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CME Group, the world's largest and most diverse exchange, and the Brazilian Mercantile & Futures Exchange S. A. (BM&F), the world's fourth largest futures exchange and the largest derivatives exchange in Latin America, announced today the execution of definitive agreements related to the previously announced cross investments between the two exchanges. CME Group will acquire an approximately 10 percent equity stake in BM&F, and BM&F will acquire approximately 1.19 million shares of CME Group common stock.
Concurrent with the closing of the cross-equity investment, the parties also plan to enter into an order routing arrangement in which CME Group would connect its CME Globex electronic distribution network to BM&F, and BM&F would connect its distribution network to CME Globex for the routing of orders for electronic trading of the products of both exchanges.
Closing of the transaction remains subject to BM&F shareholder approval and other customary closing conditions, including Brazilian regulatory approval. The BM&F shareholder meeting has been called for February 26. There can be no assurance that all conditions to closing will be satisfied.
The agreement follows the initial public offering of BM&F, which became a publicly traded company on November 30, 2007, and is listed on the Sao Paulo Stock Exchange (BOVESPA)'s Novo Mercado under the ticker symbol BMEF3.
CME Group and BM&F have also entered into a memorandum of understanding to explore additional commercial agreements, including: CME Group providing offshore collateral management services; BM&F becoming a "super-clearing" member of CME Group to facilitate access to CME Group products on behalf of BM&F market participants that lack independent arrangements with CME Group clearing members; and joint product development.
Lehman Brothers is acting as financial advisor to CME Group and Skadden, Arps, Slate, Meagher & Flom LLP is acting as CME Group's legal advisor.
CME Group (http://www.cmegroup.com) is the world's largest and most diverse exchange. Formed by the 2007 merger of the Chicago Mercantile Exchange (CME) and the Chicago Board of Trade (CBOT), CME Group serves the risk management needs of customers around the globe. As an international marketplace, CME Group brings buyers and sellers together on the CME Globex electronic trading platform and on its trading floors. CME Group offers the widest range of benchmark products available across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, agricultural commodities, and alternative investment products such as weather and real estate. CME Group is traded on the New York Stock Exchange and NASDAQ under the symbol "CME."
