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(A free translation of the original in Portuguese)










BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Financial Statements at
December 31, 2008









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2008 MANAGEMENT REPORT
Dear Shareholders,
BM&FBOVESPA SA hereby submits for your review the Management Report related to
the activities developed by the Company in 2008.
ECONOMIC OUTLOOK
The year of 2008 was marked by the worst world financial crisis since the 30s. Having
begun in the United States real estate sector in 2007, the crisis deepened, especially as of
the third quarter of 2008, when investment bank Lehman Brothers collapsed. This caused
strong instability in the international financial markets, a sharp contraction in credit
markets and, subsequently, a sudden deceleration in the level of global economic activity
whose proportions have thus far been impressive and whose consequences are still
uncertain.
The origin of this crisis was the enormous growth in financial leverage initiated in 2001,
during a period of historically low US interest rates. Its most serious effects were felt in the
US mortgage market, where the originate-and-distribute
model blossomed. Under this
model, receivable rights were securitized, packaged into securities and sold to investors
who were not involved in the credit granting process, such as pension funds, insurance
companies and hedge funds
,
in addition to Special Investment Vehicles, which were not
included in the banks' balance sheets
.
Such a movement culminated in high asset
inflation in the major world economies and was followed by a significant growth in credit
derivatives, or Credit Default Swaps (CDS).
As the mortgage crisis unfolded, the large banks that had a high risk exposure to assets of
this kind were required to make large provisions, which basically involved the higher risk
mortgage loans, that is, the subprime mortgage-backed securities.
This situation forced banks to seek cash injections to maintain their activities, and also led
the US government and other G7 governments to launch assistance packages to aid their
respective financial systems. However, the insufficiency of these initiatives led to Lehman
Brothers' bankruptcy in September of 2008.
The most visible consequence of this episode was the almost complete paralysis of credit
granting due to an increased counterparty risk, which caused all kinds of effects on the
real economy, all of which point to a severe recession in the developed countries as well
as in the majority of developing countries.
In Brazil, the crisis impact was particularly felt on the fourth quarter of 2008, in view of the
international liquidity contraction, the commodity price downfalls, and the economic
deceleration in major Brazilian export sector clients. Domestically, there was a retraction
in credit grating, a significant depreciation of the currency and a considerable decrease in
the confidence level of companies and consumers, which caused a reduction in spending.
Nevertheless, the stability and evolution exhibited by the Brazilian economy in the last few
years, as well as the specific characteristics of its financial system positively differentiate
the country from the major world economies.
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.2.
Therefore, several factors allow us to predict that although the impact of the crisis will be
deeply felt by the Brazilian economy, it will likely be less dramatic than that felt on average
by the world economy. Some of these factors are:
· The good capitalization conditions of the Brazilian financial system, which has no
exposure to assets linked to the subprime mortgage segment as other countries do;
· The high reserve requirements for banks and the high level of prime interest rate,
which provide the monetary and liquidity policy with its ongoing large-scale response
capacity;
· A well-capitalized banking sector, which prevents a deeper credit contraction from
materializing, especially via BNDES loans;
· Brazil's international reserves, which amounted to USD193.8 billion at the end of
2008, allowing the Central Bank of Brazil to provide hard currency so as to
compensate for the sharp retraction in international funding, which particularly affects
the foreign trade sector;
· The institutional solidity of the Brazilian equity and derivatives markets, which
compares favorably not only to that of the so-called BRICs (an acronym for Brazil,
Russia, India and China, i.e. the four fastest growing developing economies), but also
to that of many developed countries. Their trade and settlement procedures have also
been exemplary under high volatility market conditions;
· The low financial leverage in Brazil and the more transparent regulations, in addition to
the smaller size of the OTC market;
· A falling public debt (36.01% of the GDP at the end of 2008) as a result of both a
prudential fiscal policy and a policy geared to the accumulation of international
reserves.
Finally, it should be noted that the current crisis is expected to produce important
regulatory changes in the financial and capital markets, which should bring more
transparency to OTC products and strengthen securities trading systems with a central
counterparty. It is understood that during periods of instability such as those verified in the
last few months, the low level of information and the counterparty risk associated with
market transactions tend to increase the volatility and the overall risk. For this reason,
regulatory changes will tend to make the markets less unstable and risky during
uncertainty periods.
Said regulatory changes will be compatible with the standards currently adopted by the
Brazilian market and by BM&FBOVESPA, whose trading systems are integrated with the
equity and derivatives clearinghouses.
OPERATING PERFORMANCE
Despite the country's better conditions, the deleveraging and asset devaluation process
had an impact on the BM&FBOVESPA markets, imposing a reduction in the BM&F
Segment trading volume and in the BOVESPA Segment market capitalization.
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.3.
BM&F Segment
Volume and Average Rate per Contract (RPC)
In 2008 the average daily trading volume on the derivatives markets left no room for
doubting the crisis impact, mostly after Lehman Brothers collapsed in September. Trading
volumes reduced due to the smaller risk exposure assumed by market participants,
especially in November and December, when 1.11 million and 1.09 million contracts were
respectively traded, as opposed to the average 1.54 million and 1.76 million contracts
traded in the 3Q2008 in the 2Q2008 respectively.
On the other hand, the new pricing policy and the currency depreciation that occurred in
the second half of the year (the prices of the exchange rate, interest rate denominated in
exchange rate and commodity contracts fluctuate according to the US Dollar) led the RPC
to jump from 1.57 to 2.07 between August and October.
The pricing policy change for the BM&F Segment included the following stages:
· On August 25, 2008, the 5% across the board discount policy and the 25% discount
for participants that held at least 10,000 BMEF3 shares was discontinued
· On November 17, 2008, a transitory fixed-discount policy was introduced, establishing
a 40% discount for all participants, a 50% discount for those who trade via Direct
Market Access (DMA), and a 70% discount for algorithmic traders, in order to
neutralize the effects of the increase in the RPC verified after the discounts were
suspended in August 2008. Moreover, alterations were introduced to the way fees
were charged for some contracts, such as stock index futures, whose fees became
flat;
· On February 16, 2009, a new pricing policy was introduced with progressive discount
ranges by trading volume.
The new policy tends to make the BM&FBOVESPA products more competitive for
participants and more adequate to market reality, in addition to boosting liquidity and
attracting investors who use an electronic trading platform, notably algorithmic traders.
1.45
1.66
2.17
1.94
1.66 1.69 1.66
1.37
1.59
1.47
1.09 1.11
Ja
n

08
Fe
b

08
Ma
r

08
Ap
r

08
Ma
y

08
Ju
n

08
Ju
l

08
Au
g

08
Se
p

08
Oc
t

08
No
v

08
De
c

08
Daily Average Volume (millions of contracts)
1.47 1.44
1.33 1.35 1.40 1.40 1.34
1.57
1.90
2.07
1.73
1.41
Ja
n

08
Fe
b

08
Ma
r

08
Ap
r

08
Ma
y

08
Ju
n

08
Ju
l

08
Au
g

08
Se
p

08
Oc
t

08
No
v

08
De
c

08
Rate per Contract (BRL)
When comparing year-end volumes, there has been an interruption in the growth trend
verified in the trading volume since 2004. The daily average reached 1,573,300 contracts
in 2008, down 9.59% from 2007.
Nevertheless, the RPC rose from BRL1.22 to BRL1.53, or 24.7%, mostly due to the
changes in pricing policy previously mentioned. It should also be noted that the fees
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.4.
applicable to all derivatives were adjusted at the end of 2007, in order to offset the PIS
and COFINS taxes to which revenues are subject.
BM&F Segment ­ Average Daily Trading Volume
Year
Interest
rates in BRL
Interest rates
in USD
Exchange
rates
Indices Commodities WebTrading OTC
Total
2004
421,994 136,504
110,126
86,191 3,615
- 47,031
805,461
2005
501,421 87,557
167,913
73,794 3,299 4,623
13,513
852,120
2006
710,507 63,246
265,696
67,594 3,881 36,732
19,813
1,167,469
2007
988,112 87,877
472,995
111,973
10,062 57,764
11,485
1,740,268
2008
788,665 94,281
534,922
87,632
14,916 40,478
12,447
1,573,342
BM&F Segment ­ Average Rate per Contract
Year
Interest
rates in BRL
Interest rates
in USD
Exchange
rates
Indices Commodities WebTrading OTC
Total
2004
0.89 2.00 4.00
1.56
7.16 - 1.20
1.62
2005
0.96 1.39 2.86
1.69
5.69 0.04
1.70
1.47
2006
0.91 1.09 2.24
1.42
4.75 0.03
1.57
1.25
2007
0.95 0.97 1.86
1.50
3.19 0.05
2.11
1.22
2008
1.14 1.28 2.07
2.15
3.59 0.16
2.35
1.53
Spot US Dollar
In addition to derivatives trading, the BM&F
Segment trades and settles, through the
Foreign Exchange Clearinghouse, spot US
Dollar transactions. In 2008 this market traded
BRL771 billion, up 9.4% from 2007. This
amount reflected the currency devaluation that
occurred during the second half of 2008.
360,883
704,970
771,065
441,447
2005
2006
2007
2008
Spot US Dollar Volume (R$ million)
Direct Market Access
Launched at the end of August 2008,
trading via DMA has displayed a
strong growth, with a peak of 2,600
trades per day on average and a 10%
share of the total derivatives trading
volume recorded in December. This
way of access, which makes trading
more agile, will certainly attract new
participants, such as algorithmic
traders.
1,485
2,190
2,590
2,553
93
0.4%
4.0%
5.8%
7.6%
10.0%
500
1,000
1,500
2,000
2,500
3,000
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Nu
m
b
er
o
f
tr
ad
es
0%
2%
4%
6%
8%
10%
12%
D
M
A
sh
ar
e
i
n
t
o
tal
tr
ad
es
Nr. of Trades (Average)
DMA Share
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.5.
Investor Participation
In 2008 the highlight of investor breakdown per derivatives market segment showed an
increase in the participation of foreign investors and companies in the trading volume.
In the comparison with 2007 figures, the average participation of foreign investors grew
from 16.9% to 18.8%, while the average participation of companies grew from 2.1% to
2.9%. On the other hand, the average participation of financial institutions fell from 49.2%
to 47.6% and that of individuals fell from 9.2% to 8%.
24%
23%
23%
22%
21%
24%
25%
21%
22%
24%
22%
20%
17%
17%
18%
19%
19%
18%
18%
18%
22%
22%
20%
20%
9%
7%
7%
7%
7%
7%
7%
8%
10%
9%
10%
8%
47%
50%
49%
50%
50%
48%
48%
50%
43%
42%
44%
48%
2%
3%
3%
2%
3%
3%
3%
3%
4%
3%
3%
4%
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
1%
Institutional Investors
Foreign Investors
Individuals
Financial Institutions
Companies
Central Bank
Concerning historical evolution, financial institutions maintain their lead as the major
players in the BM&F Segment, responding for 47.6% of the total volume of contracts
traded (53.8% in 2004). Institutional investors and foreign investors occupy the second
and third positions respectively. The latter more than doubled their participation between
2004 and 2008, leaping from 8.6% to 18.8%.
25.4%
23.6%
24.6%
22.6%
22.6%
8.6%
11.7%
14.7%
16.9%
18.8%
10.0%
7.0%
7.5%
9.2%
8.0%
53.8%
55.8%
51.2%
49.2%
47.6%
2.3%
1.8%
2.0%
2.1%
2.9%
0.0%
0.1%
0.1%
0.1%
0.1%
2004
2005
2006
2007
2008
Institutional Investors
Foreign Investors
Individuals
Financial Institutions
Companies
Central Bank
background image
.6.
BOVESPA Segment
The Brazilian stock market importance grew significantly during the last five years, without
presenting any inflection points even during 2008, whose second semester was marked
by a sharp market capitalization drop. The year's highlights were an increased turnover
velocity
1
, the growth in average daily trades, and the enhancement in individuals'
participation, mainly via the Home Broker system (Internet-based trading).
Trading and market value
In the second half of 2008 the financial crisis hit stock prices, thereby reducing the market
capitalization of listed companies from July on, particularly in the fourth quarter.
The reflections of this downfall were felt in November and December, with the average
daily volume decreasing to BRL3.8 billion. Nonetheless, it was partially offset by an
increased turnover velocity (average of the last 12 months) as of September, when it was
60.9% (58.7 in August), reaching 63.2% in December.
Another highlight was the sizeable growth in the number of trades over the last months of
2008, with a record of 337,400 in October. In December the daily average totaled 255,600
trades, almost the same level as that of May, when the country reached the investment
grade rating.
Despite the poor performance during the last quarter of the year, the average daily
financial volume grew by 12.9%, from BRL4.9 billion to BRL5.5 billion. The average daily
volume of trades augmented by 60.3%, from 152,900 to 245,100. During the last quarter it
attained the highest quarterly average ever recorded (294,900 trades).
6.0
6.1
5.6
6.2
7.0
6.3
5.6
4.8
5.5
5.3
3.8
3.8
208.5
203.3
204.0
206.1
260.3
226.4
229.0
214.2
293.6
337.4
291.9
255.6
-
1
2
3
4
5
6
7
8
Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08
Jul-08
Aug-08 Sep-08 Oct-08 Nov-08 Dec-08
T
r
a
d
e
d

V
a
l
u
e
(
B
R
L
b
i
llio
n
)
-
50
100
150
200
250
300
350
400
N
u
m
b
er
o
f
t
r
a
d
es (t
h
o
u
san
d
s
)
Traded Value
Nr. of Trades
1
Turnover velocity shows the relationship between the value traded on the cash market (in this case, the
average of the 12 months preceding and including the referential month) and the market value of listed
companies.
background image
.7.
1.4
1.3
1.4
1.8
2.0
2.2
2.5
2.5
2.3
2.3
2.4
2.3
63.2%
62.3%
62.4%
60.9%
58.7%
59.5%
58.7%
58.7%
58.0%
57.4%
57.7%
57.4%
-
0.5
1.0
1.5
2.0
2.5
3.0
Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08
Jul-08
Aug-08 Sep-08 Oct-08 Nov-08 Dec-08
A
v
e
r
a
g
e
m
k
t
.
c
a
p
it
a
l
iz
a
t
ion
(
B
R
L

t
r
illi
on
)
54%
55%
56%
57%
58%
59%
60%
61%
62%
63%
64%
Tu
r
no
v
e
r
Average mkt cap
Turnover (12 months)
From 2004 to 2008, the stock market financial volume and number of trades presented a
respective compounded average growth rate of 32.2% and 35.5%. The turnover velocity
has been on the rise--from 42.3% to 56.4% in 2006 and 2007 respectively--and reaching
a high of 63.2% in 2008.
1,221
1,611
2,434
4,895
5,525
53,751
62,247
87,488
152,872
245,071
-
1,000
2,000
3,000
4,000
5,000
6,000
2004
2005
2006
2007
2008
A
D
T
V
(
B
R
L

m
i
ll
io
n
)
-
50,000
100,000
150,000
200,000
250,000
300,000
A
v
er
ag
e o
f

t
r
ad
es
Traded value
Nr of trades
905
1,128
2,478
1,375
390
519
730
1,123
650
1,545
37.6%
38.7%
42.3%
56.4%
63.2%
-
500
1,000
1,500
2,000
2,500
3,000
2004
2005
2006
2007
2008
0%
10%
20%
30%
40%
50%
60%
70%
Market capitalization (BRL billion)
Custody (BRL billion)
Turnover
Investor Participation
The share of individuals rose in 2008, representing 30% through 34% of the trading
volume during the last quarter. The share of foreign investors remained the same: They
initiated the year with a 35% participation and ended it with 36%. The share of individuals
should also be highlighted between 2007 and 2008, as it changed from an average of
23% to 26.8%
background image
.8.
24%
26%
27%
26%
28%
24%
24%
24%
26%
30%
34%
30%
30%
29%
27%
29%
26%
26%
29%
29%
28%
24%
24%
24%
35%
35%
36%
33%
35%
37%
35%
35%
35%
37%
34%
36%
9%
9%
7%
8%
7%
9%
9%
10%
8%
6%
5%
6%
2%
2%
2%
4%
3%
3%
2%
3%
3%
3%
3%
4%
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Individuals
Institutional Investors
Foreign Investors
Companies
Financial Institutions
Others
n important factor explaining the growth of individuals' participation in the traded value
A
was the Home Broker system, which presented an upward trend, by moving from 10.3%
in January to 15.8% at year-end, and attaining a high of 18% in November. The number of
custody accounts also followed this trend, changing from 488,000 to 559,000, up 14.5%.
488
491
508
502
509
540
552
552
551
565
571
559
10.3%
11.5% 11.4% 12.0%
14.0%
11.6%
11.0%
9.3%
12.9%
14.1%
18.0%
15.8%
440.0
460.0
480.0
500.0
520.0
540.0
560.0
580.0
Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08
Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08
C
us
t
ody
a
c
c
ount
s
(
t
hous
a
nds
)
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
H
o
me
B
r
o
k
e
r
v
s
t
r
a
d
e
d
v
a
lu
e
Custody accoutns
Home Broker vs traded value
onsidering the five-year period (2004 through 2008), the Home Broker system share in
C
the traded volume jumped from 4.5% to 12.9%. The number of custody accounts also
displayed a sharp increase, with a 34.5% compounded average growth rate. Concerning
investors' participation, the emphasis was on foreign investors, whose share expanded
from 27.3% to 35.3%.
background image
.9.
27.5%
25.4%
24.6%
23.0%
26.8%
28.1%
27.5%
27.2%
29.8%
27.1%
27.3%
32.8%
35.5%
34.5%
35.3%
13.8%
11.7%
10.4%
10.4%
7.8%
3.0%
2.3%
2.2%
2.2%
2.8%
2004
2005
2006
2007
2008
Individuals
Institutional Investors
Foreign Investors
Companies
Financial Institutions
Others
558,561
126,725
166,703
233,659
477,872
4.5%
5.5%
6.8%
8.4%
12.9%
0
100,000
200,000
300,000
400,000
500,000
600,000
2004
2005
2006
2007
2008
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Number of accounts
Home Broker system share in traded value
Capital Raising and Listed Companies
In 2008 four new companies started trading on the stock market and eight follow-on
offerings were conducted by listed issuers, amounting to BRL33.2 billion. This figure
represented a significant drop in relation to 2007, when 76 IPOs and follow-on offerings
were carried out, with total proceeds over BRL70 billion.
The
Novo Mercado
, which is the main corporate governance level of the BOVESPA
Segment, ended the year with 99 listed companies. Added to the special governance
levels (Level 1 and Level 2), they reached 160 companies. This set of companies
accounted for 58.5% of the market value of the total listed companies and 67.8% of the
traded value in December 2008.
Following the development and enhanced sophistication of capital market transactions as
a whole, BM&FBOVESPA announced in November that it would conduct a revision of the
Novo Mercado Listing Rules
addressed to Levels 1 and 2 (they had been previously
revised in early 2006). The new revision is expected to be concluded by the end of 2009.
4.5
5.4
15.4
55.6
7.5
4.3
8.5
15.1
14.5
25.7
9
26
64
4
7
8
10
16
12
8
0
10
20
30
40
50
2004
2005
2006
2007
2008
T
o
t
a
l v
a
lu
e

r
a
i
s
e
d
(
B
R
L
b
i
ll
io
n
)
0
10
20
30
40
50
60
N
u
m
b
e
r
of offe
r
i
ng
s
60
70
Value of IP Os
Value of follow-on offerings
Number of IP Os
Number of follow-on offerings
background image
.10.
Securities Lending
Reflecting the changes in the economic environment and market prospects, open interest
in the securities lending system fell significantly after June 2008, when it amounted to
BRL23.5 billion, and sharply in December, when it went down to BRL6.9 billion. This was
notably due to a reduction in price levels and changes to market participant strategies and
expectations.
24.0
23.2
21.5
20.9
22.8
23.5
18.1
14.1
11.9
8.0
8.0
6.9
55.3
50.0
49.7
49.7
55.8
56.8
48.5
53.6
53.1
45.5
45.9
-
5.0
10.0
15.0
20.0
25.0
Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08
Jul-08
Aug-08 Sep-08 Oct-08 Nov-08 Dec-08
O
p
e
n

in
t
e
r
e
s
t
(
B
R
L
b
illio
n
)
-
10
20
30
40
50
60
N
um
be
r
of
t
r
a
de
s
(
t
hous
a
nds
)
63.4
30.0
70
Open interest
Nr of trades
The analysis of the 2004-2008 period
highlights a continuous growth in the
number of trades. The average value
of open interest, however, reduced
between 2007 and 2008.
It is important to point out that all the
trades in the securities lending system
count on central counterparty services,
including risk management and
exposure limits for each company
whose shares can be lent.
1,578
3,803
6,643
18,518
16,902
78,729
166,494
271,210
568,592
627,414
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2004
2005
2006
2007
2008
A
v
e
r
a
g
e
o
p
e
n

in
t
e
r
e
s
t
(
B
R
L

m
illio
n
)
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
N
u
m
b
er o
f
t
r
ad
es
Average open interest
Number of trades
Tesouro Direto
Service
An example of a product which is in full
expansion in the BOVESPA Segment,
the
Tesouro Direto
service is an
Internet-based system for the purchase
of government bonds by individual
investors that was launched by the
Brazilian Treasury Department and is
operated by the Company. In the
476
800
1,048
1,394
2,283
32,647
49,498
73,198
102,090
144,809
0
500
1,000
1,500
2,000
2,500
2004
2005
2006
2007
2008
V
a
l
ue
of
b
ond
s
i
n s
t
oc
k
(
B
R
L m
i
l
l
i
on)
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
N
u
m
b
er
o
f
clie
n
t
s
Value of bonds in stock
Number of Clients
background image
.11.
2004-2008 period, the stock of government bonds in the
Tesouro Direto
service had a
compounded average growth rate of 36.8%. The number of investors increased 34.7%
per annum on average.
Foreign Investment
The flow of foreign investment into the Brazilian stock market in 2008 was negative at
BRL4.8 billion, which is the net balance between the IPO purchases made by foreign
investors in the amount of BRL19.8 billion and the outflow of investments from
BM&FBOVESPA in the amount of BRL24.6 billion. This retraction was mostly verified in
the second half of the year, with July and October registering strong outflows, mirroring
the international crisis and the nonexistence of primary and secondary offerings.
(8,000)
(6,000)
(4,000)
(2,000)
(8,000)
(6,000)
(4,000)
(2,000)
0
2,000
4,000
6,000
8,000
Jan
Fev
Mar
Abr
Mai
Jun Jul
Ago
Set
Out
Nov Dez
Fl
ow
(
B
R
L
m
i
l
l
i
on)
0
2,000
4,000
6,000
8,000
C
u
m
u
la
t
iv
e
f
lo
w
(
B
R
L

m
ill
io
n
)
Monthly foreign investment flow
Cumulative foreign investment flow
OTHER HIGHLIGHTS
Integration
There is no doubt that the most important corporate action for the Company in 2008 was
the integration between BM&F SA and Bovespa Holding SA. This process has positioned
BM&FBOVESPA among the major world players in the sector, by resulting in one of the
most complete and diversified stock and derivatives exchanges which is able to meet the
growing challenges faced by the world capital and financial markets.
Their integration was initiated on May 8, 2008, with the relevant BM&F SA and Bovespa
Holding SA shareholders' meetings being held, and formally concluded on November 28,
2008, with the shareholders' meeting that approved the merger of the São Paulo Stock
Exchange (former Bovespa Holding SA) and the Brazilian Clearing and Depository
Corporation (CBLC) into BM&FBOVESPA being held.
The BVMF3 ticker was first traded on August 20, 2008, after the BM&FBOVESPA
registration as a publicly-held company was approved by the Brazilian Securities and
Exchange Commission (CVM) on August 11, 2008. The exchange ratio for each BOVH3
background image
.12.
(former Bovespa Holding SA) share was 1.4248 BVMF3 shares. The exchange ratio for
each BMEF3 (former BM&F SA) share was 1 BVMF3 share.
As a result of this integration, the Company's corporate structure has been simplified, as
follows:
Synergies
In May 2008, following the announcement of the integration of BM&F and
BOVESPA, we started capturing synergies from the integration process through
elimination of common activities. At that time, we established a 25% cost savings
target, which we intended to achieve within a three-year period by combining the
operations of what we now call the BM&F and the Bovespa segments, based on
the starting point provided by the operating expenses incurred in 2007 by the two
then independent companies, as adjusted for inflation.
In the course of 2008, a multitude of initiatives were taken with a view to attaining
that target. The most significant effect of the actions we implemented since then
was a reduction in personnel to 1,468 from 1,826 previously, as comprising both
employees and third party providers, with 358 employee terminations.
Another important effect of our capturing synergies was a reduction in data
processing expenses. In July 2008, we completed the migration to a low platform
trading environment in the Bovespa segment, from the previous mainframe
platform, which permitted terminating service agreements for software and
hardware maintenance related to the mainframe platform, and represented
savings of approximately R$2 million by year.
In addition, about 25 other service agreements were renegotiated and/or
terminated, representing additional annualized savings of about R$3 million in
2008.
Synergies were also captured in the marketing and communications department,
including through selective utilization of ongoing marketing programs, a 50%
reduction in compulsory releases and publications.
In addition, certain administrative actions led to significant synergies being
captured, including the renegotiation on more favorable conditions of cleaning,
Brazilian
Commodities
Exchange
BM&FBOVESPA
USA
Settlement
Bank
100%
100%
50%
99%
BVRJ
86%
BSM
1 quota
background image
.13.
building maintenance and security service agreements, representing additional
annualized savings of about R$3 million.
These management initiatives in 2008 accounted for an overall R$53 million
reduction in annualized operating expenses.
CME Group Agreement
On February 26, 2008, the former BM&F SA shareholders approved the agreement
signed between BM&F SA and the CME Group, which controls the Chicago Mercantile
Exchange, the Chicago Board of Trade and the New York Mercantile Exchange (whose
merger was subsequent to the date of BM&F SA shareholders' extraordinary meeting).
Under the agreement, the Company and the CME Group will work together to develop the
derivatives market and establish a partnership relation with the purpose of enhancing their
respective services and products.
The highlight of this agreement is the order routing between the two markets through the
GLOBEX electronic trading platform, which started in early September 2008 with the
North-South routing, after Commodity Futures Trading Commission (CFTC) authorization.
As a result, foreign investors connected to the GLOBEX now receive the market data feed
for the contracts traded in the Global Trading System (or GTS, the trading platform used
by the BM&F segment) and can route orders into this system.
In continuation to order routing through the GLOBEX, the South-North part of the project
was inaugurated on February 9, 2009, after CVM authorization, enabling clients
connected to the GTS to send orders to the GLOBEX.
Through the agreement, BM&FBOVESPA became the holder of a 1.7% stake in the CME
Group, and the CME Group became the holder a 4.9% stake in the Company.
Electronic Trading System Evolution
In 2008 the BM&FBOVESPA electronic trading systems underwent several changes and
completed an important stage to insert its markets in the world financial scene and
strengthen its leadership in Latin America. Through these changes the Company intends
to provide improved conditions for access, market data feed distribution and connection,
in addition to enhancing order routing and trading speed.
These changes have also placed BM&FBOVESPA in a better position to move toward
electronification, stepping into the frontier of expertise in trading, clearing and settlement
systems, in addition to providing access to algorithmic traders, who use computer
programs for entering trading orders and are important liquidity providers in the more
developed markets.
BM&F Segment
The electronic trading platform used in the BM&F Segment, the GTS underwent profound
modifications throughout the year with an emphasis on: The complete replacement of the
older software version for a new open, proprietary version; the launch of the spot US
Dollar in the system; and the adoption of the Financial Information eXchange (FIX)
Protocol for the exchange of messages.
background image
.14.
These developments paved the way for an important trading model change, which was
the implementation of DMA. DMA has allowed the Company to enhance its market data
feed distribution capacity and to improve access conditions to its markets. The first DMA
module was delivered on August 29, 2008. It has been increasingly utilized by the
connected clients since then, in addition to showing a growth in traded instruments,
trading and financial volumes.
Furthermore, because DMA provides trade execution with greater agility through the total
electronification of trade flows, its introduction has made connection with the CME
GLOBEX possible, as previously mentioned. It has also given access to algorithmic
traders, who share a significant portion of international market volumes, but have only just
begun their activities in the Brazilian derivatives market.
In December 2008, BM&FBOVESPA green lighted order routing via DMA providers, which
are companies that usually connect to international investors through large data
transmission networks.
BOVESPA Segment
The processing capacity of the
Mega Bolsa
system has increased from 400,000 to
770,000 trades per day. Moreover, the new
Mega Bolsa
trading station - which was
developed by the BM&FBOVESPA team and will replace the GLWIN terminals (trading
interfaces of French origin) still used by some of the brokers by the end of the 1Q2009,
was delivered to the market.
Still concerning trade processing capacity, BM&FBOVESPA will double in 2009 that of the
Mega Bolsa
system from the current 770,000 to 1,500,000 trades per day, for both the
equity and equity derivatives markets, in addition to reducing trade execution latency.
New functionalities to support trading of other floating-rate securities, such as Exchange
Traded Funds (ETFs), a securities lending platform and improvements in the means of
access to the FIX Protocol were added to the system.
Common Developments
After integration, the Company now counts on a standout Data Center infrastructure,
thereby creating the conditions for it to evolve the provision of access to trading systems.
background image
.15.
Jul 8
Therefore, and with a view to attracting algorithm traders, the Company is working on a
project involving co-location, which represents an access mode that will permit the
physical connection of the systems of these participants with Company servers, thus
reducing trade execution latency by 90%. This technology is of fundamental importance
for high frequency participants to eliminate the time consumed in long distance networks,
as their trade models reside closer to matching engines.
For 2009 investments in technology project development are estimated at BRL116 million,
with an emphasis on: A new contingency site for BRL26.5 million; the
Mega Bolsa
system
enhancement and capacity expansion for BRL18.5 million; a new SINACOR back-office
system for BRL11.3 million; the financial community communications network refinement
for BRL 6 million; a system for the standardization of participant registration and data
routing for BRL7.8 million; and the structure of an area to be responsible for software
development for BRL5 million.
The other projects will address the areas of technological infrastructure and software
development infrastructure, and are estimated at BRL40.5 million.
Pricing Policy
The Company introduced sensible changes to its fee structure for both BM&F and
BOVESPA Segments and other activity lines. The principal motivation behind this price
revision was the implementation of a more efficient charge for each product and service,
in order to achieve a fairer and more diversified revenue base which could stimulate
trading and improve liquidity. For this purpose the Company sought to reduce cross
subsidies (a situation whereby transaction revenues subsidize other services rendered by
the Company), especially in the BOVESPA Segment, and equalize its service fees with
those charged by international exchanges.
1Q08
2Q08
3Q08
4Q08
BM&F
Segment
Bovespa
Segment
May 10 - New GTS
(end of migration
process)
- GTS
Dec 3
(communication
interface via FIX
Protocol)
Jul 14 - US Dollar
on GTS
Aug 29 -
Trading via
DMA
Sep 30 - Order
routing system
with CME
(implementation)
- Order routing
via DMA provider
(green light)
Dec 13 - GTS > Globex
(1
st
mock trading
session to test order
routing system)
Jun 5 ­ Mega Bolsa
system (new 837
version & processing
capacity expanded to
770,000 trades per
day)
Dec 6 ­ Mega Bolsa
trading station
(end of migration)
Jun 10 ­ Automated
connection
enhancements
background image
.16.
With its new policy BM&FBOVESPA intends to balance its sources of revenues by making
its products more competitive for participants and more adequate to market reality,
besides augmenting the portion of its revenues that is not related to transactions, such as
depository services, market data, and technological access package for both market and
listing participants.
Among the major changes made to its pricing policy, the following have been singled out
and highlighted below:
BM&F Segment
The pricing policy change for the BM&F Segment included the following stages:
1. On August 25, 2008, the 5% across the board discount policy and the 25% discount
for participants that held at least 10,000 BMEF3 shares was discontinued;
2. Between November 17, 2008, and February 13, 2009, a fixed-discount policy was in
place to neutralize the effects of the increase in the average rate per contract verified
after the discounts were suspended in August 2008. Also, in November 2008
alterations were introduced to the way fees were charged for some contracts, such as
stock index futures, whose fees became fixed;
3. On February 16, 2009, a new pricing policy was introduced with progressive discount
ranges by trading volume, which follow the evolution of the derivatives contracts
traded on the BM&F Segment, with a view to boosting liquidity.
BOVESPA Segment
A new pricing policy will be introduced on April 6, 2009, which includes the following:
· Adoption of a variable charge with decreasing percent ranges, in relation to the
amount of securities held in custody, applicable to all accounts with a portfolio value
over BRL300,000 (except for nonresident investors);
· Reduction in the cash stock market settlement fee for both individuals and legal
entities;
· A 5 basis point rebate to the fees paid by borrowers on the securities lending program
to be transferred to lenders (except for nonresident lenders).
Furthermore, studies are being conducted to implement special charges to depositary
receipt programs of Brazilian issuers.
Other Activities
Market data: In 2008 the Company published a new market data price list, in order to
make the BM&F and BOVESPA Segment policies compatible and equalize them to the
international standards, highlighting the extinction of the gradual charges that existed in
both policies. The resulting alterations will become effective as of April 1, 2009.
The main modifications to the listing policy are:
· Adjustment to the minimum annual fee for issuers on the exchange-traded and
organized OTC markets from BRL9,000 to BRL35,000;
background image
.17.
· Suspension of the annual fee exemption for investment funds composed of
receivables (or FIDC in their Portuguese acronym) and for ETFs/FIDC;
· Creation of the analysis fee for registration at BRL7,700 for companies benefitting
from fiscal incentives and investment funds;
· Suspension of the annual fee exemption for issuers of securities other than equities
whenever said securities amount up to BRL170 million.
Access package: In 2008 BM&FBOVESPA also launched a new access mode which
included the conditions and requirements for current and new trading and settlement
participants in the BM&F and BOVESPA Segments. The aim was to provide participants
with greater flexibility, thereby allowing them to choose the focus of their operation and
specialization while introducing the standardization of both segments' requirements,
where applicable.
New Products
BM&F Segment
· CDS futures: Based on senior debt bonds issued by the Federative Republic of Brazil
expiring in three, five and seven years, they were introduced in May 2008.
· Spot US Dollar: The Company began offering spot US Dollar transactions in the GTS
in July 2008.
· Corn futures and options: Launched in September 2008, simultaneously trading the
cash settled corn futures and the corn price basis futures allow for basis risk reduction.
· Market making: Initiated at 2008 year-end, the market maker program has the purpose
to increase liquidity.
· Futures-style options on US Dollar: This contract has the purpose to offset options risk
with the futures market, which may result in a reduction in the total collateral amount
pledged by some investors, and subsequently in the transaction cost.
· Real/Euro futures: Launched jointly with the CME on February 6, 2009, the Real/Euro
futures contract facilitates the access of Brazilian and European companies with
branches in Brazil to the protection mechanisms for currency variation, in addition to
significantly contributing to reduce the Brazilian FX market volatility. Trading a
Real/Japanese Yen futures contract will follow suit.
BOVESPA Segment
·
Bovespa Mais
segment: First listed in February 2008, this special OTC market
segment is addressed to the companies, specifically small and medium-sized, that
seek a progressive access to the capital markets.
· New indices: Two new equity indices were introduced at the end of August 2008: the
MidLarge Cap and the SmallCap; whereas the Consumption Index (ICON) and the
Real Estate Index (IMOB) were first calculated and published in January 2009.
· New ETFs: In a joint effort with the Barclays Bank SA, three new ETFs, the iShares
Ibovespa, the iShares MidLarge Cap and the iShares SmallCap, started trading in
December 2008.
background image
.18.
Profit Distribution and Share Repurchase Program
In 2008 the BM&FBOVESPA Board of Directors resolved to pay BRL431,598,419.45 in
dividends and interest on equity (IOE), with BRL292,222,000.00 paid in 2008 and the
remaining BRL139,376,419.45 to be paid by April 15, 2009.
In addition, and before their integration, in March BM&F SA decided to pay IOE of
BRL20,539,417.12, whereas in April Bovespa Holding SA decided to pay IOE of
BRL23,443,737.10, to be attributed to the mandatory dividends.
The table below details the interest on equity and dividends approved for 2008:
Company Type
of
event
Date Fiscal
year
Amount
(BRL
Gross
value per
share
(BRL)
Net value
per share
(BRL)
Shareholders'
position
(base date)
Payment
date
BM&F SA
IOE
BDM
Mar 25,
2008
2008
20,539,417.12
0.02032024
0.01727221 Mar 28, 2008
Apr 15,
2008
Bovespa Holding
SA
IOE
BDM
Apr 17,
2008
2008
23,443,737.10
0.03310
0.028135 Apr 22, 2008
Apr 30,
2008
BM&FBOVESPA
IOE
BDM
Aug 14,
2008
2008
149,203,000.00
0.072995
0.0620457 Aug 25, 2008 Sep 2, 2008
Dividends
BDM
14/08/08
2008
143,019,000.00
0.0699696
0.0699696 Aug 25, 2008 Sep 2, 2008
IOE
BDM
Dec 19,
2008
2008
139.376.419,45
0.069307
0.058911 Dec 30, 2008
By Apr 15,
2009
On September 24, 2008, the BM&FBOVESPA Board of Directors approved the
implementation of a share repurchase program allowing the Company to acquire up to
71,266,281 shares of its issuance, which then represented approximately 3.5% of its free
float.
By the end of February 2009, the Company had already repurchased 45,686,000 shares,
at the average price of BRL5.85, according to the following table:
Month
Quantity of shares
Average price (BRL
Total (BRL)
September 2008
757,800
7.92
6,001,650.00
October 2008
5,183,400
7.52
38,983,565.10
November 2008
9,456,300
4.76
45,004,740.00
December 2008
18,793,700
5.44
102,207,863.11
2008 total
34,191,200
5.62
192,197,818.21
January 2009
9,288,300
6.46
60,031,758.37
February 2009
2,206,500
6.79
14,992,125.06
Total 45,686,000
5.85
267,221,701.64
By the end of February of 2009, 1,288,500 shares had been used to meet the former
BM&F SA's Stock Option Plan, which was taken over by the Company in conformity with
the resolutions adopted by the Shareholders' Extraordinary General Meeting held on May
8, 2008.
background image
.19.
Share Performance (BVMF3)
The BM&FBOVESPA share
was first traded on August 20, 2008, with ticker BVMF3. In
the 4Q2008, it was already the seventh most actively share traded on the Brazilian
market, representing 3.4% of the total traded on the round lot cash market. Considering
the initial trade date, the annual turnover was 267%, with an average 21.9 million shares
traded daily.
BM&FBOVESPA Share Performance (BVMF3)
Month
Daily average
Average price
Month-end price
Trades Traded
shares
Volume
(BRL million)
Aug 2008¹
4,955 11,303,800 137.0
11.76 12.44
Sep 2008
10,211 24,173,182 220.2
9.38
8.50
Oct 2008
11,493 26,757,335 166.6
6.60
5.79
Nov 2008
9,137 20,001,621 162.7
5.16
5.15
Dec 2008
8,458 21,735,060 163.7
5.59
6.02
¹ As of August 20.
Additionally, the BM&FBOVESPA share was included in the portfolios of the following
equity indices: Bovespa Index (Ibovespa); Brazil Index-50 (IBrX-50); Brazil Index (IBrX);
Special Corporate Governance Stock Index (IGC); Special Tag Along Stock Index (ITAG);
and the MidLarge Cap Index (MLCX) launched on August 29, 2008.
ECONOMIC AND FINANCIAL PERFORMANCE
Net Income
In 2008 BM&FBOVESPA posted a net income of BRL645.6 million. It should be noted that
nonrecurring expenses reached BRL129.6 million, regarding mainly the integration
process between BM&F SA and Bovespa Holding SA. The expenses related to the
proportional amortization of goodwill resulting from the incorporation of the Bovespa
Holding SA shares, in the amount of BRL324.4 million, were apportioned to income.
The operating margin reached 54.5% and the EBITDA margin was 56.7%, whereas the
net margin was 40.3%.
Revenues and Expenses
The consolidated gross revenue totaled BRL1,783.4 million, to which the BOVESPA
Trading and Settlement System contributed with BRL1,050.8 million, or 58.9%, and the
BM&F Trading and Settlement System contributed with BRL634.2 million, or 35.6%.
Other operating revenues generated BRL98.3 million, which included market data vending
in the amount of BRL43.4 million, and dividends from equity interests held by the
Company in the amount of BRL20.6 million.
background image
.20.
The highlights were the combined revenues from the BOVESPA Trading and Settlement
System, which reached BRL894.4 million, or 50.2% of the total, and the BM&F derivatives
trading segment, which reached BRL622.9 million, or 34.9% of the total. Therefore, 85.1%
of the revenues derived from trading and settlement on the equity and derivatives
markets. Revenues were subject to overall taxes of BRL181.3 million, or approximately
10.2% of the gross operating revenues.
The consolidated operating expenses totaled BRL723.7 million, which suffered the impact
of the integration process between BM&F SA and Bovespa Holding SA, in the amount of
BRL129.6 million. Personnel, data processing and third-party services accounted
respectively for 59.8% of the total expenses.
Financial Income
The financial income was BRL306 million in 2008, arising from revenues of BRL364.9
million and expenses of BRL58.9 million. Financial revenues resulted mainly from
remuneration of the cash managed by BM&FBOVESPA, which reached BRL2.4 billion on
December 31, 2008, whereas financial expenses comprise the following items:
· Tax on financial operations (IOF) and banking interest applicable to the loan
contracted by the former BM&F SA, in order to pay a special dividend to the
shareholders of the former Bovespa Holding SA as part of their integration process;
· Foreign exchange variation applicable to bank accounts managed abroad;
· Expenses involving settlement and custody services utilized by the Settlement Bank;
Income Tax, Social Contribution and Amortization of Goodwill
On the year ended December 31, 2008, income before taxes was BRL859.9 million. This
amount resulted in the collection of BRL331.9 million as income tax and social
contribution, and also enabled the creation of deferred tax credits, totaling BRL119.1
million, arising from:
· The amortization of goodwill resulting from the incorporation of the Bovespa Holding
SA shares by BM&FBOVESPA during the period from May through November 2008;
· The utilization of the Bovespa Holding SA tax loss, up to the date of its merger into
BM&FBOVESPA;
· The temporary additions to and exclusions from the taxable income calculation.
In view of the above-referred amounts, the actual tax rate for 2008 was 24.7%.
Assets
In 2008 BM&FBOVESPA total assets in the consolidated balance sheet reached
BRL20,430.1 million, with BRL2,414.2 million corresponding to cash and financial
investments, or 11.8%.
Permanent assets totaled BRL17,655.8 million, with BRL1,318.3 million in investments,
BRL247.8 million in fixed assets and BRL16,089.6 million in intangible assets.
background image
.21.
Liabilities and Shareholders' Equity
In the total liabilities account, 5.3% were represented by current liabilities, which
amounted to BRL R$1,075.7 million basically referring to cash collateral posted by
customers (BRL586 million) and provision for dividends and interest on equity payable
(BRL195 million).
Long-term liabilities, which basically referred to provisions for contingencies, totaled
BRL46.7 million on December 31, 2008, or 0.2% of the total liabilities.
On December 31, 2008, shareholders' equity totaled BRL19,291.7 million. This amount
included the capital of BRL2,540.2 million (12.4%), the capital reserve of BRL16,606.9
million (81.3%), the revaluation reserve of BRL24.1 million (0.1%), the bylaws reserves of
BRL302.9 million (1.5%), the legal reserve of BRL3.5 million (0.02%), and finally the
treasury shares' reducer account, as the result of the share repurchase program of
BRL185.9 million.
SUBSIDIARIES
Rio de Janeiro Stock Exchange
The Rio de Janeiro Stock Exchange (BVRJ) is an inactive stock exchange. It has signed a
memorandum of understanding with the Rio de Janeiro State Government, aiming at
suggesting alternatives for the strengthening of Rio's financial sector.
Brazilian Commodities Exchange
Through the Brazilian Commodities Exchange, BM&FBOVESPA enables the
commercialization of agricultural products and offers services for the public sector by
means of its electronic auction system and for the private sector by means of the private
system for the acquisition of goods and services.
Performing a key role in the auctions of the National Food Supply Company (CONAB), the
Brazilian Commodities Exchange registered a financial volume of BRL1.038 billion in this
segment, with 4.1 metric tons of commodities traded. The transactions carried out in the
coffee auctions held by the Ministry of Agriculture amounted to BRL33 million.
Transactions involving physical products and the registration of OTC contracts totaled
BRL2.77 billion.
Settlement Bank
With the purpose of addressing the needs of its clients and to the specific requirements of
its markets, BM&FBOVESPA provides the holders of access rights and its
Clearinghouses, through its wholly-owned subsidiary
Banco BM&F de Serviços de
Liquidação e Custódia SA
, with a centralized custody service for the assets pledged as
collateral for transactions.
BM&F USA Inc.
background image
.22.
BM&F USA Inc., a wholly-owned subsidiary located in the city of New York (USA), also
with a representative office in Shanghai (China), represents BM&FBOVESPA abroad
through relationships with other exchanges and regulatory agents, and assists in the
procurement of new clients.
EXTERNAL AUDIT
Under the terms of CVM Instruction 381, of January 14, 2003, the Company and its
subsidiaries have retained PricewaterhouseCoopers to provide auditing for their financial
statements.
The policy that governs the engagement of external audit services by the Company and
its subsidiaries is based on internationally accepted accounting principles which preserve
service independence and include the following practices: (i) The auditors cannot hold
executive and managerial functions at the Company and its subsidiaries; (ii) the auditors
cannot perform operating activities at the Company and its subsidiaries that could
compromise the auditing function; and (III) the auditors must be impartial, in order to avoid
conflicts of interest and loss of independence, and objectivity in their opinions and reports
about the financial statements.
In 2008 the independent auditors and related parties provided external audit-unrelated
services that reached more than 5% of the total fees paid to external auditing.
In order to meet the provisions of CVM Instruction 381, the other services rendered and
the dates they were contracted for are listed below:
· June 19, 2008, services for the evaluation of the service levels contracted from
Primesys/RCCF. The contracted amount was BRL215,600 (16.5% in relation to the
external audit contract).
· July 2008, review services for the business and operational model of the Futures
Commission Merchant project. This contract was valued at BRL845,300, (64.9% in
relation to the external audit contract). The Company paid BRL754,500 In 2008
(57.9% in relation to the external audit contract).
The operations policy that guides the engagement of external audit-unrelated services to
be rendered by the independent auditors is based on applicable regulations and
internationally accepted principles which preserve service independence. These principles
include the following practices: (a) The auditors cannot audit their own work; (b) the
auditors cannot hold managerial functions at their client: and (c) the auditors cannot
promote their client's interests.
Independent Auditors' Justification ­ PricewaterhouseCoopers
The provision of other professional services which do not related to external audit, as
described above, does neither affect the independence nor the objectivity in the external
audit examinations that were carried out. The operations policy governing the provision of
external audit-unrelated services to the Company is based on the principles of
independence of the Independent Auditors, which have all been met during the provision
of said services.
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.23.
HUMAN RESOURCES
Since the Company's core business relies mainly on people, it regards the maintenance of
a team excellence as a strategic priority. Aiming to ensure the preservation of long-term
competitiveness, the Company is continually striving to promote the professional and
personal growth of its staff members. At the end of 2008, as a result of the integration
between the former BM&F SA and Bovespa Holding SA, the Company staff consisted of
1,168 employees and 79 trainees.
The Company seeks to adequately compensate the skills and responsibilities of its
professionals by adopting a compensation policy that is compatible with the marketplace
and monitored through salary surveys conducted with the support of specialized
consultants. The compensation policy has two staff recognition mechanisms: A short-term
mechanism through a bonus program and a long-term mechanism through a stock option
program. In 2008 the Company granted both a special short-term bonus, due to the
companies' integration, and a stock option program, which altogether included about 350
people.
The Company also provides all of its employees with medical and dental care, life
insurance, and a private pension plan. It also maintains the Occupational Health and
Medical Control Program, through which clinical, occupational and speech-language
pathology services are provided and vaccination campaigns are conducted for the
prevention of influenza, nutritional deficiencies, postural problems, high cholesterol, high
blood pressure, diabetes and obesity, among others.
Together with other entities, the Company sponsors the MERCAPREV private pension
fund, which is a defined contribution retirement plan. The total contributions made to this
fund reached BRL2.8 million in 2008.
Also in 2008 the Company made an investment of BRL153,027.72 in staff training. In
addition, it maintains a regular intern program that enables student interns to experience
day-to-day market activities and receive additional university course credits. In 2008 a
total of 165 students took part in this program at the Company, with 79 active student
interns at year-end.
In order to further improve the qualification of the Brazilian capital market professionals,
the Company also offers continual training and recycling programs for brokerage house
professionals. In turn, the Company's education incentive program, which provides staff
members with financial assistance to help fund their academic and professional
development, benefitted 106 graduate level employees and 72 postgraduate level
employees. The number of participants enrolled in English and Spanish language courses
reached 166 employees.
RISK MANAGEMENT
BM&FBOVESPA manages the clearinghouses from former BM&F SA and Bovespa
Holding SA (former CBLC): the Derivatives, Foreign Exchange, Securities, and Corporate
Floating-Rate and Fixed-Income Clearinghouses. These clearinghouses, which are
considered systematically important by the Central Bank of Brazil, act as central
counterparty (CCP) for the derivatives market (futures, forwards, options and swaps), the
foreign exchange market (spot US dollar), the federal government bond market (spot and
forward transactions, repos and securities loans), and the corporate floating-rate (equities,
equity derivatives) and fixed-income markets.
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.24.
By acting as the buyer to all sellers and the seller to all buyers, the major function of a
CCP is assume the counterparty risk and ensure proper settlement for all trades. To this
end, the principal activities of a CCP include calculation, control and mitigation of the
credit risk posed by the participants that utilize its settlement systems. Should a
participant fail to make the payments due or to deliver commodities, assets or securities,
the CCP will resort to its safeguard mechanisms, which may include BM&FBOVESPA's
own equity eventually.
In order to mitigate the assumed risks, each BM&FBOVESPA Clearinghouse has its own
risk management system and safeguard structure. The safeguard structure of a
Clearinghouse represents the set of resources and mechanisms that it can utilize to cover
losses related to the settlement failure of one or more participants.
Risk management occurs on each market through margin calls, which are required from
all participants, with each Clearinghouse establishing the stress scenarios applicable to
the risk it has assumed, as defined by the BM&FBOVESPA Risk Committee.
Risk assessment occurs on a daily basis. The derivatives market segment also counts on
the intraday risk system, which is capable of measuring the updated risk exposure of its
participants several times during the day, by adding their new transactions to their
portfolios.
Due to the intradaily frequency of risk assessment, the Derivatives Clearinghouse is able
to require agilely additional margin call from its participants, which contributes in a
decisive manner to the mitigation of its credit risk.
The table below shows the collateral position of participants in each Clearinghouse. The
strong share of federal government bonds should be noted at the two major
clearinghouses (Derivatives and Corporate Floating-Rate and Fixed-Income).
Base date: December 31, 2008
Clearinghouse
Pledged Collateral
BRL billion
Used Collateral
BRL billion
Derivatives 99.0
79.6
Government bonds
89.8
75.6
Letters of credit
3.7
1.5
Other collateral*
5.5
2.5
Corporate Floating-Rate and
Fixed- Income
21.5 10.5
Government bonds
10.2
5.7
Equities
9.1
3.4
Other collateral*
2.2
1.4
Foreign Exchange
3.7
1.0
Securities 1.4
0.1
BRL TOTAL
125.6
91.2
* Collateral posted in equities, private banking securities, gold, cash and fund shares.
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.25.
SOCIAL AND ENVIRONMENTAL RESPONSIBILITY
BM&FBOVESPA Institute for Social and Environmental Responsibility
The Institute's mission is to promote democracy and private investment in social and
environmental responsibility projects. This is done through programs and projects linked
to education, culture, social services and environment preservation.
Special attention is addressed to education, particularly child and youth education. This is
the best way to foster the necessary social and economic changes that are needed for the
construction of a society with greater respect for human rights and better living conditions
for all people.
In this context the Institute's initiatives aim to:
· Reinforce and complement formal education;
· Provide young people with professional skills;
· Spread democratic values;
· Preserve and recuperate the environment;
· Promote sports practice as an instrument for human development;
· Create ways for stimulating companies and the civil society to participate in these
activities.
The "Grade 10 Human Rights Program," a cultural contest launched to celebrate the 60
years of the Universal Declaration of Human Rights, is among the 2008 highlights. Geared
to junior and high school students from the State Government educational system, the
program involved the elaboration of literary works (short stories and poetry) and plastic
artwork based on the human rights concept.
A fund raising from individuals and companies for NGO projects listed in the Social and
Environmental Exchange (BVSA) was also noteworthy. The total funds raised, BRL2.2
million, were directed to several social and environmental projects throughout Brazil.
BVSA, a program which is recognized by the United Nations as a standard to be
implemented in other countries, brings together investors interested in contributing to the
improvement of the country's educational system and environment.
APBM&F Job Training Association
The APBM&F job training association is committed to promoting social inclusion through
initiatives that not only address immediate needs, but even more importantly ensure a
better future for thousands of youngsters. APBM&F offers three programs,
Employment
Capacitation
,
Do-it-All
and
Beauty Parlor
. In 2008 more than 400 students took part in
these programs.
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.26.
Political campaign donations
Political campaign donations in 2008 amounted to R$ 2.6 million and were aimed to the
financing of local electoral campaigns related to the election polls of October 2008. These
campaign contributions were made in accordance with applicable electoral legislation.
INSTITUTE OF EDUCATION
Responsible for all the training and qualification actions involving the BM&FBOVESPA
markets, the Institute of Education provides to the general public, as well as the
professionals from the financial market and regulatory bodies, with a high standard of
excellence in all of its introductory, specialization and postgraduate courses, with an
average annual enrollment of 2,800 students.
The library for the Institute of Education has more than 5,000 titles in its collection. The
Market Information Center provides researchers, teachers and students with free research
services.
BM&FBOVESPA also sponsors classrooms in several educational institutions, in order to
approximate the academic community to the capital and derivatives markets. Highlighted
here from among those institutions are: the Getúlio Vargas Foundation (FGV), the São
Paulo University (USP), the Armando Álvares Penteado Foundation (FAAP), the
Campinas University (FACAMP), IBMEC, and the Pontifical Catholic University (PUC).
The Institute of Education, which is the main center for the dissemination of derivatives
markets in Latin America, enrolled 4,000 students for its classrooms and online classes in
2008. It also launched new courses covering the principal activities currently taking place
throughout its markets. In 2008, 119 students graduated from the MBA in Derivatives and
MBA in Pricing and Risk courses. Both programs are recognized by the Brazilian Ministry
of Education.
ATHLETICS CLUB
O BM&FBOVESPA Athletics Club, which is the major athletics club in Brazil, consists of
100 athletes for the different track-and-field sports (sprints, middle and long distance
races, jumping
events and throwing events) and a technical training team. Some of the
country's top athletes belong to the Club, such as Marilson Gomes dos Santos, Fabiana
Murer, Vanderlei Cordeiro de Lima, Carlos Chinin, Tânia Spindler, and Fabiana Cristine.
Among the Club's priorities are the continual inclusion and development of promising
young Brazilian athletics
Support for track-and-field was initiated in 1988, when the Company decided to sponsor
this sport through the
Olympic Gold
Award
, which was created to honor and encourage
Brazilian medal winners in the Olympic Games through the presentation of gold bars.
The Athletics Club was created by the Company in 2002. Track-and-field was chosen
because it is a sports modality which represents an opportunity of social and economic
development for many underprivileged youngsters. It also remains the area of sports
which receives the least amount of support from the Brazilian private and public sectors.
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.27.
Among the athletes' main achievements in 2008 long jumper Maurren Maggi became first-
ever Brazilian women's athletics Olympic gold medalist in Beijing; long distance runner
Marílson Gomes dos Santos became a two-time winner of the New York City Marathon;
and the BM&FBOVESPA Athletics Club became a seven-time winner of the Brazil
Athletics Trophy tournament.
In order to be able to compete with the world's best athletes, the BM&FBOVESPA
Athletics Club team members receive a monthly allowance defined by the Special Club
Committee, transportation and a complete uniform.
In 2008 the Club's general expenses, which include expenses with the athletes, the
technical committee and administrative expenses, reached BRL3.3 million--BRL3.1
million in 2007. The Club counts on its own budget and is financed by the funds allocated
in 2007 prior to the IPO of the former BM&F.
MARKET POPULARIZATION AND EDUCATIONAL PROGRAMS
BM&FBOVESPA SA - Securities, Commodities and Futures Exchange develops various
promotional and educational programs to popularize its markets and explain its role in
trading products like equities, funds and futures contracts. In 2008 the total number of
individual visitors was 78,305 and the total number of service consultations reached
21,683.
Among the main dissemination programs the highlights were:
·
BM&FBOVESPA Where You Are project
: This initiative was developed in 2002 with
the purpose of providing the public with information about the exchange-traded
markets. This program, which includes visits to universities and factories, as well as
the participation in fairs, expositions and other places where a large number of people
converge, including summer beaches, has already reached about half a million people
throughout Brazil in over 5,000 events, originating 3,000 investment clubs--800 in
2008;
·
Women in Action
: This program focuses on familiarizing women with capital market
concepts. The program has already been attended by over 30,000 women in 13
Brazilian states. In 2008 nine courses were held for 235 participants;
·
BM&FBOVESPA Where You Are project--Agribusiness
: This is the most recent
module of the popularization program, through which visits are made to the main
Brazilian agribusiness cities to spread information about the Company markets. In
2008 the basic concepts of the derivatives, futures and equity markets were explained
to over 2,000 participants through ten events, and questions were answered to over
2,800 people through the
Exchangemobile
program.
In terms of educational programs, the Company has developed several activities to inform
and educate potential investors. Giving priority to children, teenagers and college
students, these activities included monitored visits to the BM&FBOVESPA Cultural Space,
regional lectures, student contests and partnerships with educational institutions.
The interest in knowing the equity and derivatives markets by Brazilian individuals
continued to rise in 2008. Over 400,000 people have participated in the courses, lectures
and monitored visits provided by BM&FBOVESPA.
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.28.
There are other programs that foster interest in the Company markets, including the
following:
·
Educar
: This is a financial education program that promotes courses on how to
manage one's personal finances, being addressed to different age groups. Since the
program was launched in 2005, it has been attended by over 90,000 people--30,000
in 2008;
·
BM&FBOVESPA Challenge
: This program was created in 2008 to disseminate market
and financial education concepts among junior and high school students from private
schools. It has been attended by 6,659 participants since 2006;
·
Folhainvest Simulator
: This is an online simulator that was developed ten years ago in
partnership with the newspaper
Folha de S. Paulo.
It provides participants with the
opportunity of experiencing practical market situations by managing a virtual equity
portfolio. In another successful year 303,000 participated in the 2008 program;
·
BM&FBOVESPA Simulator
: This is a system that allows for trading coffee, live cattle,
soybean, US Dollar and Ibovespa mini contracts. According to their profiles,
participants select the market where they wish to trade. The BM&FBOVESPA
Simulator had over 33,000 users at the end of 2008.
MARKET OMBUDSMAN
Implemented in April of 2001, the major purpose of the Market Ombudsman service is to
address investor demands relating to the trading, settlement and custody processes,
which may generate a conflict between investors and market agents accredited by the
Company, for which it will seek a consensual resolution. The Market Ombudsman service
is very relevant in view of the increasing popularization of the stock market in Brazil.
Technological innovations, such as the Home Broker system services, have paved the
way for the democratic access to the stock market. At the same time, beginners may have
questions have about the trading, custody and settlement processes of the transactions
performed at the Company. If these questions are not properly addressed, they may
generate conflicts with market intermediaries. These conflicts may range from any failure
and/or irregularity in an order execution or settlement to an investor's simple
misinformation about the important aspects that are involved in a trade. In 2008 the
Market Ombudsman service received 3,365 inquiries, up 23.3% from 2007.
BM&FBOVESPA MARKET SUPERVISION (BSM)
BSM is a not-for-profit association which is responsible for reviewing, supervising and
monitoring the transactions and activities of trading participants and agents that provide
clearing/settlement and/or custody services and trade on the exchange-traded and OTC
markets managed by Company.
Its main powers and duties include:
· Supervise and monitor the fulfillment of the regulations issued by the regulatory and
self-regulatory bodies to which participants and agents, by virtue of their activities at
BM&FBOVESPA, the Company's operational areas, regarding the transactions carried
out through its systems, and the issuers of listed equities and securities are subject;
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.29.
· Establish administrative proceedings as the result of evidences of irregularities against
participants and agents, as well as their managers, employees, brokers and
representatives;
· Manage the Investor Compensation Mechanism (MRP), whose purpose is to ensure
investors of the refund for any losses arising from the activities of market
intermediaries' or custodians' managers, employees and representatives in securities
transactions;
· Resolve the complaints submitted by investors to the MRP, under the terms of the
regulations set forth by the CVM;
· Supervise fully the trading of the BM&FBOVESPA shares, in order to guarantee its
compliance with the requirements prescribed in the rules applicable to the other
issuers.
BSM was created following the international supervision and monitoring standards for
exchange-traded markets. It is managed by the Self-Regulation Officer and by the BSM
Supervision Board, consisting of a majority of independent members.
CORPORATE GOVERNANCE
The Company is managed by the Board of Directors consisting of 11 members, who
include a majority of independent directors, as provided for in its Bylaws, and by the
Executive Board consisting of 6 members.
The Company integrates the more rigorous listing segment in terms of BM&FBOVESPA's
corporate governance requirements--the so-called
Novo Mercado
segment, whose rules
include the issuance of common shares only and the tag along right.
In addition to the Board of Directors, which meets on a regular basis every month, the
Company also counts on the Audit Committee, the Nomination and Compensation
Committee, and the Regulatory Committee, which assist the Board of Directors' activities.
The Company Bylaws also authorizes the constitution of a corporate governance
committee, which will consist of the chairperson of the Board of Directors, the Chief
Executive Officer, two other Directors, and the two external members.
Among other powers and duties, this committee will: (i) Promote and control the adoption
of good corporate governance practices; (ii) preserve ethical and democratic values,
diligently providing the markets controlled managed by the Company and its controlled
companies with transparency, visibility and access; and (iii) review and recommend
strategies which preserve or add value to the Company's institutional image.
OPERATIONAL RISK MANAGEMENT
Amongst the risk management actions implemented in 2008, it is worth
highlighting three initiatives: Adoption of a Unified Information Security Policy;
Improvements to Internal Controls and Central Counterparty Risk.

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.30.
Adoption of a Unified Information Security Policy
Following the integration of the two Exchanges there was need for the Company to
conduct a thorough revision of the different information security policies and adopt
a unified and improved policy, in keeping with the new company reality.
This led to establishment of a new information security regulatory structure aimed
to providing guidelines for adoption and implementation of a three-tiered approach
to security regarding our systems and company information, embodied in the
following documents:
· Information Security Policy;
· Information Security Rules;
· Information Security Procedures.
Pursuant to this regulatory structure we established standards, responsibilities and
practices to manage information security, such that the Board of Executive
Officers is charged with approving the information security policy and taking action
to ensure compliance. In addition, an Information Security Management
Committee, or CGSI, was established to provide the board of executive officers
with adequate support. This Committee comprises eight members under
coordination of the Information Security Management Manager that responds to
the Chief Operating and IT Officer.

Improvements to Internal Controls
In addition, at the time of the integration process each company kept different
processes, systems and approaches in connection with information registration
and financial reporting. As a result, an action plan was adopted to revise and
improve existing controls with the objective of ensuring accurate and complete
financial statements and reports, whereas reducing related risks to a minimum.
This plan, which started in August 2008, included goals and actions in the short-,
medium- and long-term established on the bedrock provided by four key initiatives,
as follows:
· System integration;
· Improvements to internal controls;
· Definition of spheres of competence and allocation of responsibilities
through function segregation;
· Human resources training
Completion of the plan is scheduled to take place within the first half of 2009, and
the short- and medium-term actions have already been implemented.

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.31.
Central Counterparty Risk
The Company's main operational risk correlates closely with counterparty risk,
which we manage through our clearinghouses for the derivatives and equities
markets.
Actions focused on mitigation of counterparty risk permeate the operations of our
clearinghouses. For more information on Central Counterparty Risk, see the Note
on "RISK MANAGEMENT" which is part of this report.
ARBITRATION CLAUSE
The Company, its shareholders, managers, and the members of the Fiscal Council, if in
operation, are obliged to settle by arbitration any and all disputes or controversies that
may arise between them, in particular relating to or resulting from the application, validity,
effectiveness, interpretation, violation and the effects of the provisions set forth in the
Company Bylaws, in Law No. 6404/1976, in the rules issued by the National Monetary
Council (CMN), the Central Bank of Brazil and the CVM, in other rules applicable to the
operations of the capital market in general, as well as in the
Novo Mercado
Listing Rules,
in the
Novo Mercado
Membership Agreement, in the Arbitration Clauses and in the
Arbitration Rules of the Market Arbitration Chamber (CAM), to be conducted by the CAM
created by BVSP pursuant to its Rules.
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(A free translation of the original in Portuguese)
BM&FBOVESPA S.A. ­
Bolsa de Valores, Mercadorias
e Futuros
Financial Statements
at December 31, 2008
and Report of Independent Auditors
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2
Report of independent auditors


To the Board of Directors and Stockholders
BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros


1
We have audited the accompanying balance sheet of BM&FBOVESPA S.A. ­ Bolsa de
Valores, Mercadorias e Futuros ("BM&FBOVESPA") and the consolidated balance sheet of
BM&FBOVESPA and its subsidiaries ("Consolidated") as of December 31, 2008 and the
related statements of income, of changes in stockholders' equity, of cash flows and of value
added of BM&FBOVESPA, as well as the related consolidated statements of income, of cash
flows and of value added, for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on
these financial statements.
2
We conducted our audit in accordance with approved Brazilian auditing standards, which
require that we perform the audit to obtain reasonable assurance about whether the financial
statements are fairly presented in all material respects. Accordingly, our work included,
among other procedures: (a) planning our audit taking into consideration the significance of
balances, the volume of transactions and the accounting and internal control systems of the
Companies, (b) examining, on a test basis, evidence and records supporting the amounts
and disclosures in the financial statements, and (c) assessing the accounting practices used
and significant estimates made by management, as well as evaluating the overall financial
statement presentation.
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros


3
3
In our opinion, the financial statements audited by us present fairly, in all material respects,
the financial position of BM&FBOVESPA and of BM&FBOVESPA and its subsidiaries at
December 31, 2008, and the results of operations, the changes in stockholders' equity, cash
flows and value added of BM&FBOVESPA for the year then ended, as well as the
consolidated results of operations, cash flows and value added of BM&FBOVESPA and its
subsidiaries for the year then ended, in accordance with accounting practices adopted in
Brazil.
4
As described in Note 1 to the financial statements, the Company was incorporated on
December 14, 2007 and did not have any operating activities until May 8, 2008, when the
exchanges merged. Accordingly, the comparative financial statements for the prior year are
not being presented.



São Paulo, March 17, 2009



PricewaterhouseCoopers
Auditores Independentes
CRC 2SP000160/O-5



Ricardo Baldin
Contador CRC 1SP110374/O-0


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BM&F BOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros
Balance Sheet
at December 31, 2008
(In thousands of reais)
(A free translation of the original in Portuguese)
Assets
Notes
BM&FBOVESPA
Consolidated
Current assets
1,904,077
1,965,461
Cash and cash equivalents
4
40,921
40,227
Financial investments
4
1,685,145
1,744,069
Accounts receivable - net
5
104,481
105,169
Other receivables - net
6
7,468
9,933
Taxes recoverable and prepaid
9,539
9,540
Deferred income tax and social contribution
20
48,594
48,594
Prepaid expenses
7,929
7,929
Non-current
18,342,857
18,464,628
Long-term receivables
641,653
808,863
Financial investments
4
468,892
629,945
Other receivables - net
6
6,576
11,361
Deferred income tax and social contribution
20
73,476
73,476
Judicial deposits
92,513
93,885
Prepaid expenses
196
196
Investments
7
1,407,909
1,318,282
Interest in subsidiaries
92,063
-
Other investments
1,315,846
1,318,282
Property and equipment
8
203,708
247,850
Intangible assets
9
16,089,587
16,089,633
Goodwill
16,064,309
16,064,309
Software and projects
25,278
25,324
Total assets
20,246,934
20,430,089
The accompanying notes are an integral part of these financial statements.
4
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BM&F BOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros
Balance Sheet
at December 31, 2008
(In thousands of reais)
(A free translation of the original in Portuguese)
Liabilities and shareholders' equity
Notes
BM&FBOVESPA
Consolidated
Current liabilities
909,932
1,075,744
Collateral for transactions
18(b)
585,963
585,963
Earnings and rights on securities in custody
10
36,020
36,020
Suppliers
18,392
18,442
Salaries and social charges
20,288
20,806
Provision for taxes and contributions payable
11
40,065
40,254
Income tax and social contribution
-
2,652
Financing
13
4,087
4,087
Dividends and interest on own capital payable
194,984
194,984
Redemption of preferred shares to be settled
12
4,132
4,132
Other accounts payable
14
6,001
168,404
Non-current
45,278
62,621
Long-term liabilities
45,278
46,729
Provision for contingencies and legal obligations
15
43,657
46,160
Other accounts payable
14
1,621
569
Minority interest in subsidiaries
-
15,892
Shareholders' equity
16
19,291,724
19,291,724
Capital
2,540,239
2,540,239
Capital reserve
16,611,784
16,611,784
Revaluation reserves
24,131
24,131
Legal reserve
3,453
3,453
Statutory reserves
297,997
297,997
Treasury stock
(185,880)
(185,880)
Total liabilities and shareholders' equity
20,246,934
20,430,089
The accompanying notes are an integral part of these financial statements.
5
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BM&F BOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros
Statement of Income
Year ended December 31, 2008
(In thousands of reais, unless otherwise stated)
(A free translation of the original in Portuguese)
Notes
BM&FBOVESPA
Consolidated
Operating revenues
994,037
1,783,358
Trading and/or settlement system - BM&F
622,907
634,230
Derivatives
601,275
601,275
Foreign exchange
21,302
21,302
Assets
330
330
Bolsa Brasileira de Mercadorias (Brazilian Commodities Exchange)
-
7,865
Bank
-
3,458
Trading and/or settlement system - Bovespa
295,401
1,050,774
Negotiation ­ trading fees
179,374
635,091
Transactions ­ clearing and settlement
66,925
259,355
Loans of marketable securities
9,774
48,528
Listing of marketable securities
10,487
29,776
Depository, custody and back office
22,379
62,523
Trading participant access
6,462
15,501
Other operating revenues
75,729
98,354
Vendors ­ quotations and market information
30,506
43,359
Commodity classification fee
3,535
3,535
Other
24
41,688
51,460
Deductions of revenue
(104,176)
(181,347)
Transfer of fees - Bovespa
(4,104)
-
PIS and COFINS taxes
(90,514)
(162,752)
Taxes on services
(9,558)
(18,595)
Net operating revenue
889,861
1,602,011
Operating expenses
(448,518)
(723,658)
Administrative and general
Personnel and related charges
(173,390)
(247,349)
Data processing
(83,962)
(141,282)
Depreciation and amortization
(22,126)
(35,140)
Outsourced services
(37,355)
(44,043)
Maintenance in general
(9,822)
(13,536)
Communications
(8,108)
(18,721)
Rents
(3,089)
(4,351)
Supplies
(2,695)
(3,629)
Promotion and publicity
(20,733)
(29,602)
Taxes
(454)
(1,655)
Board and committee members' compensation
(6,582)
(9,219)
Integration expenses
22
(58,537)
(129,576)
Sundry
21
(21,665)
(45,555)
Equity in the results of subsidiaries
7
386,402
-
Goodwill amortization
9
(324,421)
(324,421)
Financial results
171,588
305,972
Financial income
199,667
364,859
Financial expenses
(28,079)
(58,887)
Income before taxation of profit
674,912
859,904
Income tax and social contribution
20 (c)
(29,316)
(212,741)
Current
(142,392)
(331,879)
Deferred
113,076
119,138
Minority interest
-
(1,567)
Net income for the year
645,596
645,596
Outstanding shares at the end of the year
2,010,990,091
2,010,990,091
Net income per share at the end of the year (in reais)
0.321034
0.321034
The accompanying notes are an integral part of these financial statements.
6
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BM&F BOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros
Statement of Changes in Stockholders' Equity
(In thousands of reais)
(A free translation of the original in Portuguese)
Revaluation
Statutory
Treasury
Capital
reserve
Legal
reserves
stock
Retained
Note
Capital
reserve
(Note 16(d))
reserve
(Note 16(e))
(Note 16(b))
earnings
Total
At December 31, 2007
1
-
-
-
-
-
-
1
Merger of BM&F S.A.
1
1,010,785
1,175,121
24,711
3,453
401,447
-
-
2,615,517
-
Initial recognition of stock option plan - CPC 10
19
-
229,519
-
-
(229,519)
-
-
-
Initial recognitiont of financial lease contracts - CPC 06
-
-
-
-
3,567
-
-
3,567
Merger of shares of Bovespa Holding
1
1,526,237
16,415,854
-
-
-
-
-
17,942,091
-
Redemption of preferred shares
12
-
(1,240,000)
-
-
-
-
-
(1,240,000)
-
Issue of shares - stock option plan
16
3,216
-
-
-
-
-
-
3,216
-
Realization of revaluation reserve - subsidiaries
-
-
(580)
-
-
-
-
(580)
Repurchase of shares
16
-
-
-
-
-
(192,448)
-
(192,448)
Disposal of treasury stock
19
-
-
-
-
-
6,568
(5,401)
1,167
Recognition of stock option plan
19
-
26,359
-
-
-
-
-
26,359
Net income for the year
-
-
-
-
-
-
645,596
645,596
Appropriation of net income:
Dividends
16(c)
-
-
-
-
-
-
(203,644)
(203,644)
Interest on own capital
16(c)
-
-
-
-
-
-
(309,118)
(309,118)
Statutory reserves
-
-
-
-
127,433
-
(127,433)
-
At December 31, 2008
2,540,239
16,606,853
24,131
3,453
302,928
(185,880)
-
19,291,724
-
Revenue reserves
The accompanying notes are an integral part of these financial statements.
7
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BM&F BOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros
Statement of Cash Flows
Year ended December 31, 2008
(In thousands of reais)
(A free translation of the original in Portuguese)
BM&FBOVESPA
Consolidated
Cash flows from operating activities
Net income for the year
645,596
645,596
Adjustments for:
Depreciation and amortization
22,126
35,140
Profit on sale of property and equipment
69
2,527
Deferred income tax and social contribution
(113,076)
(119,138)
Equity in results of subsidiaries
(386,402)
-
Expenses related to the stock option plan
26,359
26,359
Goodwill amortization
324,421
324,421
Interest expenses
18,531
18,531
Sundry
(10,169)
9,506
Variation in financial investments and collateral for transactions
1,334,603
1,096,446
Variation in taxes recoverable and prepaid
104,431
(2,115)
Variation in accounts receivable
40,749
48,945
Variation in other receivables
3,085
49,658
Variation in prepaid expenses
4,465
3,663
Variation in judicial deposits
(12,366)
(64,186)
Variation in earnings and rights on securities in custody
(598)
8,023
Variation in suppliers
(4,564)
(3,034)
Variation in provision for taxes and contributions payable
(18,081)
4,316
Variation in provisions for income tax and social contribution
(185,984)
(105,713)
Increase in salaries and social charges
(17,053)
(5,604)
Variation in other liabilities
(13,309)
(30,950)
Variation in provision for contingencies
3,159
11,827
Net cash provided by operating activities
1,765,992
1,954,218
Investing activities
Receipt on sale of property and equipment
765
7,819
Payment for purchase of property and equipment
(32,406)
(56,544)
Cash and cash equivalents merged/consolidated
94,373
10,816
Variation in interest in subsidiaries
(437)
1,353
Variation in software and projects
(7,834)
(21,616)
Net cash from (used in) investing activities
54,461
(58,172)
Financing activities
Capital increase
3,216
3,216
Disposal of treasury stock - stock options exercised
1,167
1,167
Repurchase of shares
(192,448)
(192,448)
Payments of financing
(2,841)
(2,841)
Short term borrowings
500,000
500,000
Short term borrowings repaid
(518,531)
(518,531)
Redemption of preferred shares
(1,235,868)
(1,235,868)
Payment of dividents and interest on own capital
(334,227)
(410,514)
Net cash provided by financing activities
(1,779,532)
(1,855,819)
Net increase in cash and cash equivalents
40,921
40,227
Change in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
-
-
Cash and cash equivalents at the end of the year
40,921
40,227
Net increase in cash and cash equivalents
40,921
40,227
The accompanying notes are an integral part of these financial statements.
8
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BM&F BOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros
Statement of Value Added
Year ended December 31, 2008
(In thousands of reais)
(A free translation of the original in Portuguese)
BM&FBOVESPA
Consolidated
1 - Revenues
994,037
1,783,358
Trading and/or settlement system
918,308
1,685,004
Other operating revenues
75,729
98,354
2 ­ Goods and services acquired from third parties
246,981
425,944
Operating expenses (a)
246,981
425,944
3 ­ Gross value added (1-2)
747,056
1,357,414
4 - Retentions
346,547
359,561
Goodwill amortization
324,421
324,421
Depreciation and amortization
22,126
35,140
5 ­ Net value added produced by the company (3-4)
400,509
997,853
6 ­ Value added transferred from others
586,069
364,859
Equity in results of subsidiaries
386,402
-
Financial income
199,667
364,859
7 ­ Total value added to be distributed (5+6)
986,578
1,362,712
8 - Distribution of Value Added
986,578
1,362,712
Personnel and related charges
173,390
247,349
Board and committee members' compensation
6,582
9,219
Income tax, taxes and contributions (b)
129,842
395,743
Interest and rents (c)
31,168
63,238
Minority interest in subsidiaries
-
1,567
Interest on own capital and dividends
512,762
512,762
Loss on Disposal of treasury stock
5,401
5,401
Reserves
recorded
127,433
127,433
(a) Operating expenses (excludes personnel, Board and committee members' compensation, depreciation, rents and taxes)
and includes transfer of trading fees ­ Bovespa
(b) Including: taxes, PIS, COFINS, ISS and income tax and social contribution (current and deferred)
(c) Including: rents and financial expenses
The accompanying notes are an integral part of these financial statements.
9
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10
(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Financial Statements
at December 31, 2008
(All amounts in thousands of reais, unless otherwise stated)


1
Operations

The Company was incorporated on December 14, 2007, with its headquarters in São Paulo, under
the name of T.U.T.S.P.E. Empreendimentos e Participações S.A. and with the objective of investing
in other companies, as a partner, shareholder or quotaholder, in Brazil or abroad.

No operating activities were carried out by the Company during the period from December 14, 2007
to May 8, 2008.

On April 8, 2008, at the Extraordinary General Meeting ("AGE"), the shareholders decided, among
other matters, to:

i.
Change the Company's name to Nova Bolsa S.A. (Nova Bolsa);

ii.
Move the Company's headquarters to Praça Antonio Prado, 48, Centro, São Paulo;

iii.
Reverse split the Company's capital, in the proportion of 125 existing shares to 1 (one) share of
the capital after the reverse split, without changing the capital amount, such that capital
comprised 4 nominative common shares, with no par value.

Merger of BM&F S.A. and of the shares of Bovespa Holding

At the Extraordinary General Meetings (AGEs) held on May 8, 2008, approval was given for the
merger of Bolsa de Mercadorias & Futuros-BM&F S.A. (BM&F S.A.) and of the Bovespa Holding
S.A. (Bovespa Holding) shares, resulting in the corporate restructuring designed to integrate the
activities of BM&F S.A. and Bovespa Holding. At one of the AGEs, approval was given for the
merger into Nova Bolsa, of all assets, liabilities, rights and responsibilities of BM&F S.A.,
evaluated at their respective book values, in the net amount of R$2,615,517. On the same date,
approval was given to merge Bovespa Holding's shares, at market value, into Nova Bolsa, in the
amount of R$ 17,942,091, such that Bovespa Holding became the wholly owned subsidiary of Nova
Bolsa. As a result of the merger, BM&F S.A. became extinct and was succeeded by Nova Bolsa in
all of its assets, rights and obligations for all legal purposes.
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11
We present below the merged amounts of BM&F S.A.:
Current assets and long-term
receivables
1,673,709
Current and long-term liabilities
513,185
Cash and banks
49,253
Collateral for transactions
404,711
Financial investments
1,577,051
Suppliers
10,989
Accounts receivable
13,375
Provision for taxes and contributions
payable
39,691
Other receivables
5,174
Salaries and social charges
12,599
Prepaid expenses
5,795
Other accounts payable
17,890
Judicial deposits
23,061
Provision for contingencies
27,305
Permanent assets
1,454,993
Shareholders' equity
2,615,517
Capital
1,010,785
Financial investments
1,373,706
Capital
reserve
1,175,121
Interest in subsidiaries
1,361,611
Revenue reserve
3,453
Other investments
12,095
Revaluation reserves
24,711
Statutory
reserves
401,447
Property and equipment
81,287
Property in use
100,951
Equipment and facilities
99,999
Other
25,923
(Accumulated depreciation)
(145,586)
Total
assets
3,128,702
Total liabilities and shareholders'
equity
3,128,702

The above amounts correspond to the book balances of BM&F S.A. at December 31, 2007, adjusted
by the effects arising from the AGE of February 26, 2008 at which approval was given for the
merger of CMEG 2 Brazil Participações Ltda., with the consequent capital increase in BM&F S.A.
of R$ 101,078 and creation of the capital reserve in the amount of R$ 1,175,121.

As established in the Protocol and Justification of Merger, the equity variations from the base date
of December 31, 2007 to the date of the merger of BM&F S.A., in the amount of R$ 79,643, were
appropriated and recorded in the books of Nova Bolsa.

In addition, 722,888,403 common shares of Bovespa Holding were merged at the market value of
R$ 17,942,091. As established in the Protocol and Justification of the Merger, the equity variations
in Bovespa Holding from the base date of December 31, 2007 to the date on which the merger of
shares became effective, were sustained by Bovespa Holding and absorbed by Nova Bolsa, upon the
effective merger of shares, through the recording of equity in the results.

BM&F S.A. shareholders received 1 common share of Nova Bolsa for each common share of
BM&F S.A. Bovespa Holding shareholders received 1.42485643 common shares of Nova Bolsa for
each common share of Bovespa Holding held, as well as redeemable preferred shares in the
proportion of 1 preferred share for each 10 common shares held in Bovespa Holding. These shares
were redeemed at the same Extraordinary General Meeting, obliging Nova Bolsa to pay the overall
amount of R$ 1,240,000 to the shareholders of Bovespa Holding.

Following the merger of BM&F S.A., Nova Bolsa's capital was increased by R$ 1,010,785 with the
issue of 1,010,785,800 common shares. Further, as a result of the merger of Bovespa Holding
shares, the capital of Nova Bolsa was increased by the amount of R$ 1,526,237, with the issue of
1,030,012,191 common shares, whereby subscribed and paid-up capital totaled R$ 2,537,023,
comprising 2,040,797,995 common shares, with no par value.
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12
At one of the AGEs held on May 8, 2008, approval was also given to change the name Nova Bolsa
S.A. to BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros (BM&FBOVESPA or
Company).

On August 11, 2008, the Brazilian Securities Commission (CVM) approved the registration of
BM&FBOVESPA as a public company.

As a result of the integration of BM&F S.A. and Bovespa Holding S.A., the shares of the new
company, BM&FBOVESPA S.A., are traded since August 20, 2008, under the ticker symbol
BVMF3.

On August 29, 2008, Bovespa Holding S.A.'s registration as a public company was cancelled.

Merger of subsidiaries ­ Bolsa de Valores de São Paulo ­ BVSP (formerly Bovespa Holding) and
Companhia Brasileira de Liquidação e Custódia - CBLC

The merger is part of the corporate reorganization process involving BM&FBOVESPA and its
subsidiaries and was designed among other advantages to simplify operations, increase productivity
gains and reduce operating costs among the companies involved.

At the Extraordinary General Meeting (AGE) held on August 29, 2008, approval was given for the
merger into Bovespa Holding of all assets, liabilities, rights and obligations of its subsidiary BVSP,
evaluated at their corresponding book values at the base date of June 30, 2008. As a result of the
merger, BVSP became extinct and was succeeded by Bovespa Holding in all of its assets, rights and
obligations for all legal purposes.

At the same AGE, approval was given to change the name Bovespa Holding S.A. to Bolsa de
Valores de São Paulo S.A. ­ BVSP.

At the Extraordinary General Meeting (AGE) held on November 28, 2008, in accordance with the
Protocol and Justification of Merger signed on October 21, 2008 by the directors of
BM&FBOVESPA, approval was given for the merger of the total assets, liabilities, rights and
obligations of its subsidiaries: Bolsa de Valores de São Paulo S.A. ­ BVSP (formerly Bovespa
Holding S.A.) and Companhia Brasileira de Liquidação e Custódia ­ CBLC, evaluated at their
corresponding book values on August 31, 2008. We present below the composition of the net assets
of the subsidiaries merged on that date:
Details BVSP
CBLC
Assets
Current assets
1,490,775
702,980
Cash and banks and financial investments
1,296,777
631,317
Accounts receivable, net
108,557
23,298
Taxes recoverable and prepaid
69,333
41,636
Other receivables
16,108
16,729

Non-current assets
622,813
41,880
Long-term receivables
55,864
5,774
Permanent assets
566,949
36,106
Total assets
2,113,588
744,860


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13
Details BVSP
CBLC
Liabilities and shareholders' equity

Current liabilities
470,744
280,629
Deposits in guarantee of transactions
-
152,637
Earnings and rights on securities under custody
-
36,618
Suppliers/accounts payable
8,490
3,477
Taxes and contributions
128,227
76,212
Social and labor legislation payables
22,374
2,368
Dividends and interest on own capital payable
301,480
-
Other accounts payable
10,173
9,317

Non-current liabilities
11,123
2,070
Long-term liabilities
11,123
2,070
Total liabilities
481,867
282,699
Net assets merged
1,631,721
462,161

As established in the Protocol and Justification of Merger, the equity variations, from the base date
of August 31, 2008 to the date on which the merger of BVSP and CBLC occurred, in the amounts
of R$ 9,573 and R$ 2,011, respectively, were appropriated and recorded in the books of
BM&FBOVESPA.

Following the merger, whereby these companies became extinct, BM&FBOVESPA is responsible
for the activities previously carried out by the subsidiaries and consequently succeeds them in all
rights and obligations related to the contracts required for performing these activities, as well as in
relation to any lawsuits to which the merged companies are parties
.

As a result of all these mergers and the corporate restructuring process, BM&FBOVESPA's main
objective is to carry out the following activities or to invest in companies in which such activities
are carried out:
·
Management of organized markets of marketable securities, providing for the organization,
performance and development of free and open markets for the negotiation of any types of
securities or contracts, that have as reference or objective financial assets, indices, fees, goods,
currencies, energy, transportation, commodities and other assets or rights, direct or indirectly
related to such assets, for spot or future delivery;

·
Maintenance of proper environments or systems for carrying out purchases, sales, auctions and
special operations involving marketable securities, securities, rights and assets, in the stock
exchange market and in the organized over-the-counter market;

·
Rendering services of registration, offset and settlement, both physical and financial, through an
internal agency or a company especially incorporated for this purpose, assuming or not the
position of central counterparty and guarantor of the definite settlement, under the terms of the
legislation in force and its own regulations;

·
Rendering services of central depositary and fungible and non-fungible custody of goods,
marketable securities and any other physical and financial assets;

·
Providing services of standardization, classification, analysis, quotations, statistics, professional
education, preparation of studies, publications, information, libraries and software on matters of
interest to the Company and the participants of markets directly or indirectly managed by it;
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14

·
Providing technical, administrative and managerial support for market development, as well as
carrying out educational, promotional and publishing activities related to its objective and to the
markets managed by it;

·
Performance of other similar or correlated activities explicitly authorized by the Brazilian
Securities Commission (CVM); and
·
Investment in the capital of other companies or associations, headquartered in Brazil or abroad,
as a partner, shareholder or member pursuant to the regulations in force.

BM&FBOVESPA organizes, develops and provides for the operation of free and open securities
markets, for spot and future delivery. Its activities are organized through its trading systems and
Clearings and include transactions with securities, interbank foreign exchange and securities under
custody in the Special System for Settlement and Custody (Selic) markets.

BM&FBOVESPA develops technology solutions and maintains high performance systems,
providing its customers with security, agility, innovation and cost efficiency. The success of its
activities depends on the ongoing improvement, enhancement and integration of its trading and
settlement platforms and its capacity to develop and license leading-edge technologies required for
the proper performance of its operations.

Through its subsidiary Bolsa Brasileira de Mercadorias, its business includes the registration and
settlement of spot, forward and options transactions involving commodities, assets and services for
physical delivery, as well as the securities representing these products, in the primary and secondary
markets.

With the objective of responding to the needs of clients and the specific requirements of its markets,
through its wholly-owned subsidiary Banco BM&F de Serviços de Liquidação e Custódia S.A., it
provides its members and its Clearings with a centralized custody service for the assets pledged as
collateral for transactions.

BM&F USA Inc., a wholly-owned subsidiary located in the city of New York (USA), which also
has a representative office in Shanghai (China), represents BM&FBOVESPA abroad through
relationships with other exchanges and regulatory agents, as well as assisting in the procurement of
new clients.
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15
2
Preparation and Presentation of the Financial Statements

These financial statements were approved by the Board of Directors of BM&FBOVESPA on March
17, 2009.

The financial statements of BM&FBOVESPA have been prepared and are presented in accordance
with accounting practices adopted in Brazil and in conformity with the provisions contained in
Brazilian Corporation Law, as amended by Law 11,638/07 and Provisional Measure 449/08, the
statements issued by the Accounting Pronouncements Committee (CPC), as well as the standards
and instructions of the Brazilian Securities Commission (CVM).

As described in Note 1, BM&FBOVESPA is a new company resulting from the corporate
restructuring of BM&F S.A. and Bovespa Holding on May 8, 2008. Accordingly, no comparative
information on the individual and consolidated results of operations for 2007 is presented.

The preparation of financial statements requires the use of estimates to record certain assets,
liabilities and other transactions. Accordingly, the Company's financial statements include
estimates related to the provisions required for contingent liabilities, the fair value of certain
financial instruments, provisions for income tax, determination of the useful economic life of
specific assets, including goodwill on the acquisition of investments and the corresponding
amortization criteria, impairment of assets and others. The actual results may differ from those
estimated. BM&FBOVESPA and the consolidated entities review these estimates and assumptions
at least when preparing the financial statements.
a.
Law 11,638/07 and Provisional Measure 449/08
With the enactment of Law 11,638 and publication of Provisional Measure 449/08, provisions of
Brazilian Corporation Law were changed, revoked and introduced as regards certain accounting
practices and the presentation of the financial statements, effective as from the fiscal year ended
December 31, 2008. The main purpose of this law and MP was to adapt Brazilian corporate
legislation to facilitate the process of convergence of the accounting practices adopted in Brazil
with the International Financial Reporting Standards issued by the International Accounting
Standards Board (IASB). Moreover, as a result of the enactment of this law and provisional
measure, in 2008, certain accounting pronouncements were published by the Brazilian Accounting
Pronouncements Committee (CPC), applicable to all companies constituted as corporations,
including publicly held and large-sized companies.

The main changes to the accounting practices and their effects on the financial statements of
BM&FBOVESPA for the year ended December 31, 2008 include the following:

(i) Share-based remuneration ­ Pursuant to CPC 10 ­ Share-based compensation, approved by
CVM Deliberation 562/08, BM&FBOVESPA recognized as expense portions of the contracts
existing at December 31, 2008 relating to the Stock Option Plans granted to administrators and
employees. The effects arising from the adoption of this new practice and the main features and
information relating to the stock option plans are presented in Note 19.

(ii) Impairment ­ Pursuant to CPC Technical Pronouncement 01, approved by CVM Deliberation
527/07, the Company must determine, at a minimum at the end of each fiscal year, whether there is
any indication of asset impairment. No evidence of asset impairment was identified. Moreover, as
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16
required by CPC 01, the goodwill on the merger of shares of Bovespa Holding was tested for
impairment and no impairment of goodwill was identified.

(iii) Statement of Cash Flows and Statement of Value Added (DVA) ­ The Cash Flow Statement is
presented in accordance with CVM Deliberation 547/08, which approved accounting
pronouncement CPC 03 ­ Statement of Cash Flows, as a replacement for the Statement of Changes
in Financial Position. The Statement of Value Added is presented in accordance with CVM
Deliberation 557/08, which approved accounting pronouncement CPC 09 ­ Statement of Value
Added.

(iv) Deferred Charges ­ Expenditures recorded in deferred charges related to software licenses
acquired and software development were reclassified to intangible assets.

(v) Non-operating results ­ MP 449/08 eliminated the segregation of the non-operating result group
in the statement of income for the year. The revenues and expenses previously presented as non-
operating results are now presented in the operating results group.

(vi) Costs for Transactions and Premiums on Issuance of Securities ­ In accordance with CPC 08,
approved by CVM Deliberation 556/08, the transaction costs incurred in the acquisition of the
Company's own shares in 2008, based on the Share Buyback Program, in the amount of R$ 250,
were treated as an increase in the cost of acquisition of these shares.

(vii) Financial Instruments ­ As regulated by CPC 14 ­ Financial Instruments, approved by CVM
Deliberation 566/08, investments in financial instruments, including derivatives, must be recorded
at their market value when they comprise trading or available-for-sale securities, or recorded at
their amortized cost when they comprise securities held to maturity. The Company's financial
investments had already been recorded at market value, and all the instruments were classified in
the measured at fair value through profit or loss category. Accordingly, there were no significant
impacts resulting from the adoption of this pronouncement.

(viii) Financial Leases ­ BM&FBOVESPA has financial lease agreements mainly related to
information technology equipment. In accordance with the provisions determined in accounting
pronouncement CPC 06 ­ Leasing, approved by CVM Deliberation 554/08, the Company classified
the lease agreements as either financial or operating, based on their specific characteristics.

The IT equipment leased under the financial lease agreements was recorded in property and
equipment and the corresponding obligation in the "Financing" account, in the amounts of R$ 6,401
and R$ 4,087 at December 31, 2008, respectively. The opening adjustments resulting from the
adoption of this pronouncement were recorded against revenue reserves in stockholders' equity and
amounted to R$3,567.

(ix) Revaluation reserves ­ The new Law permits companies to opt whether to maintain the existing
revaluation reserve balances and realize these balances pursuant to the prior rules or reverse them at
the end of 2008. The management of BM&FBOVESPA elected to realize the balances of these
reserves based on the prior rules. (See Note 16(d)).

(x) Transitional Tax Regime ­ Provisional Measure 449/08 introduced the Transitional Tax Regime
(RTT) for taxable income determination purposes, addressing the tax adjustments arising from the
new methods and accounting criteria introduced by Law 11638/07. The Company must declare its
option for the RTT up to June 30, 2009, when filing the Corporate Income Tax Return (DIPJ) for
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17
2008. If it opts to use RTT, the income tax (IRPJ) and social contribution on net income (CSLL)
payable for the two-year period 2008-2009, will continue to be determined based on the provisions
of Brazilian Corporation Law in force at December 31, 2007.
b.
Principles for the consolidation of the financial statements
The consolidated financial statements include the balances of BM&FBOVESPA and its
subsidiaries, in compliance with the provisions of CVM Instruction 247/1996, as well as the special
purpose entities, comprising the exclusive investment funds (CVM Instruction 408/2004), as
presented below:
Stake - %
Entities and subsidiaries
Banco BM&F de Liquidação e Custódia S.A. ("Banco BM&F")
100.00
Bolsa Brasileira de Mercadorias ("BBM")
50.12
Bolsa de Valores do Rio de Janeiro ­ BVRJ ("BVRJ")
86.09
BM&F USA Inc.
100.00

Exclusive investment funds
Supremo Renda Fixa ­ Fundo de Investimento em Cotas de Fundos de Investimento
Bradesco Fundo de Investimento Multimercado Letters

In preparing the consolidated financial statements, the balances of assets and liabilities of the
subsidiaries and the exclusive investment funds were consolidated, except for those investing in
retail fund shares. The value of investments in exclusive investment funds, the corresponding
portion of the respective shareholders' equity of the subsidiaries and the balances of assets and
liabilities resulting from transactions carried out between the consolidated subsidiaries and
associated companies are eliminated, and minority interests in the shareholders' equity and
statement of income are separately disclosed.

The escrow funds, Fundo de Garantia da Bolsa de Valores do Rio de Janeiro ­ BVRJ and Fundo de
Garantia da Bolsa Brasileira de Mercadorias are no longer consolidated by BM&FBOVESPA,
based on the interpretation of CVM Instruction 408 and considering the purpose of the funds and
corresponding conditions required for assisting and providing indemnification to investors seeking
reimbursement for losses incurred in stock exchange transactions established in CVM Instruction
461.

3
Significant Accounting Practices
a.
Determination of net income
Income and expenses are recognized on an accrual basis.
b.
Cash and cash equivalents

The balances of cash and cash equivalents for cash flow statement purposes comprise cash and
bank deposits.
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c.
Financial instruments
(i) Classification and calculation

The Company classifies its financial assets in the following categories: calculated at market
value through income, loans and receivables, held to maturity and available for sale. The
classification depends on the purpose for which the financial assets were acquired. Management
determines the classification of the financial assets when they are first recorded.
Financial assets measured at fair value through profit or loss
The financial assets maeasured at fair value through profit or loss are financial assets held for
active and frequent trading or assets designated by the entity, when first recorded, as measurable
at fair value through profit or loss. Derivatives are also classified as held for trading and
accordingly, are recorded in this category. The assets in this category held for trading are
classified as current assets. Gains or losses arising from the fair value variations of financial
assets calculated at fair value through income are recorded in the statement of income in
"financial results" for the period in which they occur.
Loans and receivables
These comprise loans granted and receivables which are non-derivative financial assets with
fixed or determinable payments, not quoted in an active market. Loans and receivables are
included in current assets, except for those with maturity of more than 12 months after the
balance sheet date (these are classified as non-current assets). The Company's loans and
receivables comprise trade accounts receivable and other accounts receivable. Loans and
receivables are recorded at amortized cost, based on the effective interest rate method.
Assets held to maturity
These are financial assets quoted in an active market which are acquired with the intention and
financial ability to be held in the portfolio up to their maturity. They are evaluated at the
acquisition cost, plus related earnings with a contra-entry to income for the year, based on the
effective interest rate method.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives which are classified in this category or not
classified in any other. They are included in non-current assets, unless the management intends
to sell the investment within 12 months subsequent to the balance sheet date. Available-for-sale
financial assets are recorded at fair value. Interest on available-for-sale securities, calculated
based on the effective interest rate method, is recognized in the statement of income as financial
income. The amount relating to the fair value variation is recorded in shareholders' equity, in the
Carrying value adjustments account and is realized in net income when the asset is sold or
becomes impaired.
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Fair value
Fair values of investments with public quotations are based on current purchase prices. For
financial assets without an active market or public quotation, the Company determines fair value
through valuation techniques, such as option pricing models.
The Company evaluates, at the balance sheet date, if there is objective evidence that a financial
asset or a group of financial assets is overstated (impaired) in relation to its recoverable value.
(ii) Derivative instruments and hedge activities
Initially, the derivatives are recognized at fair value on the date on which the derivative
agreement is signed and, subsequently, recalculated at their fair value, with the fair value
variations recorded in income, except when the derivative is recorded as a cash flow hedge.
Although the Company uses derivatives through the exclusive investment funds for protection
purposes, it does not adopt hedge accounting.
The fair value of the derivative instruments is presented in Note 4.
d.
Accounts receivable, other receivables and allowance for doubtful accounts

Accounts receivable and other receivables are initially stated at present value, less the
allowance for doubtful accounts. The allowance for doubtful accounts is recorded when there is
objective evidence that the Company will not be able to realize the amounts receivable in
accordance with the original contract terms. The amount of the allowance is the difference
between the book value and the recoverable value.
e.
Prepaid expenses

Prepaid expenses mainly recognize amounts related to software maintenance contracts, which
are amortized based on the terms of the contracts in force.
f.
Investments
Investments in entities and subsidiaries are recorded and evaluated based on the equity
accounting method, with the related income (or expense) recognized in income for the year as
operating income (or expense). The accounting practices of the subsidiaries are consistent with
the practices adopted by the Company.
Other investments are recorded at cost of acquisition or merger, less the provision for
adjustment to realizable value when the loss is considered permanent.
g.
Intangible assets

An intangible asset is an identifiable non-monetary asset without physical substance, such as
goodwill.
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Goodwill
Goodwill or negative goodwill on the acquisition of an investment is calculated as the
difference between the purchase amount and book value of the shareholders' equity of the
company acquired. Goodwill or negative goodwill is subdivided into two categories: (i) market
value adjustment, both upward or downward, of assets, comprising the difference between the
book value of the company acquired and the fair value of assets and liabilities and (ii) future
profitability, comprising the difference between the fair value of assets and liabilities and the
purchase amount.

The portion corresponding to the market value adjustment of assets was allocated to the
corresponding acquired/merged assets and liabilities. The upward market value adjustment is
amortized as the corresponding assets are realized over a period of up to 25 years.

The portion based on estimated future income is recorded in the intangible group and amortized
over a 10-year period, according to the extent of and in proportion to the projected results on
which it was based.

In accordance with the new pronouncements issued by CPC, the portion based on the
expectation of future earnings will no longer be amortized as from 2009.

Software and projects

Software licenses acquired are capitalized and amortized over their estimated useful life, at the
rates described in Note 9.

Costs of software development or maintenance are expensed as incurred. Expenditures directly
associated with identifiable and unique software, controlled by the Company and which will
probably generate economic benefits greater than the costs for more than one year, are
recognized as intangible assets. Direct expenditures include remuneration of the software
development team.
Expenditures for development of software recognized as assets are amortized using the straight-
line method over their useful lives, at the rates described in Note 9.
h.
Property and equipment
Recorded at cost of acquisition or construction. Depreciation is calculated on the straight-line
method and takes into consideration the useful economic life of the assets, at the rates listed in
Note 8.
i.
Contingent assets and liabilities and legal obligations

The recognition, measurement, and disclosure of contingent assets and liabilities and legal
obligations comply with the criteria defined in CVM Deliberation 489/2005.
·
Contingent assets - These are not recorded, except when management has full control over
their realization or when there are secured guarantees or favorable decisions to which no
further appeals are applicable, such that the gain is almost certain. Contingent assets, the
realization of which is considered probable, where applicable, are only disclosed in the
financial statements.
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·
Contingent liabilities - These are recognized based on a number of factors including: the
opinion of legal advisors; the nature of the lawsuits; similarity with precedents; the
complexity of the proceedings; and the prior court decisions. They are recognized whenever
the loss is evaluated as probable, since this would give rise to a probable outflow of
resources for the settlement of the obligations, and the sums involved are measurable with
sufficient reliability. The contingent liabilities classified as possible losses are not recorded
and are only disclosed in the notes to the financial statements, and those classified as
remote are neither recognized nor disclosed.
·
Legal obligations - Obligations that result from a contract by means of explicit or implicit
terms, or from the law or another legal instrument, are required, under BM&FBOVESPA
accounting policy, to be recognized, where applicable.
j.
Judicial deposits
Judicial deposits are monetarily restated and presented in non-current assets.
k.
Other assets and liabilities
These are stated at their known and realizable/settlement amounts plus, where applicable,
related earnings and charges and monetary and/or exchange rate variations up to the balance
sheet date.
l.
Impairment of assets

Property, plant and equipment and other non-current assets, including goodwill and intangible
assets, are reviewed annually to identify evidence of unrecoverable losses, and also whenever
events or changes in the circumstances indicate that the book value may not be recoverable. In
this case, the recoverable value is calculated to verify if there is any loss. Loss is recognized at
the amount by which the book value of the asset exceeds its recoverable value, which is the
higher between the net sales price and the value in use of an asset. For evaluation purposes,
assets are grouped at the lowest level for which there are separately identifiable cash flows.
m.
Leases

Leases of property and equipment in which the Company substantially assumes all ownership
risks and benefits are classified as financial leases. These financial leases are recorded as a
financed purchase, recognizing at the beginning of the lease a property and equipment item and
a financing liability (lease). Property and equipment acquired in finance leases are depreciated
at the rates defined in Note 8.

A lease in which a significant portion of the ownership risks and benefits remains with the
lessor is classified as an operating lease. Operating lease payments (net of all incentives
received from the lessor) are charged directly to results.
n.
Provisions
Provisions are recognized when the Company has a legal or informal present obligation as a
result of past events, a cash outflow will probably be necessary to settle the obligation and a
reliable estimate of the amount can be made.
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o.
Employee benefits
(i) Pension
obligations
The Company has no defined benefits plans. The Company offers its employees a defined
contribution plan and pays contributions on contractual or voluntary bases. Once the
contributions have been made, the Company has no obligations related to additional payments.
The regular contributions comprise net periodic costs for the period in which they are payable
and, therefore, are included in the personnel costs.
(ii) Share-based
remuneration
(stock options)
The Company offers to its employees and executives share-based remuneration plans, to be
settled in Company stock, according to which the Company receives services in consideration
for stock options. The fair value of options granted related to services to be provided is
recognized as an expense, during the period in which the right is obtained, i.e., the period
during which specific vesting conditions must be met. On the date of the balance sheet, the
Company revises the estimated number of options which will vest and subsequently, recognizes
the impact of the change on initial estimates, if any, in the statement of income with a contra-
entry to the capital reserve in shareholders' equity on a prospective basis.
p.
Financing
Financing is initially recognized at fair value, upon receipt of the funds, net of transaction costs.
Subsequently, the financing is presented at amortized cost, that is, plus charges and interest in
proportion to the period incurred ("pro rata temporis").
q.
Current and non-current assets and liabilities
The segregation between current and non-current assets/liabilities is based on a period of 365
days as from the base date of the financial statements.
r.
Foreign currency translation

Transactions in foreign currency are translated into reais using the exchange rates effective on
the transaction dates. Balance sheet account balances are translated at the exchange rate in
effect on the balance sheet date. Foreign exchange gains and losses resulting from the
settlement of these transactions and from the translation of monetary assets and liabilities
denominated in foreign currency are recognized in results.
s.
Taxes and contributions

BM&FBOVESPA is a for-profit business corporation and accordingly its income is subject to
certain taxes and other contributions which are listed below.

Provisions for income tax, social contribution and other taxes are calculated at the rates
presented below:
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·
Income tax
15%
·
Additional income tax
10%
·
CSLL
9%
·
PIS 1.65%
·
COFINS
7.6%

Banco BM&F de Serviços de Liquidação e Custódia S.A. calculates the contributions to PIS
and to COFINS at the rates of 0.65% and 4%, respectively, and CSLL at 15% from May 1,
2008.

The subsidiaries Bolsa Brasileira de Mercadorias and BVRJ are not-for-profit entities.
t.
Deferred income tax and social contribution

Deferred taxes are calculated on income tax and social contribution losses and the temporary
differences between the tax calculation bases of assets and liabilities and the respective book
values in the financial statements. The currently defined tax rates of 25% for income tax and
9% for social contribution are used to calculate deferred tax assets .

Deferred tax assets are recognized to the extent that it is probable sufficient future taxable profit
will be available to be offset by temporary differences and/or tax losses, considering projections
of future income prepared based on internal assumptions and future economic scenarios which
may, accordingly, undergo change.

u.
Net income per share

Net income per share is determined based on the number of outstanding shares at the date of the
financial statements.

4
Cash and Cash Equivalents and Financial Investments

a.
Cash and Cash Equivalents

For the purposes of the statement of cash flows, the following balances are being considered as cash
and cash equivalents:
BM&FBOVESPA
Consolidated
Details
Banks - deposits in domestic currency
23,178
21,824
Banks - deposits in foreign currency
17,743
18,403
Total
40,921
40,227

b.
Financial Investments

The breakdown of financial investments by nature and time to maturity is as follows.
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BM&FBOVESPA
Details
Without
maturity
Up to 3
months
More than 3
months and
up to 12
months
More than 12
months and
up to 5 years
More than
5 years
Total
31/12/2008
Financial investment funds (1)
881,450
-
-
-
-
881,450
Interest bearing account (deposits
abroad)
181,317
-
-
-
-
181,317
Bank certificates of deposit
-
-
10,826
460
-
11,286
Securities purchased under resell
agreements
-
430,827
-
-
-
430,827
Financial Treasury Bills
-
88,377
35,096
141,318
308,290
573,081
National Treasury Bills
-
20
53,191
9,734
-
62,945
National Treasury Notes
-
-
71
167
32
270
Other investments
3,970
-
-
8,891
-
12,861
Total financial investments
1,066,737
519,224 99,184 160,570
308,322 2,154,037
Financial investments - short term
1,685,145
Financial investments - long term
468,892
CONSOLIDATED
Details
Without
maturity
Up to 3
months
More than 3
months and
up to 12
months
More than 12
months and
up to 5 years
More than
5 years
Total
31/12/2008
Financial investment funds (1)
881,734
-
-
-
-
881,734
Interest bearing account (deposits
abroad)
181,317
-
-
-
-
181,317
Bank certificates of deposit
-
-
10,826
1,219
-
12,045
Securities purchased under resell
agreements
-
486,327
-
-
-
486,327
Financial Treasury Bills
-
90,140
36,400
253,197
356,705
736,442
National Treasury Bills
-
20
53,264
9,734
-
63,018
National Treasury Notes
-
-
71
167
32
270
Other investments
3,970
-
-
8,891
-
12,861
Total financial investments
1,067,021
576,487 100,561
273,208
356,737 2,374,014
Financial investments - short term
1,744,069
Financial investments - long term
629,945
(1)
Investments in funds that invest in quotas of other financial investment funds, the portfolios
of which mainly comprise investments in federal government bonds and that have the CDI
as their profitability benchmark.

The main investment funds are detailed in the table below:
Fund Bank
Details Amount
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25
FIC Megainvest
Santander
Exclusive fund that invests in quotas of
other retail funds;
624,629
FIC Referenciado DI Federal
Bradesco
Retail fund that invest in quotas of other
retail funds;
151,890
FIC Bradesco 777
Bradesco
Exclusive fund that invests in quotas of
other retail funds.
104,735

The government bonds are held in custody with the Special System for Settlement and Custody
(SELIC), the quotas of investment funds are held in custody with their respective managers and the
shares are in the custody of CBLC.

Classification
Considering the nature and objective of the Company and its financial investments, these are
classified as financial assets calculated at fair value through income, designated by management
when they are first recorded.

Fair value

The fair value of the main financial investments is calculated as follows:

Quotas of investment funds ­ fair value calculated based on the amount of the quota determined on
the last business day prior to the balance sheet publication as disclosed by the corresponding
Manager.

Federal government securities ­ calculated based on the amounts and prices disclosed by the
National Association of Open Market Institutions (ANDIMA) or, when these are unavailable, on
the price defined by management which best reflects the sales price, determined based on
information gathered from other institutions.

Bank certificates of deposit (CDB) and securities purchased under resell agreements (guaranteed by
Federal Government Bonds) ­ calculated at amounts adjusted to the balance sheet date, based on
contractual interest, indexed to the CDI/Selic rate .

Restricted funds

With the objective to ensure the proper liquidation of trades carried out and as central counterparty
of all settlements, the Company maintains funds linked to its operations, which are restricted as
detailed below:
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BM&FBOVESPA and
Consolidated
Operational Fund of the Foreign Exchange
Clearinghouse
50,000
Guarantor Fund of the Floor-Traded Spot US
Dollar Market
15,000
Special Clearing Member Fund
40,000
Agricultural Market Trading Fund
50,000
Operational Fund of the Securities Clearinghouse
40,000
Guarantee Reserve for Trade Settlement
47,092
Mechanism for reimbursement - Guarantee funds
92,342
Federal Government Bonds restricted in
compliance with Article 5 of Law 10214 of March
27, 2001 (Special Equity)
108,398
Investments in investment funds linked to the
Settlement Fund (former CBLC).
159,742

Total Funds
602,574
Derivative financial instruments

The derivative financial instruments comprise One-Day Interbank Deposit Futures Contracts (DI1)
and are stated at their market values. These contracts are included in the exclusive fund portfolios
which were consolidated (Note 2(b)) and are used to cover the fixed interest rate exposure,
swapping the interest rate to floating (CDI). Even though these derivatives are designed to provide
protection, hedge accounting is not adopted.

We present below the positions, the object (element to be hedged) and the results of derivative
transactions for the year:
December 31, 2008
Notional amount
Market value
Amounts paid /
received during the
year
Interest rate
Future contracts ­ sold position
(31,080)
(32,499)
(7,292)

LTN
31,339
32,472
7,258

Net position
259
(27)
(34)

The DI1 contracts have the same maturity dates as the National Treasury Notes (fixed interest rate)
to which they are related. There are no derivative instruments contracted for speculative purposes.
Financial risk management policy
The Company's investment policy emphasizes low risk cash alternatives, mainly federal
government bonds, acquired frequently through investment funds. As a result, in general,
BM&FBOVESPA has most of its investments in conservative investment funds, with portfolios
backed by federal government bonds that are indexed to the SELIC/CDI rate.
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Sensitivity analysis

The table below presents a summary of the financial instruments exposure classified by market risk
factors at December 31, 2008:
Risk Factors (Consolidated)
Risk factor
Risk
Percentage
CDI
Falling CDI
96.68%
Fixed rate
Rising fixed rate
1.36%
USD Falling
dollar 1.37%
Inflation Falling
inflation
0.42%
Gold Falling
gold 0.17%
100.00%

Interest Rate Risk

This risk arises from the possibility that fluctuations in future interest rates for the corresponding
maturities could affect the fair value of the Company's transactions.
·
Floating-rate Position

As a financial investment policy and considering the need for immediate liquidity with the least
possible impact from interest rate fluctuations, the Company maintains its financial assets and
liabilities indexed to floating interest rates. The table Risk Factors (Consolidated) includes the
investments in CDB, securities purchased under resell agreement and quotas of retail investment
funds which use CDI as a benchmark.

This strategy minimizes the impact on the fair value or present value arising from possible
variations in future interest rates. Accordingly, the effective impact of these fluctuations on the fair
value of financial investments is not material.
·
Fixed-rate Position

The Company has a portion of its financial investments with net exposure to fixed interest rates.
However, in terms of percentage, considering the amounts involved as presented in the table Risk
Factors (Consolidated), the effects on the portfolio are not considered material.

Exchange rate risk

This arises from the possibility that fluctuations in the exchange rates for the acquisition of input
materials, product sales and the contracting of financial instruments could have an impact on the
related domestic currency amounts.

As well as the amounts payable and receivable in foreign currencies, the Company has third-party
deposits in foreign currency to guarantee the settlement of transactions by the foreign investors and
also own investments in currency abroad:

The table below shows the sensitivity analysis in a scenario considered to be the most probable
according to management, besides two other scenarios which could result in losses to the
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Caompany, should they happen. To establish these two scenarios, the Company considered a
reduction of 25% and 50% in the risk factor analyzed.
Scenarios
Probable
Possible - 25%
Remote - 50%
31/12/2008
Rate R$/US$
2.3370
2.3582
1.7687
1.1791
Net exposure
29,894
30,165
22,624
15,083
Effect
271
(7,270)
(14,811)

The most probable scenario for the exchange rate was defined using the future contract traded with
the shortest maturity date at December 31, 2008.

Inflation and gold position
Considering the amounts and percentages involved, as detailed in the table Risk Factors
(Consolidated), the effects on the portfolio are not considered material.

5
Accounts Receivable

The breakdown of accounts receivable is as follows:
BM&FBOVESPA Consolidated
Current
Classification fee receivable
95,812
95,999
Vendors ­ Signal broadcast
5,768 5,851
Loans to employees
293
293
Listing fees receivable
2,992
Other accounts receivable
5,467
2,893
Provision for doubtful accounts
(2,859)
(2,859)
Total 104,481
105,169

6
Other Receivables

Other receivables comprise the following:
BM&FBOVESPA
Consolidated
Current
Sale of properties receivable (1)
1,513
1,513
Restricted deposits (Banco BM&F S.A.)
1,778
Amounts receivable ­ Associação BM&F
4,295
4,295
Other accounts receivable
1,660
2,347
Total
7,468
9,933




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BM&FBOVESPA
Consolidated
Non-current
Brokers in liquidation (2)
-
10,425
Sale of properties receivable (1)
4,045
4,045
Other accounts receivable
2,531
3,316
Allowance ­ Other receivables (total) (2)
-
(6,425)
Total
6,576
11,361
(1)
Amounts receivable from the sale of properties, the amounts of which are being received in
monthly or annual installments, with final maturity in 2011.

(2)
Allowance for doubtful accounts recorded mainly on the balance of accounts receivable
from brokers in liquidation, which takes into consideration the equity memberships of the
brokers that are pledged.

7
Investments

a.
Investments in subsidiaries

Investments in subsidiaries comprise the following:
BM&FBOVESPA
Companies
Adjusted
shareholders'
equity
Total
amount
of
common
shares
Total number
of equity
memberships
% Stake
Accumulated
income
Equity in
income
Investment
31/12/08
Subsidiaries
Banco BM&F de Liquidação e
Custódia S.A.
34,680 24,000
100
5,019
4,953
34,680
Bolsa Brasileira de
Mercadorias
15,150
405
50,12
2,632
1,350
7,934
Bolsa de Valores do Rio de
Janeiro (BVRJ) (1)
57,057
115
86,09
1,829
946
48,381
BM&F USA Inc.
1,068
1,000
100
(871)
(871)
1,068
Total interests in subsidiaries
92,063
(1)
The balances consider the revaluation of properties of BVRJ, which produced an impact on
the revaluation reserve in the shareholders' equity of BM&FBOVESPA. At December 31,
2008, the balance of this reserve amounts to R$15,823 in BM&FBOVESPA.
The subsidiaries presented above were included in the consolidated financial statements, and
the investment amount was eliminated against the related equity amounts.

Activity in the investments during the year:
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Investments
BVSP
(formerly
Bovespa
Holding)
Banco
BM&F
Bolsa
Brasileira de
Mercadorias
Bolsa de
Valores do
Rio de
Janeiro
BM&F
USA Inc
Total
Balances merged
1,557,179
29,727
6,584
47,809
1,939 1,643,238
Equity in results
380,024
4,953
1,350
946
(871)
386,402
Dividends and interest on
own capital
(305,482)
-
-
- -
(305,482)
Realization of the
revaluation reserve
-
-
-
(374) -
(374)
Merged on 08/29/2008
(1,631,721)
-
-
-
- (1,631,721)
At December 31, 2008
-
34,680
7,934
48,381
1,068
92,063
(1) On November 28, 2008, approval was given at the Extraordinary General Meeting for the
merger into BM&FBOVESPA of the net book value of the companies Bolsa de Valores de São
Paulo S.A. ­ BVSP (formerly Bovespa Holding S.A.) and its subsidiary Companhia Brasileira
de Liquidação e Custódia ­ CBLC (Note 1).

b.
Other Investments
BM&FBOVESPA
Consolidated
CME Group (1)
1,276,199
1,276,199
Bovespa Supervisão de Mercado
20,000
20,000
Works of art
7,722
10,158
Works of art ­ Revaluation (2)
8,308
8,308
Properties 3,465
3,465
Other
152
152
Total
1,315,846
1,318,282
(1)
These are shares of CME Group arising from the merger of CMEG 2, evaluated based on
their cost, considering the 1.78% stake in the investee. For this investment, management
concluded that there are no indications based on internal and external sources that the
investment could lose economic value (become impaired).
(2)
The merged balances of BM&F S.A. include revaluation of works of art, recorded in 2007,
based on the appraisal report of experts, which in BM&FBOVESPA form part of the
revaluation reserve in shareholders' equity (Note 16(d).
c.
Special purpose entities
Exclusive investment funds

The balances related to the exclusive investment funds included in the consolidation process of
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31
these financial statements, under the terms of CVM Instruction 408, are summarized as follows:
Details
Supremo Renda Fixa ­ FICFI
Bradesco FI Multimercado
Letters

Assets
Cash and cash equivalents and financial investments
378,313
1,160
Other receivables
2
-
Total assets
378,315
1,160

Liabilities and equity
Accounts payable
12
6
Quotaholders' equity
378,303
1,154
Total liabilities and quotaholders' equity
378,315
1,160
8
Property and Equipment
At December 31, 2008, the breakdown of property and equipment is as follows:
BM&FBOVESPA
Details
Annual
depreciation
rate
Cost
Depreciation
Net
Buildings 4%
169,856
(86,920)
82,936
Furniture and fixtures
10%
27,392
(15,001)
12,391
Apparatus and equipment
10%
20,790
(12,470)
8,320
Computer-related equipment
20%
169,696
(116,000)
53,696
Facilities 10%
25,064
(13,681)
11,383
Telephone system
10%
18,006
(16,479)
1,527
Other
10% to 20%
29,101
(22,206)
6,895
Construction in progress
­
26,560
­
26,560
Total
486,465
(282,757)
203,708
Consolidated
Details
Annual
depreciation
rate
Cost
Depreciation
Net
Buildings 4%
209,828
(89,486)
120,342
Furniture and fixtures
10%
27,921
(15,334)
12,587
Apparatus and equipment
10%
20,949
(12,529)
8,420
Computer equipment
20%
170,418
(116,705)
53,713
Land
5,614
­
5,614
Facilities 10%
26,094
(14,013)
12,081
Telephone system
10%
18,018
(16,490)
1,528
Other
10% to 20%
29,273
(22,269)
7,004
Construction in progress
26,561
­
26,561
Total
534,676
(286,826)
247,850
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9
Intangible Assets

Goodwill

The goodwill on the acquisition of Bovespa Holding was calculated as the difference between the
market value of the Bovespa Holding shares that were merged (purchase amount), in the amount of
R$ 17,942,091 and the book value of the Bovespa Holding net equity at December 31, 2007, in the
amount of R$ 1,543,799, adjusted by the following events which occurred between December 31,
2007 and the date of the merger: (i) capital increases in the amount of R$ 37,028, (ii) payment of
interest on own capital in the amount of R$ 23,444 and adjustment of the amount of proposed
dividends for 2007 in the amount of R$ 205.

The market value of the merged Bovespa Holding shares was determined based on the average
price weighted by the financial volume traded, adjusted by amounts distributed, as observed in
BVSP trading in the 30 days that preceded the disclosure of the Significant Event on February 19,
2008.

The goodwill determined above in the amount of R$16,384,912 was subdivided into (i) downward
net market value adjustment of assets, comprising the difference between the book value of the
company acquired and the fair value of the assets and liabilities in the amount of (R$ 3,819)and (ii)
future profitability, comprising the difference between the fair value of assets and liabilities and the
purchase amount of R$ 16,388,731, under the terms of CVM Instructions 247 and 285.
The portion corresponding to the market value adjustment of assets was allocated to the
corresponding assets acquired and subsequently merged. The table summarizes these adjustments:
Investments
1,227
Property and equipment
489
Intangible - software
(5,535)

Total
(3,819)
The remaining portion of goodwill in the amount of R$ 16,388,731 is based on estimated future
income and supported by an economic and financial appraisal report of the investment. Up to
December 31, 2008, goodwill was amortized in the amount of R$ 324,421 considering a period of
10 years, calculated based on the extent of and in proportion to the estimated results on which the
goodwill was based.

In accordance with the new pronouncements issued by CPC, the portion based on the expectation of
future earnings will no longer be amortized as from January 1, 2009 and will be subject annually to
impairment testing, pursuant to Technical Pronouncement CPC 01.

The goodwill based on expected future income was tested for impairment at the end of 2008. The
test, based on an appraisal report prepared by specialists, did not reveal the need for any
adjustments to the goodwill amount.

The key assumptions used to project the future cash flows of BM&FBOVESPA, in the segment
BOVESPA, were based in the analyses of the performance over the last years and on the
expectations of growth in the market in which it operates, as well as management expectations and
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strategies for the next 10 years.

The cash flows were projected in nominal terms, i.e. they take into account future inflation and
were projected for the period between December 1, 2008 to December 31, 2017.

The residual value was determined based on the present value of the perpetuity of the cash flows for
the last year projected, including a nominal and constant increase, equivalent to the expected growth
of the Brazilian GDP plus the expected inflation.

The discount rate used to calculate the present value of the cash flows projected was 18.88% p.a.

The macroeconomic assumptions used in the projections were based on the Focus Report from the
Brazilian Central Bank:
Macroeconomic indicators projected
2009
2010
2011
2012-2017
GDP growth
2.77%
3.88%
4.23%
4.34%
Brazil (IPCA)
(inflation)
5.24%
4.53%
4.39%
4.33%
USA inflation
2.35%
2.35%
2.35%
2.35%
Source: Central Bank Focus Report

Software and projects

The balance at December 31, 2008 comprises costs for the acquisition and development of software
and systems in the net amount of R$2,478, with amortization rates of 20% to 33% per annum, and
expenditures in the amount of R$ 22,800 for the implementation and development in progress of
new systems and software.

10
Earnings and Rights on Securities in Custody

These comprise dividends and interest on capital received on behalf of the owners of securities from
listed companies, which will be transferred to the custody agents and subsequently to their clients,
who are the owners of the shares.

11
Provision for Taxes and Contributions Payable

At December 31, 2008, the breakdown of this balance was as follows:
Details
BM&FBOVESPA
Consolidated
Withholding taxes and contributions payable
29,626
29,674
PIS/Cofins 8,904
9,014
ISS (Municipal service tax)
1,535
1,566
Total 40,065
40,254
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12
Redemption of Preferred Shares to be Settled

As described in Note 1, the former shareholders of Bovespa Holding received redeemable preferred
shares from BM&FBOVESPA following the merger of Bovespa Holding shares. These shares were
redeemed on May 8, 2008, with the consequent cancellation of the preferred shares against the
capital reserve, with no capital decrease, resulting in a liability to BM&FBOVESPA payable to the
shareholders in the amount of R$ 1,240,000.

A significant portion of the liabilities related to the redemption of the preferred shares was settled in
June 2008.

At December 31, 2008, the remaining balance amounts to R$ 4,132 and mainly refers to amounts
payable to foreign investors.

13
Financing

The Company has a financing balance related to financial leases. This balance at December 31,
2008 was R$ 4,087.

14
Other Accounts Payable

BM&FBOVESPA
Consolidated
Custody agents
3,825
3,825
Legal counsel
512
512
Finep ­ Carbon credits
320
320
Demand deposits (1)
-
30,619
Liabilities for securities purchased under
resell agreements (1)
-
130,608
Other 2,965
3,089
Total 7,622
168,973

Current 6,001
168,404
Non-current 1,621
569

(1) Balances related to the transactions of Banco BM&F S.A.

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15
Contingent Assets and Liabilities
a.
Contingent assets

BM&FBOVESPA has no contingent assets recognized in its balance sheet, and at present no
lawsuits which are expected to give rise to future gains.
b.
Contingent liabilities

BM&FBOVESPA and its subsidiaries are defendants
in a number of labor, tax and civil
lawsuits which have arisen during their normal operating activities.

The procedure utilized by BM&FBOVESPA for recognition of these obligations is that
specified in CVM Deliberation 489. The lawsuits are classified by their probability of loss
(probable, possible or remote), based on an evaluation using parameters such as previous
judgments and the history of loss in similar suits.

The proceedings in which the loss is evaluated as probable mainly comprise the following:
·
Labor claims mainly filed by employees of outsourced service providers, on account of alleged
noncompliance with labor legislation. There are also claims filed by former BVRJ employees,
specifically as regards to noncompliance with rules related to collective bargaining agreements;
·
Civil proceedings, mainly consisting of matters pertaining to civil liability for losses and
damages.
c.
Legal obligations

These are proceedings in which BM&FBOVESPA seeks exemption from (i) social security
contributions on payroll and payments to self-employed professionals, as well as discussions
over the legality of Labor Accident Insurance (SAT) charges; (ii) PIS and Cofins on income
related to interest on own capital received.
A provision for the amounts related to legal obligations is recorded in full.
d.
Changes in balances

The activity in provisions for contingencies and legal obligations may be summarized as
follows:
BM&FBOVESPA
Civil
Labor
Legal
obligations
Total
Merger amounts
3,620
3,243
22,737
29,600
New provisions
473
13,122
13,595
Amounts written off/used
(703)
(71)
(774)
Revaluation of contingent risks
(5)
(164)
(169)
Price-level restatement
421
321
663
1,405
At December 31, 2008
3,333
3,802
36,522
43,657


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36
Consolidated
Civil
Labor
Legal
obligations
Total
Merger amounts
7,015
4,284
23,036
34,335
New provisions
13
1,013
13,122
14,148
Amounts written off/used
(3,648)
(212)
(3,860)
Revaluation of contingent risks
86
(146)
(60)
Price-level restatement
434
482
681
1,597
At December 31, 2008
3,900
5,421
36,839
46,160

At December 31, 2008, BOVESPA had judicial deposits of R$ 92,513 and consolidated judicial
deposits of R$ 93,885 recorded in non-current assets.
e.
Possible losses

The proceedings classified as a "possible loss" are so classified as a result of uncertainties
surrounding their outcome. They are lawsuits for which jurisprudence has not yet been defined
or which still depend on verification and analysis of the facts, or even present specific aspects
that reduce the chances of loss.

BM&FBOVESPA and its subsidiaries have tax, civil and labor lawsuits involving risks of loss
classified by management as possible, based on the evaluation of their legal advisors, for which
no provision has been recorded. These proceedings comprise the following:

·
Labor proceedings, mainly claims filed by employees of outsourced service providers, on
account of alleged noncompliance with labor legislation. The amounts related to the
lawsuits classified as possible at December 31, 2008 are R$ 6,926 in the parent company
and R$ 8,065 on a consolidated basis.
·
Civil proceedings mainly consist of matters pertaining to civil liability for losses and
damages. The amount involved in the lawsuits classified as possible at December 31, 2008
is R$ 1,341 in the parent company and on a consolidated basis.
·
Tax proceedings of BM&FBOVESPA and its subsidiaries mainly dispute the classification
of exchanges as subject to the payment of social contributions. Most of these amounts are
related to 2 lawsuits filed by BM&FBOVESPA against the Federal Government alleging
that the Company was not subject to the payment of social contributions prior to the 1999
fiscal year. The amount involved in the aforementioned proceedings as of December 31,
2008 is R$ 77,170 in the parent company and on a consolidated basis.
f.
Remote losses

BM&FBOVESPA, as successor of the former BOVESPA, and the subsidiary BVRJ are
defendants in an action for material damages and pain and suffering filed by Mr. Naji Robert
Nahas, Selecta Participações e Serviços SC Ltda. and Cobrasol-Companhia Brasileira de Óleos
e Derivados, on the grounds of alleged losses in the stock market sustained in June 1989. The
sum assigned to the cause by the plaintiffs is R$ 10 billion. In relation to the material damages
and pain and suffering claimed, the plaintiffs ask that BVRJ and BM&FBOVESPA be
sentenced in proportion to their responsibilities. On January 22, 2009, a sentence was published
in which the claims made by the plaintiffs were considered completely unfounded. The
Company and its legal advisors consider that the chances of loss in this lawsuit are remote.
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16
Shareholders' Equity
a.
Capital

BM&FBOVESPA's capital is R$ 2,540,239, comprising 2,044,014,295 nominative common
shares with voting rights and no par value.

Capital formation
Number
of
Shares In
reais
Initial capital
T.U.T.S.P.E Empr. Partic. S.A..
4
1
Merger
BM&F S.A.
1,010,785,800
1,010,785
Bovespa Holding
1,030,012,191
1,526,237
Capital increase ­ stock options (1)
3,216,300 3,216
Total 2,044,014,295
2,540,239

(1) At the meeting held on August 19, 2008, the Board of Directors approved the issue of 3,216,300
common shares to cover the exercising of stock options granted to beneficiaries under
BM&FBOVESPA's stock options plan (Note 19)
b.
Treasury Stock
Share buyback program
On September 24, 2008, the Board of Directors approved the Company's Share Buyback
Program.

The shares can be acquired over a period of 365 days up to September 23, 2009.

The Company commenced the repurchase of shares on September 29, 2008 and by December
31, 2008, 34,191,200 common shares (48% of the total program) had been acquired.

The maximum number of common shares to be acquired is 71,266,281, or 3.5% of the total
number of outstanding shares.

At the meeting held on December 16, 2008, the Board of Directors ratified again the
Company's Share Buyback Program whereby the repurchased shares can be cancelled or used
for purposes of the Company's Stock Option Plan.

Treasury shares
We present below the activity of treasury stock during the year:
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Number
of
Shares
Opening balance
-
Shares acquired from dissident shareholders
4
Acquisition of shares ­ Buyback program
34,191,200
Shares sold ­ stock options (Note 19)
(1,167,000)
At December 31, 2008
33,024,204
Average cost of treasury stock (in reais)
5,62

Cost of treasury stock (in thousands of reais)
185,880
Market value of treasury stock at December 31, 2008
(in thousands of reais)
198,806
c.
Dividends and interest on own capital

Pursuant to the bylaws, the shareholders are guaranteed interest on own capital or dividends, at
a minimum percentage of 25% of the net income of the Company, adjusted under the terms of
Brazilian Corporation Law.

The proposal of dividends, subject to the approval of the shareholders at the General Meeting,
calculated under the terms of the aforementioned law, especially as regards Articles 196 and
197, is as follows:
Net income for the year
645,596
Transfer to reserves
Legal
(*)
-
Calculation basis of dividends
645,596
Proposed dividends
203,644
Interest on own capital
309,118
512,762
Percentage on net income for the year
79.4%

(*) No legal reserve is required since its amount added to the amount of the capital reserves
totals more than 30% of capital.
Gross Amount
Amounts paid
Interest on own capital ­ Board of Directors' Meeting of BM&F S.A. on
March 25, 2008 - R$ 0.02032 per share
20,539
Interest on own capital ­ Board of Directors' Meeting of BM&F
BOVESPA on August 14, 2008 - R$ 0.072995 per share
149,203
Dividends ­ Board of Directors' Meeting of BM&F BOVESPA on August
14, 2008 - R$ 0.069969 per share
143,019
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Gross Amount
Amounts recorded as a provision
Interest on own capital ­ Board of Directors' Meeting of
BM&FBOVESPA on December 19, 2008 - R$ 0.069307 per share
139,376
Dividends ­ Board of Directors' Meeting of BM&FBOVESPA on March
17, 2009 ­ R$ 0.0303174
60,625

512,762
d.
Revaluation reserves

Revaluation reserves were established as a result of the revaluation of works of art in
BM&FBOVESPA on August 31, 2007 and of the property of the subsidiary BVRJ, based on
independent experts' appraisal reports.

At December 31, 2008, the breakdown of the revaluation reserve was as follows:
BM&FBOVESPA
December 31,
2008 Realization method
Own assets
Works of art
8,308
Disposal
BVRJ's assets
Property 13,388
Depreciation
Land 2,435
Disposal
Total 24,131

e.
Statutory reserves

Their purpose is to form funds and safeguard mechanisms required for the adequate
development of the activities of BM&FBOVESPA., guaranteeing the proper settlement and the
reimbursement of losses arising from the intermediation of transactions carried out in its auction
systems and/or registered in any of its trading, registration, clearing and settlement systems, and
from custody services.

Note 18 describes the situations in which the resources that make up the statutory reserve of the
funds that form an integral part of the Foreign Exchange, Derivatives and Securities
Clearinghouses and of the Guarantee Fund may be utilized, and the procedures to be adopted
for this purpose.
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17
Related Party Transactions
a.
Transactions and balances with related parties
Assets(liabilities)
Income(expense)
BM&FBOVESPA
December 31, 2008
Year ended December
31, 2008
Bolsa de Valores do Rio de Janeiro
Accounts payable
(1,361)
Social contribution on equity
memberships
(475)
Banco BM&F de Serviços de Liquidação e
Custódia S.A.
Cash and cash equivalents
2,760
Accounts receivable
457
Recovery of expenses
3,325
Bolsa Brasileira de Mercadorias
Minimum contribution on equity
memberships
(150)
Recovery of expenses
2,184
BM&FBOVESPA Supervisão de
Mercados
Accounts receivable
405
Recovery of expenses
1,483
Instituto BM&FBOVESPA
Accounts receivable
441
Donation
(9,250)
Recovery of expenses
441

The main transactions with related parties are listed below and were carried out under the
following conditions:
BM&FBOVESPA pays a minimum monthly fee to BVRJ and Bolsa Brasileira de Mercadorias in
exchange for equity membership of these associations.

BM&FBOVESPA, by request of Banco BM&F, Bolsa Brasileira de Mercadorias and Associação
BM&F, contracts companies specialized in providing information technology services designed to
support the activities of these entities and transfers the respective costs incurred, in full, to the first
two entities.

Banco BM&F entered into an agreement with BM&FBOVESPA which, in addition to granting
occupancy of a building owned by the latter, also establishes the utilization of its technology
infrastructure and also its personnel, with transfer of the corresponding costs.

BSM has entered into an agreement with BM&FBOVESPA for the transfer and recovery of costs
which establishes the reimbursement to BM&FBOVESPA of the net amount paid monthly for
expenses incurred in contracting resources and for the infrastructure made available to BSM to
assist in the performance of its supervisory activities.
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b.
Remuneration of key management personnel
Key management personnel include Members of the Board, Executive Officers, the Head of
Internal Audit and the Director of Human Resources.
At December 31,
2008
Management benefits
Short-term benefits (salaries, participation in results, etc.)
14,750
Post-employment benefits
42
Employment contract rescission benefits
6,161
Share based remuneration (1)
14,202
(1) Represents the expense calculated for the year in relation to the stock options granted to key management
personnel which was recognized in accordance with the criteria described in Note 19.

18 Safeguard
Structure
a.
Risk management

Credit risk - Performance of BM&FBOVESPA as a central counterparty (CCP) guarantor of
markets (Clearing)

BM&FBOVESPA manages four clearinghouses considered systematically important by the
Central Bank of Brazil, i.e. the Derivatives, Foreign Exchange and Securities Clearinghouses
and, through its wholly-owned subsidiary CBLC, the Equity and Private Debt Clearinghouse.

The activities carried out by the clearinghouses of BM&FBOVESPA are governed by Law
10214, of March 27, 2001, which authorizes the multilateral clearing of obligations, establishes
the central counterparty role of the systemically important clearinghouses and permits the
utilization of the collateral obtained from the defaulting participants to settle their obligations in
the clearinghouse environment, including in cases of civil insolvency, composition with
creditors, intervention, bankruptcy and out-of-court liquidation.

Through these Clearinghouses, BM&FBOVESPA acts as a CCP in the derivatives market
(futures, forwards, options and swaps), in the equity market (spot, forwards, options and
futures), the foreign exchange market (spot US dollar), the federal government bond market
(spot and forward transactions and securities loans) and private debt securities (spot and
securities loans). In other words, by assuming the role of a central counterparty,
BM&FBOVESPA becomes responsible for the proper settlement of trades carried out and/or
registered in its systems, as established in the regulations in force..

The performance of BM&FBOVESPA as a central counterparty exposes it to the credit risk of
the participants that utilize its settlement systems. If a participant fails to make the payments
due, or to deliver the assets, securities and/or commodities due, it will be incumbent upon
BM&FBOVESPA to resort to its safeguard mechanisms, in order to ensure the proper
settlement of the transactions in the established time frame and manner. In the event of a failure
or insufficiency of the safeguard mechanisms of its Clearinghouses, BM&F BOVESPA might
have to use its own equity, as a last resort, to ensure the proper settlement of trades.
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The BM&FBOVESPA Clearinghouses are not directly exposed to market risk, as they do not
hold net long or net short positions in the various contracts traded. However, the increase of
price volatility can affect the magnitude of amounts settled by the various market participants,
and can also heighten the probability of default by these participants. Furthermore, as already
emphasized, the Clearinghouses are responsible for the settlement of the trades of a defaulting
participant, which could result in losses for BM&FBOVESPA if the amounts due surpass the
amount of collateral available. Accordingly, despite the fact that there is no direct exposure to
market risk, this risk can impact and increase the credit risks assumed.

To mitigate the risks assumed, each BM&FBOVESPA Clearinghouse has its own risk
management system and safeguard structure. The safeguard structure of a Clearinghouse
represents the set of resources and mechanisms that it can utilize to cover losses relating to the
settlement failure of one or more participants. These systems and structures are described in
detail in the regulations and manuals of each Clearinghouse, and have been tested and ratified
by the Central Bank of Brazil, in accordance with National Monetary Council (CMN)
Resolution 2882 and BACEN Circular 3057.

The main components of the safeguard structure of the Derivatives Clearinghouse are described
below:

·
Collateral deposited by derivatives market participants;

·
Joint responsibility for trade settlement by the brokerage house and clearing member which
acted as intermediaries, as well as the collateral deposited by these participants;
·
Operational Performance Fund, with the amount of R$ 1,145,908, at December 31, 2008,
formed by resources transferred by holders of settlement rights at the Derivatives
Clearinghouse (clearing members) and holders of full trading rights, with the exclusive
purpose of guaranteeing the operations;
·
Agricultural Market Trading Fund, with the amount of R$ 50,000, intended to hold
resources of BM&FBOVESPA allocated to guarantee the proper settlement of transactions
with agricultural commodity contracts;
·
Special Clearing Member Fund, with the amount of R$ 40,000, formed by a capital transfer
from BM&FBOVESPA., intended to hold BM&FBOVESPA resources allocated to
guarantee the proper settlement of transactions, regardless of the type of contract;
·
Clearing Fund, with the amount of R$ 387,235, formed by collateral transferred by clearing
members, intended to guarantee the proper settlement of transactions after the resources of
the two previous funds have been used;
·
Special equity with the amount of R$ 28,808 at December 31, 2008, in compliance with the
provisions of Article 5 of Law 10214, of March 27, 2001 and of Article 19 of Circular
3057 of the Brazilian Central Bank, of August 31, 2001.

The main components of the safeguard structure of the Foreign Exchange Clearinghouse are
described below:
·
Collateral pledged by foreign exchange market participants;
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43
·
Participation fund, with the amount of R$140,584 at December 31, 2008, formed by
collateral transferred by Clearinghouse participants, intended to guarantee the proper
settlement of transactions;
·
Operational Fund of the Foreign Exchange Clearinghouse, with the amount of R$ 50,000,
with the purpose of maintaining funds of BM&FBOVESPA to cover losses resulting from
operating or administrative failures;
·
Guarantor Fund of the Floor-Traded Spot US Dollar Market, with the amount of R$ 15,000,
with the purpose of maintaining funds of BM&FBOVESPA to cover the price variation risk
between the moment a spot US dollar transaction is matched on the floor and its acceptance
by the banks for which it is specified;
·
Special equity with the amount of R$ 28,808 at December 31, 2008, in compliance with the
provisions of Article 5 of Law 10214, of March 27, 2001 and of Article 19 of Circular
3057 of the Brazilian Central Bank, of August 31, 2001.
The main components of the safeguard structure of the Securities Clearinghouse are described
below:
·
Collateral deposited by federal government bond market participants;
·
Operational Fund of the Securities Clearinghouse, with the amount of R$ 40.000, with the
purpose of maintaining funds of BM&FBOVESPA to cover losses resulting from operating
or administrative failures of participants;
·
Special equity with the amount of R$ 20,277 at December 31, 2008, in compliance with the
provisions of Article 5 of Law 10214, of March 27, 2001 and of Article 19 of Circular
3057 of the Brazilian Central Bank, of August 31, 2001.
The main components of the safeguard structure of CBLC are described below:

·
Collateral deposited by CBLC's market participants;
·
Joint responsibility for trade settlement by the brokerage house and clearing member that
acted as intermediaries, as well as the collateral deposited by these participants;
·
Settlement Fund, with the amount of R$ 350,210 at December 31, 2008, formed by
collateral transferred by clearing members and by CBLC, intended to guarantee the proper
settlement of transactions;
·
Special equity with the amount of R$ 30,374 at December 31, 2008, in compliance with the
provisions of Article 5 of Law 10214, of March 27, 2001 and of Article 19 of Circular
3057 of the Brazilian Central Bank, of August 31, 2001.
Guarantee Reserve for Trade Settlement, with the amount of R$ 47,092, for the purpose of
forming the safeguard mechanisms needed for the proper development of BM&FBOVESPA's
activities, ensuring the proper settlement and reimbursement of losses resulting from
intermediation of trades executed in its auction system and/or registered in any of its trading,
registration, clearing and settlement systems, and from custody services.
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The risk management policy adopted by the Clearinghouses is established by the
BM&FBOVESPA Risk Committee, in which BM&FBOVESPA officers participate, including
the Chief Executive Officer, the Clearinghouses' Chief Officers, the Depositary Chief Officer
and the Risk Chief Officer, the Operations and IT Chief Officers, the Products Chief Officer, as
well as the Risk Management Systems Officer and the Trading Officer, among others. The main
duties of the Committee are (i) the evaluation of the macroeconomic and political environment
and of its impacts on the markets managed by BM&FBOVESPA. (ii) the determination of the
models utilized for calculation of collateral and for control of the intraday risk of the
transactions performed, (iii) the definition of parameters utilized by these models, especially the
stress scenarios referring to each type of risk factor, (iv) the assets accepted as collateral, their
form of valuation, maximum limits of use and applicable haircut factors, and (v) other studies
and analyses.

In view of the amounts involved, the collateral pledged by the participants who carry out the
transactions represents the most significant component of the Clearinghouse safeguard
structures.

For most of the contracts, the amount required as collateral is calculated so as to cover the
market risk of the transaction, i.e. its price volatility, during the time frame of two days, which
is the maximum time expected for the settlement of the positions of a defaulting participant.
This time frame may vary depending on the nature of the contracts and assets negotiated.

The models utilized in the margin requirement calculation are based on stress testing, a
methodology that seeks to gauge market risk considering not only the recent historical price
volatility, but also the possibility of unexpected events that could modify the historical patterns
of prices and of the market in general.

The main parameters utilized by the margin calculation models are the stress scenarios, defined
by the Risk Committee for the risk factors that affect the prices of contracts and securities
traded at BM&FBOVESPA. Among the main risk factors are the Brazilian real/US dollar
exchange rate, the term structure of the local fixed interest rate, the term structure of the US
dollar interest rate, the Bovespa Index and the cash prices of shares, among others.

In the definition of stress scenarios, the Risk Committee utilizes a combination of quantitative
and qualitative analyses. The quantitative analysis is conducted with the support of statistical
models of risk estimation, such as the Extreme Value Theory (EVT), estimation of implied
volatilities, and GARCH family models, besides historical simulations. The qualitative analysis,
in turn, considers aspects related to the domestic and international economic and political
environments, and their possible impacts on the markets managed by BM&FBOVESPA.

Market risk - Investment of cash funds
Considering the importance of BM&FBOVESPA's equity as a last resource available in the
safeguard structure of its Clearinghouses, its investment policy emphasizes low risk cash
alternatives, normally federal government bonds, including exposure through exclusive and
retail funds. As a result, in general, BM&FBOVESPA has most of its investments in
conservative investment funds, with portfolios backed by federal government bonds that are
indexed to the SELIC/CDI rate.
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b.
Collateral for transactions

Transactions performed in the BM&FBOVESPA markets are backed by cash margin deposits,
government bonds and private securities, letters of credit and other financial instruments. At
December 31, 2008, the pledged collateral totaled R$ 125,676,805, as follows:
Derivatives Clearinghouse
Federal government bonds
89,760,722
Letters of credit
3,690,835
Equities
2,678,991
Bank certificates of deposit
2,161,736
Gold
319,831
Cash (1)
327,644
FIC Banco BM&F Investment Fund
78,130
FIF BB-BM&F Investment Fund
29,049
Rural Product Note
829
Subtotal
99,047,767
Foreign Exchange Clearinghouse
Federal government bonds
3,550,223
Cash (1)
174,060
Subtotal
3,724,283
Securities Clearinghouse
Federal government bonds
1,423,484
Shares Clearinghouse - CBLC
Federal government bonds
10,185,946
Equities
9,101,835
International bonds (2)
1,219,499
Bank certificates of deposit (CDBs)
467,649
Letters of credit
239,625
Cash (1)
101,927
Gold
25,958
FIF BB-CBLC
6,140
Other
132,692
Subtotal
21,481,271
Total
125,676,805
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(1)
The balance of collateral recorded in current liabilities refers to deposits in currency. The
availability of these funds is managed and their utilization is dependent on the fluctuation of
the required margin balance.
(2)
US and German federal government bonds.
c.
Other information - Clearing Fund (Derivatives Clearinghouse)

This is formed by funds invested by the clearing members, with the exclusive purpose of
guaranteeing transactions, and may include bank letters of credit, government bonds and private
securities, cash, gold and other assets, at the sole discretion of BM&FBOVESPA. Collateral
represented by securities and other assets depends on prior approval from BM&FBOVESPA.

The liability of each clearing member is joint and limited, individually. At December 31, 2008,
the Clearing Fund was comprised as follows:
Composition

Federal government bonds
324,979
Letters of credit
30,000
Bank certificates of deposit
18,560
Equities
7,763
Gold
1,928
Cash(1)
4,005
FIF BB-BM&F
1
Amounts deposited
387,236
Amounts that ensure clearing member/trader
participation
(333,500)
Excess collateral
53,736
The minimum contribution for each clearing member is R$ 2,000, R$ 3,000 and R$ 4,000,
depending on whether this member is the holder of a type 1, type 2 or type 3 settlement right,
respectively, in the Derivatives Clearinghouse. In addition, each clearing member must
contribute R$ 500 per participant entitled to trade under their responsibility. The total amount
deposited to the Clearing Fund is R$ 333,500, at December 31, 2008, while the remainder refers
to the surplus of non-enforceable deposited collateral.

d.
Operational Performance Fund (Derivatives Clearinghouse)

This fund is formed by resources transferred by holders of settlement rights in the Derivatives
Clearinghouse (clearing members) and holders of full trading rights, with the exclusive purpose
of guaranteeing transactions. These resources can take the form of bank letters of credit,
government bonds and private securities, cash, gold and other assets, at the sole discretion of
BM&FBOVESPA. Collateral represented by securities and other assets depend on prior
approval from BM&FBOVESPA.
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The Operational Performance Fund presents the following position at December 31, 2008:
Composition
Federal government bonds
863,451
Letters of credit
160,730
Bank certificates of deposit
98,683
Equities
17,647
FIC Banco BM&F
4,177
Cash (1)
1,220
Amounts deposited
1,145,908
Amounts that ensure clearing member/trader
participation
(1,026,700)
Excess collateral
119,208

(1)
The balance of collateral recorded in current liabilities refers to deposits in currency. The
availability of these funds is managed and their utilization is dependent on the fluctuation of
the required margin balance.
The minimum contribution for each clearing member is R$5,500, R$ 6,500 and R$ 7,500,
depending on whether this member is the holder of a type 1, type 2 or type 3 settlement right,
respectively, in the Derivatives Clearinghouse.
The minimum contribution for each commodities broker is R$6,000 for holders of full trading
rights. The minimum contribution of the holders of full trading rights of interest, exchange
rates and Ibovespa is R$4,000. The minimum contribution for the holders of the trading rights
of other contracts settled in the Derivatives Clearinghouse is R$ 3,000.
The minimum contribution for each special operator is R$ 1,600 for the holders of full trading
rights and restricted trading rights of interest, exchange rates and Ibovespa. For the holders of
trading rights of other contracts settled in the Derivatives Clearinghouse, the minimum
required contribution is R$1,000.
e.
Participation fund (Foreign Exchange Clearinghouse)

Formed by deposits, in assets and currencies, required for the authorization of participants in
the Foreign Exchange Clearinghouse. Their purpose is to guarantee performance of the
obligations assumed by them.

At December 31, 2008, the Participation Fund presents the following position:
Composition

Federal Government Bonds
140,584
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f.
Guarantor Fund of the Floor-Traded Spot US Dollar Market (Foreign Exchange
Clearinghouse)

Formed by deposits in assets and currencies by the foreign exchange clearinghouse participants
and by funds of BM&FBOVESPA to cover the price variation risk between the moment a spot
US dollar transaction is matched on the floor and its acceptance by the banks for which it is
specified.

At December 31, 2008, the Guarantor Fund of the Floor-Traded Spot US Dollar Market
presents the following position:

Composition

Federal government bonds
13,812
Letters of credit
240
Cash
480
Investment of BM&FBOVESPA
15,000
Amounts deposited
29,532
g.
CBLC's Settlement Fund
The Settlement Fund is formed by funds provided by CBLC's clearing agents and funds from
BM&FBOVESPA for sole purpose of covering losses that may arise from default and/or to
provide liquidity to cover possible mismatches in connection with the clearing and settlement
process of the transactions.

At December 31, 2008, the Settlement Fund presents the following position:
Composition

Federal government bonds
190,629
Investments of BM&FBOVESPA in exclusive
investment funds, federal government bonds and
securities purchased under resell agreements
159,580
Amounts deposited
350,209
h.
Guarantee funds and Mechanism for reimbursement
BM&FBOVESPA maintains a Guarantee Fund, in the form of a statutory reserve, with the
amount of R$ 92,342 for the sole purpose of assuring its clients that hold trading and
settlement rights the reimbursement of certain losses provided for in the regulations.

The subsidiaries Bolsa Brasileira de Mercadorias and Bolsa de Valores do Rio de Janeiro
(BVRJ) also maintain Guarantee Funds, special purpose entities without a legal status. The
maximum liability of these Guarantee Funds is limited to the sum of their net assets.
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BSM also manages a Mechanism for Reimbursement of Losses, the sole purpose of which is to
assure reimbursement of loss to clients of brokerage firms that trade in BM&FBOVESPA upon
the occurrence of events determined in the regulation. The purpose of these funds is to assure
that their members' clients are refunded for losses resulting from errors in the execution of
orders accepted and from inadequate or irregular use of funds belonging to clients, under the
terms of CVM Instruction 461/07.

We present below a summary of the main accounting balances of these mechanisms:
Descrição
Guarantee Fund -
Bolsa Brasileira de
Mercadorias
Guarantee Fund ­
BVRJ
Mechanism for
Reimbursement of
Losses
Ativo
Cash in banks and financial investments (1)
666
32,511
174,053
Sundry credits
19
5,915
3,936
Total assets
685
38,426
177,989
Passivo
Provision for contingencies
-
38,035
-
Other liabilities
4
1,250
1,114
Net assets
681
(859)
176,875
Total liabilities and net assets
685
38,426
177,989

(1)
The amount of R$29,447, included in cash in banks and financial investments of the
Guarantee Fund of BVRJ is tied to a lawsuit, as is the total amount of sundry credits.

19 Employee
Benefits
Stock options ­ BM&F S.A. (Transferred to BM&FBOVESPA)
At the AGE held on September 20, 2007, approval was given for an option plan for shares issued by
BM&F S.A. for the purpose of "granting purchase rights on a number of shares, for recognition and
retention of the employees of BM&F S.A. and, subsequently, of the Company, after May 8, 2008,
up to a limit of 3% of the Company's capital stock".

The stock options granted under the stock option purchase plan of the extinct BM&F were assumed
by BM&FBOVESPA, as decided at the AGE of May 8, 2008.

On December 18, 2007, 27,056,316 stock options were granted under the plan with a fixed exercise
price of R$ 1.00 per share. Subsequent to this date, no further stock options were granted or vesting
conditions changed under this plan. The number of stock options at December 31, 2008 totaled
14,843,088.

The Plan was mainly devised to provide managers and employees of the former BM&F (i) with
consideration for services carried out by the beneficiaries during the period prior to the
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demutualization process and also (ii) to retain professionals for a period of four years subsequent to
the approval of the Plan and IPO.

The main items used as a basis for acknowledging these services and for allocating the options
granted were:
(i)
Exercise price fixed at R$ 1.00
(ii)
Right to exercise options even if the beneficiary is dismissed by the Company, as well
as on retirement, dismissal as a result of disability or death of the beneficiary.
(iii)
Number of years of service of each beneficiary
(iv)
Different period for each exercise of options

In compliance with the provisions of CPC 10 ­ Share-based Payment, approved by CVM
Deliberation 562/08, the obligations generated by the stock options existing at December 31, 2008
are recognized during the period in which the right was obtained (in general, the period during
which the service is provided) and accordingly have the following impacts: (i) directly in
shareholders' equity, with respect to prior periods, related to consideration for services carried out
prior to the date of the adoption of CPC 10, i.e. January 1, 2008; as well as (ii) in the statement of
income, in relation to the portion of services carried out in 2008; and (iii) on a prospective basis,
over the next three years, established to meet the plan vesting conditions (provision of future
services).

As a result, the Company recognized, as an effect of the adoption of CPC 10, the amount of
R$229,519 directly against revenue reserves as a counter-entry to capital reserves. Expenditures for
2008 totaled R$25,935. In addition, the Company considered in this calculation an estimated
turnover of 5%, i.e. the estimated number of options which will not vest due to employees who opt
to leave the Company.

Stock options ­ BM&FBOVESPA's Plan

On May 8, 2008, at the AGE of BM&FBOVESPA, approval was given to institute a stock option
plan within the authorized limit of 2.5% of the Company's capital.

On November 11, 2008, the Board of Directors approved the Stock Option Plan, defining its
operation and objectives, which are to align the interests of shareholders with those of directors,
managers, employees and service providers who are considered strategic, and employees considered
as talents of BM&FBOVESPA and its subsidiaries.

The options were granted on December 19, 2008, at an exercise price of R$ 5.174 per share,
corresponding to the average closing price of trading in the 20 days that preceded the date on which
the options were granted, observing the vesting periods for exercising the options.

The granting of up to 4,714,850 stock options was approved, distributed equally on four vesting
dates over a four-year period. From this number, as well as discounting the number of options
which it is known will not be granted, the Company discounted an estimated turnover of 5%, i.e. the
estimated number of options which will not vest, due to employees who opt to leave the Company
or whose employment is terminated by the Company.

As regards the authorized limit, options corresponding to only 0.2% of Company capital were
granted up to December 31, 2008 and accordingly the remainder may be granted during the option
period.
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As a result, the Company recognized the expenses related to this plan for 2008 in the amount of
R$ 424 with a counter-entry to capital reserves in shareholders' equity.

Total options granted
Exercise
Open
Fair value
Vesting period
price
contracts
of options
Plan
Date granted
up to
(in reais)
Granted
Exercised
at 12/31/08
on date of grant
BM&F S.A.
12/18/2007
N/A
1.00
7,829,928
7,829,928
-
22.60
BM&F S.A.
12/18/2007
12/18/2009
1.00
6,408,796
1,461,100
4,947,696
21.81
BM&F S.A.
12/18/2007
12/18/2010
1.00
6,408,796
1,461,100
4,947,696
21.54
BM&F S.A.
12/18/2007
12/18/2011
1.00
6,408,796
1,461,100
4,947,696
21.32
27,056,316
12,213,228 14,843,088
BM&FBOVESPA
12/19/2008
6/30/2009
5.174
1,132,962
-
1,132,962 3.76
BM&FBOVESPA
12/19/2008
6/30/2010
5.174
1,132,962
-
1,132,962 3.76
BM&FBOVESPA
12/19/2008
6/30/2011
5.174
1,132,963
-
1,132,963 3.76
BM&FBOVESPA
12/19/2008
6/30/2012
5.174
1,132,963
-
1,132,963 3.76
4,531,850
- 4,531,850
31,588,166
12,213,228 19,374,938

Total options exercised

As regards the plan transferred to BM&FBOVESPA, on December 18, 2007, 7,829,928 options
were exercised at an exercise price of R$1.00 each. The market price of the shares on that date was
R$23.60.

Further, in 2008, 4,383,300 options were exercised at an exercise price of R$1.00 each, as follows
(i) on August 19, 2008 3,216,300 stock options exercised, with an average market price on that date
at R$11.29, (ii) on December 26, 2008, 829,500 stock options exercised, with the average market
price on that date at R$5.78 and (iii) on December 29, 2008, 337,500 stock options exercised, with
the average market price on that date at R$6.02.

Activity during the year
Number of shares
At December 31, 2007
19,226,388
Options granted (1)
4,531,850
Options canceled
-
Options exercised
(4,383,300)
At December 31, 2008
19,374,938
(1) exclusively from the Stock option plan of BM&FBOVESPA

The percentage of capital dilution to which the current shareholders could be subject in the event all
the options already granted at December 31, 2008 are exercised is some 0.96%.

Effects arising from the exercise of the options during the year
Amount received on sale of shares ­ Options exercised
1,167
(-) Cost of treasury stock sold
(6,569)
Effect of disposal of shares
(5,402)
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Option Pricing Model

To determine the fair value of the options granted, the Company has taken into account the
following aspects:
a)
The stock options that were granted by the Company allow the exercise in advance as from
a specific future date (vesting date) which is situated between the grant date and the option
expiry date;
b)
The shares pay dividends between the grant date and the option expiry date.

Accordingly, these options present characteristics from the European model (exercise in advance is
not allowed) until the vesting date and characteristics from the American model (possibility of
exercise in advance) between the vesting date and the option expiry date. These options are known
as Bermuda type or Mid-Atlantic and their price must be between the price of an European option
and the price of an American option with similar characteristics. In relation to the dividend
payment, there are two impacts on the price of the option that should be taken into account: (i) the
fall in share prices after the dates on which they become ex-dividends and (ii) the influence of such
payments on the decision to exercise the option in advance.

Considering the aspects above, the Binomial method was used to determine the fair value of the
options granted. This method produces results which are equivalent to the results of the Black &
Scholes model for non-complex European options, having the advantage of being able to
incorporate the characteristics of an exercise in advance and the payment of dividends in relation to
the stock options considered.

The main assumptions considered in the options' fair value determination were:
a)
The options were evaluated based on the market parameters effective on each of the grant
dates of the different plans;
b)
For estimating the risk-free interest rate, the Company used the future interest contracts
negotiated for the maximum exercise period of each option;
c)
The liquidity of the stock options, comprising the respective programs, was low on the
grant dates and accordingly the implied volatilities in these contracts are atypical and it
would not be feasible to use them for estimating volatility. In addition, since the Company
was a recently listed entity at the time the plans were granted, historical volatility does not
provide sufficient information on share volatility, considering the contractual term for
exercising the options. As a result, the Company used as a basis for estimating the volatility
of its shares the implied volatility of similar entities (international stock exchanges) over
periods in which liquidity was sufficient to guarantee the quality of the data gathered;
d)
The share prices were adjusted in order to take into account the impact of dividend
payments;
e)
The maximum period for exercising the options granted was used to determine the maturity
of the options.

The remaining usual assumptions related to option pricing models, such as inexistence of arbitrage
opportunities and constant volatility over the period, were also considered in the calculation.
Pension plan

The private pension fund "Fundo de Pensão Multipatrocinado das Instituições do Mercado
Financeiro e de Capitais (MERCAPREV)" is structured as a defined contribution retirement plan
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and is sponsored by the following entities ADEVAL, ANCOR, BM&FBOVESPA, Sindival and the
brokerage firms Theca, Souza Barros and Talarico.

Contributions to the pension plan for the year ended December 31, 2008 amounted to R$2,781. The
net assets of MERCAPREV at December 31, 2008 total R$ 106,709.

20 Income Tax and Social contribution on Net Income

(a)
Deferred income tax and social contribution

The balance of deferred tax assets is as follows:
BM&FBOVESPA
Consolidated
Temporary provisions
4,293
4,293
Temporary differences
1,862
1,862
Tax, labor and civil contingency provisions
4,177
4,177
Tax loss carryforwards
35,036
35,036
Goodwill amortization
76,702
76,702

At December 31, 2008
122,070
122,070
(b)
Estimated realization period

The deferred income tax and social contribution assets arising from temporary differences are
recorded in the books taking into consideration the probable realization of these tax assets, based on
projections of future results prepared in accordance with and supported by internal assumptions and
future economic scenarios that may, accordingly, undergo change.

It is expected that deferred tax assets, net of deferred tax liabilities, will be realized as follows: 2009
­ R$ 48,594, 2010 ­ R$ 20,914, 2011 ­ R$ 16,436, 2012 ­ R$ 16,436 e 2013 ­ R$ 19,690.

As the income tax and social contribution taxable bases not only arise from the profit that may be
generated, but also from the existence of non-taxable income, non-deductible expenses, tax
incentives and other variables, there is no immediate correlation between the Company's net income
and the income subject to income tax and social contribution. Therefore, the expectation of the use
of deferred tax assets should not be used as the only indicator of future income of the Company.
The goodwill amount that will be deductible in the income tax and social contribution calculation
for tax purposes amounts to R$ 13,459,731.

(c)
Reconciliation of the income tax and social contribution expense

The income tax (IR) and social contribution (CS) amounts presented in the parent company and
consolidated statements of income at nominal rates are reconciled as follows:
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BM&FBOVESPA
Consolidated
Book income before income tax and social contribution
674,912 859,904
Income tax and social contribution before additions and exclusions
(229.470)
(292.367)
Additions:
(200.230)
(186.226)
Non-deductible expenses
(57.841)
(30.108)
Temporary additions
(133.427)
(147.156)
Other
(8.962)
(8.962)
Exclusions:
287.308
146.714
Reversal of provisions and other non-taxable revenue
4.591
13.444
Equity in results
177.520
­
Interest on own capital
105.100
115.831
Tax incentives
73
183
Other
24
1.265
Deduction of tax losses brought forward ­ IR/CS
­
15.991
Current income tax and social contribution
(142.392)
(331.879)
Deferred income tax and social contribution
113.076
119.138
Income tax and social contribution expense for the year
(29,316) (212,741)

21 Sundry
Expenses
BM&FBOVESPA
Consolidated
Details
Contributions and donations (1)
5,721
18,386
Electricity, water and sewage
4,539
7,015
Travel 3,316
5,341
Sundry provisions
1,534
1,892
Insurance 892
1,275
Judicial processes
-
1,830
Remaining expenses from demutualization and public offering
-
789
Other 5,663
9,027
Total 21,665
45,555

(1) Of the total R$18,386 in consolidated, R$8,830 comprises a donation to Instituto Bovespa de
Responsabilidade Social e Ambiental by BVSP and CBLC in connection with the exercise of the
subscription right of 2,830,000 shares of Bovespa Holding on April 1, 2008, in accordance with the
conditions established for the exercise of the subscription bonus paid up by Instituto Bovespa.

22 BM&FBOVESPA
Integration
As described in Note 1, in May 2008, approval was given to merge BM&F S.A. and Bovespa
Holding.

In June 2008, the Board of Directors approved the names of the Company's Executive Officers and
disclosed the complete management organization chart of BM&FBOVESPA S.A.
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The complete organization chart for all employee levels of BM&FBOVESPA was disclosed at the
end of August 2008.

As a result of this integration process, the Company implemented a program to identify synergies
designed to decrease operating expenses by eliminating common activities.

Non-recurring expenses related to the implementation of this plan were classified as integration
expenditures and totaled an amount of R$ 129.5 million in 2008 consolidated. These expenses
mainly comprised costs associated with the dismissal of personnel and for contracting outsourced
services related to the integration process, which together comprise 55.7% of the total integration
expenses.

The second most significant expenditure related to the integration process comprised payment of
outsourced service providers, such as legal, business and human resource consultants, which
represent 41.1% of the total integration expenditures.
Integration expenses
BM&FBOVESPA
Consolidated
Details
Personnel and related charges
33,824
72,134
Outsourced services
24,313
53,267
Sundry 400
4,175
Total 58,537
129,576

23 Operating
Leases
Future minimum non-cancellable payments on operating leases for IT related equipment are
presented below:
Up to one year
13,729
From one year to five years
5,425
19,154
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24
Other operating revenues
BM&FBOVESPA
Consolidated
Details
Dividends from equity interests
20,650
20,650
Property rents
-
5,605
Reversal of provisions
5,052
5,052
Recovery of RCCF costs
2,929
2,929
Other recoveries
7,233
839
Data processing and software license
2,854
4,254
Reversal of provision for contingencies
-
3,555
Profit on the disposal of fixed assets
69
2,527
Sundry 2,901
6,049
Total 41,688
51,460

25 Insurance

The Company searches in the market for insurance consultant support to establish coverage
compatible with its size and operations. The coverage, at December 31, 2008, was contracted at the
amounts indicated below, according to the insurance policies:

Lines
Amounts
insured
Amounts at risk, material damages, property and equipment
256,730
Civil liability
6,500
Works of art
16,133

26
Subsequent Events and Other Information

Repurchase of shares

As described in Note 16 (b), the Board of Directors approved the Company's Share Buyback
Program on September 24, 2008.

The Company repurchased shares between September 29 and October 17, 2008 and between
November 13, 2008 and February 6, 2009, observing the trading restriction period as determined by
CVM Instruction 358. During this period, the Company repurchased 45,686,000 shares,
representing 64.1% of the maximum number of common shares to be acquired under the buyback
program.
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Organizational restructuring

At the meeting held on January 20, 2009, the Company's Board of Directors approved the
resignation of the executive officers of the Corporate Matters Executive Board and the Integration
Executive Board. BM&FBOVESPA established the new organization chart for all employee levels
considering the extinction of these boards as from February 2, 2009.


* * *