Brazil’s premier stock and derivatives exchange, BM&FBovespa, and Chi-X Global have completed the formal acceptance of Chi-FX the new trading platform which will allow overseas investors to trade in Brazilian financial instruments without having currency risk.
The new platform called Brazil Easy Investing (BEI) is powered by Chi-FX technology. According to data on the BM&FBovespa website, foreign investors account for 42% of total market share in the Brazilian markets. BEI will allow both retail and institutional investors trading outside LATAM’s most populous nation to trade in financial instruments denominated in their local currency, thus avoiding exposure in the real.
“This is a major milestone for our Chi-FX platform” said Tal Cohen, CEO of Chi-X Global in a statement. “Brazilian market participants will be able to offer their off-shore clients an automated solution for trading Brazilian equities with embedded FX rates, thereby reducing latency, broadening access and minimizing currency risk for international investors. This is an exciting time for Chi-FX and we will be exploring new opportunities to expand the platform throughout Latin America.”
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Cicero Vieira Neto, COO of BM&FBOVESPA commented in the official press briefing: “The Chi-FX platform is now certified for commercial use. BM&FBOVESPA is in the process of completing the additional steps necessary to have BEI ready for participant certification and then full production use. We are looking forward to the launch of BEI, which coupled with the recent changes to the CPF registration process, will represent a significant step in the ongoing development of the Brazilian capital market and facilitated access to non-resident investors.”
Brazil’s financial markets are set for major changes, the acceptance of Chi-X and the recent launch of ATS signify crucial reforms in the country, the monopoly held by BM&FBovespa is set to be challenged. The average daily trading volume in Brazilian equities in May was $3.53 billion.
The Brazilian real, like other emerging market currencies has been suffering against the greenback. Earlier this month the real slid to a four year low, the government re-acted by lifting the foreign exchange derivatives tax of 1% in an attempt to balance the flow of dollars entering the nation.