BM&FBovespa sees new forex futures stoking volume

* Five forex contracts include pound, yen, Mexican peso

* Thin volumes in first two days of trading

By Silvio Cascione

SAO PAULO, June 3 (BestGrowthStock) – Brazil’s BM&FBovespa
(BVMF3.SA: ), the world’s third-largest exchange operator by
market value, launched five new currency futures contracts this
week, betting on rising demand from local companies expanding
abroad.

As Brazil takes a more important role in the global
economy, exporters want more ways to insure themselves against
unfavorable moves in exchange rates, Marcos Carreira,
derivatives director at the BM&FBovespa, told Reuters late on
Wednesday.

Sao Paulo-based BM&FBovespa, which operates Brazil’s stock,
commodities and derivatives exchanges, has launched contracts
for ethanol and partnered with BlackRock Inc (BLK.N: ) and
Deutsche Bank (DBKGn.DE: ) to offer exchange-traded funds and
other products. The exchange wants to boost trading volumes and
diversify away from interest rates futures and stocks that make
up the bulk of its revenue.

The company introduced on Monday contracts for the British
pound, Japanese yen, Mexican peso, Canadian dollar and
Australian dollar. It already offers U.S. dollar and euro
contracts.

“Companies are buying from and selling to a wider range of
countries, so it’s natural to have more currencies you want to
hedge,” Carreira said.

BM&FBovespa is not currently developing futures contracts
for other currencies, he added.

LOW VOLUMES

Liquidity was thin in the first two days of trading. The
Mexican peso futures, the most popular of the new contracts on
Monday and Tuesday, only had six trades with 985 contracts. By
comparison, the U.S. dollar futures (0#DOL:: ) traded more than
400,000 contracts on Tuesday, according to BM&FBovespa data.

Few clients have discovered the new products, traders said.
Rossano Oltramari, an analyst with XP Investimentos brokerage
in Sao Paulo, praised the move but said it was still at an
early stage.

Low volumes in the first days are normal, Carreira said.

“Two or three days of trading don’t make up a big enough
sample,” he said, adding that Monday was a holiday in the
United States and Britain.

“Our main concern is to ensure market participants have
access to the information they need on these products. We are
open to their feedback.”

The new products were designed to start trading with
roughly the same size as the standard U.S. dollar futures:
60,000 Australian dollars (0#AUD:: ), 60,000 Canadian dollars
(0#CAD:: ), 5 million yen (0#JPI:: ), 35,000 British pounds
(0#GBP:: ) and 750,000 Mexican pesos (0#MXN:: ).

However, sharp moves in exchange rates could change the
size of the contracts in the future, Carreira said.

Investing Research

(Editing by Samantha Pearson)

BM&FBovespa sees new forex futures stoking volume