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The Brazilian Securities, Commodities and Futures Exchange has authorized, as of 12/07/2009, Flexible Call and Put Options on iShares Ibovespa Index Fund (BOVA11) for trading. This new OTC derivatives contract allows financial institutions to structure an array of investment strategies for their clients like, protected capital, for example.
The BOVA11, is one of the four Exchange Traded Funds (ETFs) offered by BM&FBOVESPA. They track the performance of Ibovespa, IBR-X 50, Mid-Large Cap Index, and Small Cap Index, indexes developed and calculated by the Exchange.
The new contract is registered in the derivatives OTC market, under the code FBC, for flexible call options, and FBP for flexible put options. Each contract corresponds to the share value multiplied by the number of shares to be freely agreed upon between the parties, subject to the minimum trading lot of 100 shares.
Flexible option contracts allow the counterparties a greater flexibility in defining transaction characteristics such as: contract size, expiration date, traded premium, and strike price – all subject to the limits established by BM&FBOVESPA.
The contracts may be registered with or without the guarantee feature. In the first option, the Exchange acts like the central counterparty. The financial instrument also offers the inclusion of barrier price types that allow the activation or deactivation of exercise rights and obligations.
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ETFs complete one year of trading with a BRL 3.8 billion turnover
ETFs iShares Ibovespa (BOVA11), iShares MidLarge Cap (MILA11), and iShares Small Cap (SMAL11) completed, at the beginning of December, a year of trading at BM&FBOVESPA. During this period, in 39,200 transactions, 73.4 million quotas were traded that totaled a financial volume of BRL 3.8 billion.
Since it tracks the Exchange’s principal index (Ibovespa), the BOVA11 was the most traded ETF, with a financial volume of BRL 3.74 billion, representing 83.8% of the total traded by all four ETFs. Along the year, 72,683 quotas of BOVA11 were traded in 38,780 trades, with daily averages of BRL 14.1 million, 274 quotas, and 146 trades.
