UPDATE: CME, Brazil's Bovespa To Cross-License Index Futures
March 06 2012 - 6:47PM
Dow Jones News
CME Group Inc. (CME) said it will partner with Brazilian
exchange BM&F Bovespa S/A (BVMF3.BR) in a plan that will see
each exchange company offer some of the other's most popular
futures, including contracts tied to the Standard & Poor's 500
stock index.
Under the deal, Bovespa will license the main indicator of the
Brazilian stock market's average performance for trade on the
Chicago Mercantile Exchange, offering the equities benchmark
through dollar-denominated Ibovespa futures. Bovespa, meanwhile,
will launch dollar-denominated S&P 500 Index futures to be
settled in the Brazilian real.
The Brazilian exchange also will license settlement prices for
CME Group's mini-sized soybean futures and New York Mercantile
Exchange Light Sweet Crude Oil futures, also known as the West
Texas Intermediate, or WTI, contract.
Cross-listing one another's benchmark contracts deepens the
existing tie-up between BM&F Bovespa and CME, which includes an
equity swap and collaboration on a new technology platform that
will power the Brazilian markets.
It also represents the second major push by the exchange
partners to drum up more trading among their collective customer
base. CME and BM&F Bovespa have an existing electronic
order-routing arrangement that has generated some volumes in Brazil
but less in Chicago.
Bovespa expects to launch the mini-sized soybean futures in the
second quarter, while the WTI futures are slated for launch in the
third quarter.
Each exchange expects to launch its respective equity index
futures in the second half.
The new agreement also provides room for the companies to
license more products in the future.
-By Drew FitzGerald and Jacob Bunge, Dow Jones Newswires;
212-416-2909; Andrew.FitzGerald@dowjones.com
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