BM&FBOVESPA

Investor Relations Department

December 2014
1

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 industries
BM&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 that
could cause actual results to differ materially from those projected in this presentation and do not guarantee any
future BM&FBOVESPA performance.
The factors that might affect performance include, but are not limited to: (i) market acceptance of BM&FBOVESPA
services; (ii) volatility related to (a) the Brazilian economy and securities markets and (b) the highly-competitive
industries 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 entrants
to the Brazilian markets; (v) ability to keep up with rapid changes in technological environment, including the
implementation of enhanced functionality demanded by BM&FBOVESPA customers; (vi) ability to maintain an
ongoing process for introducing competitive new products and services, while maintaining the competitiveness of
existing 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 date
they were made, and BM&FBOVESPA undertakes no obligation to update them in light of new information or
future development.
This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall
there be any sale of securities where such offer or sale would be unlawful prior to registration or qualification
under the securities law. No offering shall be made except by means of a prospectus meeting the requirements of
the Brazilian Securities Commission CVM Instruction 400 of 2003, as amended.
2

HISTORY, BUSINESS MODEL AND CORPORATE GOVERNANCE

BRAZILIAN MARKET OPPORTUNITIES
MAIN GROWTH INITIATIVES
OPERATIONAL PERFORMANCE
FINANCIAL HIGHLIGHTS
APPENDIX (includes results for 3Q14)

HISTORY, BUSINESS MODEL AND CORPORATE

GOVERNANCE
Safety, resilience and transparency

History of BM&FBOVESPA
Important global exchange
1890:
Foundation of Bolsa
Livre (BOVESPA's
predecessor)

1967:
BOVESPAs
Mutualization

1986:
Start of
BM&F
activities

Aug 2007:
BOVESPA Hld
demutualization

Oct 2007:
BOVESPA Hld
IPO (BOVH3)

Sep 2007: BM&F

demutualization

Nov 2007:
BM&F IPO
(BMEF3)

May 2008:
integration between BM&F and
BOVESPA Hld and creation of
BM&FBOVESPA (BVMF3)

MARKET CAPITALIZATION (US$ billion) AND OPERATING MARGIN (%)

12M to Jun. 28, 2013; 12M to Mar 31, 2013. Source: Bloomberg (November 28,2014).

Vertical model as a differential

Value gained across most of the chain
VALUE CHAIN

TRADING

PRE-TRADING
Risk Analysis

Access

Risk Analysis
(DMA)

POST-TRADE
Trade

Allocation
Transfer

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

Clearing/risk
analysis

Position/
Auxiliary
Settlement Collateral Depository Services

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

Central Depository (CSD): performs centralized asset custody and

treatment of corporate actions (dividends, stock splits, etc.)

Vertical model as a differential

BM&FBOVESPA present at all post-trade stages
BRAZIL
(Internalization of orders is forbidden)

US
(Internalization of orders is allowed)
Trading Venues

Trading
DTCC
Brokers A and B
Broker
A

Brokers
A and B

Broker
B

Post trade
CCP
SSS
CSD

Investors

Investors
Investors

Investors

Model 100% vertical: clearing, settlement

and central depository at the final beneficial
owner level

Clearing, settlement and custody occur at the

brokerage houses

Brokers settle positions and control their

clients portfolios through BM&FBOVESPAs
infrastructure (impact on post-trade fees)

Each prime broker has its own structure to

control its customers portfolios and settle
positions (impact on the prime brokers costs)
7

Brazilian market regulatory framework

Resilience and safety as priorities
Brokerage
houses &
investors

Regulations prohibit internalization of orders, dark pools

and ATS/MTFs and simultaneous exchange/OTC equities
trading
Settlement and clearing of equities trading must be done
through a CCP
Settlement and clearing at the final beneficial owner level
make the Brazilian market safer and more resilient

Trading

Post-Trade

Under the prevailing regulations, potential competitors

must provide an integrated solution with the same status
regarding 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
8

Corporate Governance
Multidisciplinary knowledge in conducting business
BOARD OF DIRECTORS

EXECUTIVE OFFICERS

Pedro Parente (Chairman)

Independent Director, engineer

Edemir Pinto
CEO

Marcelo Trindade (Vice Chairman)

Independent Director, lawyer

Eduardo Guardia
Chief Product / IRO

Alfredo Antnio Lima de Menezes

Non Executive Director, Executive Officer of Bradesco

Ccero Vieira
COO

Andr Esteves
Non Executive Director, CEO of BTG Pactual

Daniel Sonder
CFO

Daniel Luiz Gleizer

Non Executive Director, Director of Ita Unibanco

Luis Furtado
CIO

Charles Carey
Independent Director, Director of CME Group
Claudio Haddad
Independent Director, engineer and professor
Jos Berenguer Neto
Non Executive Director, CEO of JP Morgan Brazil

COMMITTEES
Audit Committee
Nominations and Corporate Governance Committee

Jos Roberto Mendona de Barros

Independent Director, economist and professor

Compensation Committee

Luiz Fernando Figueiredo

Independent Director, Co-Founder of Mau Investments

Risk Committee

Luiz Nelson Guedes De Carvalho

Independent Director, professor

Advisory Committee For The Securities Intermediation Industry

Ownership structure
Widely-held shareholder base

10.44%

Funds managed by OppenheimerFunds, Inc.

6.84%

Funds managed by Vontobel Asset Management Inc.

5.32%
CMEG Brasil I Participaes Ltda.

5.02%
3.15%

Funds managed by BlackRock Inc.

Treasury stock

69.23%

Other

AGM - Mar. 24, 2014

Number of individual shareholders
Number of institutional shareholders
Total number of shareholders
Free float (ON)

51,924
3,245
55,169
1,852,153,920 (97.5%)

Updated on March 11, 2014

10

BM&FBOVESPAs Sustainability Policy

Approved by the Board of Director

11

BRAZILIAN MARKET OPPORTUNITIES

Main growth drivers

12

Opportunities in the Brazilian market

BM&FBOVESPA is ready to capture future growth

Growth opportunities in the Brazilian equities

and derivatives markets
EQUITIES MARKET
Portfolio diversification: diversification of institutional investors
portfolios with a higher participation of equities
Retail investors: small number of retail investors and growth of the
middle class

Listed companies: low number of listed companies, while important

sectors are not adequately represented on the exchange

DERIVATIVES MARKET
Growth of credit and fixed-rate government debt: higher demand for
hedging from financial institutions and institutional investors
Growth of foreign trade: higher demand for hedging through FX
contracts
Equities market development: growth in demand for index-based
contracts
OTC derivatives: capital requirements (Basel) should benefit OTC
transactions through a CCP

13

Capital Market
Great opportunities in the equities and derivatives segments
NUMBER OF CUSTODY ACCOUNTS (thousand)

INVESTMENT FUNDS

Number of retail investors represents only 0.3% of the

population (lower than global average)

Funds AUM evolution (in BRL billion). Global average of 40% for
equities

PENSION FUNDS

LISTED COMPANIES
Lower number of listed companies in comparison with
other countries

Participation of equities in the portfolio of pension funds

6,973
5,008
4,132

3,886

3,245
2,055

1,813
363

India

USA

China/HK

Canada

Spain

Australia

Korea

Source : BM&FBOVESPA, ANBIMA , WFE (Dec-13) and ABRAPP. *Oct/14 ** Jun/14

Brazil

May have a partial overlap between investment funds and pension funds portfolios.

14

MAIN GROWTH INITIATIVES

Investments, new products and focus on the
customer

15

BM&FBOVESPA IT, Risk and Operating Development

Building a state-of-the-art platform to boost market growth
High performance: high availability, submilliseconds latency, standard deviation
low

BM&FBOVESPA is investing
more than USD650 million
(2010 - 2015) to build worldclass and cutting-edge IT, Risk
and Operating infrastructure

Operational leverage: easily scalable

capacity

Capital efficiency for clients

Capital efficiency for clients: integrated

risk calculation (equities and derivatives OTC and listed); and unification of
settlement windows

Attract and retain clients and

strengthen relationship with
intermediaries

Rationalization and standardization of

rules, procedures and requirements
Capital efficiency for clients: integrated
risk calculation (OTC and Exchange Traded
Derivatives)

Development of markets and

products
OTC MARKET

Operational leverage for

BM&FBOVESPA
Innovate and enhance market
robustness ahead of regulatory
demands

Customer relationship: strengthening

relationships with customers
Customer relationship: able to host
participants and clients infrastructure

NEW
DATA CENTER

Significant capacity to expand co-location

16

PUMA Platform
High availability and performance
RESILIENCE AND AVAILABILITY
438 uninterrupted trading days*

Capacity and resilience of the

system tested in times of high
volatility and message peaks

* Until Sep. 26, 2014

BOVESPA segment

The entire trading infrastructure must be

adequately sized for peak message traffic:
BOVESPA Segment Apr. 29th
Peak of msgs/min: 619,063
Average msgs/min: 60,000 - 70,000

BM&F segment

BM&F Segment Aug. 13th

Peak of msgs/min: 85,388
Average msgs/min: 7,000 - 8,000
17

Clearinghouses Integration
Further differentiation in BM&FBOVESPA post-trade

Derivatives
(BRL 132.6 bn*)
Financial and
commodities derivatives
(futures, options and
forwards)
OTC derivatives
Implemented on
Aug 18th, 2014

Equities and corporate

debt (BRL 74.4 bn*)

FX
(BRL 3.7 bn*)

Equities, ETFs and

corporate fixed income
cash market

FX spot market
(US$ vs. BRL )

Equity and indices

derivatives (options and
forward)

Securities
(BRL 0.7 bn*)
Cash market and
forward market for
government bonds

Securities lending

INTEGRATED CLEARINGHOUSE**
=

Capital efficiency

Aggregate of pledged collateral at our clearinghouses totaled BRL 211.4 billion in Jun 30, 2014. ** Implementation of BM&FBOVESPA Clearinghouse subject to the results of the tests with
the market and the authorization from regulators..
18

Clearinghouses Integration and New Risk Model (CORE)

Post-trade environment evolution
Organization of the post-trade
environment by types of assets/products

Organization of the post-trade

environment by process
Equities, ETFs,
BDRs

4 rulebooks and
4 manuals.
Other products
and assets

4 participant
structures

4 distinct
environments /
IT architectures
4 settlement
windows and 4
multilateral
balances

4 systems /
back-office
processes

Government
Bonds

Rules and Manuals

Structure of market participants
Participants and customer registration
OTC
derivatives

Allocation and transfer

Corporate
fixed income

Position control

Clearing and settlement

4 systems /
processes for risk
management

4 registration
systems for
participants and
clients.
4 pools of
collateral

Risk management
Pool of collateral
Securities
lending

Interbank spot
foreign
exchange

Futures, options,
forwards

Exchange and market

participation cost
reduction

Liquidity management
improvement

More efficient
allocation of capital by
investors

Operational and
technological risk
reduction
19

Clearinghouses Integration and New Risk Model (CORE)

Derivatives clearinghouse migration results

Roughly R$20 billon released in collateral

R$15 billion reduction in required collateral

R$5 billion increase to the value of deposited
collateral
R$12 billion withdrawn in the early days of
activity
More than 5,000 margin simulation exercises
per day

20

Products and Services Development

Focus on the customers demands and needs

Long-term development of products, markets and services

Greater liquidity for listed products
Development of infrastructure for expansion of MM and HFT activity
Capital efficiency generated by CORE enables/encourages the realization of new strategies
Development of the securities lending platform
Marketing listed products and attracting new customers

Expanding the retail investor base

Incentive program with market participants
Expanding the portfolio to attend to the investment profile of individuals (Tesouro Direto, Fixed
Income ETFs, FIIs ...)
Discussion about tax treatment simplification in the equities market
Capture of institutional investors diversification into foreign securities
Listing of foreign securities (non-sponsored BDRs and Foreign Index ETF)
Cross-listing of futures contracts

21

Products and Services Development

Focus on the customers demands and needs

Long-term development of products, markets and services

Greater number of listed companies
Discussions with the Government to encourage and facilitate IPOs by SMEs

Law 13.043 grants exemption on capital gains for elegible SMEs investors until 2023
Creation of investiment fund with proper structure to invest in SMEs
Reduction of maintenance and public offer cost for listed companies
Include stocks in the roll of restricted public distribution efforts
BNDES suppor to foster IPOs on BOVESPA MAIS

Fixed Income and OTC markets (product, market and revenue diversification)
Securities registration: (i) marketing of already-available products (CDB, LCA, LCI and COE); ii)
new products (CDB - new types, Financial Bills, COE - physical delivery and repos)

OTC Derivatives: (i) benefits of CORE; (ii) SWAPs and Flexible Options migration to the new
platform (flexibility and operational efficiency); and (iii) development of SWAPs with cash flow
Corporate bonds: (i) acceptance of securities with restricted distribution efforts (ICVM 476);
and (ii) migration of trading to PUMA

Constant fee structure and incentive improvements

Use of pricing policies and incentives as important tools for the development of products,
markets and services, as well as alignment with market participants
Review and monitoring of existing pricing and incentives policies
22

Development Discussions with the Government

Creating incentives and addressing important issues
Addressing important issues to foster the long-term development of the
Brazilian capital market
Tax treatment for Retail Investors
BM&FBOVESPA and the Brazilian IRS are developing a
proposal to simplify tax treatment for individual investors in
equities market
Fixed income ETFs
Tax treatment definition
Incentives for SMEs
Tax exemption on capital gains; reduction of maintenance
costs of publicly-held companies; restricted distribution
offering, and entrepreneurial and management
qualification programs
Securities Lending
Tax treatment clarification on payouts(dividends and
interest on capital)
23

OPERATIONAL PERFORMANCE

24

BOVESPA Segment
Operational highlights
AVERAGE DAILY TRADING VALUE ADTV (BRL billion)*

AVERAGE ANNUAL MARKET CAP (BRL trillion)

TURNOVER VELOCITY** (12 months average*)

*
*Updated to November 28, 2014. **Ratio of cash market trading volume to the market cap of the exchange.

25

BM&F Segment
Operational highlights
AVERAGE DAILY TRADED VOLUME ADV (thousands of contracts)

REVENUE PER CONTRACT - RPC (BRL)

2006

2007

2013

2014*

N-13

D-13

J-14

F-14

M-14

A-14

M-14

J-14

J-14

A-14

S-14

O-14 N-14*

Interest rates in BRL

0.906 0.950 1.141 0.979 0.889 0.918 1.004 1.046

1.115

1.115

1.266

1.049

0.980

1.105

1.185

1.211

1.168

1.152

1.177

1.090

1.076 1.226

FX rates

2.244 1.859 2.065 2.161 1.928 1.894 2.205 2.535

2.628

2.611

2.832

2.629

2.633

2.616

2.555

2.594

2.659

2.619

2.578

2.464

2.654 2.980

Stock Indices

1.419 1.501 2.145 1.620 1.564 1.614 1.524 1.761

1.740

1.664

2.122

1.695

1.958

1.597

1.834

1.601

2.095

1.527

1.863

1.477

1.721 1.628

Interest rates in USD

1.094 0.965 1.283 1.357 1.142 0.941 1.015 1.231

1.278

1.359

1.340

1.325

1.414

1.553

1.275

1.300

1.332

1.156

1.250

1.240

1.264 1.078

Commodities

4.749 3.195 3.587 2.307 2.168 2.029 2.239 2.534

2.376

2.430

2.760

2.401

2.199

2.683

2.587

2.883

2.223

2.152

2.084

2.315

2.295 2.510

Mini contracts

0.034 0.054 0.162 0.176 0.128 0.129 0.116 0.119

0.117

0.120

0.128

0.122

0.123

0.119

0.118

0.120

0.123

0.120

0.115

0.107

0.113 0.120

OTC

1.571 2.111 2.355 1.655 1.610 1.635 1.769 1.409

2.062

1.266

0.978

1.077

1.069

1.155

1.501

2.679

3.027

3.862

3.236

2.069

1.911 1.517

Total RPC

1.247 1.224 1.527 1.365 1.134 1.106 1.191 1.282

1.339

1.367

1.575

1.294

1.261

1.393

1.411

1.406

1.431

1.335

1.373

1.249

1.284 1.405

*Updated to November 28, 2014.

2008

2009

2010

2011

2012

26

Investor participation in volumes

Equities and derivatives segments
BOVESPA SEGMENT (EQUITIES)

BM&F SEGMENT (DERIVATIVES)

27

FINANCIAL HIGHLIGHTS
Cost discipline and capital return to shareholders

28

Income Statement
History
SUMMARY OF INCOME STATEMENT (CONSOLIDATED)
(in BRL thousand)

2009

2010

2011

2012

Net revenue

1,510,569

1,898,742

1,904,684

2,064,750 2,131,795 1,657,209

Expenses

(569,832)

(633,504)

(816,664)

(763,080) (797,160) (558,304)

(446,677)

(543,881)

(584,521)

(563,487) (575,764) (417,449)

940,737

1,265,238

1,088,020

1,301,670 1,334,635

942,147

62.3%

66.6%

57.1%

63.0%

62.6%

62.8%

38,238

219,461

149,270

171,365

144,673

245,837

289,039

280,729

208,851

181,535

154,881

Income before taxation of profit

1,186,574

1,592,515

1,588,210

1,659,791 1,687,535 1,241,701

Income tax and social contribution

(304,505)

(448,029)

(539,681)

(585,535) (606,588) (496,570)

881,050

1,144,561

1,047,999

1,074,290 1,081,516

1,223,761

1,586,374

1,545,627

1,612,136 1,609,769 1,105,422

0.6104

0.7929

0.7932

Adjusted expenses
Operating income

Operating margin
Equity method result

Financial result

Net income*
Adjusted net income
Adjusted EPS (BRL )

0.8351

2013

0.8389

9M14

745,131

0.6007

*Attributable to shareholders of BM&FBOVESPA.

29

Revenue and Expense breakdowns

Diversified revenue sources as a differential, costs under control
REVENUE BREAKDOWN (3Q14)

Total revenue
R$594.7
million

EXPENSE BREAKDOWN (3Q14)

Expenses
R$193.8
million

30

Adjusted Opex Budget

Focus on cost control

Adjusted expenses estimates increase below inflation

Focus on expenses control offset most of the inflationary adjustments over the past years
Opex- millions R$

2014 budget reaffirmed

2014e vs. 2013: 3.34%
IPCA 2014e: 6.38%
2015e vs. 2014e: 1.26%4
IPCA (average) 2015e: 6.50%
CAGR 2010-15e: 2.07%4
IPCA (average) 2010-15e: 6.23%

Expenses adjusted to Companys depreciation, stock granting plan principal and social charges -, stock options plan, tax on dividends from the CME
Group, transfer of fines and provisions.
Considers the high point 2014 budget;
IPCA for 2014 and 2015 based on market expectations released by the Central Bank in Dec. 05, 2014;
4 Considers the mid-point of 2015 budget and high point 2014 budget

31

Capex Budget
Investments phase

The CAPEX program initiated in 2010 renewed the Company's IT,

operations and service platform
Capex- millions R$

NEW
DATA CENTER

BTC

Market
Maker

SINACOR

...

32

1H14 Expenses Breakdown

Pursuit of greater efficiency and controlling expenses

Prioritization of activities, review of contracts and enhancement of

processes has resulted in greater efficiency
129.8

1H11

1H14

55.4

1H11

21.1

Marketing

1H11

Communicat.

Data
processing

1H11

46.7

1H11
1H14

Real Var.

19.0%

-3.3%

18.8%

-12.0%

-15.9%

-37.7%

-78.4%

-84.0%

Strategic review of marketing activities

-41.9%

-57.0%

Reduced costs from the posting of trading and custody

statements, as a result of changes to the submission process

Diligent process of managing resources and headcount sizing

Average annual wage increase of 7.2% and recognition of
individual talents

Higher expenses with maintenance of new IT platforms

17.7

1H14

1H14

Nominal Var.

154.4

1H14

Third party
services

Personnel
expenditure

R$ MM

Expenses reduction with service providers and deprecation of

legacy IT platforms
Prioritization of activities and projects
Review of contracts

24.1
5.2
12.3
7.1

Includes personnel capitalization and excludes stock option and bonus expenses, Calculated based on the annual wage increase between 2011 and 2013 for
personnel expenditure and the IPCA of services accumulated from July, 2011 to June, 2014 for the other lines of expenses

33

Financial Highlights
Financial solidity combined with return of excess capital to shareholders

Distribution of most of the cash generation, reaffirming the

commitment to return capital to shareholders
Payout
(% of GAAP earnings)
2009: 80%
2010: 100%
2011: 87%
2012: 100%
2013: 80%
9M14: 80%

+
Buyback
Almost 13% of free
float repurchased in
almost 6 years (2H089M14)

Cash Generation after Investments and Interest Payments

(Accumulated between January, 2009 and September, 2014, in R$ million)

Cash Position
R$2,091 MM

Indebtedness
R$1,513 MM

Rating
Moodys
Baa1 (issuer global scale)
Baa2 (issuer BR scale)
Baa1 (global notes)
S&P
BBB+ (counterparty cred.)
A-2 (issuer)

Data of BM&FBOVESPA (not consolidated): excludes variation in financial transactions and collateral pledged by participants, proceeds raised in connection with the
acquisition of CME Group shares in 2010. Data from September, 2014 and excludes third party resources (investors collateral, resources deposited in the
BM&FBOVESPA Bank and others).

34

3Q14 RESULTS

35

3Q14 Highlights
Solid results in a challenging environment; one-off charge
FINANCIAL HIGHLIGHTS (3Q14 vs. 3Q13)

Total revenue: R$594.7 MM, -0.4%

BM&F seg.: R$228.7 MM, flat
Bovespa seg.: R$263.6 MM, +2.5%
Other: R$102.4 MM, -7.8%
Net revenue: R$546.0 MM, +2.0%
Adjusted expenses: R$146.8 MM, -2.3%
Operating income: R$352.2 MM, +3.2%
EBITDA: R$431.2 MM, +3.4%
(EBITDA margin 79.0%)
Financial Results: R$47.3 MM, -4.6%
Adjusted net income: R$357.4 MM, -11.5%
Adjusted EPS: R$0.195, -7.5%

TAX RELIEF PROGRAM (REFIS) ONE-OFF CHARGE

Dispute related to the deductibility of expenses from

Bovespa Holdings IPO
Amount under dispute reduced from R$123.0 MM to
R$69.2 MM one-off net impact of R$63.1 MM (R$18.1
MM as financial expense and R$45.0 MM as income tax)
VOLUME HIGHLIGHTS
Better volumes quarter-over-quarter for both segments
Oct14 volumes: Bovespa seg. +64.0% yoy (all time high);
and BM&F seg. +38.0% yoy
RETURNING CAPITAL TO SHAREHOLDERS
Payout: R$190.7 MM in 3Q14, 80% of GAAP net income
Share buyback: Jul-Oct14: 12.4 MM shares (0.7% of the
free float) 11.2 MM repurchased in October.
MAIN PROJECTS AND UPDATES
Clearinghouses Integration: derivatives module fully
implemented on August 18, 2014
Indices development: partnership with S&P DJI

Excludes stock options plan cost, depreciation, tax on dividends from CME Group and provisions. 2 According to CVM Rule 527/12 that does not exclude equity method accounting.
Excludes deferred liability recognized in correlation with temporary differences from amortization of goodwill for tax purposes, stock options plan cost, investment in associate (CME
36
Group) accounted under the equity method of accounting, net of taxes related to dividends and taxes paid overseas to be compensated.

Bovespa Segment Performance

Margins positively impacted by the mix effect
AVERAGE DAILY TRADING VALUE (ADTV)
3Q14 vs. 3Q13: +0.8%
Roughly flat at R$7.29 billion, mainly due to:
9.9% increase in average market capitalization
Lower turnover velocity yoy
Volatility related to elections in Brazil positively
impacted volumes from mid-August

TRADING MARGINS (in basis point - bps)

Market
Cash market
Derivatives on single stocks
Options market (stocks / indices)
Forward market
Total Bovespa

3Q14
5.061
13.115
13.145
12.999
5.502

MARKET CAPITALIZATION AND TURNOVER VELOCITY

3Q13
4.991
13.021
13.029
12.999
5.363

3Q14 vs. 3Q13: +2.6%

Trading/post-trade margins impacted by the mix effect:
Lower participation of local institutional investors
Higher participation of equity derivatives
Lower participation of day traders
37

BM&F Segment Performance

Mix effect and FX rate drove RPC down, offsetting ADV growth
AVERAGE DAILY VOLUME (ADV) AND AVERAGE REVENUE PER CONTRACT (RPC)
(in millions of contracts)

3Q14 vs. 3Q13:

ADV: 2.7 million contracts, +7.3%

Contracts with RPC referenced in USD represented ~26%

of derivatives ADV in 3Q14

+47.3% ADV of mini contracts

+38.9% ADV of Interest Rates in USD contracts
RPC: -6.4%
Mix effect: higher participation of lower priced
contracts (mini contracts and options) coupled with
higher participation of day traders
2.5% Real appreciation against USD in the period

REVENUE PER CONTRACT AND FX RATE

MINI CONTRACTS

(in R$)
11.3%

~44% of derivatives revenue was priced in USD in 3Q14

8.6%

9.1%

215.1

202.8

3Q13

4Q13

8.8%

249.4

255.1

1Q14

2Q14

ADV (millions of contracts)

*Average

FX rate (R$/US$) in the quarter, considering the closing price for previous month.

11.9%

316.8

3Q14

% Total

38

3Q14 Revenue Breakdown

Diversified revenue base
REVENUE BREAKDOWN

CASH EQUITIES TRADING REVENUE

ACCOUNTED FOR
5.9% OF TOTAL

DERIVATIVES REVENUE
(BM&F + BOVESPA) ACCOUNTED FOR
43.5% OF THE TOTAL
38.1%: Cash Market
5.9%: Trading
32.2%: Post-Trade
5.7%: Stock and Indices Derivatives
37.8%: Financial/Commodity Derivatives

Total Revenue
R$594.7 million

18.1%: Brazilian Real interest rate contracts

13.5%: FX Contracts
2.9%: USD interest rate contracts
3.3%: Other Financial/Commodity Derivatives
18.4%: Other Revenue
3.2%: Securities Lending
3.1%: Depository, Custody and Back-Office
3.1%: Vendors
2.0%: Listing
1.6%: Trading Access

1Trading

and Post-trade

39

3Q14 Expenses Breakdown

Delivering efficiency on a diligent expense management
ADJUSTED EXPENSES (3Q14 vs. 3Q13)
(in R$ millions)

Adjusted Expenses (-2.3%)

Adjusted personnel (-2.2%): (i) headcount downsizing;
(ii) reduction to profit-sharing accrual; and (iii) higher
personnel expenses capitalized
Data processing (-11.5%): 3Q13 was impacted by the
concentration of expenses for software service and
maintenance of IT platforms
Communication (-30.3%): reduction in mail service
expenses, reflecting improvements and electronification
of the statements mailing process
Other (+120.0%): higher donations and contributions
including, particularly:
Contribution to the Federal Government educational
program called Cincias sem Fronteiras

Transfer of fines due to failures in the financial and

physical settlement processes, which are now
destined to BSM

*Include expenses with maintenance in general, taxes adjusted by the dividends from CME Group, board and committee members compensation and others.

40

9M14 Expenses Breakdown

Pursuit of greater efficiency and controlling expenses
Prioritization of activities, review of contracts and enhancement of processes has resulted in
greater efficiency
9M14 adjusted expenses grew 2.5% yoy, significantly bellow inflation
Main forces pressuring
expenses

Main factors offsetting

expenses growth

-2.2%

Average annual wage

increase of 7.0%

Diligent management of
assets and headcount
dimensioning; lower profit
sharing

3.5%

-3.0%

Higher expenses from new

IT platforms maintenance
and inflationary contract
adjustments

Review of contracts,
legacy system deprecated

2.9%

-3.6%

Inflationary contract
adjustments

Contracts review

260.6

264.2

Data
processing

Personnel
expenditure

(in R$ millions)

Third party
Marketing Communicat.
services

Real Var.

Nominal Var.

4.9%

81.3
84.2
25.7
26.5

-22.8%

-27.6%

Inflationary contract
adjustments

Improvements and
eletctronification of the
mailing process for
statements successfully
implemented

-18.0%

-23.2%

Inflationary contract
adjustments

Strategic review of
marketing activities;
ongoing process of
expenses review

13.2
10.2

9.9
8.1

Includes personnel capitalization and excludes stock option and bonus expenses, Calculated based on the annual wage increase between 2013 and 2014 for personnel expenditure and
the IPCA of services accumulated from September, 2013 to September, 2014 for the other expenses lines.

41

Financial Highlights
Consistently returning capital to shareholders
CASH AND FINANCIAL INVESTMENTS

RETURNING CAPITAL TO SHAREHOLDERS

(In R$ millions)

Payout

3Q14

2Q14

1,390

360

1,131

404

1,037

909

R$190.7 MM in dividends (80% of the 3Q14 GAAP net

income): payment on November 28th (shareholders
position of November 17th)

3,842

1,055

3,497

1,053

Share Buyback
1Q14

4Q13

3Q13

2,441

2,134

1,686

432

457 359

497 355

897

1,307

1,921

1,960

5,077
4,871

4,498

Market participants cash collateral and others

Subsidiaries
Clearinghouses' required safeguards
Available funds

Mar-Oct14: 41.5 MM shares (R$456.9 MM) under the

current program (up to 100 MM shares until Dec14)
YTD14: 78.4 MM shares (R$827.4 MM) reaching 4.1% of
the free-float

FINANCIAL RESULT
Financial result of R$47.3 MM, down 4.6% from 3Q13,
explained mainly by R$18.1 MM interest payment in
connection with the settlement of a tax dispute under the
REFIS

CAPEX
Clearinghouses required safeguards: growth in line
with additional collateral pledged by market
participants

3Q14: R$47.7 MM (R$153.7 MM in 9M14)

Capex budget ranges:
2014: between R$230 260 MM
2015: between R$190 220 MM

Includes earnings and rights on securities in custody.

Includes third party collateral at BM&FBOVESPA Settlement Bank (Banco BM&FBOVESPA).

42

Resilient IT Infrastructure
Capacity and resilience of the system tested in times of high volatility

Investments in trade and post-trade platforms ensured the resilience

of our systems in a period of messages and trades peaks

486 uninterrupted trading days*

Msgs Bovespa Seg. (04/29/14)

Msgs BM&F Seg. (08/13/14)

# of Trades in the Bovespa Seg. (million)

3

Less than three months after

its launch, the new
Clearinghouse has already
handled record volumes in the
BM&F Segment

Oct-27-14
Record # of Trades
2,582,718

# of Trades in the BM&F Seg. (million)

400
300

Oct-16-14
Record # of Trades
376,741

200
1

0
Jan-14 Feb-14Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14

100
0
Jan-14 Feb-14Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14

* Until Nov. 13th, 2014

43

Growth Products
Increasing revenue diversification
REVENUE GROWTH OF SELECTED PRODUCTS

Products well accepted by clients, with continuous developments to maintain growth

trend

Securities Lending
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
(2010-14):

+22.9%

(In R$ millions)

44

Financial Statements
Summary of Balance Sheet (Consolidated)
ASSETS

LIABILITIES AND SHAREHOLDERSEQUITY

(in R$ millions)

9/30/2014

12/31/2013

(in R$ millions)

3,025.6

4,319.5

370.0

1,196.6

Collateral for transactions

2,337.0

2,853.4

Others

318.5

269.5

22,214.7

21,577.2

1,517.3

1,135.4

1,134.2

820.8

383.1

314.6

3,544.6

3,346.3

421.0

423.2

16,731.7

16,672.3

Others

Goodwill

16,064.3

16,064.3

Minority shareholdings

Total Assets

25,240.3

25,896.7 Liabilities and Shareholders equity

Current assets
Cash and cash equivalents
Financial investments
Others
Non-current assets
Long-term receivables
Financial investments

Others
Investments
Property and equipment
Intangible assets

9/30/2014

12/31/2013

1,888.7

2,710.8

1,333.4

2,073.0

555.3

637.9

Non-current liabilities

4,386.1

3,886.9

Foreign debt issues

1,493.2

1,426.2

Deferred Inc. Tax and Social Contrib.

2,718.7

2,295.8

174.2

165.0

18,965.4

19,298.9

2,540.2

2,540.2

15,213.7

16,056.7

1,196.4

687.3

15.1

14.7

25,240.3

25,896.7

Current liabilities

Others

Shareholders equity
Capital stock
Capital reserve

45

Financial Statements
Net income and adjusted expenses reconciliations
ADJUSTED NET INCOME RECONCILIATION
3Q14

3Q13

238.4 281.6
7.3
5.6
138.6 138.9
(43.7) (38.2)
16.7
15.8
357.4 403.7

Net Income*
Stock options plan
Deferred tax liabilities
Equity in income of investees (net of taxes)
Recoverable taxes paid overseas
Adjusted Net Income

Change
3Q14/3Q13
-15.3%
30.2%
-0.2%
14.3%
5.6%
-11.5%

2Q14
250.1
7.6
138.6
(39.8)
16.3
372.8

Change
3Q14/2Q14
-4.7%
-3.2%
0.0%
9.9%
2.5%
-4.1%

9M14

9M13

744.6
21.8
415.9
(128.1)
51.2
1,105.4

899.4
21.4
416.7
(117.0)
47.4
1,267.9

Change
9M14/9M13
-17.2%
2.0%
-0.2%
9.4%
7.9%
-12.8%

* Attributable to BM&FBOVESPA shareholders.

ADJUSTED EXPENSES RECONCILIATION

3Q14
Total Expenses
Depreciation
Stock options plan
Tax on dividends from the CME Group
Provisions
Adjusted Expenses

193.8
(29.5)
(7.3)
(5.8)
(4.3)
146.8

3Q13
194.1
(32.5)
(5.6)
(5.1)
(0.6)
150.2

Change
3Q14/3Q13
-0.2%
-9.2%
30.2%
13.2%
-2.3%

2Q14
178.2
(28.0)
(7.6)
(5.3)
(3.2)
134.1

Change
3Q14/2Q14
8.7%
5.2%
-3.2%
9.2%
36.7%
9.5%

9M14
558.3
(87.1)
(21.8)
(16.6)
(15.4)
417.4

9M13
543.7
(88.4)
(21.4)
(14.8)
(11.8)
407.3

Change
9M14/9M13
2.7%
-1.5%
2.0%
12.1%
30.4%
2.5%

46

Financial Statements Summary

SUMMARY OF INCOME STATEMENT (CONSOLIDATED)

(in R$ millions)
Net revenues

3Q14

3Q13

Change
Change
2Q14
9M14
3Q14/3Q13
3Q14/2Q14

546.0

535.4

(193.8)

(194.1)

352.2

341.3

64.5%

63.7%

47.3

49.6

-4.6%

59.5

Financial result

449.0

434.2

3.4%

Net income*

238.4

281.6

Adjusted net income

357.4

Adjusted EPS (in R$)

Adjusted expenses

Expenses
Operating income
Operating margin
Equity in income of investees

2.0%

464.8

-0.2% (178.2)
3.2%

9M13

17.5% 1,500.5 1,656.2

8.7%

(558.3)

Change
9M14/9M13
-9.4%

(543.7)

2.7%

942.1 1,112.5

-15.3%

286.6

22.9%

76 bps 61.7%

286 bps

62.8%

67.2%

-438 bps

-20.5%

154.9

129.8

19.3%

391.1

14.8% 1,241.7 1,374.2

-9.6%

-15.3%

250.1

-4.7%

899.4

-17.2%

403.7

-11.5%

372.8

-4.1% 1,105.4 1,267.9

-12.8%

0.195

0.211

-7.5%

0.203

-3.8%

0.601

0.660

-9.0%

(146.8)

(150.2)

-2.3% (134.1)

9.5%

(417.4)

(407.3)

2.5%

744.6

* Attributable to BM&FBOVESPA shareholders.

47

APPENDIX

48

High growth products

Growing sophistication of market participants
Initiatives to develop and prompt higher volume in certain products
Performance shows that the initiatives are being well received by the market
Options with Market Maker

Real Estate Funds (FIIs)

(ADTV in BRL million)

(ADTV in BRL million)

Securities Lending
(Open Interest - average for the period - in BRL billion)

+50.3%
CAGR(09-14): + 85.7%

ETFs

Brazilian Treasury Direct - Tesouro Direto

(ADTV in BRL million)

CAGR (10-14): +36.7%

*Updated to October 31,2014. ** Update to September 30, 2014.

(Custody in BRL billion)

CAGR (10-14): +12.8%

Agribusiness Credit Bills

(AUM in BRL billion)

CAGR (10-14): +33.5%

49

BOVESPA Segment
Raising Capital
PUBLIC OFFERINGS (BRL billion)
Updated to November 28, 2014

PIPELINE: OFFERINGS ANNOUNCED SO FAR TO THE MARKET

There are 4 offerings in the pipeline
IPO:T4U, Ouro Verde, JBS and AZUL

Additionally, there are 5 Real Estate Funds filed with CVM: estimated value of R$ 1.1 billion
* Excludes the portion acquired by the Brazilian government in the Petrobras offering, via the transfer of rights in barrels (BRL 74.8 billion).

50

BOVESPA Segment
Foreign investment flow
MONTHLY NET FLOW OF FOREGIN INVESTMENTS (in BRL billons)

Includes public offering (primary market) and regular trades (secondary market).

*Updated to November 28, 2014.

51

Trading in ADRs of Brazilian companies

Liquidity migration process interrupted
Novo Mercado
Launch
(Dec. 2000)

End of CPMF
(Financial
Transaction Tax)

End of IOF Tax (2%) for

foreign investors
(Dec. 2011)

Sarbanes-Oxley Act
(Jul. 2002)

September14

30.1%
40.5%
10.3%

28.1%

31.5%

59.5%

Source: Bloomberg (in USD

traded value of 35 companies
with ADRs programs )

PUBLIC OFFERINGS IN NUMBER OF COMPANIES

IPOs
Follow ons
Total
Dual Listings

2001
14
14

2002
1
5
6

2003
8
8

2004
7
8
15

2005
9
10
19

2006
26
16
42

2007
64
12
76

2008
4
8
12

2009
6
18
24

2010
11
11
22

2011
11
11
22
-

2012
3
9
12

2013
10
7
17

2014
1
1
2
-

Total
153
138
291
5
52

Products and Services Development

Evolution and governance of pricing policy structure

Honing of
BM&FBOVESPAs
pricing policy and
incentives

Markets and products development

Models review

Main drivers

Price recomposition
Pricing new products

Annual fee adjustment

for issuers
BM&F seg. (disc. over
exchange fees for
HFTs)

2008

BOVESPA seg. (volume

discount for HFTs)

BM&F seg. (prices

per volume tiers)

2009

Charges on
Depository amount in
balance
Market Data Pricing
Policy

Discounts review

OTC Products
BOVESPA seg. (disc.
per volume day-trade
and rebalancing)

Rebalancing
trading/pos- trade

2010

2011

Incentive program
for Tesouro Direto

2012

Creation of an
organizational
structure for fees

2013

2014

2015...

Incentive program for

retail base

Announc. pricing
revision for
Market Data,
Issuers, DMA
(BM&F seg.) and
Sec. Lending

53

Products and Services Development

Recent changes in pricing policy and incentives

Products / Market

Main changes

SECURITIES LENDING

Elimination of 0.05% incentive for national lenders (settlement rate for

voluntary loan maintained at 0.25% p.a.)

DMA

Elimination of 10% discount for trades via DMA in Derivatives Market

(BM&F Segment)

MARKET DATA

Price recomposition and pricing of new products and services

Elimination of analysis fee discount on the annual fee

ISSUERS
Creation of analysis fee for Public Tender Offers, IPOs and Follow-ons

Depository

Adjustment of maintenance fees of custody accounts for a certain group

of investors; and creation of fees for ownership transferring within the
depository

54

Clearinghouses Integration and New Risk Model (CORE)

Benefits from Clearinghouse integration
OVERVIEW: CLOSEOUT RISK CALCULATION IN THREE STEPS

1. DETERMINING
THE CLOSEOUT
STRATEGY
T+0

T+1

T+2

T+3

T+4

...

T+N

2. RISK EVALUATION
T+0

T+1

T+2

T+3

T+4

...

T+N

T+1

T+2

T+3

T+4

CLOSEOUT RISK

PERMANENT LOSS

TRANSIENT LOSS

...

Defines the (stress) scenarios associated with

the dynamics of each risk factor relevant to
the portfolio. All assets and contracts are
reevaluated considering the scenarios defined
in this step (full valuation).

Calculates and aggregates intertemporally P&L

associated with each scenario, considering the
defined closeout strategy

3. POTENTIAL P&L
CALCULATION
T+0

Defines the portfolio closeout strategy which,

respecting the settlement restrictions of the
portfolio of assets/markets, should minimize
the risk of a loss associated with the closeout
process, preserving existing hedge strategies

T+N

Result: Two risk measuresmarket and

liquiditythat are estimated both jointly and
consistently

55

BM&FBOVESPA INVESTOR RELATIONS

+55 (11) 2565 4729 /4418 / 4207 / 4834
ri@bmfbovespa.com.br

ir.bmfbovespa.com.br
56