Balance Sheet
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52
(Consolidated)
LIABILITIES AND EQUITYASSETS
(In thousands of R$) 2013 2012 (In thousands of R$) 2013 2012
Current assets 4,319,483 3,536,282 Current liabilities 2,710,846 1,660,609
Cash and cash equivalents 1,196,589 43,642 Collateral for transactions 2,072,989 1,134,235
Financial investments 2,853,393 3,233,361 Others 637,857 526,374
Others 269,501 259,279 Noncurrent liabilities 3,886,921 3,072,623
Noncurrent assets 21,577,176 20,610,832 Debt issued abroad 1,426,193 1,242,239
Long-term receivables 1,135,424 808,868 Deferred inc. tax and social contrib. 2,295,774 1,739,644
Financial investments 820,778 573,636 Others 164,954 90,740
Others 314,646 235,232 Equity 19,298,892 19,413,882
Investments 3,346,277 2,928,820 Capital 2,540,239 2,540,239
Property and equipment, net 423,150 360,993 Capital reserve 16,056,681 16,037,369
Intangible assets 16,672,325 16,512,151 Others 687,309 820,310
Goodwill 16,064,309 16,064,309 Non-controlling interests 14,663 15,964
Total Assets 25,896,659 24,147,114 Total liabilities and equity 25,896,659 24,147,114
Final Remarks
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Final Remarks
53
SOLID FINANCIAL PROFILE AND STRONG COMMITMENT TO RETURNING CAPITAL
High cash generation
Significant operating leverage
Strong focus on expense discipline
Commitment to returning capital to shareholders through payout and share buyback
DIVERSIFIED REVENUE BASE
Growing diversification (development of products and services)
Trading and post-trading revenues
TECHNOLOGICAL INNOVATION
Development of cutting edge IT platforms (fostering market development and strengthening ties withmarket participants and clients)
Leverage on the core IT platforms and established relationship with players to launch new productsand services (one-stop-shop)
RESILIENCE AND STRATEGIC POSITION
Commitment to the market integrity maintenance
Strengthening the competitive edge by delivering efficiency to the market
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BM&FBOVESPAINVESTOR RELATIONS
+55 (11) 2565 4729 / 4418 / 4834 / 7073 / 4007
ir.bmfbovespa.com.br