Fee structure Project

March 5th, 2013

AGENDA
1. Project evolution and objectives 2. Decisions on changes in the cash equities market fees 2.1. Reduction of trading fees 2.2. Benefit to day traders 2.3. Progressive trading fee reduction for cash equity market based on volumes growth 3. Implementation of the decisions 4. Next steps

1. Improving the fee structure is one of the core initiatives of BM&FBOVESPA strategic planning
Merger 2008 First announcements and deliveries of the R$ 1,2 billion investment plan (2010-2014)

2008

2009

2010

2011

2012
Advances in cash equities fee strategies and structure

Beginning of integration and capture of synergy and efficiency improvements

Reduction of cross subsidy through fee rebalancing of trading and post-trading

Price monitoring e Fee structure improvements: continuous process at BVMF

Volume based discounts in BM&F segment and discounts for HFTs in cash equities and derivatives markets Rebalancing of trading and post-trading fees: New fee policy better reflects BM&FBOVESPA cost structure Greater alignment with international markets Neutral effect on transaction cost for stock market investors
0,70 bp 20%

Study on specific markets and products: Creation of internal groups for studies about fees Hiring consultants to support analyzes

Announcement and implementation of the initial changes

Changes in fee policy of market data, custody, listing, among others

2,85 bps

83%

New studies and implementation of changes in pricing. Creation of incentives for other markets and products

2,75 bps

80%

0,60 bp

17% Nova Negociao

Atual Liquidao

2008 2010

2011 2012

2013

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Todays presentation focus

1. Main initiatives to be implemented in the cash equities market:

Initiatives

2.1. Reduction of 28.5% of the trading fee, in the cash equities market

Elimination of cross-subsidies Sharing of gains of scale

2.2. Benefit to day traders

Incentives for volumes growth

2.3. Progressive trading fee reduction for cash equity market based on volumes growth

Sharing future gains of scale

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2.1. Reduction of the trading fees of cash equities market

Objectives
Elimination of Cross subsidies Reduction of 28.5% of trading fees Benefit: retail, foreign investors and financial institutions

Mechanism
Current Fee All investors New Fee

0,7

0,5

0,2 BPS Funds and Investment Clubs

Trading Post Trading

0,7 1,8 2,5

0,5 2,0 2,5

Transactions matched during auction procedures (opening and closing calls) and Takeover Bids (OPAs) will continue with the trading fee of 0.7bps. However, due to the necessity of adaptation in the systems of the Exchange, Brokers and IT Providers, this transactions will be charged 0.5bps, from April 1st, 2013 to December 2nd, 2013.
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2.2. Benefit to day traders

Objetives
Expand volume incentives mechanism to other investors Improve our fee model to meet different investors demands Reduce overall average fee, privileging investors that are price-sensitive, linking reduced fees to higher volumes Expand to day trade segment the benefit of a volume based fee reduction Benefit: all type of investors, except for HFTs that were in the first layer of volumes Current Situation:

Mechanism
Actual model includes only investors classified as HFTs by an internal committee

New Structure:
Expand the discount policy of HFTs to all day trade transactions

2.3. Progressive trading fee reduction for cash equity market based on volumes growth
Objectives
Show clearly the BVMF commitment with its customers through sharing economies of scale, in the cash equities market Strengthen our competitive position in the cash equities trading market Create a simple mechanism that enables the sharing of future economies of scale without compromising the current margins

Mechanism
Definition of a progressive ADTV based discount policy for cash equities market (1) Discount to all customers, including HFT and day traders (2)
ADTV
(R$ billions)

0 to 9 9 to 11 11 to 13 Above 13

Trading Fee(Bps) Current Discount 0,70 -28,5% 0,70 -42,8% 0,70 -57,1% 0,70 -71,4%

New 0,50 0,40 0,30 0,20

Average On top 0,500 0,482 0,454 ....

(1) The daily volume used to calculate the monthly ADTV considers the operations of the cash equity market, including the exercise of options on equities. (2) Discount does not apply to auctions (opening and closing) and Takeover Bids (OPAs).

3. Implementation

Initiatives
2.1. Reduction of trading fess

Schedule
Implementation of interim discount from April 1st 2013 to Dec 2nd 2013 As of Dec 2nd 2013, the new Fee policy will be in place

2.2. Benefit to day traders

As of Dec 2nd 2013

2.3. Progressive trading fee reduction for cash equity market based on volumes growth

As of Dec 2nd 2013

4. Next steps

Review of the fees of equity derivatives Revision of the fee structure of future contracts of interest rate, FX and agribusiness Incentives for volume growth - Distribution channel - Market maker Up to Dec 31st, 2013 new measures should be released!

Thank you!

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