BM&FBOVESPA announces the start of the bidding process to select up to three market makers for options on stock of Banco Bradesco S.A. (BBDC4), Gerdau S.A. (GGBR4) and Banco do Brasil S.A. (BBAS3). This is the third stage of the Competitive Bidding Process to select market makers in equity options and BOVESPA Index (Ibovespa) options, developed by BM&FBOVESPA. The institutions (including nonresident) that wish to participate have until November 29, 2011 to deliver proposals and the winners will be announced on December 14, 2011.
For each object of the competitive bidding process, the winners shall be the three proposals that indicate the lowest maximum volatility spreads, defined as the percentage calculated on the basis of the ratio between the implied volatilities of the bid and offer prices for each option.
The four-stage bidding program has been developed to select market makers for options on the stock of ten companies (excluding Petrobras and Vale) selected on a decreasing scale of market liquidity based on 2010; and options on Ibovespa. In July 2011 the Exchange announced the market makers for OGX and Itaú Unibanco. The announcements of winners of BM&FBOVESPA’s second stage of competitive bidding, for options on the stock of BM&FBOVESPA, Usiminas and Ibovespa will occur on October 11, 2011 and the obligations start on December 12, 2011. The fourth stage will be for options on the stock of Cia. Siderúrgica Nacional, PDG Realty S.A. Empreendimentos e Participações, and Cyrela Brazil Realty S.A. Empreendimentos e Participações.
The program seeks to de-concentrate options trading, raising liquidity in underlying assets in the BOVESPA segment beyond Petrobras and Vale. It also seeks to encourage longer expirations for these contracts.
