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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Quarterly Financial Statements at
March 31, 2009
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
1Q09
OPERATING PERFORMANCE
Our performance for the first quarter of 2009, as compared to the same quarter a year
earlier, was impacted by the global economic downturn started in the second half of 2008,
which resulted in a decline in volumes traded on both BM&F and Bovespa segment
markets.
This decrease is due primarily in the increase in risk aversion, which resulted in
significantly lower interest in leveraging processes by market participants, and a slump in
the market prices of stocks traded in our equities markets.
A quarter on quarter comparison of 1Q09 indicates a recovery in volume traded in the
BM&F segment and, in particular, a surge of trades in interest rate contracts in BRL due
mainly to expectations of cuts in the Central Bank reference rate.
Turnover velocity
1
and average number of trades in the Bovespa segment rose in the first
quarter of 2009 when compared to the same period a year ago, which coupled with the
increase in number of investors indicate the fundamentals of our market remain
unchanged.
At the end of March 2009, the Brazilian capital market registered the first offering of
shares since July 2008.
In January 2009 our new listing pricing policy took effect, having resulted in revenues of
R$10.6 million in 1Q09 versus R$8 million in the last quarter.
BM&F Segment
In a year over year comparison of the first quarter, total volume traded fell by 16.2%. In
particular, this drop reflects (i) a decrease by 33.7% in volume of FX contracts traded, to
378.6 thousand from 570.9 thousand daily contracts previously; (ii) a 21.2% drop in
volume of index-based contracts traded, to 72.8 thousand from 92.4 thousand daily
contracts; and (iii) a 7.5% fall in interest rate in BRL contracts traded, to 861.8 thousand
from 931.3 thousand daily contracts previously.
However, on a quarter on quarter basis, daily average contracts traded increased by
19.0% in 1Q09, to 1.47 million daily contracts from 1.23 million in the previous quarter.
This recovery is due primarily to a 53.1% increase of trades in interest rate contracts, to
daily average of 861.8 thousand in the quarter from 563.0 thousand earlier (as set forth in
the table below).
Average revenue per contract (RPC) for 1Q09 dropped by 4.0% from a year ago, to
R$1.345 from R$1.401, due primarily to a 19.6% fall in RPC from trades in interest rate
contracts, to R$0.886 from R$1.102 earlier, due also to a rise in volumes of short-term
interest rate contracts, in addition to a 26.3% drop in revenues from trades in index-based
1
Turnover velocity is the ratio between financial volume traded on the cash market and the market
capitalization of listed companies.
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contracts, to R$1.572 from R$ 2.132 previously, as a result of the effects of the change in
our pricing policy, given that in the first quarter of 2008 our fees on trades in these
contracts would vary in line with the number of points in the stock indices.
In turn, RPC from trades in USD futures contracts increased by 44.2%, to R$1.554 from
R$1.078, whereas trades in FX contracts climbed 30.9%, to R$2.422 from R$1.850,
essentially due to devaluation of the Brazilian real against the U.S. dollar, as these
contracts are indexed to the U.S. dollar.
A quarter on quarter comparison of 1Q09 indicates a 24.8% slump in average RPC, to
R$1.345 from R$1.789 in the quarter to December 2008, due to the effects of the discount
policy that prevailed between November 17, 2008 and February 13, 2009, which was
discontinued.
Product
1Q09
4Q08
1Q08
Variation
1Q09/4Q08
(%)
Variation
1Q09/1Q08
(%)
BRL Int. rate contracts
861,8
563,0
931,3
53,1%
7,5%
USD Int. rate contracts
92,5
92,2
93,0
0,3%
0,5%
FX Contracts
378,6
434,3
570,9
12,8%
33,7%
Indexbased contracts
72,8
83,1
92,4
12,5%
21,2%
Commodity contracts
10,1
13,0
13,4
22,6%
24,6%
OTC contracts
4,8
9,2
14,0
48,0%
65,8%
Web Trading
51,2
41,6
40,6
22,9%
25,9%
Total
1.471,7
1.236,6
1.755,6
19,0%
16,2%
Product
1Q09
4Q08
1Q08
Variation
1Q09/4Q08
(%)
Variation
1Q09/1Q08
(%)
BRL Int. rate contracts
0,886
1,164
1,102
23,9%
19,6%
USD Int. rate contracts
1,554
1,777
1,078
12,6%
44,1%
FX Contracts
2,422
2,699
1,850
10,3%
30,9%
Indexbased contracts
1,572
1,806
2,132
13,0%
26,3%
Commodity contracts
2,077
3,126
3,283
33,6%
36,7%
OTC contracts
2,192
2,443
2,057
10,3%
6,5%
Web Trading
0,185
0,173
0,155
7,1%
19,4%
Total
1,345
1,789
1,401
24,8%
4,0%
AVERAGE DAILY TRADED CONTRACTS (THOUSANDS)
AVERAGE RATE PER CONTRACT (BRL)
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Overall ADTV (Thousands)
1,756
1,765
1,543
1,237
1,472
1Q08
2Q08
3Q08
4Q08
1Q09
DMA (Direct Market Access)
Order routing services have stepped up in the first quarter, both via our DMA system,
traditional model, which utilizes the financial community communications network and
through the CME Globex platform under an order routing agreement we maintain with the
CME Group. The share of volume traded through DMA increased from 3% to
approximately 6.5% between January and March 2009.
Due to then deepening global economic downturn adherence to the GTS and Globex
interconnected routing order systems began to bear fruit only in the first quarter of 2009,
having reached daily average of 10.7 thousand contracts in March, or 0.6% of the volume
traded in the BM&F Segment, whereas trading by algorithmic traders accounted for a daily
average of 8.1 thousand contracts, or 0.3% of the overall number of contracts in the
quarter. In April 2009 the share of algorithmic traders in overall ADTV increased to 0.53%
and reached 1.8% in FX contracts.
BM&F Segment - DMA Evolution
3
37
36
41
40
82
161
227
0.1%
1.1%
1.2%
1.9%
1.8%
3.0%
6.4%
6.5%
0
50
100
150
200
250
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Mar-09
0%
1%
2%
3%
4%
5%
6%
7%
ADTV via DMA (Thousands)
DMA share in total ADTV
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Bovespa segment
At the end of the first quarter of 2009, the equities and equity derivatives markets (except
stock index contracts) and the market for corporate fixed income securities (see the table
below) registered average daily traded value of R$3.9 billion, a 33.7% decline from R$5.9
billion in the same quarter a year ago. This drop is due mainly to a sharp fall of 36.6% in
the average market capitalization of listed companies, to R$1,441 billion from R$2,272
billion earlier, which was partially offset by increase in annualized turnover velocity, to
61.8% from 58.7% previously. Average daily number of trades for 1Q09 increased by
35.5%, to 278.3 thousand from 205.3 thousand on a year over year basis.

On a quarter on quarter basis, average daily trading value for 1Q09 dropped by 10.6%,
from R$4.4 billion in the quarter to December 2008, due to a fall in annualized turnover
velocity to 61.8% from 74.6% earlier, given that average market capitalization increased
by 4.1%, to R$1,441 billion from R$1,384 billion previously. In addition, the number of
trades for 1Q09 fell by 6.3%, to 278.3 thousand trades, as compared to 297.0 thousand in
the previous quarter, which is due to heightened volatility in these markets towards the
end of the quarter to December 2008.
Bovespa Segment - ADTV and number of trades
5.9
6.5
5.3
4.4
3.9
205
230
246
297
278
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
1Q08
2Q08
3Q08
4Q08
1Q09
-
50
100
150
200
250
300
350
ADTV (BRL Billions)
Daily Number of Trades (Thousands)
Annualized Turnover Velocity
58.7%
62.0%
62.1%
74.6%
61.8%
1Q08
2Q08
3Q08
4Q08
1Q09
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1Q09
4Q08
1Q08
Variation
1Q09/4Q08
(%)
Variation
1Q09/1Q08
(%)
Stocks and Equity Deriv.
3,906.2
4,370.2
5,895.6
10.6%
33.7%
Cash market
3,622.5
4,147.0
5,500.5
12.6%
34.1%
Derivatives
283.7
223.3
395.1
27.1%
28.2%
Forward market
66.6
72.7
229.9
8.4%
71.0%
Options market (stocks / indices)
217.1
150.5
165.2
44.2%
31.4%
Fixed income and other spot securities
1.8
2.7
11.0
33.0%
83.6%
Total
3,908.1
4,372.9
5,906.6
10.6%
33.8%
1Q09
4Q08
1Q08
Variation
1Q09/4Q08
(%)
Variation
1Q09/1Q08
(%)
Stocks and Equity Deriv.
278,324
297,067
205,326
6.3%
35.6%
Cash market
216,645
245,262
161,510
11.7%
34.1%
Derivatives
61,678
51,805
43,817
19.1%
40.8%
Forward market
937
963
2,758
2.8%
66.0%
Options market (stocks / indices)
60,742
50,842
41,059
19.5%
47.9%
Fixed income and other spot securities
8
7
10.0
7.6%
23.7%
Total
278,331
297,074
205,336
6.3%
35.5%
AVERAGE DAILY TRADED VALUE (BRL MILLION)
AVERAGE DAILY NUMBER OF TRADES (THOUSANDS)
ETF (Exchanged Traded Funds)
Volume traded in ETFs has been growing steadily since February 2009, at which time
average daily volume traded reached R$5.3 million, having climbed to R$11.4 million in
March and R$20.3 million in April, primarily due to significant trading by institutional
buyers, financial institutions and foreign investors, which accounted for 37.4%, 32.5% and
15.9% of volume traded in the quarter to March 2009, respectively.
ETFs* - average daily traded value (BRL Millions)
11.2
8.8
5.3
11.4
Dec08
Jan09
Feb09
Mar09
*BOVA11/ MILA11/ SMAL11/ PIBB11
ETFs share in total traded value
Jan - Mar'09
Institutional
Investors
37.4%
Foreign Investors
15.9%
Financial
Institutions
32.5%
Individuals
13.2%
Companies
1.1%
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1Q09
4Q08
1Q08
Variation
1Q09/4Q08
(%)
Variation
1Q09/1Q08
(%)
End of period Market Cap. (R$ billions)
1,485.7
1,375.3
2,272.7
8.0%
34.6%
Average Market Cap. (R$ billions)
1,441.5
1,384.3
2,331.8
4.1%
38.2%
End of period Ibovespa
40,925.9
37,550
60,968.0
9.0%
32.9%
Average Ibovespa
39,717.0
37,269
61,192.9
6.6%
35.1%
Value under custody (R$ billions)
704.9
650.4
1,027.5
8.4%
31.4%
Number of custody accounts (thousands)
547.8
558.6
507.7
1.9%
7.9%
Securities Lending
End of period Open Interest (R$ billions)
9,829.6
6,941.7
21,523.8
41.6%
54.3%
Companies listed
432
439
451
1.6%
4.2%
Treasury Direct stock of securities (R$ millions
2,659.7
2,282.9
1,471.6
16.5%
80.7%
Turnover Velocity (annualized)
61.8%
74.6%
58.7%
OTHER OPERATIONAL STATISTICS
Listings
At the end of the quarter to March 2009, the 157 companies listed to trade securities on
our special corporate governance listing segments represented 57% of the exchange
market capitalization, 66% of financial volume traded and 75% of the number of trades on
the cash market.

At the end of the quarter, Redecard, a company listed on the Novo Mercado, conducted a
R$2.2 billion follow-on offering, which was the first offering process carried out in the
Brazilian public capital market since July 2008.
Investors
Investor participation in our markets
1Q09 trading by financial institutions in the BM&F segment picked up, having increased to
48.0% from 44.7% in the quarter to December 2009, whereas in the Bovespa segment,
the most active investors were retail investors, specifically individual investors, whose
share of total trading grew to 33.5% from 25.4% in the same quarter a year earlier.
In addition, the flow of foreign investments to the stock market of the Bovespa segment
also picked up in the first quarter of 2009, having netted R$1.3 billion, the first positive
quarter since the end of the quarter to June 2008.
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BM&F Segment - investors share
47%
50%
49%
50%
50%
48%
48%
50%
43%
42%
44%
48%
49%
48%
47%
24%
23%
23%
22%
21%
24%
25%
21%
22%
24%
22%
20%
21%
19%
23%
17%
17%
18%
19%
19%
18%
18%
18%
22%
22%
20%
20%
19%
19%
18%
9%
7%
7%
7%
7%
7%
7%
8%
10%
9%
10%
8%
8%
10%
9%
2%
3%
3%
2%
3%
3%
3%
3%
4%
3%
3%
4%
3%
3%
3%
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
Aug-08 Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Mar-09
Financial Institutions
Institutional Investors
Foreign Investors
Individuals
Companies
Central B ank
Bovespa Segment - investidors share
24%
26%
27%
26%
28%
24%
24%
24%
26%
30%
34%
30%
34%
33%
34%
30%
29%
27%
29%
26%
26%
29%
29%
28%
24%
24%
24%
24%
23%
24%
35%
35%
36%
33%
35%
37%
35%
35%
35%
37%
34%
36%
34%
35%
34%
9%
9%
7%
8%
7%
9%
9%
10%
8%
6%
5%
6%
6%
7%
7%
2%
2%
2%
4%
3%
3%
3%
3%
2%
3%
3%
4%
2%
2%
2%
Jan-08
Feb-08
Mar-08
Apr-08 May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08 Dec-08
Jan-09
Feb-09
Mar-09
Individuals
Institutional Investors
Foreign Investors
Co mpanies
Financial Institutions
Others
Bovespa Segment - foreign investment flow (BRL Billions)
(8.0)
(6.0)
(4.0)
(2.0)
0.0
2.0
4.0
6.0
8.0
Jan-08
Feb-08 M ar-08
Apr-08 M ay-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
M ar-09
Monthly foreign investment flow
Cumulative foreign investment flow
Investors trading in the Home Broker system and number of investors accounts
Average daily value traded on the Bovespa Home Broker system in 1Q09 amounted to
R$684.6 million, as compared to R$614.6 million in the same quarter a year earlier,
representing year over year growth of 11.4%. As a percentage of volume traded in the
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Bovespa segment, average Home Broker trading for the quarter was 17.5%, as compared
to 11.1% in the quarter to March 2008 and 16.0% sequentially.
The number of custody accounts in the period to March 2009 reached 547 thousand,
versus 507 thousand at the end of March 2008, an increase of 7.9%, whereas on a
quarter on quarter basis, the number of accounts fell by 1.9% from 558.6 thousand
accounts at the end of the quarter to December 2008.
Bovespa Segment - investidors and Home Broker
508
540
551
559
548
11.1%
12.5%
11.1%
16.0%
17.5%
480
490
500
510
520
530
540
550
560
1Q08
2Q08
3Q08
4Q08
1Q09
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Number of investors accounts (Thousands)
Home Broker share in total traded value
Corporate Governance
We expect the ongoing process of revision and improvement of the regulations applicable
to the Level 1 and Level 2 of Corporate Governance Practices, and the Novo Mercado,
which started in November 2008, will be completed by end-2009.
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Capture of Synergies
The results for the first quarter of 2009 already show more significant signs of the
synergies captured from our recent integration process, which we have been closely
monitoring. Among several instances of cost savings registered thus far, we highlight a
30% reduction in number of personnel at the end of the quarter to March 2009 comparing
to the pre merger headcount. Expectations are that by the end of 2009 we will have
registered total operational expenses (not including depreciation and adjustments
resulting from pronouncements by Committee of Accounting Standards, or CPC) of
approximately R$ 450 million, representing a decrease of R$116 million when compared
to the combined operational expenses of 2007, as adjusted for inflation for the last two
years.
511
488
450
53
116
2007
2008
2009e
Cost Reduction Compared with 2007 Expenses*, in BRL Millions
Cost Reduction
Actual
* 2007 expenses, as adjusted for inflation
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ANALYSIS OF THE MAIN LINE ITEMS OF THE INCOME STATEMENT
FINANCIAL PERFORMANCE
Net income
Net income for the first quarter of 2009 was R$227 million, with net margin of 71.7%,
whereas EBITDA amounted to R$176.7 million and EBITDA margin for the same period
was 55.8%.
Revenues and Expenses
Consolidated gross operational revenues amounted to R$351.9 million, with revenues of
R$200.5 million from activities in the Bovespa segment having accounted for 57% of
these revenues, whereas revenues of R$130.5 million from activities in BM&F segment
accounted for 37.1% of consolidated gross operational revenues.
Other operational revenues for the period, of R$20.9 million, derived primarily from the
sale of market data (information signals) to vendors, which accounted for R$11.5 million,
and from dividends amounting to R$5.4 million derived from the ownership interest we
hold in the CME Group.
Revenues from trading and settlement activities in the Bovespa segment, which amounted
to R$158.2 million and accounted for 45% of total revenues, coupled with revenues from
trading in derivatives in the BM&F segment, which amounted to R$127.1 million and
accounted for 36.1% of total revenues combined to account for 81.1% of our revenues
from trading and settlement activities in equities and derivatives markets. Income and
social contribution taxes levied on revenues amounted to R$35.4 million, representing
approximately 10.1% of gross operational revenues.
Consolidated operational expenses amounted to R$148.8 million, wherein the line items
personnel and related expenses, data processing, and third party service accounted for
82.3% of the total. Expenses with the costs of employment terminations in the quarter
amounted to approximately R$18 million, whereas expenses with recognized costs of the
employee stock options plan amounted to additional R$18.8 million.
Interest Income, net
Net interest income for the quarter to March 2009 reached R$67.9 million, as resulting
from R$74.3 million in revenues and R$6.4 million in expenses. Interest income correlates
mainly with interest earning cash flow, accumulating BRL 3.15 billion at the end of the
quarter to March 31, 2009.
Income tax and social contribution on net income; amortization of goodwill
Income before taxes for 1Q09 totaled R$235.6 million, and resulted in payment of income
tax and social contribution on net income amounting to an aggregate of R$8.4 million. The
actual income and social contribution tax rate for the quarter was 3.6%, primarily due to
amortization of intangible assets (goodwill).
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Main lines items under Assets
At the end of the quarter to March 2009, the consolidated balance sheet of
BM&FBOVESPA S.A. registered total assets of R$21,204.3 million, where cash and cash
equivalents coupled with short-term investment securities accounted for R$3,145.7
million, or 14.8% of total assets.
Permanent assets totaled R$17,659.5 million, where the line items investments amounted
to R$1,318.3 million, property and equipment, net, amounted to R$246.7 million, and
intangible assets (goodwill) amounted to R$16,094.5 million.
Pursuant to Law No. 11,638/07, enacted to adapt local accounting principles and more
closely align them with IFRS standards, starting from 2009 we no longer recognize
amortization of goodwill in statements mandated by the corporate legislation, and do so
only for tax purposes. Under the previous legislation, recognition of goodwill had the effect
of reducing net income. In contrast, we are now required to perform annual impairment
tests, which correlate with revaluation and adjustments for goodwill to match fair value, as
appropriate. Based on the report and conclusions of an independent specialist, presented
to us by end-2008, no adjustments to goodwill registered by us is required at this time.
At the end of the quarter to March 2009, we reviewed the bases on which the investment
was registered, and maintained the argument that no impairment charge is required at this
time.
Similarly, with regard to our investment in the CME Group, we understand that there were
no valid reasons to record impairment charges either at the end of the year to December
2008, or of the quarter to March 2008,
Main lines items under Liabilities and Shareholders' Equity
Under total liabilities, current liabilities amounting to R$1,677.2 million represented 7.9%
of total consolidated liabilities, and correlated mainly with the amount of cash collaterals
from customers in the amount of R$1,135.9 million and the provision for dividends and
interest on shareholders' equity payable, in the amount of R$185.1 million.
Long-term liabilities consisting primarily of provision for contingencies amounted to
R$47.5 million, representing 0.2% of total liabilities.
Shareholders' equity totaled R$19,463.9 million, and consisted of capital stock of
R$2,540.2 million (12.0%), capital reserves of R$16,625.6 million (78%), revaluation
reserve of R$24.0 million (0.1%), Bylaws reserves of R$302.9 million (1.4%), legal reserve
of R$3.5 million (0.02%) and net income for the period of R$225.6 million (1.1%).
Shareholders' equity was adjusted to reflect treasury stock worth R$258.0 million, existing
as a result of the share buyback.
Independent Auditors
Pursuant to CVM Instruction 381 dated January 14, 2003, the Company and its
subsidiaries have retained PricewaterhouseCoopers Auditores Independentes to audit the
financial statements.
The policy on retention of independent auditing services by us and our subsidiaries was
built on the framework provided by internationally accepted principles that aim to preserve
the independence of work of this nature and include the following recommended
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practices: (i) the auditors may not hold executive or management functions in the
Company or its subsidiaries; (ii) the auditors may not perform operational activities within
the scope of the Company and its subsidiaries, in case these are susceptible of
compromising or jeopardizing the effectiveness the auditing work; and (iii) in preparing
reports and making statements in connection with the financial statements, the auditors
must remain impartial and keep objectivity (avoiding conflicts of interest and loss of
independence).
Subsequent events
The annual shareholders' meeting of April 28, 2009, elected a new Board, whose
members will serve for a two-year term of office.
In accordance with a proposal submitted by the Board, the extraordinary shareholders'
meeting held on May 8, 2009, approved certain changes to our Bylaws. These changes
include an enhanced corporate governance model, as well as new names and changes to
the responsibilities of the Board advisory committees. These changes, which are
summarized below, stem from our continuing evaluations for improvement of the
corporate governance model.
Aligned with recent trends in corporate governance practices, the Audit Committee will be
uncharged of detailing the Company's internal control and risk management systems.
The role of the Compensation Committee (previously named Appointment and
Compensation Committee) is to ensure diligent and effective management of one of our
most important tools to ensure alignment of interests, i.e., compensation. In addition, it
performs activities to ensure business continuity by requiring and advising the board on
succession plans, so as to mitigate risk that executive transition processes could affect
our performance for lack of planning.
The role of the Nomination and Corporate Governance Committee (previously named
Corporate Governance Committee) including selecting and nominating persons capable of
effectively performing duties as members of the very board of directors, of the board
advisory committees and as lead executive, which permits more detailed evaluations and
scrutiny of prospective candidates. In addition, the Committee advises the board on
possible improvements to our corporate governance model and practices.
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(A free translation of the original in Portuguese)
BM&FBOVESPA S.A. ­
Bolsa de Valores, Mercadorias
e Futuros
Review Report of Independent Accountants
on Quarterly Information
March 31, 2009
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2
(A free translation of the original in Portuguese)
Review Report of Independent Accountants
To the Board of Directors and Shareholders
BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
1
We have reviewed the accounting information included in the Quarterly Information of
BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros (individual and
consolidated) for the quarter ended March 31, 2009, comprising the balance sheet, the
statements of income, of changes in equity, of cash flows and of added value, and
explanatory notes. This Quarterly Information is the responsibility of the Company's
management.
2
Our review was carried out in accordance with specific standards established by the Institute
of Independent Auditors of Brazil (IBRACON), in conjunction with the Federal Accounting
Council (CFC), and mainly comprised: (a) inquiries of and discussions with management
responsible for the accounting, financial and operating areas of the Company with regard to
the main criteria adopted for the preparation of the Quarterly Information and (b) a review of
the significant information and of the subsequent events which have, or could have,
significant effects on the financial position and operations of the Company and its
subsidiaries.
3
Based on our review, we are not aware of any material modifications that should be made to
the accounting information included in the Quarterly Information referred to above in order
that it be stated in accordance with the accounting practices adopted in Brazil applicable to
the preparation of Quarterly Information, consistent with the standards issued by the Brazilian
Securities Commission (CVM).
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
3
4
As described in Note 1 to the Quarterly Information, 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 Quarterly Information for the prior year is
not being presented.
São Paulo, May 12, 2009
PricewaterhouseCoopers
Auditores Independentes
CRC 2SP000160/O-5
Edison Arisa Pereira
Contador CRC 1SP127241/O-0
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BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros
Balance Sheet
at March 31, 2009 and December 31, 2008
(In thousands of reais)
(A free translation of the original in Portuguese)
Assets
Notes
03/31/2009
12/31/2008
03/31/2009
12/31/2008
Current assets
2,654,797
1,904,077
2,814,573
1,965,461
Cash and cash equivalents
4
153,945
40,921
14,524
40,227
Financial investments
4
2,284,072
1,685,145
2,577,550
1,744,069
Accounts receivable - net
5
136,981
104,481
138,094
105,169
Other receivables - net
6
15,256
7,468
19,854
9,933
Taxes recoverable and prepaid
16,885
9,539
16,886
9,540
Deferred income tax and social contribution
20
41,357
48,594
41,357
48,594
Prepaid expenses
6,301
7,929
6,308
7,929
Non-current
18,318,195
18,342,857
18,389,706
18,464,628
Long-term receivables
610,501
641,653
730,230
808,863
Financial investments
4
440,371
468,892
553,643
629,945
Other receivables - net
6
1,452
6,576
6,519
11,361
Deferred income tax and social contribution
20
73,476
73,476
73,476
73,476
Judicial deposits
95,006
92,513
96,396
93,885
Prepaid expenses
196
196
196
196
Investments
7
1,410,277
1,407,909
1,318,279
1,318,282
Interest in subsidiaries
94,429
92,063
-
-
Other investments
1,315,848
1,315,846
1,318,279
1,318,282
Property and equipment
8
202,942
203,708
246,680
247,850
Intangible assets
9
16,094,475
16,089,587
16,094,517
16,089,633
Goodwill
16,064,309
16,064,309
16,064,309
16,064,309
Software and projects
30,166
25,278
30,208
25,324
Total assets
20,972,992
20,246,934
21,204,279
20,430,089
BM&FBOVESPA
Consolidated
The accompanying notes are an integral part of this Quarterly Information.
4
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BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros
Balance Sheet
at March 31, 2009 and December 31, 2008
(In thousands of reais)
(A free translation of the original in Portuguese)
Liabilities and shareholders' equity
Notes
03/31/2009
12/31/2008
03/31/2009
12/31/2008
Current liabilities
1,463,204
909,932
1,677,230
1,075,744
Collateral for transactions
18 (b)
1,135,943
585,963
1,135,943
585,963
Earnings and rights on securities in custody
10
36,368
36,020
36,368
36,020
Suppliers
12,145
18,392
12,237
18,442
Salaries and social charges
29,209
20,288
29,764
20,806
Provision for taxes and contributions payable
11
17,840
40,065
18,017
40,254
Income tax and social contribution
271
-
1,339
2,652
Financing
13
3,570
4,087
3,570
4,087
Dividends and interest on own capital payable
185,098
194,984
185,098
194,984
Redemption of preferred shares to be settled
12
4,132
4,132
4,132
4,132
Other liabilities
14
6,555
6,001
218,689
168,404
Deferred income
32,073
-
32,073
-
Non-current
45,909
45,278
47,538
46,729
Provision for contingencies and legal obligations
15
44,722
43,657
47,224
46,160
Other liabilities
14
1,187
1,621
314
569
Minority interest in subsidiaries
-
-
15,632
15,892
Shareholders' equity
16
19,463,879
19,291,724
19,463,879
19,291,724
Capital
2,540,239
2,540,239
2,540,239
2,540,239
Capital reserve
16,625,612
16,606,853
16,625,612
16,606,853
Revaluation reserves
23,986
24,131
23,986
24,131
Legal reserve
3,453
3,453
3,453
3,453
Statutory reserves
302,928
302,928
302,928
302,928
Treasury stock
(257,973)
(185,880)
(257,973)
(185,880)
Retained earnings
225,634
-
225,634
-
Total liabilities and shareholders' equity
20,972,992
20,246,934
21,204,279
20,430,089
BM&FBOVESPA
Consolidated
The accompanying notes are an integral part of this Quarterly Information.
5
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BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros
Statement of Income
Quarter ended March 31, 2009
(In thousands of reais, unless otherwise stated)
(A free translation of the original in Portuguese)
Notes
BM&FBOVESPA
Consolidated
Operating revenues
347,155
351,918
Trading and/or settlement system - BM&F
127,170
130,547
Derivatives
121,434
121,434
Foreign exchange
5,692
5,692
Assets
44
44
Bolsa Brasileira de Mercadorias (Brazilian Commodities Exchange)
-
1,406
Bank
-
1,971
Trading and/or settlement system - Bovespa
200,503
200,503
Negotiation ­ trading fees
113,732
113,732
Transactions ­ clearing and settlement
44,464
44,464
Loans of marketable securities
6,127
6,127
Listing of marketable securities
10,621
10,621
Depository, custody and back office
16,084
16,084
Trading participant access
9,475
9,475
Other operating revenues
19,482
20,868
Vendors ­ quotations and market information
11,521
11,521
Commodity classification fee
215
215
Other
24
7,746
9,132
Deductions of revenue
(35,066)
(35,370)
PIS and COFINS taxes
(30,880)
(31,066)
Taxes on services
(4,186)
(4,304)
Net operating revenue
312,089
316,548
Operating expenses
(144,747)
(148,760)
Administrative and general
Personnel and related charges
(84,746)
(85,462)
Data processing
(26,013)
(26,683)
Depreciation and amortization
(8,506)
(8,951)
Outsourced services
(8,575)
(9,119)
Maintenance in general
(2,601)
(2,826)
Communications
(4,962)
(4,991)
Rents
(671)
(825)
Supplies
(465)
(477)
Promotion and publicity
(2,186)
(2,292)
Taxes
(316)
(495)
Board and committee members' compensation
(1,129)
(1,129)
Sundry
21
(4,577)
(5,510)
Equity in the results of subsidiaries
7
1,594
-
Financial results
65,552
67,859
Financial income
67,189
74,303
Financial expenses
(1,637)
(6,444)
Income before taxation of profit
234,488
235,647
Income tax and social contribution
20 (c)
(7,508)
(8,372)
Current
(271)
(1,135)
Deferred
(7,237)
(7,237)
Minority interest
-
(295)
Net income for the period
226,980
226,980
Outstanding shares at the end of the period
2,000,012,441
2,000,012,441
Net income per share at the end of the period (in reais)
0.113489
0.113489
The accompanying notes are an integral part of this Quarterly Information.
6
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BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros
Statement of Changes in Stockholders' Equity
Quarter ended March 31, 2009
(In thousands of reais)
(A free translation of the original in Portuguese)
Revaluation
Statutory
Treasury
Capital
reserve
Legal
reserves
stock
Retained
Notes
Capital
reserve
(Note 16(c))
reserve
(Note 16(d))
(Note 16(b))
earnings
Total
At December 31, 2008
2,540,239
16,606,853
24,131
3,453
302,928
(185,880)
-
19,291,724
Realization of revaluation reserve - subsidiaries
-
-
(145)
-
-
-
-
(145)
Repurchase of shares
16
-
-
-
-
-
(75,125)
-
(75,125)
Disposal of treasury stock
19
-
-
-
-
-
3,032
(1,346)
1,686
Recognition of stock option plan
19
-
18,759
-
-
-
-
-
18,759
Net income for the period
-
-
-
-
-
-
226,980
226,980
At March 31, 2009
2,540,239
16,625,612
23,986
3,453
302,928
(257,973)
225,634
19,463,879
Revenue reserves
The accompanying notes are an integral part of this Quarterly Information.
7
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BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros
Statement of Cash Flows
Quarter ended March 31, 2009
(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
226,980
226,980
Adjustments for:
Depreciation and amortization
8,506
8,951
Profit on sale of property and equipment
188
188
Deferred income tax and social contribution
7,237
7,237
Equity in results of subsidiaries
(1,594)
-
Expenses related to the stock option plan
18,759
18,759
Sundry
(2,272)
(2,687)
Variation in financial investments and collateral for transactions
(20,426)
(207,199)
Variation in taxes recoverable and prepaid
(7,346)
(7,346)
Variation in accounts receivable
(32,500)
(32,925)
Variation in other receivables
(3,332)
(5,747)
Variation in prepaid expenses
1,628
1,621
Variation in judicial deposits
(2,493)
(2,511)
Variation in earnings and rights on securities in custody
348
348
Variation in suppliers
(6,247)
(6,205)
Variation in provision for taxes and contributions payable
(22,225)
(22,237)
Variation in provisions for income tax and social contribution
271
(1,313)
Varition in salaries and social charges
8,921
8,958
Variation in other liabilities
120
50,030
Variation in deferred income
32,073
32,073
Variation in provision for contingencies
1,065
1,064
Net cash provided by operating activities
207,661
68,039
Cash flows from investing activities
Receipt on sale of property and equipment
418
418
Payment for purchase of property and equipment
(7,420)
(7,451)
Receipt on sale of assets held for sale
668
668
Capital increase in subsidiaries
(917)
-
Variation in other investments
(2)
3
Variation in software and projects
(4,888)
(4,884)
Net cash used in investing activities
(12,141)
(11,246)
Cash flows from financing activities
Disposal of treasury stock - stock options exercised
3,032
3,032
Repurchase of shares
(75,125)
(75,125)
Variation in financing
(517)
(517)
Payment of dividends and interest on own capital
(9,886)
(9,886)
Net cash used in financing activities
(82,496)
(82,496)
Net increase (decrease) in cash and cash equivalents
113,024
(25,703)
Cash and cash equivalents at the beginning of the period
40,921
40,227
Cash and cash equivalents at the end of the period
153,945
14,524
The accompanying notes are an integral part of this Quarterly Information.
8
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BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros
Statement of Value Added
Quarter ended March 31, 2009
(In thousands of reais)
(A free translation of the original in Portuguese)
BM&FBOVESPA
Consolidated
1 - Revenues
347,155
351,918
Trading and/or settlement system
327,673
331,050
Other operating revenues
19,482
20,868
2 ­ Goods and services acquired from third parties
49,379
51,898
Operating expenses (a)
49,379
51,898
3 ­ Gross value added (1-2)
297,776
300,020
4 - Retentions
8,506
8,951
Depreciation and amortization
8,506
8,951
5 ­ Net value added produced by the company (3-4)
289,270
291,069
6 ­ Value added transferred from others
68,783
74,303
Equity in results of subsidiaries
1,594
-
Financial income
67,189
74,303
7 ­ Total value added to be distributed (5+6)
358,053
365,372
8 - Distribution of Value Added
358,053
365,372
Personnel and related charges
84,746
85,462
Board and committee members' compensation
1,129
1,129
Income tax, taxes and contributions (b)
42,890
44,237
Interest and rents (c)
2,308
7,269
Minority interest in subsidiaries
-
295
Loss on disposal of treasury shares
1,346
1,346
Net income for the period retained
225,634
225,634
(a) Operating expenses (excludes personnel, Board and committee members' compensation, depreciation, rents and taxes)
(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 this Quarterly Information.
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 Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
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$2,615,517. On the
same date, approval was given to merge Bovespa Holding's shares (722,888,403 shares), at
market value, into Nova Bolsa, in the amount of R$ 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.
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.
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
11
At one of the AGEs held on May 8, 2008, approval was also given to change the name of 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.
Merger of subsidiaries ­ Bolsa de Valores de São Paulo ­ BVSP (formerly Bovespa Holding)
and Companhia Brasileira de Liquidação e Custódia - CBLC
The merger was 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 of 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.
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, indicators,
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
12
rates, goods, currencies, energy, transportation, commodities and other assets or rights directly
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 depository and fungible and custody of non-fungible 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;
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
clearinghouses 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.
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
13
Its subsidiary Bolsa Brasileira de Mercadorias is involved in 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, its wholly-owned subsidiary Banco BM&F de Serviços de Liquidação e Custódia S.A.
provides its members and its clearinghouses 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.
2
Preparation and Presentation of the Quarterly Information
This Quarterly Information was approved by the Board of Directors of BM&FBOVESPA on
May 12, 2009.
The Quarterly Information of BM&FBOVESPA has been prepared and is 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 relating to the quarter ended March 31, 2008 is being 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, 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 Quarterly Information.
Principles for the consolidation of the Quarterly Information
The consolidated Quarterly Information includes the balances of BM&FBOVESPA and its
subsidiaries, in compliance with the provisions of CVM Instruction 247/1996, as well as the
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
14
special purpose entities, comprising the exclusive investment funds (CVM Instruction 408/2004),
as presented below:
Stake %
Subsidiaries and Entities
Banco BM&F de Liquidação e Custódia S.A. ("Banco BM&F")
100,00
Bolsa Brasileira de Mercadorias
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 Quarterly Information, 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 shareholders' equity of the subsidiaries and the balances of assets and
liabilities resulting from transactions carried out between the consolidated subsidiaries and
consolidated entities are eliminated, and minority interests in the shareholders' equity and
statement of income are separately disclosed.
3
Significant Accounting Practices
a. Determination of net income
Income and expenses are recognized on an accrual basis. The amounts received as annual
fees, such as the listing of securities and certain contracts for the sale of information about the
market, are recognized on a proportionate and monthly basis in the statement of income for
the period.
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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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
15
c.
Financial instruments
(i) Classification and calculation
The Company classifies its financial assets in the following categories: recorded at market
value through profit or loss, 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 recorded at fair value through profit or loss
The financial assets recorded 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 recorded at fair value through profit or loss 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 (which 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 recorded 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
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
16
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.
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, they are 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
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
17
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.
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 profitability is recorded in the intangible group and
until December 31, 2008, was amortized over a 10-year period, to the extent of and in
proportion to the projected results on which it was based. In accordance with the
pronouncements issued by CPC in 2008, the portion based on the expectation of future
profitability is no longer amortized as from January 1, 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.
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
18
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 with realization considered probable, where applicable, are only disclosed in the
financial statements.
Contingent liabilities - These are recognized based on a number of factors including: the
opinion of legal advisors; the nature of the lawsuits; similarity to precedents; the
complexity of the proceedings; and 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 ­ These result from tax lawsuits in which the Company is discussing
the validity or constitutionality of certain taxes and charges. These are fully recognized in
the financial statements, regardless of the assessment of their probability of success.
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.
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
19
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 to settle the obligation is probable and a reliable estimate
of the amount can be made.
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.
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
20
(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:
Income tax
15%
Additional income tax
10%
CSLL
9%
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
21
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 and
calculate the contribution to PIS at the rate of 1% on payroll.
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 Quarterly Information.
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
Details
03/31/2009
12/31/2008
Banks - deposits in domestic currency
144,305
23,178
Banks - deposits in foreign currency
9,640
17,743
Total
153,945
40,921
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
22
Consolidated
Details
03/31/2009
12/31/2008
Banks - deposits in domestic currency
2,197
21,824
Banks - deposits in foreign currency
12,327
18,403
Total
14,524
40,227
b.
Financial Investments
The breakdown of financial investments by nature and time to maturity is as follows:
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
03/31/2009
Total
12/31/2008
Financial investment funds (1)
1,106,467
­
­
­
­
1,106,467
881,450
Interest bearing account
(deposits abroad)
279,761
­
­
­
­
279,761
181,317
Bank certificates of deposit
­
­
7,739
500
­
8,239
11,286
Securities purchased under resell
agreements
­
698,947
­
­
­
698,947
430,827
Financial Treasury Bills
­
844
117,891
155,850
270,552
545,137
573,081
National Treasury Bills
­
­
68,224
4,198
­
72,422
62,945
National Treasury Notes
­
37
57
150
35
279
270
Other investments
4,105
­
­
9,086
­
13,191
12,861
Total financial investments
1,390,333
699,828
193,911
169,784
270,587
2,724,443
2,154,037
Financial investments - short
term
2,284,072
1,685,145
Financial investments - long
term
440,371
468,892
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
23
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
03/31/2009
Total
12/31/2008
Financial investment funds (1)
1,106,467
­
­
­
­
1,106,467
881,734
Interest bearing account
(deposits abroad)
279,761
­
­
­
­
279,761
181,317
Bank certificates of deposit
­
­
7,739
1,788
­
9,527
12,045
Securities purchased under resell
agreements
­
984,870
­
­
­
984,870
486,327
Financial Treasury Bills
­
844
125,370
183,381
355,005
664,600
736,442
National Treasury Bills
­
­
68,300
4,198
­
72,498
63,018
National Treasury Notes
­
37
57
150
35
279
270
Other investments
4,105
­
­
9,086
­
13,191
12,861
Total financial investments
1,390,333
985,751
201,466
198,603
355,040
3,131,193
2,374,014
Financial investments - short
term
2,577,550
1,744,069
Financial investments - long
term
553,643
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, securities
purchased under resell agreements and bank certificates of deposit and have the CDI as
their profitability benchmark.
The main investment funds are detailed in the table below:
Fund
Bank
Details
03/31/2009
12/31/2008
FIC Megainvest
Santander Exclusive fund that invests in quotas of
other retail funds;
632,226
624,629
FIC Referenciado DI
Federal
Bradesco Retail fund that invest in quotas of
other retail funds;
366,504
151,890
FIC Bradesco 777
Bradesco Exclusive fund that invests in quotas of
other retail funds.
107,711
104,735
The government bonds are held in custody at the Special System for Settlement and Custody
(SELIC), the quotas of investment funds are held in custody with their respective managers and
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
24
the shares are in the custody of CBLC. (BM&FBOVESPA's Equity and Corporate Debt
Clearinghouse).
Classification
Considering the nature and objective of the Company and its financial investments, these are
classified as financial assets recorded at fair value through profit or loss, 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 date, 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:
BM&FBOVESPA and Consolidated
Details
03/31/2009
12/31/2008
Operational Fund of the Foreign Exchange
Clearinghouse
50,000
50,000
Guarantor Fund of the Floor-Traded Spot US
Dollar Market
15,000
15,000
Special Clearing Member Fund
40,000
40,000
Agricultural Market Trading Fund
50,000
50,000
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
25
BM&FBOVESPA and Consolidated
Details
03/31/2009
12/31/2008
Operational Fund of the Securities
Clearinghouse
40,000
40,000
Guarantee Reserve for Trade Settlement
47,092
47,092
Mechanism for reimbursement - Guarantee
fund
92,342
92,342
Federal Government Bonds restricted in
compliance with Article 5 of Law 10,214 of
March 27, 2001 (Special Equity)
111,902
108,398
Investments in investment funds linked to
the Settlement Fund (former CBLC).
164,236
159,742
Total Funds
610,572
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) 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 and the object (element to be hedged) as at March 31, 2009 and
December 31, 2008, as well as the results of derivative transactions for the quarter:
March 31, 2009
Notional amount
Market value
Amounts paid /
received during
the period
Interest rate
Future contracts ­ sold
position
(37,909)
(40,779)
(1,453)
LTN
38,163
40,745
1,449
Net position
254
(34)
(4)
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
26
December 31, 2008
Notional amount
Market value
Interest rate
Future contracts ­ sold
position
(31,080)
(32,499)
LTN
31,339
32,472
Net position
259
(27)
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.
Sensitivity analysis
The table below presents a summary of the financial instruments' exposure classified by market
risk factors at March 31, 2009:
Risk Factors (Consolidated)
Risk factor
Risk
Percentage
CDI
Falling CDI
96.04%
Fixed rate
Rising fixed rate
2.53%
USD
Falling dollar
0.86%
Inflation
Falling inflation
0.33%
Gold
Falling gold
0.24%
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.
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
27
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 of 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 of
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
services, product sales and the contracting of financial instruments could have an impact on the
related domestic currency amounts.
In addition to the amounts payable and receivable in foreign currencies, the Company has third-
party deposits in foreign currency to guarantee the settlement of transactions by foreign investors
and also owns investments in currency abroad: At March 31, 2009 the Company's net foreign
currency exposure amounted to R$24,661 (R$29,894 as at December 31, 2008). Considering the
amounts involved, as presented in percentage terms in the table of Risk Factors (Consolidated),
the effects on the portfolio are not considered material.
Inflation and gold position
Considering the amounts and percentages involved, as detailed in the table of Risk Factors
(Consolidated), the effects on the portfolio are not considered material.
5
Accounts Receivable
The breakdown of accounts receivable is as follows:
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
28
BM&FBOVESPA
Details
03/31/2009
12/31/2008
Trading and other fees receivable
133,667
95,812
Vendors ­ Signal broadcast
6,335
5,768
Loans to employees
247
293
Other accounts receivable
1,000
5,467
Provision for doubtful accounts
(4,268)
(2,859)
Total
136,981
104,481
Consolidated
Details
03/31/2009
12/31/2008
Trading and other fees receivable
134,268
95,999
Vendors ­ Signal broadcast
6,335
5,851
Loans to employees
247
293
Other accounts receivable
1,512
5,885
Provision for doubtful accounts
(4,268)
(2,859)
Total
138,094
105,169
Of the amounts presented above, approximately 90% is represented by receivables falling due
within 60 days.
6
Other Receivables
Other receivables comprise the following:
BM&FBOVESPA
03/31/2009
12/31/2008
Current
Sale of properties receivable (1)
5,223
1,513
Advances to employees
789
203
Amounts receivable ­ Associação BM&F
4,295
4,295
Dividends receivable
2,215
-
Sundry
2,734
1,457
Total
15,256
7,468
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
29
BM&FBOVESPA
03/31/2009
12/31/2008
Non-current
Sale of properties receivable (1)
-
4,045
Sundry
1,452
2,531
Total
1,452
6,576
Consolidated
03/31/2009
12/31/2008
Current
Sale of properties receivable (1)
5,223
1,513
Advances to employees
789
203
Restricted deposits (Banco BM&F S.A.)
2,108
1,778
Amounts receivable ­ Associação BM&F
4,295
4,295
Dividends receivable
2,215
-
Sundry
5,224
2,144
Total
19,854
9,933
Non current
Brokers in liquidation
10,425
10,425
Sale of properties receivable (1)
-
4,045
Other accounts receivable
2,519
3,316
Allowance ­ Other receivables (total) (2)
(6,425)
(6,425)
Total
6,519
11,361
(1) Amounts receivable from the sale of properties, the amounts of which are being received
in monthly or annual installments.
(2) Allowance for doubtful accounts recorded mainly on the balance of accounts receivable
from brokers in liquidation, which takes into consideration the membership certificates of
the brokers that are pledged.
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
30
7
Investments
a. Investments in subsidiaries
Investments in subsidiaries comprise the following:
BM&FBOVESPA
Subsidiaries
Adjusted
shareholders'
equity
Total amount
of common
shares
Total number
of equity
memberships
% Stake
Equity in
income
Investment
03/31/2009
Banco BM&F de Liquidação e
Custódia S.A.
36,037
24,000
100
1,357
36,037
Bolsa Brasileira de Mercadorias
15,268
405
50.12
(282)
7,652
Bolsa de Valores do Rio de Janeiro
(BVRJ) (1)
57,634
115
86.09
1,381
49,617
BM&F USA Inc.
1,123
1,000
100
(862)
1,123
Total interests in subsidiaries
1,594
94,429
(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 March 31,
2009, the balance of this reserve amounts to R$15,678 in BM&FBOVESPA (R$15,823
as at December 31, 2008).
Activity in the investments during the year:
Investments
Banco
BM&F
Bolsa
Brasileira de
Mercadorias
Bolsa de
Valores do
Rio de
Janeiro
BM&F
USA Inc.
Total
At December 31, 2008
34,680
7,934
48,381
1,068
92,063
Equity in results
1,357
(282)
1,381
(862)
1,594
Realization of the revaluation
reserve
-
-
(145)
-
(145)
Capital increase
-
-
-
917
917
At March 31, 2009
36,037
7,652
49,617
1,123
94,429
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
31
b. Other Investments
BM&FBOVESPA
03/31/2009
12/31/2008
CME Group (1)
1,276,199
1,276,199
Bovespa Supervisão de Mercado
20,000
20,000
Works of art
7,722
7,722
Works of art ­ Revaluation (2)
8,308
8,308
Properties
3,407
3,407
Other
212
210
Total
1,315,848
1,315,846
Consolidated
03/31/2009
12/31/2008
CME Group (1)
1,276,199
1,276,199
Bovespa Supervisão de Mercado
20,000
20,000
Works of art
10,153
10,158
Works of art ­ Revaluation (2)
8,308
8,308
Properties
3,407
3,407
Other
212
210
Total
1,318,279
1,318,282
(1) These are shares of CME Group arising from the merger of CMEG 2, evaluated based on
their cost, considering the 1.7% stake in the investee. For this investment, management
concluded that there are no indications based on internal and external sources that the
investment could have lost its economic value (become impaired).
(2) The balances 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(c)).
c. Special purpose entities
Exclusive investment funds
The balances related to the exclusive investment funds included in the consolidation process
of these financial statements, under the terms of CVM Instruction 408, are summarized as
follows:
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
32
Supremo Renda Fixa ­ FICFI
Details
03/31/2009
12/31/2008
Assets
Cash and cash equivalents and financial investments
388,958
378,313
Other receivables
1
2
Total assets
388,959
378,315
Liabilities and equity
Accounts payable
12
12
Quotaholders' equity
388,947
378,303
Total liabilities and quotaholders' equity
388,959
378,315
Bradesco FI Multimercado
Letters
Details
03/31/2009
12/31/2008
Assets
Cash and cash equivalents and financial investments
1,192
1,160
1,192
1,160
Total assets
Liabilities and equity
Accounts payable
12
6
Quotaholders' equity
1,180
1,154
Total liabilities and quotaholders' equity
1,192
1,160
8
Property and Equipment
The breakdown of property and equipment is as follows:
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
33
BM&FBOVESPA
03/31/2009
12/31/2008
Details
Annual
depreciation
rate
Cost
Depreciation
Net
Net
Buildings
4%
169,855
(88,556)
81,299
82,936
Furniture and fixtures
10%
27,430
(15,323)
12,107
12,391
Apparatus and equipment
10%
20,964
(12,829)
8,135
8,320
Computer-related equipment
20%
172,869
(121,266)
51,603
53,696
Facilities
10%
28,682
(14,189)
14,493
11,383
Telephone system
10%
17,687
(16,586)
1,101
1,527
Other
10% a 20%
29,064
(22,193)
6,871
6,895
Construction in progress
­
27,333
­
27,333
26,560
Total
493,884
(290,942)
202,942
203,708
Consolidated
03/31/2009
12/31/2008
Details
Annual
depreciation
rate
Cost
Depreciation
Net
Net
Buildings
4%
209,828
(91,522)
118,306
120,342
Furniture and fixtures
10%
27,989
(15,663)
12,326
12,587
Apparatus and equipment
10%
21,123
(12,891)
8,232
8,420
Computer-related equipment
20%
173,594
(121,970)
51,624
53,713
Land
5,614
­
5,614
5,614
Facilities
10%
29,712
(14,548)
15,164
12,081
Telephone system
10%
17,698
(16,597)
1,101
1,528
Other
10% a 20%
29,236
(22,256)
6,980
7,004
Construction in progress
27,333
­
27,333
26,561
Total
542,127
(295,447)
246,680
247,850
9
Intangible Assets
Goodwill
The goodwill on the acquisition of Bovespa Holding was calculated as the difference between the
background image
BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
34
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 (iii) adjustment of the
amount of proposed dividends for 2007 in the amount of R$ 205.
The goodwill 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:
Details
Amount
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 pronouncements issued by CPC in 2008, the portion based on the
expectation of future profitability is no longer amortized as from January 1, 2009. However, it
will be subject annually to impairment testing, pursuant to Technical Pronouncement CPC 01,
which will be performed by the Company in November 2009 or before that, should events or
changes in the circumstances indicate that the book value may not be recoverable.
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.
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
35
Software and projects
The balance comprises costs for the acquisition and development of software and systems in the
net amount of R$2,479 (R$2,478 as at December 31, 2008), with amortization rates of 20% to
33% per annum, and expenditures in the amount of R$27,687 (R$ 22,800 as at December 31,
2008) 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 March 31, 2009 and December 31, 2008, the breakdown of this balance was as follows:
BM&FBOVESPA
Details
03/31/2009
12/31/2008
Withholding taxes and contributions payable
3,697
29,626
PIS/Cofins
12,504
8,904
ISS (Municipal service tax)
1,639
1,535
Total
17,840
40,065
Consolidated
Details
03/31/2009
12/31/2008
Withholding taxes and contributions payable
3,736
29,674
PIS/Cofins
12,607
9,014
ISS (Municipal service tax)
1,674
1,566
Total
18,017
40,254
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
36
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 March 31, 2009 and 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 of information technology
equipment. This balance at March 31, 2009 was R$3,570 (R$ 4,087 as at December 31, 2008).
14 Other Accounts Payable
BM&FBOVESPA
Details
03/31/2009
12/31/2008
Custody agents
3,307
3,825
Legal counsel
512
512
Finep ­ Carbon credits
320
320
Contributions to be transferred- MRP
1,717
-
Other
1,886
2,965
Total
7,742
7,622
Current
6,555
6,001
Non-current
1,187
1,621
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
37
Consolidated
Details
03/31/2009
12/31/2008
Custody agents
3,307
3,825
Legal counsel
512
512
Finep ­ Carbon credits
320
320
Contributions to be transferred- MRP
1,717
-
Demand deposits (1)
22,920
30,619
Liabilities for securities purchased under
resell agreements (1)
187,824
130,608
Other
2,403
3,089
Total
219,003
168,973
Current
218,689
168,404
Non-current
314
569
(1) Balances related to the transactions of Banco BM&F.
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 by the Company and its legal advisors,
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
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
38
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; and (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
At December 31, 2008
3,333
3,802
36,522
43,657
New provisions
-
-
710
710
Amounts written off/used
(13)
(4)
-
(17)
Reassessment of contingent risks
-
(81)
(121)
(202)
Price-level restatement
93
71
410
574
At March 31, 2009
3,413
3,788
37,521
44,722
Consolidated
Civil
Labor
Legal
obligations
Total
At December 31, 2008
3,900
5,421
36,839
46,160
New provisions
-
-
710
710
Amounts written off/used
(13)
(4)
-
(17)
Reassessment of contingent risks
-
(81)
(121)
(202)
Price-level restatement
93
71
409
573
At March 31, 2009
3,980
5,407
37,837
47,224
At March 31, 2009, BM&FBOVESPA had judicial deposits of R$ 95,032(R$ 92,513 at
December 31, 2008) and consolidated judicial deposits of R$ 96,421 (R$ 93,885 at December
background image
BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
39
31, 2008) 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 involve
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 mainly 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 March 31, 2009 are R$8,867 in the parent company
(R$6,926 at December 31, 2008) and R$10,466 on a consolidated basis (R$ 8,065 at
December 31, 2008);
Civil proceedings mainly consist of matters pertaining to civil liability for losses and
damages. The amount involved in the lawsuits classified as possible at March 31, 2009 is
R$1,564 in the parent company and on a consolidated basis (R$ 1,341 at December 31,
2008);
The tax proceedings of BM&FBOVESPA and its subsidiaries mainly involve a dispute
over the classification of exchanges as subject to the payment of social contributions.
Most of these amounts are related to two lawsuits filed by BM&FBOVESPA against the
Federal Government arguing 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 March 31, 2009 is R$57,144 (R$55,797 at December 31, 2008). The
total amount involved in tax proceedings classified as possible is R$ 79,056 in the parent
company and on a consolidated basis (R$ 77,170 at December 31, 2008).
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 amount attributed to the cause by the
plaintiffs is R$ 10 billion. In relation to the material damages and pain and suffering
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
40
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.
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.
b. Treasury Shares
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
February 6, 2009, 45,686,000 common shares (64.1% 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 the Company's
Share Buyback Program whereby the repurchased shares can be cancelled or used for
purposes of the Company's Stock Option Plan.
We present below the activity of treasury stock during the quarter:
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
41
Number of shares
At December 31, 2008
33,024,204
Acquisition of shares ­ Buyback program
11,494,800
Shares sold ­ stock options (Note 19)
(517,150)
At March 31, 2009
44,001,854
Average cost of treasury stock (in reais)
5.863
Cost of treasury stock (in thousands of reais)
257,973
Market value of treasury stock at March 31, 2009
(in thousands of reais)
309,333
c. 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 March 31, 2009 and December 31, 2008, the breakdown of the revaluation reserve was as
follows:
BM&FBOVESPA
03/31/2009
12/31/2008
Realization
method
Own assets
Works of art
8,308
8,308
Disposal
BVRJ's assets
Property
13,243
13,388
Depreciation
Land
2,435
2,435
Disposal
Total
23,986
24,131
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
42
d. Statutory reserves
Their purpose is to form funds and safeguard mechanisms required for the adequate
development of the activities of BM&FBOVESPA. assuring the proper settlement and
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.
e. Dividends and interest on own capital
Pursuant to the bylaws, the shareholders are guaranteed dividends or interest on own capital,
at a minimum percentage of 25% of the net income of the Company, adjusted under the terms
of Brazilian Corporation Law.
17 Related Party Transactions
a. Transactions and balances with related parties
Assets(liabilities)
Income(expense)
BM&FBOVESPA
March 31, 2009
December 31,
2008
Quarter ended
March 31, 2009
Bolsa de Valores do Rio de Janeiro
Accounts payable
(1,483)
(1,361)
Social contribution on membership
certificates
(119)
Banco BM&F de Serviços de Liquidação
e Custódia S.A.
Cash and cash equivalents
143,039
2,760
Accounts receivable
580
457
Recovery of expenses
755
Bolsa Brasileira de Mercadorias
Accounts receivable
313
Recovery of expenses
313
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
43
Assets(liabilities)
Income(expense)
BM&FBOVESPA
March 31, 2009
December 31,
2008
Quarter ended
March 31, 2009
BM&FBOVESPA Supervisão de
Mercados
Accounts receivable
649
405
Recovery of expenses
259
Mecanismo de Ressarcimento de
Prejuízos
Amounts to be transferred
(1,717)
Instituto BM&FBOVESPA
Accounts receivable
429
441
Associação BM&F
Accounts receivable
4,295
4,295
The main transactions with related parties are listed below and were carried out under the
following conditions:
BM&FBOVESPA pays a minimum fee to BVRJ and Bolsa Brasileira de Mercadorias as a
member 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.
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.
background image
BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
44
Quarter ended
March 31, 2009
Management benefits
Short-term benefits (salaries, participation in results, etc.)
3,050
Post-employment benefits
12
Employment contract rescission benefits
9,662
Share based remuneration (1)
2,979
(1) Represents the expense calculated for the quarter 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 Corporate Debt
Clearinghouse.
The activities carried out by the clearinghouses of BM&FBOVESPA are governed by Law
10,214, 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, futures
and securities loans), 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.
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
45
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.
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 2,882 and BACEN Circular 3,057.
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, in the amount of R$1,171,700 (R$ 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, for
the exclusive purpose of guaranteeing the operations;
Agricultural Market Trading Fund, in the amount of R$ 50,000 at March 31, 2009 and
December 31, 2008, intended to hold resources of BM&FBOVESPA allocated to
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
46
guarantee the proper settlement of transactions involving agricultural commodity
contracts;
Special Clearing Member Fund, in the amount of R$ 40,000 at March 31, 2009 and
December 31, 2008, 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, in the amount of R$ 391,722 (R$ 387,235 at December 31, 2008), 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, in the amount of R$29,661 (R$ 28,808 at December 31, 2008), in
compliance with the provisions of Article 5 of Law 10,214, of March 27, 2001 and of
Article 19 of Circular 3,057 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;
Participation fund, in the amount of R$154,725 (R$140,584 at December 31, 2008),
formed by collateral transferred by Clearinghouse participants, intended to guarantee the
proper settlement of transactions;
Operational Fund of the Foreign Exchange Clearinghouse, in the amount of R$ 50,000 at
March 31, 2009 and December 31, 2008, 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, in the amount of R$ 15,000
at March 31, 2009 and December 31, 2008, 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, in the amount of R$29,661 (R$ 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 3,057 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;
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
47
Operational Fund of the Securities Clearinghouse, in the amount of R$ 40,000 at March
31, 2009 and December 31, 2008, with the purpose of maintaining funds of
BM&FBOVESPA to cover losses resulting from operating or administrative failures of
participants;
Special equity, in the amount of R$20,881 (R$ 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 3,057 of the Brazilian Central Bank, of August 31, 2001.
The main components of the safeguard structure of CBLC (Equity and Corporate Debt
Clearinghouse) 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, in the amount of R$464,148 (R$ 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, in the amount of R$31,615 (R$ 30,374 at December 31, 2008), in
compliance with the provisions of Article 5 of Law 10,214, of March 27, 2001 and of
Article 19 of Circular 3,057 of the Brazilian Central Bank, of August 31, 2001.
The risk management policy adopted by the Clearinghouses is established by the
BM&FBOVESPA Market Risk Committee, in which BM&FBOVESPA officers participate,
including 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's safeguard
structures.
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
48
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.
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 March 31, 2009, the pledged collateral totaled R$114,563,617 (R$
125,676,805 at December 31, 2008), as follows:
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
49
03/31/2009
12/31/2008
Derivatives Clearinghouse
Federal government bonds
77,647,812
89,760,722
Letters of credit
1,953,110
3,690,835
Equities
2,939,560
2,678,991
Bank certificates of deposit
1,847,475
2,161,736
Gold
339,924
319,831
Cash (1)
565,302
327,644
FIC Banco BM&F Investment Fund
71,140
78,130
FIF BB-BM&F Investment Fund
25,237
29,049
Rural Product Notes
4,233
829
Subtotal
85,393,793
99,047,767
Foreign Exchange Clearinghouse
Federal government bonds
3,507,007
3,550,223
Cash (1)
223,890
174,060
Subtotal
3,730,897
3,724,283
Securities Clearinghouse
Federal government bonds
1,026,759
1,423,484
Equities Clearinghouse - CBLC
Federal government bonds
11,580,732
10,185,946
Equities
10,049,033
9,101,835
International bonds (2)
1,580,380
1,219,499
Bank certificates of deposit (CDBs)
476,108
467,649
Letters of credit
181,717
239,625
Cash (1)
346,411
101,927
Gold
27,386
25,958
FIF BB-CBLC
4,910
6,140
Other
165,491
132,692
Subtotal
24,412,168
21,481,271
Total
114,563,617
125,676,805
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
50
(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 March 31, 2009
and December 31, 2008, the Clearing Fund was comprised as follows:
Composition
03/31/2009
12/31/2008
Federal government bonds
319,678
324,979
Letters of credit
37,500
30,000
Bank certificates of deposit
23,300
18,560
Equities
9,236
7,763
Gold
2,008
1,928
Cash(1)
-
4,005
FIF BB-BM&F
-
1
Amounts deposited
391,722
387,236
Amounts that ensure clearing member/trader
participation
(335,000)
(333,500)
Excess collateral
56,722
53,736
(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$ 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,
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
51
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 in the Clearing Fund is R$ 333,500 (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.
The Operational Performance Fund presents the following position at March 31, 2009 and
December 31, 2008:
Composition
03/31/2009
12/31/2008
Federal government bonds
854,286
863,451
Letters of credit
178,230
160,730
Bank certificates of deposit
113,785
98,683
Equities
20,255
17,647
FIC Banco BM&F
4,293
4,177
Gold
631
-
Cash (1)
220
1,220
Amounts deposited
1,171,700
1,145,908
Amounts that ensure clearing member/trader
participation
(1,034,600)
(1,026,700)
Excess collateral
137,100
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.
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
52
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
rates, 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 rates, 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 March 31, 2009 and December 31, 2008, the Participation Fund presents the following
position:
Composition
03/31/2009
12/31/2008
Federal Government Bonds
154,725
140,584
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 March 31, 2009 and December 31, 2008, the Guarantor Fund of the Floor-Traded Spot US
Dollar Market presents the following position:
Composition
03/31/2009
12/31/2008
Federal government bonds
13,636
13,812
Letters of credit
240
240
Cash (1)
240
480
Investment of BM&FBOVESPA
15,000
15,000
Amounts deposited
29,116
29,532
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
53
(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.
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 March 31, 2009 and December 31, 2008, the Settlement Fund presents the following
position:
Composition
03/31/2009
12/31/2008
Federal government bonds
298,707
190,629
Investments of BM&FBOVESPA in exclusive
investment funds, federal government bonds and
securities purchased under resell agreements
164,184
159,580
Cash (1)
1,257
-
Amounts deposited
464,148
350,209
(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.
h. Guarantee funds and Mechanism for reimbursement
BM&FBOVESPA maintains a Guarantee Fund, in the form of a statutory reserve, in 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.
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
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
54
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 at
March 31, 2009:
Details
Guarantee Fund ­
Bolsa Brasileira de
Mercadorias
Guarantee Fund ­
BVRJ
Mechanism for
Reimbursement
of Losses
Assets
Cash in banks and financial investments (1)
685
38,162
227,944
Sundry credits
19
6,027
5,967
Total assets
704
44,189
233,911
Liabilities
Provision for contingencies
-
41,727
-
Other liabilities
8
1,536
3,197
Net assets
696
926
230,714
Total liabilities and net assets
704
44,189
233,911
(1)
The amount of R$32,947, included in cash in banks and financial investments of the
Guarantee Fund of BVRJ is tied to a lawsuit, as is the total amount of sundry credits.
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
55
19 Employee Benefits
Stock options ­ BM&F S.A. (Transferred to BM&FBOVESPA)
At the AGE held on September 20, 2007, approval was given for an option plan for shares issued
by BM&F S.A. for the purpose of "granting purchase rights on a number of shares, for
recognition and retention of the employees of BM&F S.A. and, subsequently, of the Company,
after May 8, 2008, up to a limit of 3% of the Company's capital stock".
The stock options granted under the stock option purchase plan of the extinct BM&F were
assumed by BM&FBOVESPA, as decided at the AGE of May 8, 2008.
On December 18, 2007, 27,056,316 stock options were granted under the plan with a fixed
exercise price of R$ 1.00 per share. Subsequent to this date, no further stock options were
granted or vesting conditions changed under this plan. During the quarter, some employees
acquired the rights to exercise their options as a result of their dismissal. The number of stock
options that have not yet vested at March 31, 2009 totaled 12,646,938 options.
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
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
As a result of the acceleration of vesting in the cases of dismissal, the Company recognized,
during the quarter, the expenses related to the stock options of the employees dismissed that
otherwise would have been recognized in future periods. In addition, the Company recognized
the expenses related to the stock options of the remaining employees that have not yet vested,
recognizing a total expense of R$12,903 during the quarter. The Company considered in this
calculation an estimated turnover of 5%, i.e. the estimated number of options which will not vest
due to employees who opt to leave the Company.
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
56
Stock options ­ BM&FBOVESPA's Plan
On May 8, 2008, at the AGE of BM&FBOVESPA, approval was given to institute a stock option
plan within the authorized limit of 2.5% of the Company's capital, having as its main objective to
align the interests of shareholders with those of directors, managers, employees and service
providers who are considered strategic, and employees considered as talents of
BM&FBOVESPA and its subsidiaries.
In relation to 2008, the options were granted on December 19, 2008, at an exercise price of R$
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, in addition to 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 with no rights to exercise the
options.
During the first quarter of 2009, some employees that had stock options of this plan related to the
series granted in 2008, acquired the rights to exercise their options as a result of their dismissal.
As a result of the acceleration of vesting in the cases of dismissal, the Company recognized,
during the quarter, the expenses related to 675,200 stock options of the employees dismissed that
otherwise would have been recognized in future periods.
On January 20, 2009, the Board of Directors approved the granting of another series of stock
options within this plan in the total amount of 9,249,000 options, distributed equally on four
vesting dates. The new series relates to the period from 01/01/09 to 12/31/2009 which will serve
as a basis for the evaluation of the performance of the employees that received these options.
The new series of options were granted on March 1, 2009, at an exercise price of R$ 6.60 per
share, corresponding to the average closing price of trading in the 20 days that preceded the date
on which the options were granted.
As a result, the Company recognized during the quarter expenses related to both series of this
plan in the total amount of R$5,856 with a counter-entry to capital reserves in shareholders'
equity. 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
or whose employment is terminated by the Company with no rights to exercise the options.
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
57
Considering both series of this plan, the Company has granted stock options corresponding to
0.76% of the Company's capital (0.22% and 0.54%, respectively). The remainder 1.74% of the
authorized limit will be used to grant new series of stock options for the following years, having
the first business day of each year as the grant date for each new series.
As the options are exercised by the employees, the Company will issue new shares, increasing its
capital, or will use treasury shares.
Total options granted
Plan
Grant date
Vesting
period up to
Exercise
price
(in reais)
Granted
Exercised
Options
outstanding at
03/31/09
Fair value of
options on
grant date
BM&F S.A.
12/18/2007
12/18/2009
1.00
6,408,796
(1,540,150)
4,868,646
21.81
BM&F S.A.
12/18/2007
12/18/2010
1.00
6,408,796
(1,540,150)
4,868,646
21.54
BM&F S.A.
12/18/2007
12/18/2011
1.00
6,408,796
(1,540,150)
4,868,646
21.32
19,226,388
(4,620,450)
14,605,938
BM&FBOVESPA
12/19/2008
06/30/2009
5.174
1,132,962
(70,000)
1,062,962
3.76
BM&FBOVESPA
12/19/2008
06/30/2010
5.174
1,132,962
(70,000)
1,062,962
3.76
BM&FBOVESPA
12/19/2008
06/30/2011
5.174
1,132,963
(70,000)
1,062,963
3.76
BM&FBOVESPA
12/19/2008
06/30/2012
5.174
1,132,963
(70,000)
1,062,963
3.76
4,531,850
(280,000)
4,251,850
BM&FBOVESPA
03/01/2009
12/31/2009
6.60
2,312,250
-
2,312,250
2.93
BM&FBOVESPA
03/01/2009
12/31/2010
6.60
2,312,250
-
2,312,250
2.93
BM&FBOVESPA
03/01/2009
12/31/2011
6.60
2,312,250
-
2,312,250
2.93
BM&FBOVESPA
03/01/2009
12/31/2012
6.60
2,312,250
-
2,312,250
2.93
9,249,000
-
9,249,000
33,007,238
4,900,450
28,106,788
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
58
Total options exercised during the quarter
As regards the plan transferred to BM&FBOVESPA, the employees acquired the rights to
exercise a total of 2,196,150 options, with an exercise price of R$1.00 each. Of this amount,
237,150 options were exercised during the quarter as follows: (i) on February 9, 2009, 46,500
options were exercised with the average market price of the shares on that date at R$7.57, (ii) on
February 18, 2009, 75,000 options were exercised with the average market price of the shares on
that date at R$6.29, (iii) on March 2, 2009, 11,250 options were exercised with the average
market price of the shares on that date at R$5.79, (iv) on March 30, 2009, 43,200 options were
exercised with the average market price of the shares on that date at R$7.15 and (v) ) on March
31, 2009, 61,200 options were exercised with the average market price of the shares on that date
at R$7.17.
As regards BM&FBOVESPA's plan, the employees acquired during the quarter the rights to
exercise a total of 675,200 options with an exercise price of R$5.174 each. Of this amount,
280,000 options were exercised on March 31, 2009 with the average market price of the shares
on that date at R$7.17.
Activity during the quarter
Number of shares
At 12/31/08
19,374,938
Options granted
9,249,000
Options exercised
(517,150)
At 03/31/09
28,106,788
The percentage of capital dilution to which the current shareholders could be subject in the event
that all the options outstanding at March 31, 2009 are exercised is some 1.41%.
Effects arising from the exercise of the options during the quarter
Details
Amount
Amount received on sale of shares ­ Stock options exercised
1,686
(-) Cost of treasury shares sold
(3,032)
Effect of disposal of shares
(1,346)
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
59
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 or Mid-Atlantic type 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-dividend 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) To estimate 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;
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
60
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
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 quarter ended March 31, 2009 amounted to R$618.
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
Details
03/31/2009
12/31/2008
Temporary provisions
1,334
4,293
Temporary differences
1,058
1,862
Tax, labor and civil contingency provisions
4,317
4,177
Tax loss carryforwards
35,323
35,036
Goodwill amortization
72,801
76,702
Total
114,833
122,070
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
61
Consolidated
Details
31/03/2009
31/12/2008
Temporary provisions
1,334
4,293
Temporary differences
1,058
1,862
Tax, labor and civil contingency provisions
4,317
4,177
Tax loss carryforwards
35,323
35,036
Goodwill amortization
72,801
76,702
Total
114,833
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$42,042, 2010 ­ R$21,674, 2011 ­ R$17,327, 2012 ­ R$16,464 and 2013 ­ R$17,326.
At March 31, 2009, the present value of the deferred tax assets amounts to R$91,174.
As the income tax and social contribution taxable bases arise not only from the profit that may be
generated, but also from the existence of non-taxable income, non-deductible expenses, tax
incentives and other variables, there is no immediate correlation between the Company's net
income and the income subject to income tax and social contribution. Therefore, the expectation
of the use of deferred tax assets should not be used as the only indicator of future income of the
Company.
The goodwill amount deductible in the income tax and social contribution calculation for tax
purposes amounts to R$ 13,177,606 at March 31, 2009.
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
62
(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:
Quarter ended
March 31, 2009
BM&FBOVESPA
Consolidated
Book income before income tax and social contribution
234,488
235,647
Income tax and social contribution before additions and exclusions
(79,726)
(80,120)
Additions:
(8,315)
(8,586)
Adjustments from Law 11,638/07
(6,378)
(6,378)
Non-deductible expenses
(1,937)
(2,208)
Exclusions:
80,127
79,928
Goodwill amortization
79,579
79,579
Equity in results
542
-
Other
412
755
Income tax and social contribution for the period
(7,508)
(8,372)
(d)
Transitional Tax System
Provisional Measure 449/08 introduced the Transitional Tax System (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 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.
The Quarterly Information for the quarter ended March 31, 2009 was prepared taking into
consideration management's best estimates, which, at the moment, indicate the option for the
RTT.
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
63
21 Sundry Expenses
Quarter ended
March 31, 2009
Details
BM&FBOVESPA
Consolidated
Contributions and donations
536
530
Electricity, water and sewage
1,433
1,500
Travel
278
355
Sundry provisions
1,486
1,491
Insurance
100
100
Other
745
1,535
Total
4,578
5,511
22 Operating Leases
Future minimum non-cancelable payments on operating leases for IT related equipment are
presented below:
Period
Amount
Up to one year
13,838
From one year to five years
4,313
Total
18,151
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BM&FBOVESPA S.A. ­ Bolsa de Valores, Mercadorias e Futuros
Notes to the Quarterly Information
at March 31, 2009
(All amounts in thousands of reais)
64
23 Other operating revenues
Quarter ended
March 31, 2009
Details
BM&FBOVESPA
Consolidated
Dividends from equity interests
5,371
5,371
Property rents
-
1,379
Reversal of provisions
155
155
Recovery of RCCF costs
548
548
Other recoveries
334
340
Sundry
1,338
1,339
Total
7,746
9,132
24 Insurance
The Company searches in the market for insurance consultant support to establish coverage
compatible with its size and operations. The main coverage, at March 31, 2009, was contracted at
the amounts indicated below, according to the insurance policies:
Insurance lines
Amounts
insured
Amounts at risk, material damages, property and equipment
256,730
Civil liability
6,500
Works of art
16,133
*
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