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The Brazilian Securities, Commodities and Futures Exchange - BM&FBOVESPA - and the Bolsa de Comercio de Santiago (BCS) signed a strategic joint operating agreement today (December 13, 2010). The agreement will enable connectivity between the two exchanges, in particular order routing and the distribution of market data. It includes other initiatives, such as the development of the Chilean derivatives market in the Bolsa de Comercio de Santiago, the establishment of joint initiatives related to settlement, clearing and central counterparty, and access to the BM&FBOVESPA/CME trading platform for markets administered by the Chilean stock exchange.
Order Routing and Market Data
With this agreement the exchanges seek a joint technological solution that allows order routing between the two institutions. Initially, the scope of the order routing will comprise listed stocks on each exchange, as well as stock options and other related derivatives. This initiative will allow Chilean brokerage houses connected to the Bolsa de Comercio de Santiago’s trading system to send buy and sell orders for Brazilian securities at BM&FBOVESPA, and vice versa.
The partnership also permits the exchanges to receive and distribute each other’s market data. To complete this agreement, a work schedule is being developed that will involve connectivity deadlines for both exchanges, types of market data distribution, sales and marketing, and the certification of distributors, among others.
Development of the Chilean derivatives market
One of the objectives of the agreement is to enable BM&FBOVESPA and the Bolsa de Comercio de Santiago to work together on the development of a derivatives market in Chile, which will encompass options and futures on stocks, interest rates, and exchange rates.
Regulatory approval
The agreement and the implementation of the system are subject to regulatory authorization and other approval or consent by the competent authorities of each country. The settlement and clearing of orders executed through the system will be carried out in accordance to the laws and regulation in force in the market where the transaction is performed.
