Investor Relations Department - RI Mobileir.bmfbovespa.com.br/enu/2147/BVMF Presentation - June...

1PublicPublicJune/2016 X

Investor Relations Department

São Paulo, SP

2

ForwardLookingStatements

This presentation may contain certain statements that express the management’s 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.

3

REGULATION, HISTORY, BUSINESS MODEL AND CORPORATE GOVERNANCESafety, resilience and transparency

BRAZILIAN MARKET OPPORTUNITIESMain growth drivers

MAIN GROWTH INITIATIVESBuilding an State-of-the-art platform

OPERATIONAL PERFORMANCENotable global exchange

FINANCIAL HIGHLIGHTSCost discipline and capital return to shareholders

1Q16 RESULTS

APPENDIX

MAIN GROWTH INITIATIVESInvestments, new products and focus on the customer

4

Exchange sectorSafety and market integrity as priorities

Capital and derivatives markets in Brazil

Stable and solid regulation

CVM – Trade and post-trade

BACEN – Post-trade , banks and intermediaries

Main participants

Intermediaries – local and international brokers (linked to bank and independent)

Listed companies

Investors – institutional, foreign and individual (retail)

Exchange market characteristics in Brazil

BVMF is the sole exchange, despite the market being open for competitor since 2007

Stocks exclusively traded through an exchange(Dark pools, MTFs and internalization prohibit)

Identification of the final beneficial owner in the entire trading and post-trading chain

Derivatives are predominantly listed and OTC derivatives must be registered mandatorily

Securities lending mandatorily through a central counter-party (CCP)

The exchange is responsible for oversight and self-regulation of the markets in which it operates

5

“State-of-the-art” trading and post-trading

systems: ~R$1.6 billion invested in resilience,

strength and safety

Solid market position: dominant position in the

domestic market and significant presence in the

global exchanges industry

Reference in corporate governance

standards: cutting edge in adopting best practices

to the market

High dividend payer¹: +80% of the net income and R$6.2 billion on distributed earnings since 2008

Revenue diversification: trading and post-

trading services for stocks, derivatives, fixed income and OTC

Constantly seeking operational efficiency: investments in technology and cost growth below

inflation²

Why invest in BM&FBOVESPA?A global exchange

1890:Foundation of Bolsa

Livre (Bovespa'spredecessor)

Aug 2007: Bovespa Hld

demutualization

Oct 2007: Bovespa HldIPO (BOVH3)

1967:Bovespa’s

Mutualization

1986:Start of BM&F

activities

Sep 2007: BM&F demutualization

Nov 2007: BM&F IPO(BMEF3)

May 2008: Merger between BM&F and Bovespa Hld and creation of BM&FBOVESPA

(BVMF3)

¹ Practice of the period and amount distributed from Jan/2008 to Sep/2015;² Expenses adjusted to Company´s depreciation, stock granting plan – principal and social charges -, stock options plan, tax on dividends from the CME Group, transfer of fines and provisions

6

Services for the whole chain

Trading Platform: equities, derivatives, government and

corporate bonds, funds, spot FX, among others

Post-trading Platform:

Central counterparty (CCP)

Settlement System (SSS)

Central Depository (CSD)

Services for Issuers and Participants:

Listing

Trading access (brokers)

Securities lending

Custody for clubs and foreign investors (2689)

Market Data (vendors)

Indices Licensing

Software Licensing

OTC (derivatives and fixed income)

COMMODITIES

FXINTEREST

CREDIT

EQUITY

CCP, SSS and CSD

POST-TRADE

CASH

FUTUREOPTIONS

FORWARDSWAP

Multi-asset and vertically integrated modelValue gained across most of the chain

7

DTCC

BRAZIL(Internalization of orders is forbidden)

USA(Internalization of orders is allowed)

POST-TRADINGCCPSSSCSD

TRADING

Brokers A and B

Investors Investors

Brokers A and B

Investors Investors

BrokerA

BrokerB

Model 100% vertical: clearing, settlement and central depository at the FINAL BENEFICIAL OWNER LEVEL

Clearing, settlement and depository occur at the brokerage houses

Trading venues

Multi-asset and vertically integrated modelValue gained across most of the chain

8

8% 7%5% 2%

78%

Capital World Investors

Oppenheimer Funds

BlackRock Funds

Treasury stock

Others

(update in Mar. 2016)

Listed in Novo Mercado (voting shares only and other shareholders’ rights, transparency, etc.)

Majority of the Board composed of independent members (regulatory requirement)

Chairman is an independent member

Other Board members are linked to market participants or strategic partner (CME); although considered non-independent, are not connected to controlling group or management

All Board members are not Company’s executive

Well-defined and solid Board of Directors and Board’s Committees

Executive compensation system aligned with Company’s performance and strategic objectives, as well as with shareholders long-term interests

Solid Governance Practices Broadly Dispersed Shareholder Base

(update in Out. 2015)

(update in Abr. 2016)

Note: percentage ownership are estimated but may not represent exact figures due to different information dates about largest shareholders’ positions

Corporate governanceReference in corporate governance practices

(update in Abr. 2016)

(update in Aug. 2015)

9

2015-17 Board of Directors Composition

Independentmembers

Linked tomarket participant or

strategic partner (CME)

Corporate Governance Profile - Board & Committee Summary

Board

Committees

AuditNomination

and CGComp. Risk

Brokerage Industry

# Members 11 6 3 3 4 9

Independent Board 7 2 3 2 3 -

Market participant + Board 4¹ - - 1 1 2

Independent Non-Board - 4 - - - -

Market participant Non-Board - - - - - 7

# of meetings (2015) 14 7 8 8 14 5

Average attendance (2015) 94% 82% 100% 92% 80% 93%

Board Member BirthYears in the Board

Pedro Pullen ParenteFormer Minister of State; Former CEO of Media and Commodity Conglomerates

2/21/53 5

Claudio Luiz da Silva HaddadFormer CEO of Investment Bank; Founder and CEO of Business School

8/23/46 7

Antônio QuintellaFormer CEO of CS Brasil and Americas; Portfolio Manager

2/16/66 1

Laércio José de Lucena CosentinoTOTVS Chairman of the Board and TOTVS CEO

8/11/60 -

Luiz Antônio de Sampaio CamposFormer Director of CVM; Lawyer

6/9/70 1

Luiz Fernando FigueiredoFormer Governor of the Central Bank; Portfolio Manager

1/15/64 3

Luiz Nelson Guedes De CarvalhoFormer Central Bank and Sec. Commission Officer; Member of IIRC and CPC/IASB; Professor of Accounting

11/18/45 3

Denise Pauli PavarinaBradesco executive; Chairwoman of Anbima

4/14/63 1

Eduardo Mazzilli de VassimonDirector of Itaú e CRO of Itaú Holding

10/7/58 1

José Berenguer NetoCEO of JP Morgan Brazil

9/10/66 3

Charles P. CareyFormer Chairman of CBOT; CME Group Board Member

9/1/53 4

Highly qualified Board Members and well-functioning Board’s Committees

Commitment and independence of Board of Directors and Committees members

Note: in the case of the Advisory Committee for the Securities Intermediation Industry the statistics regarding number of meetings and attendance considered the previous composition with 6 members, including two Board members. This change was implemented in Feb 2015.

Corporate GovernanceMultidisciplinary knowledge in conducting business

10

Board of Directors

CEOEdemir Pinto

CFODaniel Sonder

COOCícero Vieira

CIOLuis Furtado

CPOEduardo Guardia

Management (5 Executives + 26MDs)Responsible for implementing the guidelines established by the Board or Directors, executing the strategic plan, monitoring and executing the Company’s operations

Internal Working Groups (budget, products and services, projects, others)This internal working groups are important components of the Company’s corporate governance, monitoring the budget process and establishing priorities for products, services and projects development, among other things

Advisory Committees (market and credit risks, corporate risk, sustainability, code of conduct, business continuity, others)Multidisciplinary internal groups that address and monitor important business and issues of the Company

Advisory Chambers (commodities, listing, equities, fixed income, FX, derivatives, others)Several open channels with investors, market participants and companies which collaborate to develop and improve products and services, as well as to suggest better practices

HR, Marketing and Education

Corporate Risk

Sustainability and Press

Internal Audit¹

Management and Internal Governance

Financial, Legal, IR and Issuer Regulation

Trading, Risk Management,

Clearing, Settlement, Depository,

BVMF Bank and Market

Participants Relationship

Trading, Post-trading, PMO, New Products, Infrastructure,

Mid- Back-Office Systems

Products and Business Develop.,

Commercial Relations,

Internat. Offices, Commercial Planning and

Project Analysis

Internal Working Groups Advisory CommitteesMarket Advisory

Chambers

4 MD´s 6 MD´s 6 MD´s 6 MD´s

Corporate GovernanceMultidisciplinary knowledge in conducting business

¹ The Head of the Audit Department reports functionally to the Board of Directors and the Audit Committee. The Audit Committee may periodically assess the performance of the Head of Audit Department, after consulting the Executive Board.

11

BM&FBOVESPA’s Sustainability PolicySustainability as a long-term driver

12






1Q16 RESULTS

APPENDIX


13

Growth opportunities in the Brazilian equities and derivatives markets

Opportunities in the Brazilian marketBM&FBOVESPA is ready to capture future growth

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

14

Investors’ exposure to equities is lowInvestors’ portfolio opportunities shifting to equities

Funds’ AUM evolution. Global average of 40% for equities

Investment Funds’ AUM (in BRL billions)

Number of Custody Accounts (in thousands) Pension Funds’ AUM (in BRL billions)

Number of retail investors represents only 0.3% of the population (lower than global average)

Participation of equities in the portfolio of pension funds

Investors’ portfolios are highly concentrated in fixed income

• Historically high interest rates

• Low level of sophistication of pension funds and some asset managers

• Lack of knowledge about the equity market, combined with retail investors’ fixed-income mindset

Sources: BM&FBOVESPA, ANBIMA and ABRAPP. ¹ Sep/15 and ²Feb/16.

15






1Q16 RESULTS

APPENDIX


16

BM&FBOVESPA IT, Risk and Operating DevelopmentBuilding a state-of-the-art platform to boost market growth

BM&FBOVESPA is investing more than R$ 1.6 billion (2010 -2016) to build state-of-the-art

IT, Risk and Operating infrastructure

Capital efficiency for clients

Attract and retain clients and strengthen relationship with intermediaries

Development of markets and products

Operational leverage for BM&FBOVESPA

Innovate and enhance market robustness ahead of regulatory demands

High performance: high availability, sub-milliseconds latency, low standard deviation

Operational leverage: easily scalable capacity

OTC MARKET

Capital efficiency for clients: integrated risk calculation (OTC and Exchange Traded Derivatives)

Customer relationship: strengthening relationships and adding revenue with little marginal expenses

NEW DATA CENTER

Long-term IT sustainability: significant capacity to expand co-location and own systems

Customer relationship: able to host participants and clients’ infrastructure

Capital efficiency for clients: integrated risk calculation (equities and derivatives -OTC and listed); and unification of settlement windows

Rationalization and standardization of rules, procedures and requirements

The implementation of IPN/CORE depends the approval of the regulators.

17

PUMA Trading System - PerformanceEnabling the increase of trades

Successive records broken in recent years, without delays or availability failure

Development of the number of messages/days (in millions)

Source: BM&FBOVESPA.

18

Clearinghouses’ Integration and New Risk Model (CORE)Post-trade environment evolution

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

4 rulebooks and 4 manuals.

4 participant structures

4 systems / back-office processes

4 systems / processes for risk

management

4 pools of collateral

4 settlement windows and 4

multilateral balances

4 distinct environments / IT architectures

4 registration systems for

participants and clients.

OTC derivatives

Corporate fixed income

Interbank spot foreign

exchangeFutures, options,

forwards

Securities lending

Other products and assets

Equities, ETFs, BDRs

Rules and Manuals

Structure of market participants

Participants and customer registration

Allocation and transfer

Position control

Clearing and settlement

Risk management

Pool of collateral

Government Bonds

Organization of the post-trade environment by process

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)Post-trade environment evolution

What we didAug’14: derivatives phase of the new BM&FBOVESPA Clearinghouse and of the new risk model CORE

What were the challenges

400 employees involved

46 legacy systems were deprecated and 31 new other were installed

+65 market participants (the majority adopts SINACOR)

11 parallel production cycles

CORE - complexity and sophistication

Calculate and process +1.3bn instrument prices

We have built a dedicated simulation environment, meeting demands from market participants

What is next2016: conclusion of substantially all the IT development of the equities phase in 4Q15. Next steps are:

Certification and parallel production processes

Launching will depend on tests results and regulatory approval

What are the challenges

Integration with the CSD

Settlement of securities (restrictions, failures, integration with securities lending system)

Covered options and forward transactions

Corporate actions treatment

Settlement window unification

Risk – more risk factors, higher volume of calculations

The achievements

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

Almost 6 months since the launching

Very high availability

Serving participants and clients with high quality services

Delivering efficiency

20

In one year... 10 trading records broken, +72MM risk calculations,

+1.8MM risk simulations and 99.9% availability

Integration of the Clearinghouses –Derivatives (Performance)Gains in efficiency, resilience and capacity expansion

Development of trade numbers and records (in thousands)

Source: BM&FBOVESPA.

21






1Q16 RESULTS

APPENDIX


22

Long-term development of products, markets and services

Products and Services DevelopmentFocus on the customers’ demands and needs

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, 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

23

Long-term development of products, markets and services

Products and Services DevelopmentFocus on the customers’ demands and needs

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 eligible SME’s investors until 2023

Creation of investment 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 support 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

24






1Q16 RESULTS

APPENDIX


25

AVERAGE DAILY TRADING VALUE – ADTV (BRL billion)

AVERAGE ANNUAL MARKET CAP (BRL trillion) TURNOVER VELOCITY² (12 months average)

Bovespa SegmentOperational highlights

¹Updated to May 31, 2016. ²Ratio of cash market trading volume to the market cap of the exchange.

¹¹

26

BM&F Segment Operational highlights

AVERAGE DAILY TRADED VOLUME – ADV² (thousands of contracts)

REVENUE PER CONTRACT – RPC² (BRL)

¹Updated to May 31, 2016. ² Starting from Jan/16 excludes OTC data.

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016¹ J-15 J-15 A-15 S-15 O-15 N-15 D-15 J-15 F-16 M-16 A-16 M-16

Interest rates in BRL 0.950 1.141 0.979 0.889 0.918 1.004 1.046 1.120 1.150 1.175 1.032 1.010 1.207 1.136 1.212 1.341 1.471 1.065 1.159 1.193 1.251 1.208

FX rates 1.859 2.065 2.161 1.928 1.894 2.205 2.535 2.669 3.671 4.253 3.705 3.554 3.686 3.932 4.436 4.319 4.507 4.524 4.483 4.285 4.136 3.846

Stock Indices 1.501 2.145 1.620 1.564 1.614 1.524 1.761 1.774 2.128 1.863 2.420 1.823 2.209 1.833 2.213 1.761 2.265 1.667 2.212 1.561 2.143 1.545

Interest rates in USD 0.965 1.283 1.357 1.142 0.941 1.015 1.231 1.294 1.840 2.061 1.770 1.633 1.768 2.154 2.268 1.839 1.892 2.128 2.100 2.225 1.879 1.960

Commodities 3.195 3.587 2.307 2.168 2.029 2.239 2.534 2.390 2.530 2.276 2.300 2.245 2.321 2.811 3.162 3.069 2.734 2.451 2.591 2.247 1.890 2.298

Mini contracts 0.054 0.162 0.176 0.128 0.129 0.116 0.119 0.117 0.218 0.271 0.229 0.226 0.235 0.233 0.274 0.273 0.276 0.276 0.281 0.259 0.276 0.268

OTC 2.111 2.355 1.655 1.610 1.635 1.769 1.409 2.092 3.925 - 1.768 2.465 0.817 1.169 14.879 6.120 45.662 - - - - -

Total RPC 1.224 1.527 1.365 1.134 1.106 1.191 1.282 1.350 1.516 1.475 1.436 1.341 1.482 1.476 1.671 1.660 1.940 1.484 1.526 1.480 1.517 1.363

27

Investor participation in volumesEquities and derivatives segments

BM&F SEGMENT (DERIVATIVES)²

BOVESPA SEGMENT (EQUITIES)

¹Updated to May 31, 2016. ² Starting from Jan/16 excludes OTC data.

28






1Q16 RESULTS

APPENDIX


29

Income StatementHistory of income statement results (consolidated)

(in BRL thousand) 2009 2010 2011 2012 2013 2014 2015²

Net revenue 1,510,569 1,898,742 1,904,684 2,064,750 2,126,638 2,030,433 2,216,634

Expenses (569,832) (633,504) (816,664) (763,080) (790,814) (804,070) (850,656)

Adjusted expenses (446,677) (543,881) (584,521) (563,487) (575,763) (592,349) (614,350)

Operating income 940,737 1,265,238 1,088,020 1,301,670 1,335,824 1,226,363 1,365,978

Operating margin 62.3% 66.6% 57.1% 63.0% 62.8% 60.4% 61.6%

Equity method result - 38,238 219,461 149,270 171,365 212,160 136,245

Financial result 245,837 289,039 280,729 208,851 180,695 208,157 508,796

Income before taxation of profit 1,186,574 1,592,515 1,588,210 1,659,791 1,687,884 1,646,680 2,807,222

Income tax and social contribution (304,505) (448,029) (539,681) (585,535) (606,588) (660,959) (603,764)

Net income¹ 881,050 1,144,561 1,047,999 1,074,290 1,080,947 977,053 2,202,238

Adjusted net income 1,223,761 1,586,374 1,545,627 1,612,136 1,609,769 1,478,653 1,819,187

Adjusted EPS (BRL) 0.6104 0.7929 0.7932 0.8351 0.8389 0.8048 1.0152

¹Attributable to shareholders of BM&FBOVESPA.² Impacts of non-recurring items: (i) partial divestment in CME Group; (ii) discontinuity of the equity method of accounting; and (iii) impairment of Bovespa Holding

30

Focus on expenses control offset most of the inflationary adjustments over the past years

(in BRL million)

ADJUSTED EXPENSES BUDGET

INVESTMENTS BUDGET:

Adjusted¹ expenses and investment budgetFocus on cost control and investments phase

The CAPEX program initiated in 2010 renewed the Company's IT, operations and service platform

2015 vs. 2014: 3.72%IPCA 2015: 10.67%2

2016e vs. 2015: 6.61%4

IPCA (average) 2016e: 7.04%³

CAGR 2011-16e: 2.30%4

CAGR IPCA (average) 2011-15e: 7.09%³

Review of 2016 budget: from R$165 – 195 million to R$200 –230 million

FX exposure: 40%

Update of the timeline and budget of the Company’s main projects

(in BRL million)

¹ Expenses adjusted to Company´s depreciation, stock granting plan – principal and social charges -, stock options plan, tax on dividends from the CME Group, transfer of fines and provisions. ² IPCA for 2015 released by the Central Bank ³ IPCA for 2016 based on market expectations released by the Central Bank in May. 20, 2016; 4 Considers the mid point for 2016 budget

31

Expenses DisciplineDelivering efficiency through diligent expense management

1 IPCA last 12 months until Dec´15 (Source IBGE) 2 Includes personnel expenses and capitalization and excludes costs from stock grant plan – principal and payroll taxes – stock option and bonus expenses. 3 Calculated based on the annual wage increase for personnel expenditure and the accumulated IPCA for the other lines of expenses.

Adjusted expenses grew 3.7%, significantly below average inflation of 10.7%1, reflecting prioritization of activities, review of contracts and enhancement

of processesNominal Change

Real Change3

3.9% -3.8%

-1.8% -11.2%

3.2% -6.7%

-61.1%-57.0%

(in R$ millions)

-4.5%5.7%

Nominal Change

Real Change3

18.5% -11.5%

16.9% 1,8%

-20.8% -40.0%

-81.0%-75.0%

(in R$ millions)

-76.6%-69.1%

-11.5%

Tota

l P

ers

on

ne

l 2

Dat

a p

roce

ssin

gTh

ird

par

ty

serv

ices

Mar

keti

ng

Co

mm

un

icat

.

Tota

l P

ers

on

ne

l 2

Dat

a p

roce

ssin

gTh

ird

par

ty

serv

ices

Mar

keti

ng

Co

mm

un

icat

.

2015 vs. 2014 2015 vs. 2011

32

Distribution of most of the cash generation, reaffirming the commitment to return capital to shareholders

(Total for Jan/09 through Mar/16, in R$ millions)

Cash Generation after Investment and Interest Payments¹Payout(% of net income)

2009: 80%2010: 100%2011: 87%

2012: 100%2013: 80%2014: 80%2015: 73%1Q16: 50%

Share BuybackAbout 15% of free floatrepurchased in 7-year period (2H08-1Q16)

+

Allocation of ResultsReturn of surplus capital to shareholders

¹Data 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 and the 1% sale of the CME total shares in Sep/15.

33






1Q16 RESULTS

APPENDIX


34

BM&F segment:

ADV: 3.1 million contracts, +13.6%

RPC: R$1.495, +1.5%

Bovespa segment:

ADTV: R$6.96 billion, +4.6%

Margin: 5.264 bps, -0.03 bps

Others business (not tied to volumes)

Market data (vendors): R$27.3 million, +43.8%

Tesouro Direto: 79.0% increase in average assets under custody

Total revenues: R$625.4 million, +8.3%

BM&F seg.: R$277.7 million, +10.7%

Bovespa seg.: R$224.1 million, +2.8%

Others revenues: R$123.5 million, +14.1%

Adj. Expenses¹: R$144.3 million, +4.1%

Operating income: R$361.5 million, +20.9%

IFRS net income: R$339.3 million, +21.4%

Operating highlights Operating income and net income growth

1Q16 vs. 1Q15 Highlights Solid operating performance

1 Adjusted to (i) depreciation and amortization; (ii) stock grant plan costs – principal and payroll taxes – and stock option plan; (iii) combination with Cetip; and (iv) transfer of fines, provisions and incentive programs to market participants. ² Total proceeds before taxes from sales executed in Set’15 (R$1,201.3 million) and Apr’16 (R$4,286.4 million).

Combination with Cetip

Proposal of combination subject to approval by:

Both companies’ shareholders on May 20, 2016

Regulators: Securities Commission (CVM), Central Bank and Anti-Trust (CADE)

Proceeds from the sale of CME Group shares (gross amount of R$5,487.7 million²) make up a significant part of the funding

Clearinghouse integration (equities phase)

Key project for marker participants moving forward as planned

Strategic developments (long term value creation)

35

Strategic Developments Updates on the implementation of the strategic plan

Building a world-class IT and operations infrastructure

Clearing BM&FBOVESPA (equities phase)

Conclusion of IT development in the end of 2015

Test and certification phases with market participants in progress

Next step is the parallel production phase

Deployment planned for the 4Q16, depending on test results and regulatory approval

PUMA Trading System

Resilience: availability of 99.998%

Performance: average number of messages per day in 1Q16 grew 55.0% compared to 1Q15

Greater liquidity for listed products

35 market maker programs for options on singles stocks and financial and commodities derivatives, compared to 15 programs at the end of 1Q15

Market makers for IPCA futures introduced in May’16

Non-sponsored BDRs

21 new programs in April and May, 2016, increasing the portfolio to 106 programs

Fixed Income ETFs

Regulatory and tax frameworks ready

Discussions with market participants for launching the product

Developing products/markets and revenue diversification

36

1Q16 Revenue Breakdown¹Business model resilience and revenue growth

TOP LINE GROWTH DRIVEN BY GOOD PERFORMANCE IN MOST REVENUE LINES

Total RevenuesR$625.4 million

1 The revenue breakdown considers the revenue lines “others” of the Bovespa Segment and “foreign exchange” and “securities” of BM&F Segment, as reported in the financialstatements note 20, within the other revenues not tied to volumes. ² Trade and post-trade.

(in R$ millions)(% growth YoY)

USD-linked revenues represented 28.5% of the total revenue

37

Derivatives Market¹Growth in both volumes and RPC fueled revenue growth

REVENUE (in R$ millions)

Contracts priced in USD² represented ~23% of derivatives ADV and ~55% of derivatives revenues in

1Q16

¹ Revenue does not consider the revenue lines “foreign exchange” and “securities” of the BM&F Segment, as reported in the financial statements note 20, which totaled R$5.4million in the 1Q16. ² Most of the fees charged on FX, Interest Rates in USD and Commodities are referred in USD. The average BRL/USD decreased 45.5% from 1Q15 to 1Q16.

ADV (in millions of contracts)

RPC: R$1.495 per contract, +1.5% year-over-year

Depreciation of BRL versus USD (positive impact)²

Mix effect, with higher participation of Mini contracts (negative impact)

REVENUE PER CONTRACT (RPC)

38

REVENUE² (in R$ millions)

MARKET CAPITALIZATION (in R$ trillions) AND TURNOVER VELOCITY (%)

ADTV² (in R$ millions)

Turnover velocity reached 85.8% in 1Q16 (71.8% in 1Q15); this increase was partially offset by a drop of

13.9% in the average market capitalization

Trade and post-trade margins: 5.264 bps, flat over 1Q15

Equities Market¹Revenue impacted by the turnover velocity

¹ Revenue does not considers line “others” of Bovespa Segment, as reported in the financial statements note 20, which totaled R$4.4 million in the 1Q16. ² Excludes fixed incomeline.

TRADE AND POST-TRADE MARGINS

39

Business Lines not Tied to VolumesSolid growth in revenue not tied to volumes

1Q16 REVENUE BREAKDOWN¹ (in R$ million)

¹ Revenue as reported in the financial statements note 20.

+14.1%

YoY

40

1Q15 83.5 (60%) 28.9 (21%) 7.1 (5%) 2.3 (2%) 16.8 (12%)

1Q16 80.9 (56%) 35.9 (25%) 7.6 (5%) 1.6 (1%) 18.4 (13%)

1Q16 Adjusted Expenses¹Continued focus through diligent expense management

¹ Expenses adjusted to Company’s (i) depreciation and amortization; (ii) costs from stock grant plan – principal and payroll taxes – and stock option plan; (iii) combination with Cetip; and (iv) transfer of fines, provisions and incentive programs to market participants. ² IPCA last 12 months until Mar’16 (Source IBGE). ³ Excluding the impact of stock grant/option expenses. 4 Excludes third party services connected to the combination with Cetip. 5 Include expenses with maintenance, board and committee members compensation and other.

Adjusted personnel³(-3.1%): higher capitalization of personnel expenses connected to projects; and non-recurring provision of R$6.8 million in 1Q15

Data processing (+24.3%): higher maintenance expenses tied to the new Data Center; hiring of outsourced personnel; and inflation/FX rate adjustments to IT maintenance contracts

Third party services4

(+6.6): adjustment of contracts values to the FX rate and inflation

Others5

(+9.4%): higher energy and maintenance costs

1Q16 ADJUSTED EXPENSES¹ GREW 4.1% YoY, SIGNIFICANTLY BELOW THE AVERAGE INFLATION OF 9.4%² IN THE PERIOD

Communication(-31.2%): reduction of mailing expenses of custody statements

(in R$ millions)

(in R$ millions and % of total adjusted expenses)

41

Financial HighlightsSolid and liquid financial profile

Company’s cash and financial investments

Unrestricted cash (available funds) includes proceeds from the divestment in CME Group in Sept´15

IoC payment of R$169.7 million (50% of the IFRS net income), equivalent to R$0.095 per share

Payment in June 06, 2016, based on shareholders position of May 23, 2016

2Q154,033

1Q154,355

CASH AND FINANCIAL INVESTMENTS (in R$ millions)

3Q158,165

Financial result of R$ 160.5 million, up 160.7% vs. 1Q15, mainly due to:

Higher average cash and interest rates

R$32.2 million in dividends received from CME Group

R$34.1 million, with no cash effect, related to changes in the BRL vs. USD exchange rate4

1Q165,660

4Q155,201

CAPEX of R$60.9 million in 1Q16

2016 Capex budget range from R$200 to R$230 million

Third party AvailableTotal³ Restricted

¹ Includes earnings and rights on securities in custody. ² Includes BM&FBOVESPA Bank clients’ deposits. ³ Does not include investments in CME and in Bolsa de Comercio de Santiago amounting R$4,837.0 million at 1Q16 booked as financial investments. 4 See note 4 to the financial statements.

42

Financial HighlightsStrong cash generation

CASH GENERATION BEFORE DISTRIBUTIONS¹ (in R$ millions)

Cash generation¹ reached R$496.6 million in 1Q16, 39% growth YoY

Net cash from operating activities was impacted by the hedge instruments (changes in the BRL vs. USD exchange rate and mark-to-market of SWAP and NDF)

Net cash from investment activities was impacted by higher dividends received from CME Group in 1Q16

Net cash from financing activities was impacted by cash payments of payroll taxes linked to the transition, in 1Q15, of the Company’s long-term incentive plan, from stock option to stock grant

¹ Cash generation before dividends/IoC payments and share buybacks. ² Considers the cash flow from operating activities, adjusted by the variation of financial investments and guarantees and variation of cash deposits and REPO transactions of the BM&FBOVESPA bank, as described in the note 13 to the financial statements. ³ Considers the cash flow from financing activities before the payment of dividends/IoC and share buyback.

1Q15 1Q16

Adjusted net cash from operating activities²

480.9 492.3

Net cash from investment activities -15.7 83.2

Net cash from financing activities before distributions³

-108.0 -78.9

Cash generation (before distributions)¹

357.2 496.6

43

Strategic UpdatesSale of CME Group Shares

1. Sale of CME Group shares on April 7, 2016

- R$4,286.4 million in total proceeds from the sale of shares (before taxes)

2. By entering into BRL/USD NDFs in the amount of US$1,262 million prior to the sale of CME Group shares the Company secured an effective FX rate of R$3.59/USD for the proceeds. The NDF was settled on April 13, 2016.

3. Hedge accounting (2020 Notes principal vs. CME shares) is replaced by a principal-only swap in the amount of US$612 million¹: long position in US$ and short position in CDI (79.1% of CDI)

Impacts on the income statement

1Q16: Financial income of R$34.1 million, with no-cash impact, related to changes in the BRL vs. USD exchange rate on the unhedged position of part of the principal of the 2020 Notes between March 29 and 31, 2016 (swap execution)

Impacts for the next quarters

- Financial Revenues: (i) proceeds from sale invested in BRL at local interest rates (CDI)

- Financial Expenses: (i) 79.1% of the CDI on R$2,210 million; and (ii) payment of interest on the 2020 Notes of 5.5%² per year on US$612 million (exposed to changes in the BRL vs. USD exchange rate)

- Changes in BRL vs. USD exchange rates on the balance of the 2020 Notes will have no impact on the financial results, because swap value will move in the opposite direction

SALE OF THE ENTIRE STAKE IN CME GROUP

¹ Swap of the 2020 Notes principal only, while the interest still exposed to changes in the BRL vs. USD exchange rate. ² Effective rate 6.47% per year, after withholding income tax.

44

Strategic UpdatesFinancing structure planned for the transaction with Cetip

¹ Reference Exchange Ratio as of April 8, 2016.

COMBINATION WITH CETIP FINANCING

Shares Portion

Reference Exchange Ratio: 0.9358¹ BM&FBOVESPA share per Cetip share

Cash Portion

Proceeds, before taxes, from the sale of CME Groups shares

Cash flow until the settlement date: share buyback program interrupted

Debt: stand-by financing lines signed with a group of banks; permanent financing will be raised closer to the settlement date

Financial Leverage

Gross debt/EBITDA: should exceed 2x at the settlement of the transaction and return to 1x within three years

- Financial deleveraging and return of the payout ratio to 80% of the IFRS net income should occur simultaneously over this three years period (subject to operating performance)

45

Business Combination with CetipProposed timeline and phases of the process

Closing when all regulatory approvals are obtained

April, 15th May, 20th May 20th + N months

Review of the Transaction by the regulators:

Central Bank of Brazil (BCB)

The Brazilian Securities Commission (CVM)

The Economic Defense Administrative Council (CADE)

Up to 240 calendar days extendable for an additional 90 days starting from the acceptance of the application by CADE

BVMF and Cetip’s Boards call shareholders’ meetings

BVMF and Cetip’s shareholders’ approved the transaction in the

shareholders’ meetings

With the approval of both shareholders’ meetings, the closing of the transaction will be subject to regulatory approvals from CADE, CVM and Central Bank

After the last

regulatory

approval, the

transaction will

be settled in up

to 40 days

46

Financial Statements Summary of balance sheet (consolidated)

(in R$ millions) 03/31/2016 12/31/2015 (in R$ millions) 03/31/2016 12/31/2015

Current assets 9,070.3 8,673.8 Current liabilities 3,107.9 2,096.8

Cash and cash equivalents 455.8 440.8 Collateral for transactions 1,298.2 1,338.0

Financial investments 8,257.7 7,798.5 Others 1,809.6 758.8

Others 356.9 434.4 Non-current liabilities 4,897.5 5,859.9

Non-current assets 17,636.2 17,635.1 Foreign debt issues 2,192.9 2,384.0

Long-term receivables 1,934.2 1,961.4Deferred Inc. Tax and Social

Contrib. 2,502.4 3,272.3

Financial investments 1,783.9 1,815.6 Others 202.2 203.5

Others 150.2 145.8 Shareholders´ equity 18,701.2 18,352.2

Investments 30.3 30.6 Capital stock 2,540.2 2,540.2

Property and equipment 460.0 453.1 Capital reserve 14,265.3 14,300.3

Intangible assets 15,211.8 15,190.0 Others 1,885.4 1,501.6

Goodwill 14,401.6 14,401.6 Minority shareholdings 10.3 10.1

Total Assets 26,706.5 26,308.9 Liabilities and Shareholders´ eq. 26,706.5 26,308.9

LIABILITIES AND SHAREHOLDERS´EQUITYASSETS

47

1Q16 1Q15Change

1Q16/1Q154Q15

Change

1Q16/4Q15

Total Expenses 202,0 221,4 -8,8% 213,4 -5,3%

Depreciation (23,8) (30,6) -22,2% (26,0) -8,5%

Stock Grant/Option (25,4) (43,4) -41,4% (14,1) 80,4%

Combination with Cetip (1,0) 0,0 - 0,0 -

Provisions and others (7,5) (8,8) -15,5% (2,8) 162,9%

Adjusted Expenses 144,3 138,6 4,1% 170,4 -15,3%

Financial Statements Net income and adjusted expenses reconciliations

ADJUSTED NET INCOME RECONCILIATION (in R$ millions)

ADJUSTED EXPENSES RECONCILIATION (in R$ millions)

*Attributable to BM&FBOVESPA’s shareholders.

1Q16 1Q15Change

1Q16/1Q154Q15

Change

1Q16/4Q15

IRFS net income* 339.3 279.5 21.4% (407.7) -183.2%

Stock Grant/Option (recurring net of tax) 16.8 12.1 38.4% 7.8 116.0%

Deferred Tax Liabilities 135.3 137.5 -1.6% 137.5 -1.6%

Equity in Income of Investees (net of taxes) (19.6) (37.8) -48.2% (173.7) -88.7%

Recoverable Taxes Paid Overseas 0.0 0.0 - 59.1 -

IoC Adjustments 0.0 0.0 - (200.8) -

Discontinuity of the Equity Method (net of taxes) 0.0 0.0 - 14.6 -

Impairment (net of tax) 0.0 0.0 - 1,097.4 -

Adjusted net income 471.8 391.3 20.6% 534.1 -11.7%

48

SUMMARY OF INCOME STATEMENT (in R$ millions)

Financial Statements Summary of income statement (consolidated)

1Q16 1Q15Change

1Q16/1Q154Q15

Change1Q16/4Q15

Net revenues 563.5 520.4 8.3% 543.2 3.7%

Expenses (202.0) (221.4) -8.8% (213.4) -5.3%

Operating income 361.5 299.0 20.9% 329.8 9.6%

Operating margin 64.1% 57.5% 669 bps 60.7% 343 bps

Financial result 160.5 61.6 160.7% 289.8 -44.6%

Net Income 339.3 279.5 21.4% (407.7) -183.2%

EPS (in R$) 0.190 0.156 22.5% (0.229) -183.0%

Adjusted expenses (144.3) (138.6) 4.1% (170.4) -15.3%

49






1Q16 RESULTS

APPENDIX


50

High growth productsGrowing sophistication of market participants

Securities LendingReal Estate Funds (FIIs) Options with Market Maker

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

Initiatives to develop and prompt higher volume in certain products

Performance shows that the initiatives are being well received by the market

ETFs Brazilian Treasury Direct - Tesouro Direto Agribusiness Credit Bills

(ADTV in BRL million)

+115.6%

(ADTV in BRL million)

(ADTV in BRL million) (Custody – in BRL billion)

CAGR(10-16): + 54.5% CAGR (10-16): +9.3%

CAGR (10-16): 33.9 % CAGR (10-16): +39.4%

(AUM – in BRL billion)

¹Updated to May 31, 2016.

51

Bovespa SegmentRaising Capital

PUBLIC OFFERINGS (BRL billion)

¹Excludes the portion acquired by the Brazilian government in the Petrobras offering, via the transfer of rights in barrels (BRL 74.8 billion).

¹Updated to May 31, 2016

52

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total

IPOs - 1 - 7 9 26 64 4 6 11 11 3 10 1 1 - 154

Follow ons 14 5 8 8 10 16 12 8 18 11 11 9 7 1 4 4 146

Total 14 6 8 15 19 42 76 12 24 22 22 12 17 2 5 - 296

Dual Listings - - - 2 1 1 - - 1 - - - - - - - 5

Sarbanes-Oxley Act(Jul. 2002)

Novo MercadoLaunch

(Dec. 2000)

End of IOF Tax (2%) for foreign investors

(Dec. 2011)

End of CPMF(Financial

Transaction Tax)

Trading in ADRs of Brazilian companiesLiquidity migration process interrupted

May’16

Source: Bloomberg (in USD traded value of 35 companies with ADRs programs )

PUBLIC OFFERINGS IN NUMBER OF COMPANIES

32.8%

31.4%

10.3%

25.5%

35.7%

64.3%

53

Bovespa SegmentForeign investment flow

MONTHLY NET FLOW OF FOREGIN INVESTMENTS (in BRL billons)

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

¹Updated to May 31, 2016

54

Products and Markets DevelopmentCreation of value and stimulus for the development of products and markets

Organizational Structure for Fee

Structure

Equities Market Fee Structure

Rebalancing Trading/post-trade

Fee Structure of OTC Products

Prices p/ volume

Tiers in Derivatives

Price policy for

Mkt Data

Readjustment of Issuers’ annual fee

Review of prices and

incentives: BTC, DMA, Market Data, Issuers and

Depository

Fee structure of interest rate derivatives

OTC derivatives fee structure

Transfers fee structure at CSD

2008 2009 2010 2011 2012 2013 2014 2015

Charge (BPs) onamount in depository

Enhancement of Price and Incentives Policies

55

Clearinghouses’ Integration and New Risk Model (CORE)Benefits from Clearinghouse integration

1. DETERMINING THE CLOSEOUT STRATEGY

T+0 T+1 T+2 T+3 T+4 T+N...

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

2. RISK EVALUATION

T+0 T+1 T+2 T+3 T+4 T+N...

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).

3. POTENTIAL P&LCALCULATION

T+0 T+1 T+2 T+3 T+4 T+N...

Calculates and aggregates intertemporally P&Lassociated with each scenario, considering the defined closeout strategy

CLOSEOUT RISKResult: Two risk measures—market and liquidity—that are estimated both jointly and consistently

PERMANENT LOSS TRANSIENT LOSS

OVERVIEW: CLOSEOUT RISK CALCULATION IN THREE STEPS

56

Contato

www.bmfbovespa.com.br

55 11 2565-4729 / 4418 / 4207/4834/[email protected]

Investor Relations Department - RI Mobileir.bmfbovespa.com.br/enu/2147/BVMF Presentation - June...

Documents

Transcript of Investor Relations Department - RI Mobileir.bmfbovespa.com.br/enu/2147/BVMF Presentation - June...