CME Group Inc.
) has announced the launch of the Brazilian Ibovespa Futures and
said that it will initiate the trading of the new futures in the
U.S. from October 22, 2012. Ibovespa is already traded on the
Brazilian Stocks, Mercantile & Futures Exchange
Now it will be traded in U.S. Dollars denomination and will be
listed on CME. These cross-listed futures will be governed by the
rules and regulations of CME.
The Ibovespa is a total return index of 69 stocks traded on the
BM&FBOVESPA. The index represents a theoretical portfolio made
of the stocks, which accounted for 80% of the last 12 months'
trading volume and were traded on a minimum of 80% of the trading
The constituent stocks of Ibovespa made up for 78.1% of the
capitalization in the stock market as of September 6, 2012.
However, since the portfolio is revised by the Sao Paulo Stock
Exchange after every four months, the underlying stocks of the
futures contract can vary over the lifespan of the contract.
The cross-listing of Ibovespa on CME will allow easy access to
the Brazilian futures to CME's global customer base. It will also
provide the clients with an alternative way to handle their
exposure to market and counterparty credit risk across various
Separately, CME has announced the expansion of its Chinese
product portfolio with the launch of Deliverable Renminbi futures.
These futures will begin trading on the exchange in the upcoming
months and will be subject to its rules and regulations.
CME plans to offer the futures in both standard and E-micro
sizes. Moreover, they will be listed on CME as well as CME Europe
Ltd., subject to regulatory approval in case of the latter. The
revenues and expenses related to the futures will be covered by the
International Monetary Market division of the company.
Considering the growing global market for the currency as well
as its increased trading, it can be concluded that the Renminbi
futures will be an important addition to CME's international
product offerings. The exchange already offers cash-settled CNY
futures and OTC Non-Deliverable Forward (NDF) products in
CME, which competes with other exchanges such as
NYSE Euronext Inc.
Nasdaq OMX Group Inc.
), currently carries a short-term Zacks #3 Rank (Hold). Considering
the fundamentals, we maintain our long-term Neutral recommendation
on the stock.
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