As Brazil’s financial markets continue to evolve, foreign investors look to develop electronic trading capabilities there.
A new report from Aite Group, LLC serves as a primer for investment managers and foreign investors looking for the next up-and-coming market. The report provides a history of trading in Brazil, as well as an overview of the country’s equities and derivatives markets. It also covers the market’s ability to support direct market access (DMA) and electronic trading.
The Brazilian financial markets have changed drastically in the past few years, with the BMF and Bovespa merging and the elimination of an open-outcry trading floor. Brazil’s government has been working to quash inflation through former President Itamar Franco’s Plano Real economic plan, which sought to obtain economic stabilization. As a result, Brazil looks to have found the right setting to keep its economy on a steady path, despite external disruptions. If it can continue its current record of stability, Brazil is poised to become a major financial center, worthy of foreign investment. The addition of electronic trading capabilities, which is currently being explored by foreign investors, would further solidify Brazil as a modern financial center among BRIC nations (Brazil, Russia, India and China).
"High-frequency traders from the United States and Europe are looking at the Brazilian market as a place for expansion, and the exchange is working overtime to welcome them with open arms," says Paul Zubulake, senior analyst with Aite Group and co-author of this report. "By offering server co-location for the first time, the BM&FBOVESPA has made the initial step in attracting this new breed of trader."
Phillip Silitschanu, senior analyst with Aite Group and co-author of this report, adds, "As the middle class continues to gain strength in Brazil, so will its desire for viable investment options. With consumers no longer content with simple savings accounts, the domestic retail investment market is also poised to develop rapidly."
This 26-page Impact Report contains 13 figures and three tables. Clients of Aite Group’s Institutional Securities & Investments service can download the report by clicking on the icon to the right.