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Arminio Fraga
Chairman of the Board,
BM&FBOVESPA
Edemir Pinto
Chief Executive Officer,
BM&FBOVESPA
Message from the Board of Directors
1.1
Message from the CEO
1.1
Seeds
Brazil has worked hard to modernize in the past 20 years. But the income of our popula-
tion is still only 20% of the USA's in terms of per capita GDP. So there is plenty of room for
growth. However, we will not be able to achieve our potential without investing more and
better, without high-quality education and without an efficient state.
Education is a somewhat frustrating area for those who seek rapid results. Educated chil-
dren take several years to reach the labor market. On the other hand, it is encouraging that
the need to prioritize education has begun to win hearts and minds in Brazil. In particular,
education is now a priority for families, who should be the first to demand better results
from schools and the state. Without an improvement in education we will not be able to
solve the present crisis in the labor market, which derives from a lack of skilled labor in
many sectors and not from a lack of jobs.
Labor and capital are complementary. Without better qualified labor to engage in produc-
tion, which also requires more capital, we will not achieve our growth potential.
In this respect we are also marking time, since investment is not taking off. Brazil has been
flirting, above all since 2008, with a model that ran out of steam in the 1970s, based on
government intervention via state-owned enterprises, targeted and subsidized credit, less
economic opening, and protection for specific industries.
Consuming was a natural urge for the less well-off and leveraging credit is also entirely
natural, within certain limits. But this must be accompanied by the supply side. Consump-
tion alone is not the solution. Investment is also essential.
Thus to stimulate capital we should resume the reform agenda begun in the 1990s, which
produced not only monetary stabilization with the Real Plan but also advances in pensions
and social security, fiscal policy, privatization, economic opening, extension of the social
safety network and regulation of the financial and corporate system.
While I was a government official in the early 2000s I had the opportunity to help sow the
seeds of some of these initiatives, among them the launch of the new Brazilian Payment
System (SPB), and Novo Mercado in partnership with what was then Bovespa. In both these
areas Brazil has become a global reference and is reaping an excellent harvest.
Érico Veríssimo wrote that happiness is the certainty you have not wasted your life. Thanks
to one of life's generosities I celebrated the new SPB's and Novo Mercado's first decade of
success while serving as Chairman of BM&FBOVESPA's Board of Directors, a position I am
now leaving. These reforms will continue to benefit Brazil a great deal and unequivocally
demonstrate that the private sector and the Brazilian Exchange are prepared to assume
their responsibility in building a better nation for our children.
Arminio Fraga
Chairman of the Board, BM&FBOVESPA
An exchange for families and companies
In 2012 BM&FBOVESPA continued to focus on executing its strategy of growing and diversi-
fying revenue with the aim of pursuing operational excellence. This is our permanent motto
and the main driver of the Exchange's culture, which motivates us to overcome the difficul-
ties and barriers to growth for Brazil's financial and capital markets. Much still remains to be
done. The challenges are huge. Our people's and companies' potential is our energy.
We made progress with the construction of our new technology platform, which will give
the Brazilian Exchange state-of-the art trading capacity and technology as the global busi-
ness environment improves and the Brazilian economy recovers.
The Exchange has been preparing enthusiastically to capture and multiply opportunities
in the Brazilian capital markets in the context of lower interest rates and diversification of
financial investment by families. It has done so both by investing in infrastructure and mar-
ket integrity, and by developing new products and ever-closer relationships with market
participants, to whom it will offer a complete platform for their investment and risk mitiga-
tion strategies.
The company expanded its product offering, adding new exchange-traded funds (ETFs),
for example, and increased liquidity by introducing a successful market maker program
for options, among other initiatives. The start of trading in the S&P 500 futures contract
in October 2012 marked a milestone in the relationship with our global strategic partner,
CME Group. This was the first derivative referenced to a US stock index to trade on the Bra-
zilian Exchange, facilitating local investors' access to one of the most important indexes in
the United States. Also in the context of this strategic partnership, US dollar-denominated
Ibovespa futures contracts began trading on CME Group in October.
International and local recognition of these advances came in the form of several awards. For
the second consecutive year the company won the Exchanges and Brokers World Finance
Award for the Best Sustainable Stock Exchange in Latin America from World Finance, a lead-
ing financial magazine produced in London. In the field of sustainability BM&FBOVESPA re-
affirmed its participation in initiatives such as the United Nations Global Compact.
BM&FBOVESPA's transparency and efficiency were recognized for the fourth consecutive
year by the Transparency Trophy in the category Public Companies (with annual revenue
of up to R$5 billion), awarded by Anefac, Fipecafi and Serasa Experian. In addition, for the
third consecutive year BM&FBOVESPA was considered the Best Company for Shareholders
in the category Corporate Governance by Capital Aberto magazine.
In 2012 our institutional commitment to Brazil motivated us to begin undertaking stud-
ies to encourage more Brazilian companies to hold stock offerings, even if the amounts
involved are relatively small. The outcome will be an ambitious program comprising initia-
tives on several fronts ranging from operational aspects of offerings to investor education,
so that the Brazilian Exchange can be the platform for corporate growth and contribute to
an expansion of investment in the economy.
Edemir Pinto
Chief Executive Officer, BM&FBOVESPA
2
3
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Sumário
1 PrOFilE
6
2
StrAtEgiES AnD riSk MAnAgEMEnt
10
3
ABOut thiS rEPOrt
18
4
COrPOrAtE gOVErnAnCE
20
5
PEOPlE MAnAgEMEnt
30
6
SuStAinABility
42
7
MArkEt StrEngthEning
54
8
EDuCAtiOn AnD MArkEting thE MArkEtS
58
9
EnVirOnMEntAl PErFOrMAnCE
64
10
OPErAtiOnAl AnD FinAnCiAl PErFOrMAnCE
70
OPErAtiOnAl AnD FinAnCiAl
86
gri tABlE OF COntEntS
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BM&FBOVESPA
continues to innovate
technologically
Upgrades and global benchmark
BM&FBOVESPA ­ Bolsa de Valores, Mercadorias e Futuros
S.A. is one of the world's largest exchanges and the leading
exchange in Latin America.
BM&FBOVESPA is a public company. Its stock trades under
ticker symbol BVMF3 on the Novo Mercado segment, a
special listing segment for companies committed to best
practice in corporate governance. BVMF3 is also tracked
by the Ibovespa, IBrX-50, IBrX and ITAG indexes.
2.6
Headquartered in the city of São Paulo, BM&FBOVESPA has
expanded its representative offices in the United States
(New York), United Kingdom (London) and China (Shang-
hai) to support local market participants and prospect for
potential investors.
2.4 | 2.5
Exchange and over-the-counter (OTC) markets
2.2 | 2.3
With operations in derivatives (BM&F segment) and se-
curities (Bovespa segment), the company specializes in
developing, implementing and providing systems for the
trading of stocks, corporate and government bonds, finan-
cial derivatives, agricultural commodities and spot foreign
exchange, among others.
BM&FBOVESPA offers the market a diversified and tech-
nologically advanced portfolio of products and services as
well as acting as a central securities depository, managing
securities lending transactions, publishing price quota-
tions, producing indexes and developing software.
Its clearinghouses perform registration, clearing, settle-
ment and risk management activities in full integration with
BM&FBOVESPA Settlement Bank. Thus BM&FBOVESPA acts
as central counterparty for all transactions in its derivatives,
equity and fixed-income markets, including cash and for-
ward trades, options, futures, and securities lending.
The company's internationalization strategy to expand
market access is implemented via a partnership with CME
Group and dialogue with exchanges in Asia and other Lat-
in American countries.
profile
2.7 | 2.8
1.
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The company also has its own highly esteemed mar-
ket surveillance arm, BM&FBOVESPA Market Super-
vision, which impartially assures compliance with
the applicable legislation, rules and regulations by
participants and the Exchange itself.
Development for all
As the only exchange in operation in Brazil,
BM&FBOVESPA recognizes its duty to raise public
awareness of the importance of saving and invest-
ing for the long term. Its financial education pro-
grams serve this purpose by encouraging greater
self-provision.
The company's commitment to transparency and
ethics is embodied by its special listing segments
for companies with high standards of corporate
governance (Novo Mercado, Level 1, Level 2).
Social investment focusing on community develop-
ment is also a priority for BM&FBOVESPA as a signa-
tory to the United Nations Global Compact, a strate-
gic policy initiative for businesses around the world
to promote sustainable global economic growth.
In line with its strong commitment the company
seeks to embed the concept of sustainability in its
products and services, involving all business areas
in this policy of inducing best practice as exempli-
fied by the development of "green" indicators such
as the Corporate Sustainability Index (ISE) and the
Carbon Efficient Index (ICO2).
Technological advances
The success of the Exchange's activities depends on
the continuous improvement and integration of its
trading and settlement platforms, as well as its flex-
ibility to create solutions. Its substantial investment
in leading-edge technology results in high perfor-
mance to assure security, speed and cost-effective-
ness for its customers.
A milestone in this regard was the launch of the
Post-Trading Integration Program (IPN in the lo-
cal acronym), which will result in a single clearing
house for equities, derivatives, foreign exchange
and bonds, as well as the implementation of an ad-
vanced risk management system known as Close
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PrOFilE
1
BM&FBOVESPA Market Supervision (BSM) is re-
sponsible for market surveillance in the equity
segment, acting as an ancillary body to CVM,
Brazil's securities and exchange regulator, and
for managing the Investor Compensation Mecha-
nism (local acronym MRP).
BBM, the Brazilian Commodities Exchange, man-
ages registration and settlement of trades in com-
modities, goods and services for physical delivery,
as well as securities representing these products
in the primary and secondary markets and in cash,
forward and options modalities.
BM&FBOVESPA Settlement is a wholly-owned
subsidiary set up to centralize custody of assets
pledged as collateral and margin requirement for
the Exchange's clearinghouses and holders of ac-
cess rights.
BM&F USA Inc., also a wholly-owned subsidiary, is
headquartered in New York with a representative
office in Shanghai and a full branch in London. Its
mission is to represent BM&FBOVESPA abroad.
TrOCar imagEm
vEr COm O rafaEl
Out Risk Evaluation, or CORE. Its completion is
scheduled for 2013.
group companies
2.2 | 2.3
The group's corporate structure is currently as fol-
lows:
Bm&fBOvESPa S.a. -- Securities, Commodities
and futures Exchange
BM&FBOVESPA UK
LTD.
BRAzILIAN COMMODITIES
EXCHANGE
BM&F USA INC.
BM&FBOVESPA MARKET
SUPERVISION
BM&FBOVESPA
SETTLEMENT BANK
RIO DE JANEIRO
STOCK EXCHANGE
BM&FBOVESPA
INSTITUTE
The BM&FBOVESPA Institute is a civil society organiza-
tion, which was created in 2007 for the purpose of inte-
grating and coordinating our social investment projects.
The BM&FBOVESPA Group also includes BVRJ, the Rio de
Janeiro Stock Exchange, which is not operating currently
but is available for institutional events.
BM&FBOVESPA had 1,442 employees and 85 trainees at
end-2012. The company's market value was R$27.7 bil-
lion on December 31. There were no changes in its size,
structure or equity ownership during the year.
2.9
recognition of transparency and efficiency
2.10
In 2012, for the fourth consecutive year, BM&FBOVESPA
was awarded the Transparency Trophy in the category
Public Companies with Annual Sales of up to R$5 Billion
by the National Association of Finance, Administration &
Accounting Executives (Anefac), the Accounting, Actu-
arial & Financial Research Institute Foundation (Fipecafi)
and Serasa Experian.
In addition, for the third consecutive year it won the Best
Company for Shareholders prize in the category Corporate
Governance awarded by Capital Aberto magazine. The
company ranked second among the 100 selected compa-
nies, with a score of 8.15 on a scale from zero to 10.
It also won a Value Creation award in the category Industry
Leader 2012 ­ Financial Services from the Brazilian Asso-
ciation of Publicly Held Companies (Abrasca).
For the second consecutive year the company also won
the Exchanges and Brokers Award for the Best Sustain-
able Stock Exchange in Latin America from World Fi-
nance, a leading financial magazine produced in London.
In 2012 BM&FBOVESPA also won two awards from Fu-
ture & Options World (FOW) magazine, both in the South
America category: Exchange of the Year and Best Innova-
tion by an Exchange (for implementation of the PUMA
Trading System).
The company also won the 14th Abrasca award for the
Best Annual Report in 2011 in the category Group 2 Pub-
lic Companies (net sales of less than R$3 billion).
8
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strategies and
risk management
1.2
2.
Expansion of
BM&FBOVESPA's markets
involves continuous
investiment in technology
Technology and efficiency
In 2012 BM&FBOVESPA continued to invest heavily to up-
grade its technology infrastructure and enhance its op-
erational model.
In early November the company presented its clear-
inghouse integration program to market participants ­
banks, brokerage houses, regulators and investors. This
program includes the implementation of a new risk man-
agement system called CORE, short for Close Out Risk
Evaluation, unique in the global industry.
The aim of the program is to integrate the existing four
clearinghouses ­ for equities, derivatives, foreign exchange
and other assets, especially bonds ­ into a new, highly se-
cure and robust unified platform based on a faster data
processing architecture with the capacity to handle more
than 10 million orders per day and calculate risk in real time.
Simplification and standardization of processes will also
be key features of the new clearinghouse, which is sched-
uled for implementation in the fourth quarter of 2013.
The unified clearinghouse will introduce new concepts,
technologies and solutions that will revolutionize impor-
tant services provided by the Exchange.
The new model will also mean more efficiency, agility
and flexibility thanks to the simplicity and modular na-
ture of the new technological solution.
The investment budget is estimated at between R$260
million and R$290 million for 2013 and R$170 million-
R$200 million for 2014. In 2012 investment totaled
R$258.4 million.
Part of this investment resulted, among other things, in
the development of the post-trading integration pro-
gram, an effort involving professionals from several areas
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of the Exchange who are working simultaneously
on 15 projects, including CORE, which will inte-
grate the risk methodologies.
In 2013 integrated tests with the market are sched-
uled and implementation of the new systems in
the production environment will begin. Once this
stage is completed, migration of the processes for
derivatives registration, clearing and settlement to
the new single clearinghouse will begin. The equi-
ties clearinghouse is scheduled to migrate to the
new system in 2014.
It is important to note that the partnership with
Cinnober will result in operational autonomy with
regard to the TRADExpress RealTime Clearing sys-
tem, an advanced solution with the flexibility to
adapt to different participant structures, asset
classes and settlement models.
In parallel with the clearinghouse integration
project, the company continued to extend the
BM&FBOVESPA PUMA Trading System, a multi-as-
set electronic trading platform developed in part-
nership with CME Group and launched in 2011.
The derivatives model was implemented first. De-
velopment of the equities module was completed
in 2012. Migration of Mega Bolsa, the equities
and equity derivatives trading system, to PUMA is
scheduled for the first quarter of 2013.
The first stage of the development of the new reg-
istration system for the over-the-counter (OTC)
market was completed and is scheduled to begin
operating fully in the first quarter of 2013.
Work began on the construction of a new data
center in 2012 and is scheduled for completion in
2013 to unify the company's main data centers in a
scalable environment that will support the growth
of its business in the years ahead, as well as miti-
gating risks and improving the availability and op-
erational security of its technology infrastructure.
Market security and efficiency
Technology guarantees market security and efficien-
cy. Another factor that differentiates BM&FBOVESPA
in its commitment to excellence is constant invest-
ment in the following:
Self-regulation and market supervision
­ Through
BM&FBOVESPA Market Supervision (BSM), an inde-
pendent organization that acts as an ancillary arm
of CVM in the sphere of securities market surveil-
lance, the Exchange promotes regulation and as-
sures the proper functioning of the markets and
participants, bolstering market integrity and inves-
tor protection.
Operational qualification of brokerage houses
­
BM&FBOVESPA's Operational Qualification Program
(PQO) certifies the quality of the services provided
by brokerage houses, encompassing customer reg-
istration, order execution, settlement, risk manage-
ment, information security and business continuity,
among other processes. Quality seals for execution
brokers, carrying brokers, retail brokers, agro bro-
kers and online trading services (Home Broker) are
awarded under the Operational Qualification Pro-
gram. In 2012 this activity of certifying brokerage
houses was transferred to BSM.
Issuer relationships, promotion and supervi-
sion
­ BM&FBOVESPA constantly invests in the
maintenance and development of a favorable en-
vironment for companies to raise funds. The total
number of companies currently listed on all special
corporate governance segments is 178, of which
127 are listed on Novo Mercado.
International promotion of the Brazilian markets
­ As part of its commitment to develop the mar-
kets, BM&FBOVESPA sponsors and actively partici-
pates in a range of initiatives designed to promote
local markets internationally, such as BRAiN ­ Brasil
Investimentos e Negócios, an institution created to
coordinate and promote Brazil as Latin America's
main global investment and business hub.
Social and environmental promotion activities
­
The Exchange has a long tradition of social invest-
ment through the BM&FBOVESPA Institute. It also
sponsors a number of initiatives with the aim of
encouraging listed companies to include sustain-
ability in their business agendas. These include
the BM&FBOVESPA Athletics Club, the Job Train-
ing Association, and the Environmental & Social
Exchange (BVSA).
In 2012, with the support of a global consulting
firm, the company began reviewing its fee structure
in pursuit of enhanced efficiency for all segments.
The first changes will be announced in 2013.
Growth and market strengthening
BM&FBOVESPA's growth strategy for 2012 priori-
tizes projects that diversify its revenue streams.
The company aims to strengthen existing prod-
ucts and services, as well as developing new solu-
tions with high growth potential, by expanding its
new issuer motivation and prospecting activities,
encouraging companies to raise capital by listing
on the Bovespa Mais access segment, extending
the market maker program to all assets and deriva-
tives, extending access to new types of investors by
launching products and services on a global scale,
bolstering the liquidity of commodity derivatives,
strengthening the BM&FBOVESPA Educational Insti-
tute as the main center for training and education
in capital markets and derivatives, and extending its
financial education programs for individuals.
Promotion of small IPOs
BM&FBOVESPA is constantly increasing its efforts
to motivate and prospect for new issuers. In 2012
the company conducted studies on ways of in-
creasing the number of issuers in Brazil, particu-
larly by helping small and medium enterprises in
all sectors to raise capital in the equity market.
The working group set up for this purpose com-
prised representatives of the following organiza-
tions, besides the Exchange itself: ABDI, the Bra-
zilian industrial development agency; BNDES, the
national development bank; CVM, the securities
and exchange commission; and Finep, the federal
innovation agency. It visited seven countries ­ Aus-
tralia, Canada, China, Poland, South Korea, Spain
and the United Kingdom ­ to find out about al-
ternative stock market rules and practices tailored
to the capital-raising needs of small and medium
enterprises. It also endeavored to explore the prac-
tices prevailing in the main stock markets in these
countries, many of whose leading exchanges also
list a large number of SMEs.
The working group's main findings, published in
November, emphasized the importance of less
burdensome disclosure requirements, more sim-
plified governance rules, larger discounts for
smaller issuers, and tax incentives for investors
rather than issuers.
The composition of the Technical Committee
on Small IPOs was announced in December, as
planned. Its remit is to discuss proposals and pres-
ent an agenda of activities for 2013. Proposals also
on the table as a result of the roundtable session
held on November 5 with CVM include tax incen-
tives for investors and/or investment funds, mea-
sures to lower the cost of listing and maintaining
public companies, and activities to educate inves-
tors on specific aspects of SMEs.
Products and services
The Exchange believes strongly in the develop-
ment and growing sophistication of the Brazilian
capital markets and participants. For this reason
it has introduced new products and services and
pursued greater liquidity for existing products.
In 2013 the company will focus on developing
equity options by intensifying market maker
programs; on ETFs, introducing new bidding
processes and launching funds as well as off-
shore indexes; and on commodities, launching
new contracts, producing indicators and ex-
tending the market maker program for futures
and options.
The company will also continue to improve the
securities lending service by upgrading the
BTC system and enhancing the efficiency of the
settlement process for these transactions. The
service will remain superior to those of other
countries inasmuch as BM&FBOVESPA acts as
counterparty to and guarantees all securities
lending transactions.
Another product line is the cross-listing of prod-
ucts licensed by other exchanges, especially de-
rivatives. In 2012 the Exchange launched CME
soybean futures and CME S&P 500 futures, as well
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as BRICS index futures (tracking the exchange in-
dexes for Brazil, Russia, India, China and South Af-
rica).Crosslisting of the Ibovespa and of WTI crude
oil, S&P 500 is planned in 2013.
Individual investors
The company will intensify its partnerships with
brokerage houses and retail banks to train trad-
ers and managers with the aim of bolstering by
individual investors' trading volumes and par-
ticipation by encouraging them to invest directly
in the products offered by the Exchange or in
investment funds. The financial education pro-
grams offered by the Educational Institute will
also be intensified.
Information services
The various stakeholder groups with which
BM&FBOVESPA has relationships require ease of
access and more detailed information. To optimize
and automate communication with issuers, inves-
tors and other stakeholders, the company plans a
complete reformulation of its internet portal. This
will include the creation of a portal specifically for
issuers, which will publish financial statements and
provide support for Investor Relations, as well as
a portal specifically for investors, offering a refor-
mulated Electronic Investor Channel linked to the
portal for issuers.
Internationalization
The drivers of BM&FBOVESPA's growth strategy also
include diversifying its investor base and building
closer ties with foreign exchanges and institutions.
To this end the company plans to identify needs
and develop new products or structures that offer
exposure to Brazil and its markets.
Risk management
BM&FBOVESPA follows advanced risk manage-
ment procedures to deal with market, liquidity and
counterparty risks.
The Exchange is a global benchmark in risk and
collateral management, currently administering
four clearinghouses (for equities and fixed in-
come, derivatives, foreign exchange and assets)
considered systemically important by the Central
Bank of Brazil. These clearinghouses act as the
central counterparty (CCP) for all trades executed
via their systems.
The clearinghouses have an advanced risk man-
agement structure that stands out among the
similar models operated in various countries. All
transactions executed by financial institutions and
investment funds must be registered with a cen-
tralized registration system authorized by the Cen-
tral Bank of Brazil.
This system permits identification of the clearing
agent, brokerage house and beneficial owner re-
sponsible for each transaction. Regulators are able
to access rapidly and efficiently all data on risk ex-
posure and transactions executed by institutions.
Risk calculation and individualized collateral re-
quirements
Risk control follows a specific methodology for
each market. Risk is calculated using a stress test-
ing model in almost real time (several times during
the day), and additional collateral or margin de-
posits are required whenever necessary.
Risk calculation and collateral requirements are
individualized for each beneficiary owner. Collat-
eral is posted to custody accounts managed by the
clearinghouses themselves, and beneficiary own-
ers' accounts are completely and effectively segre-
gated from each other.
BM&FBOVESPA's clearinghouses have accounts
with the Central Bank of Brazil for the settlement
of all transactions executed, avoiding exposure to
commercial bank credit risk.
Regulation and supervision
BM&FBOVESPA's clearinghouses have a robust
regulation and supervision structure based on ex-
change self-regulation, on constant assessment
and supervision of its risk management and settle-
ment models by the Central Bank of Brazil, and on
CVM's supervision of the securities markets, in-
cluding derivatives.
Central counterparty risk
Through its clearinghouses BM&FBOVESPA acts
as central counterparty to all trades in the eq-
uity market (cash, forwards, options, futures and
securities lending), derivatives market (futures,
forwards, options and swaps), foreign-exchange
market (spot dollar), government bond market
(cash, forwards, repos, loans) and corporate bond
market (cash, loans).
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By acting as central counterparty, the Exchange
assumes responsibility for complete settlement
of transactions executed through its systems and/
or registered with them. As such it intermediates
between the parties to each transaction, acting as
buyer to all sellers and seller to all buyers for settle-
ment purposes.
Thus if participants fail to discharge their obliga-
tions to the clearinghouses, by not making pay-
ments on time or not delivering assets, for ex-
ample, BM&FBOVESPA must activate safeguards
and ultimately have recourse to its own funds. To
manage the risks inherent in this function, the CCP
focuses on calculating, controlling and mitigating
its credit-risk exposure to participants.
Safeguards
To assure adequate mitigation of the risks assumed,
each of BM&FBOVESPA's clearinghouses has its own
risk management system and its own safeguards
­ resources and mechanisms that can be used to
cover losses relating to settlement failure by one or
more participants, including the collateral pledged
by market participants, margin deposits, funds spe-
cifically set up for this purpose, special assets, and
co-responsibility for settlement assumed by broker-
age houses and clearing members or agents.
BM&FBOVESPA's clearinghouses are not directly
exposed to market risk because they do not hold
long or short net positions in any of the contracts
and securities traded on its markets. However, sig-
nificant price volatility can affect the magnitude of
the amounts to be settled and increase the prob-
ability of participant default.
In addition, the clearinghouses are responsible
for settlement of the transactions executed by de-
faulting participants. This can result in losses to the
Exchange if the amounts owed exceed the value
of the guarantees available. Thus despite the lack
of direct exposure, market risk can affect the credit
risks assumed and may even increase them.
BM&FBOVESPA's Equities and Derivatives Clear-
inghouses are responsible for settlement and risk
management relating to approximately 85% and
90% of the total Latin American equity and deriva-
tives markets respectively.
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Clearinghouses ­ Deposited Collateral
Daily average
12/31/12
12/31/11
Var, (%)
Equity and corporate debt
77,719,8
69,770,1
11,4%
Derivatives
94,052,4
104,195,5
-9,7%
FX
3,662,7
3,448,6
6,2%
Securities
1,047,0
1,142,3
-8,3%
Total
176,481,9
178,556,5
-1,2%
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about this
report
3.5
3.
about this
report
3.5
3.
A BM&FBOVESPA
constantly computes and
updates its indicators
This annual report details the performance of BM&FBOVESPA and all oper-
ations conducted between January 1 and December 31, 2012, at its head
offices in São Paulo, Brazil. The previous report was published in 2012 and
referred to the company's operations in 2011.
3.1| 3.2| 3.3 | 3.6 | 3.8
The consolidated financial statements were prepared and are presented in
accordance with International Financial Reporting Standards (IFRS), applied
to the 2012 annual balance sheet and retroactively to the previous year in
order to permit comparisons between the two periods.
3.9
In 2012 no significant restatements or changes were made to the types of in-
formation provided, which are therefore entirely comparable with the 2011
report and those referring to previous years. Similarly, no significant changes
were made to the size and structure of the company or its capital structure,
and no specific restrictions were made to the scope, boundaries or measure-
ment methods used.
3.7 | 3.10 | 3.11
This is the fourth consecutive annual report published by BM&FBOVESPA in
accordance with Global Reporting Initiative (GRI) guidelines, continuing the
effort to comply with Level C requirements. It presents information on rela-
tions with all stakeholder groups, including employees, contractors, suppli-
ers, market participants, shareholders, government and regulators, among
others.
3.5 | 3.9
Computing and upgrading of indicators for the annual report, especially on
the social and environmental dimensions, were supported by a firm of com-
munication consultants and reviewed by BM&FBOVESPA's Executive Board
and Sustainability Committee. The financial statements were audited by
PricewaterhouseCoopers Auditores Independentes.
3.13
The 2012 Annual Report will remain available online on the BM&FBOVESPA
website (
www.bmfbovespa.com.br
) and has been printed only in a summa-
rized version on certified paper with vegetable oil-based ink to minimize the
environmental impact of this publication.
The GRI Content Index is on page 174.
3.12
For more information about this report, contact Investor Relations at the e-
mail address
ri@ bmfbovespa.com.br.
3.4
18
19
background image
corporate
governance
4.
BM&FBOVESPA is
committed to strict rules
for corporate governance,
transparency, and ethical
relations with the market
Governance structure
4.1
BM&FBOVESPA is recognized for its responsible manage-
ment, transparency and efficiency. In 2012 it once again
won the Transparency Trophy and a Best Companies for
Shareholders Award in the category Corporate Gover-
nance, as well as winning the Abrasca award for the Best
Annual Report in 2011.

This recognition demonstrates that the Exchange seeks
constantly to enhance corporate governance, adopting
best practices and assuring the alignment of interests
between the company, its top management, its control-
ling and minority shareholders, market participants, and
other stakeholders.
Transparent management, a disciplined regulatory en-
vironment and respect for the rights of shareholders
maximize value creation by the company and provide
related parties with elements for informed strategic de-
cision making.
General and Extraordinary Shareholder Meetings
4.4
Meetings of the company's shareholders are convened at
least two weeks in advance for the first call and one week
in advance for the second call. In addition to the powers
established by law or by the company's articles of incor-
poration and bylaws, shareholder meetings are empow-
ered to decide on the appropriation of annual earnings
and their distribution to shareholders; approve grants of
incentive stock options or the issuance of stock to execu-
tives and employees of the company and its subsidiaries
and affiliates; and approve profit sharing schemes in ac-
cordance with its human resources policy.
To facilitate and encourage participation in shareholder
meetings, BM&FBOVESPA allows electronic proxy vot-
20
21
background image
ing and authorizes some of its executive officers
to receive proxy forms with specific instructions to
vote on items of business. In addition, the compa-
ny's website provides channels for contact via the
Ombudsman (
www.bmfbovespa.com.br
) and the
Investor Relations portal (
bmfbovespa.com.br/ri
).
BM&FBOVESPA also offers employees opportunities
to express their opinions. The organizational climate
survey ("Opinião de Valor") and its ramifications are
examples of transparency in this process. In addi-
tion, the Chief Executive Officer (CEO) periodically
presents employee-related decisions, findings and
recommendations to the Board of Directors.
Board of Directors
BM&FBOVESPA is governed by a Board of Direc-
tors and an Executive Board. The members of the
Board of Directors are elected by the Annual Gen-
eral Meeting of shareholders (AGM). The Board of
Directors then appoints the members of the Ex-
ecutive Board. All members of both Boards serve
two-year terms. According to the company's by-
laws, no member of the Board of Directors may be
appointed to the Executive Board.
4.2
The Board of Directors has 11 members, six of whom
are independent. All members serve concurrent
two-year terms and can be re-elected. This body is
responsible for setting and overseeing global strat-
egies, and for the supervision of internal controls,
particularly with regard to risk management.
4.3
The Board of Directors holds regular meetings ev-
ery two months but can be convened at any time
when necessary. In 2012 it met nine times.
The members of the Board of Directors are qualified
in the economic, financial, environmental and social
fields, with ample knowledge and experience in these
areas. Their remuneration and that of the Executive
Board, which are established by the Compensation
Committee, includes fixed and variable components
as well as long-term incentives, currently consisting
of the Stock Options Program approved by the AGM.
Notwithstanding the excellence of its members, the
Chairman conducts a formal annual assessment of
the Board of Directors as a body, analyzing its stra-
tegic focus, decision-making process, conduct of
meetings, motivation, and alignment of interests.
Advisory committees to the Board of Directors
The Audit Committee, Corporate Governance &
Nomination Committee, Compensation Commit-
tee and Risk Committee report to the Board of
Directors in an advisory capacity. Their members
serve two-year terms.
Audit Committee ­ One independent member of
the Board of Directors and four external members
oversee and evaluate the quality of internal audit-
ing and independent external auditing of both the
company and its subsidiaries and affiliates.
Corporate Governance & Nomination Commit-
tee
­ Three members of the Board of Directors, two
of whom are independent, work to improve cor-
porate governance, evaluate the adoption of best
practices, and select and nominate candidates to
the Board of Directors and Executive Board.
Compensation Committee ­ Three members of
the Board of Directors, two of whom are indepen-
dent, review the compensation and benefit policy
and personnel management model, proposing im-
provements and monitoring their implementation.
Risk Committee ­ Four members of the Board of Di-
rectors analyze market, liquidity, credit and systemic
risks in the markets managed by the company.
More information on the Board of Directors and its
committees can be found in the Corporate Gover-
nance section of the Investor Relations portal (http://
ir.bmfbovespa.com.br > Corporative Governance).
Executive Board
Appointed by the Board of Directors, BM&FBOVESPA's
Executive Board consists of the Chief Executive Of-
ficer and four other executives. It executes the stra-
tegic guidelines established by the Board of Direc-
tors and monitors their results. It also establishes
guidelines of its own for BM&FBOVESPA's opera-
tional, socio-economic and sustainability-related
activities, as well as performing within its remit
all the activities necessary for the organization to
function properly.
The company also has a number of committees
that assist and advise the Chief Executive Officer,
including committees representing agribusiness,
the capital markets and other important sectors,
the Committee to Enhance Intermediation, the
Listing Committee, the Regulations Committee,
the Operational Qualification Program Certifica-
tion Committee, the Sustainability Committee,
and the Market Risk Technical Committee, whose
main remit is to analyze the macroeconomic out-
look and its effects in terms of risk on the markets
in which the company operates.
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4
Pedro Pullen
Parente
Candido
Botelho
Bracher
Charles Peter
Carey
Claudio
Luiz da Silva
Haddad
José Roberto
Mendonça
de Barros
Julio de
Siqueira
Carvalho
de Araújo
Luis Stuhlberger
Marcelo Fernandez
Trindade
Renato Diniz
Junqueira
René Marc
Kern
Edemir Pinto
Cícero Augusto
Vieira Neto
Eduardo
Refinetti
Guardia
Luis Otávio
Saliba Furtado
Marcelo
Maziero
Arminio Fraga
Neto
Chairman of Board
of Directors
Vice Chairman
Chief Executive
Officer
Chief Operating
Officer
Chief Financial
Officer
Chief Information
Security Officer
Chief Product &
Customer Officer
Independent
director
Independent
director
Director
Director
CME
Independent
director
Independent
director
Director
Director
Independent
director
Director
Independent
director
Board of Directors
Executive Board
22
23
background image
Business drivers
4.8
Since 2008 BM&FBOVESPA has been undergoing
changes and seeking to identify internally what
defines it as an organization, its purposes and as-
pirations.
Mission, Vision & Values
The Mission Statement, Vision and Values are be-
ing drafted. Aspects relating to economic, social
and environmental responsibility grounded in the
concept of sustainability are being analyzed so
that they can be integrated into the management
of the company's business.
BM&FBOVESPA permanently pursues opportuni-
ties to broaden the perspectives for its actions
through socio-environmental initiatives.
The company does not perform any activities that
pose a risk to health or the environment. Further-
more, it prioritizes responsible practices in select-
ing and contracting with suppliers, such as those
relating to environmental impact, ethical conduct,
health and safety, and non-involvement in proven
cases of corruption, bribery, slave or forced labor
and child labor.
Corporate responsibility
BM&FBOVESPA company seeks to be an outstand-
ing example of corporate responsibility. All em-
ployees, interns and contractors have formal work
contracts. Every effort is made to ensure that indi-
viduals are respected in the workplace. No cases of
discrimination on grounds of ethnicity, color, gen-
der, religion, ideology, nationality or social status
were reported in 2012.
Codes of Conduct
4.4
The BM&FBOVESPA Code of Conduct establishes
rules to avoid conflicts of interest, encompassing
relationships with external stakeholders as well as
employees, the treatment of privileged informa-
tion, and securities trading.
The
Code of Conduct
applies to BM&FBOVESPA
and all its subsidiaries and affiliates, and is signed
by all employees. Suspected infringements are
reported in writing to the Code of Conduct Com-
mittee. Such reports are never anonymous. The
committee appoints a rapporteur to take the nec-
essary steps to investigate each report. The Audit
Department monitors all such cases and submits
its findings to the Code of Conduct Committee for
analysis. The CEO periodically presents decisions,
findings and recommendations to the Board.
So3
In 2012 the Exchange kept fully in force the
Sup-
plier Code of Conduct
, which covers principles and
practices that must be part of the day-to-day rou-
tine of all those involved in building and maintain-
ing relations that add value and develop society
economically, socially and environmentally. They
include:
Complying with all laws, rules and regulations
that prescribe a minimum age for work, and
not employing children aged under 14.
Admitting adolescents as apprentices only
when previously registered with public and/or
non-governmental organizations authorized
by the competent government agencies.
Guaranteeing school attendance by adoles-
cent apprentices aged over 14, and assuring
respect for their labor and social security rights
and specific stage of development.
Strictly obeying the laws applicable to com-
bating working conditions analogous to slav-
ery, forced labor and child labor, on pain of im-
mediate unilateral termination of contract.
·
· In 2012 no cases of infringement or corruption
at BM&FBOVESPA were reported to the Code
of Conduct Committee, and no significant
fines or non-monetary penalties resulted from
non-compliance with laws, rules and regula-
tions in the period.
So4 | So8
Abrasca Code
On December 12, 2011, BM&FBOVESPA adhered to
the
Abrasca Code of Self-Regulation and Best Prac-
tice for Publicly Held Companies
, declaring that it
applies the principles and rules established by the
Code except the recommendation that all advisory
committees to the Board of Directors be chaired by
members of that Board. In fact the Exchange does
apply this rule, with the sole exception of the Audit
Committee, which is chaired by an independent
external member who has the requisite technical
qualifications. The company believes the choice of
this member is aligned with the committee's remit
and with its requirements in terms of indepen-
dence and competencies.
Conflicts of interest
4.6
BM&FBOVESPA's policy on conflicts of interest is
aligned with the requirements of Law 6404/76. In-
fringements are reported to the Corporate Gover-
nance & Nomination Committee for analysis. The
committee proposes corrective action for approval
by the Board of Directors.
The company's bylaws include several rules de-
signed to prevent access to certain kinds of infor-
mation, as well as participation in Board discus-
sions and decisions, by members of the Board of
Directors involved in conflicts of interest with the
company.
The bylaws also determine that the management
of BM&FBOVESPA, including members of the Board
of Directors, must sign a declaration of adherence
to the Insider Information & Trading Policy Manual.
In addition, the Conflict of Interest & Related Party
Transactions Policy applies to all employees and
executives of BM&FBOVESPA and its subsidiaries
and affiliates.
The company has put in place formal mecha-
nisms for shareholders to express their opinions
to top management through the Investor Rela-
tions Department. The Ombudsman pursues con-
sensus solutions for any conflicts among inves-
tors and participants in the markets managed by
BM&FBOVESPA.
Institutional representation
4.12 | 4.13
BM&FBOVESPA is a member of or signatory to sev-
eral institutions of an economic, environmental
and/or social nature.
Member, Associação Viva o Centro ­ seats on
board and executive
Member, Network of Brazilian Women Leaders
for Sustainability, Ministry of the Environment
Member, Steering Committee, National Regis-
ter of Companies Committed to Ethics & Integ-
rity (Cadastro Empresa Pró-Ética)
Member, Business for Climate Platform (Empre-
sas pelo Clima), FGV ­ seat on advisory board
Member, GRI Focal Point Brazil Advisory Group
Member, Steering Committee, Ethos Indica-
tors, Third Generation
Member, São Paulo Against Violence Institute
­ seat on board
Member, Grupo de Institutos, Fundações e Em-
presas (GIFE) ­ seat on supervisory board
Member, Honorary Council, Carbon Disclosure
Project (CDP), South America
Member, Technical Advisory Council, Carbon
Disclosure Project (CDP), South America
Member, GRI Stakeholder Council
Member, Sustainability Research Group, Brazil-
ian Institute of Corporate Governance (IBGC)
Signatory, Voluntary Commitment to the UN
Sustainable Stock Exchanges (SSE) initiative
(Global Compact, PRI, UNEP-FI, UNCTAD)
Signatory, Brazilian Business Compact For In-
tegrity & Against Corruption
Signatory, UN Global Compact ­ member, Bra-
zilian Global Compact Committee
Signatory, Brazilian National Compact for the
Eradication of Slave Labor
Signatory, Principles for Responsible Invest-
ment (UN PRI) ­ member, PRI Engagement
Group Brazil
Institutional participation
4.4 | 4.12 | 4.13
As part of its business strategy, BM&FBOVESPA par-
ticipates in several domestic and international as-
sociations or organizations, where it is a project or
committee member or invited to share its expertise.
BRAiN (Brasil Investimentos & Negócios, a joint
initiative of Anbima, BM&FBOVESPA and Febr-
aban) ­ associate member
Ibero-American Federation of Exchanges
(FIAB) ­ member, Executive Committee and
Working Committee
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24
25
background image
Futures Industry Association (FIA) ­ associate
member
Brazilian Institute of Corporate Governance
Institute (IBGC) ­ sponsoring organization and
member of several committees (Guidelines,
Legal, Finance, Sustainability, Communication)
International Organization of Securities Com-
missions (IOSCO) ­ member, Self-Regulato-
ry Organizations Consultative Committee
(SROCC), Council of Securities Regulators of
the Americas (COSRA), and IOSCO Working
Group that coordinates Brazilian participation
World Federation of Exchanges (WFE) ­ mem-
ber, Board, Working Committee, Communica-
tions and Regulation Task Forces
Stakeholder relations
4.14 | 4.15 4.16 | 4.17
BM&FBOVESPA maintains mechanisms not only
to assure the proper functioning of its business
but also to foster best practice in corporate gov-
ernance among market participants and other
stakeholders, especially shareholders, brokerage
houses, listed companies, government, investors,
analysts and suppliers.
The company's stakeholder engagement initia-
tives include application of the AA1000 corporate
responsibility management standard, focusing
on accounting, auditing and social/ethical report-
ing, educational campaigns, actions to encour-
age companies and individuals to participate in
socio-environmental initiatives such as the Envi-
ronmental & Social Investment Exchange (BVS&A)
and the Em Boa Companhia ("In Good Company")
website, and regular meetings of the Advisory
Committees set up to build closer ties with the
markets with the participation of representatives
of various segments.
Responsible practices
­ BM&FBOVESPA fosters best practice in transpar-
ency and management through various strategic
initiatives including the creation of listing segments
for companies with high levels of corporate gover-
the company's relevant long-term relationships
not elsewhere described") whether they publish a
regular sustainability report and where it is avail-
able, or explain why not.
The aim is to contribute to the movement to in-
crease transparency in the disclosure of non-fi-
nancial information, for which there is growing de-
mand from the general public as well as investors
in light of their understanding of the importance
of sustainability in business and society.
BM&FBOVESPA believes its Report or Explain initia-
tive will motivate growing numbers of companies
to adopt the practice of reporting information and
results in the social, environmental and corporate
governance dimensions of their activities.
In 2012 the company presented the main points
of the new base questionnaire for evaluation of
companies that apply for inclusion in the eighth
portfolio of the Corporate Sustainability Index
(ISE). Among the proposals approved by the ISE's
Board of Governors (CISE) was the inclusion of
an open-ended text field for each indicator in
the questionnaire. This new feature will enable
companies to add any information they deem
necessary to their answers to multiple-choice
questions. The instrument is a continuation of the
Exchange's actions to foster transparency, pro-
viding one more incentive for companies to dis-
close their responses to the ISE questionnaire in
response to growing interest from analysts, inves-
tors and the general public.
Market Ombudsman
BM&FBOVESPA's Market Ombudsman is a channel
for communication with stakeholders. The Market
Ombudsman interacts with stakeholders both ac-
tively through contacts and visits, and passively
through suggestions and complaints received via
the internet and by telephone.
The Market Ombudsman prioritizes direct investi-
gation of all cases, submitting the information and
data collected to the Executive Board and Board
of Directors at the end of each quarter. The service
is available to all stakeholders but demand comes
mainly from investors, most of whom are custom-
ers of brokerage houses.
There are no records of complaints regarding data
security or privacy breaches in the period, or of any
significant fines for failure to comply with the laws
and regulations governing the supply and use of
products and services.
pr8 | pr9
The Ombudsman responds to all contacts and in-
variably makes sure that both the response and
the solution offered in each case are evaluated,
in accordance with ISO 9001 certification require-
ments. As of 2013, the Exchange will manage pro-
cess quality and performance internally.
Indicators are monitored monthly by Customer
Service (SAP) to evaluate the satisfaction of broker-
nance development ­ Novo Mercado, Level 2, Level
1 and Bovespa Mais ­ and a number of sustainability
indexes: the Special Corporate Governance Index
(IGC), Corporate Governance Trade Index (IGCT),
the Corporate Governance Index ­ Novo Mercado
(IGC-NM), the Corporate Sustainability Index (ISE)
and the Carbon Efficient Index (ICO2).
As yet another sustainability initiative,
BM&FBOVESPA adopted Report or Explain guid-
ance recommending that listed companies state
in item 7.8 of the Reference Form ("Description of
Shareholders
· IR portal
· Quarterly earnings reports
· Quarterly fact sheets
· Integrated reporting
Suppliers
· Supplier Code of Conduct
· Selection of suppliers based on sustainability criteria
· Control of supplier register using assessment and certi cation based on
Internal Policy for the Acquisition of Goods & Contracting of Services, which
includes a speci c item on responsible practices in supplier selection and
contracting covering environmental impact, ethical conduct, health and
safety, and non-involvement in proven cases of corruption, bribery, slave or
forced labor and child labor.
·
·
·
·
Employees & Contractors
Você em Alta (intranet)
Novo Valor (sustainability program)
Opinião de Valor (organizational climate survey)
Em Ação (voluntary service portal)
Analysts
·
IR portal
·
Analyst kit

Brokerage Houses
· BM&FBOVESPA Service Center (CAB)
· Operational Quali cation Program (PQO)
· Educational Institute
· Broker search (web)
· Quer Ser Sócio? ( nancial education portal)
Government & Regulatory
· BM&FBOVESPA Supervisão de Mercados (BSM)
· Legislation Portal

Listed Companies
Investors in general
· Mobile applications
· Financial education courses and programs
· Educational Institute
· Equity and futures trading simulators
· Ombudsman
· Quer Ser Sócio? ( nancial education portal)
· BVSA portal
· TV BVMF
· Dia da Empresa (Company Day)
· Educational Institute
· Market Maker Program
· Corporate Governance Seals
· BVSA portal
· Em Boa Companhia (Corporate Sustainability)
· Companies Portal

Listing segments

· Novo Mercado
· Corporate Governance Levels 1 & 2
· Bovespa Mais
Governance indexes

· Special Corporate Governance Index (IGC)
· Special Tag Along Index (ITAG)
· Corporate Governance Index - Novo Mercado (IGC-NM)
· Corporate Governance Trade Index (IGCT)
Sustainability indexes

· Corporate Sustainability Index (ISE)
· Carbon E cient Index (ICO2)
Stakeholder relationship channels
4.14 | 4.15
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26
27
background image
age house customers and members of the public
who contact BM&FBOVESPA. The findings are de-
scribed in a management report, including satis-
faction surveys covering the quality of telephone
service and average response time.
pr5
SAP satisfaction survey ­ telephone service
Excellent
Very good
Good
Average
Poor
Total
10,589
1,886
571
145
199
13,390
79,08%
14,09%
4,26%
1,08%
1,49%
100%
SAP satisfaction survey ­ service via website
Excellent
Very good
Good
Average
Poor
Total
170
62
25
19
51
327
51,99%
18,96%
7,65%
5,81%
15,60%
100%
The number of contacts recorded by SAP in 2012
was 58.724. Response time averaged 2.16 days. The
level of satisfaction with telephone service and ser-
vice via the internet was 97.43% and 78.59% respec-
tively. More details are presented in the table below.
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28
29
background image
Valorization, recognition and
training are strategies to foster
employee engagement and
performance
In 2012 BM&FBOVESPA stepped up its investment and
initiatives in employee and leader training, in organiza-
tional climate management, and in the development of a
new organizational culture.
Opinion of Value Survey
In 2011, as part of the evolution of its management
model, organizational culture and continuous workplace
improvement process, BM&FBOVESPA conducted an or-
ganizational climate survey called Opinion of Value to
diagnose the level of employee satisfaction and engage-
ment, and find out about the expectations and aspira-
tions of the workforce.
Employees voluntarily formed 20 working groups, which
during 2012 drew up action plans to cover the require-
ments pinpointed by the survey. The actions were
grouped as outlined below.
Corporate communication ­ One of the main findings
of the survey was the need to enhance the organization's
capacity to plan and prioritize targets, align targets be-
tween areas, and give direction to its teams. The actions
adopted to achieve this enhancement included the cre-
ation of a Strategic Planning Unit, the implementation
of important initiatives such as communication of the
2012 Corporate Plan to all levels of the organization, the
alignment and sharing of targets across units up to the
Executive Board level, the creation of a Project Portfolio
Management Committee (CGP), and preparation of the
2013 Corporate Plan approved by the Board of Directors.
Training and development ­ The company continued to
invest in the Leaders Days Program, external assessment
activities, coaching, and other structured face-to-face
programs for managers focusing more intensely on such
subjects as performance and recognition, and training
and development.
people
management
5.
RELATÓRIO ANUAL
20
12
ANNUAL REPORT
20
12
RELATÓRIO ANUAL
20
12
ANNUAL REPORT
20
12
RELATÓRIO ANUAL
20
12
30
31
background image
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people management
5
Processes ­ Several working groups identified pro-
cesses as a root cause and called for processes to
be improved. A new unit entitled Processes & Per-
formance was set up to meet this requirement by
monitoring, evaluating, redesigning and improv-
ing existing processes.
Performance and pay models ­ A multidisciplinary
group was set up early in the year, with employ-
ees from several areas participating. All elements
of the assessment and pay model were openly
discussed and proposals were sent to the Execu-
tive Board. Examples of actions adopted in 2012
include changes to the profit sharing assessment
scale, feedback to teams regarding their scores,
and assignment of weights to individual targets.
In parallel, the departmental working groups fo-
cused actively on specific plans for the require-
ments of their areas.
To address the challenge of sustaining the process
and the commitment to implement the actions
defined following the survey, fortnightly reports
were distributed with updates on the progress
achieved to date, results, and positive impacts on
the workplace climate.
New Exchange Culture
The Opinion of Value Survey also showed that
giving teams direction means defining and com-
municating the organization's future vision and
values. Another work front related to this theme
that required significant attention from the Execu-
tive Board and the Board of Directors was the New
Exchange Culture project.
With the support of outside international consul-
tants, the project involved more than 150 people
in the existing culture diagnosis stage, working in
13 groups of leaders and teams. The discussion of
the desired culture included individual interviews
and presentations by members of the Executive
Board and the Board of Directors. In addition, a
planning group was set up with directors of the
company to develop an organizational culture de-
velopment plan for 2013. The plan was approved
by the Executive Board and aims to transform the
organization through practical actions and proj-
ects for the coming year.
Leaders Days
Leaders Days is the company's structured continu-
ous program implemented in 2010 with two tracks:
training (mandatory) and individual development
(optional).
This program is for executive and non-executive
directors, managers and senior specialists, and co-
ordinators and specialists. It begins with a detailed
external assessment of each leader's competen-
cies using several behavioral tests and exercises to
reach a diagnosis including strengths and weak-
nesses or development needs. Forty new leaders
took this part of the program in 2012.
The findings are used as a basis for the participants
to take the parallel training and development
tracks. The latter, which is optional, consists of ex-
ternal coaching to assist with an individual devel-
opment plan based on the results of the compe-
tency assessment. The number of participants in
this process in 2012 was 101.
All participants take the training track, which con-
sists of face-to-face modules specially constructed
for the company by Fundação Dom Cabral, a re-
nowned institution that specializes in executive
development.
The first module is the People Management Cycle
developed on the basis of the leaders' competen-
cies, the company's people management model,
and the general findings of the assessment pro-
cess and Opinion of Value Survey. The goal is to
clarify the leader's role and enable the participants
to swap experiences and do practical exercises in-
volving typical everyday real-life situations.
The next step consists of workshops designed to
strengthen the participants' grasp of the concepts
involved. In 2012 the workshops focused on the
people management processes that most require
well-qualified managers, especially performance
evaluation, recognition, team target management
and feedback, and training and development.
The number of leaders trained in 2012 was 250,
with a total of 546 participations in the various
face-to-face modules of the program.
Talent management
In 2012 BM&FBOVESPA performed a talent and suc-
cession mapping and planning exercise for all de-
partments. This annual process aims to guarantee
the preparation of leaders to tackle the challenges
faced by the organization now and in future.
Successors to each department's leaders were
identified and action plans were proposed for the
company's critical positions, including individual
development and retention mechanisms.
To complement this process, the requirements for
leadership positions in all departments were eval-
uated and validated, and a succession nomination
calibration flow was established to legitimate the
planning procedure.
Profile of BM&FBOVESPA's team
la1
BM&FBOVESPA had 1,442 employees and 85 in-
terns at end-2012.
The entire workforce (1,527 people) was located in
the Southeast Region. All except for interns were
employed full-time and had indefinite duration
employment contracts.
The number of people with special needs (PSN)
was 72 at end-2012, in compliance with the 5%
quota requirement established by the applicable
federal and state laws.
For BM&FBOVESPA, attracting and integrating new
employees require consistent efforts to recruit and
select people aligned with the organizational cul-
ture.
In 2012 the company hired 303 people, of whom
205 were employees, 81 were interns, and 17 were
PSN.
In 2012 the lowest salary paid to an intern corre-
sponded to 208% of the state minimum wage; for
employees the ratio was 199%. It is important to
note that no one employed by the company was
paid the minimum wage either in 2012 or in previ-
ous years. The lowest salary corresponded to 172%
and 223% of the state minimum wage in 2010 and
2011 respectively.
ec5
Every single employee of BM&FBOVESPA is cov-
ered by a collective bargaining agreement.
la4
Number of employees and interns
Position
2010
2011
2012
Executive
Officer
36
37
34
Manager
85
94
97
Coordinator
145
152
170
Staff
1.118
1.172
1.141
Intern
78
88
85
Ratio of men's to women's basic salary by em-
ployee category
la4
Category
2010
2011
2012
Diretoria
114,44% 92,12%
84,36%
Executive
Officers
99,39%
101,09% 100,81%
Managers
95,44%
93,16%
93,39%
Managers
86,12%
83,99%
85,74%
32
33
background image
Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other diversity indicators
la13
Gender & ethnicity
(absolute numbers)
2010
2011
2012
2010
2011
2012
2010
2011
2012
2010
2011
2012
Men
Women
Black men
Black women
Exec. Officers
31
30
28
5
7
6
-
-
-
-
-
-
Managers
57
70
77
28
24
20
-
-
1
-
-
-
Coordinators
108
114
128
37
38
42
1
1
1
-
-
-
Staff
771
784
750
347
388
391
18
21
20
4
10
8
Interns
36
54
50
42
34
35
-
-
-
1
-
-
Total
1.003
1.052
1.052
459
491
494
19
22
22
5
10
8
Age & PSN (absolute
numbers)
2010
2011
2012
2010
2011
2012
2010
2011
2012
2010
2011
2012
Aged 30
or less
Aged 31-50
Aged 51+
Special
needs (PSN)
Exec. Officers
-
-
-
29
31
28
7
6
6
-
-
-
Managers
4
7
6
73
79
80
8
8
11
-
-
-
Coordinators
25
26
21
104
112
136
16
14
13
-
-
-
Staff
505
516
475
569
606
612
44
50
54
35
72
72
Interns
78
88
85
-
-
-
-
-
-
-
-
-
Total
612
637
587
775
828
856
75
78
84
35
72
72
Employee turnover*
la2
By gender (%)
2010
2011
2012
Male
9,51
11,67
13,36
Female
5,13
7,00
7,66
By age (%)
2010
2011
2012
Aged 30 or less
7,39
10,24
12,25
Aged 31-50
6,43
7,91
8,19
Aged 51+
0,82
0,52
0,59
capítulo
people management
5
Separations
By gender
2010
2011
2012
Male
139
180
204
Female
75
108
117
By age
2010
2011
2012
Aged 30 or less
108
158
187
Aged 31-50
94
122
125
Aged 51+
12
8
9
* Percentages based on number of employees leaving during year divided by total in December of each year.
Quality of life and benefits
The company believes health, leisure, culture and
emotional balance exert a significant influence on
the team's performance and productivity. It there-
fore encourages participation in the Quality of Life
Program, which extends far beyond legal benefits
(prescription drug discounts, life insurance, emer-
gency loans, food vouchers, meal vouchers, child-
care vouchers) by offering options that raise aware-
ness of the importance of wellbeing.
Quality of Life Program
la3
The program has three pillars, comprising interlock-
ing activities in work-life balance (Mais Equilíbrio),
wellness (Mais Saúde), and leisure and culture (Mais
Lazer e Cultura). It completed two years in 2012,
proving that action taken to enhance employees'
well-being contributed significantly to improve-
ments in the workplace climate. The program in-
cludes Facilities Exchange (Bolsa Facilidades), which
facilitates access to goods and services that contrib-
ute to employee wellbeing through partnerships in
sports, culture, recreation and leisure.
Dorival Rodrigues Alves Center
34
35
background image
Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other diversity indicators
la13
Gender & ethnicity
(absolute numbers)
2010
2011
2012
2010
2011
2012
2010
2011
2012
2010
2011
2012
Men
Women
Black men
Black women
Exec. Officers
31
30
28
5
7
6
-
-
-
-
-
-
Managers
57
70
77
28
24
20
-
-
1
-
-
-
Coordinators
108
114
128
37
38
42
1
1
1
-
-
-
Staff
771
784
750
347
388
391
18
21
20
4
10
8
Interns
36
54
50
42
34
35
-
-
-
1
-
-
Total
1.003
1.052
1.052
459
491
494
19
22
22
5
10
8
Age & PSN (absolute
numbers)
2010
2011
2012
2010
2011
2012
2010
2011
2012
2010
2011
2012
Aged 30
or less
Aged 31-50
Aged 51+
Special
needs (PSN)
Exec. Officers
-
-
-
29
31
28
7
6
6
-
-
-
Managers
4
7
6
73
79
80
8
8
11
-
-
-
Coordinators
25
26
21
104
112
136
16
14
13
-
-
-
Staff
505
516
475
569
606
612
44
50
54
35
72
72
Interns
78
88
85
-
-
-
-
-
-
-
-
-
Total
612
637
587
775
828
856
75
78
84
35
72
72
Employee turnover*
la2
By gender (%)
2010
2011
2012
Male
9,51
11,67
13,36
Female
5,13
7,00
7,66
By age (%)
2010
2011
2012
Aged 30 or less
7,39
10,24
12,25
Aged 31-50
6,43
7,91
8,19
Aged 51+
0,82
0,52
0,59
capítulo
people management
5
Separations
la2
By gender
2010
2011
2012
Male
139
180
204
Female
75
108
117
By age
2010
2011
2012
Aged 30 or less
108
158
187
Aged 31-50
94
122
125
Aged 51+
12
8
9
* Percentages based on number of employees leaving during year divided by total in December of each year.
Quality of life and benefits
The company believes health, leisure, culture and
emotional balance exert a significant influence on
the team's performance and productivity. It there-
fore encourages participation in the Quality of Life
Program, which extends far beyond legal benefits
(prescription drug discounts, life insurance, emer-
gency loans, food vouchers, meal vouchers, child-
care vouchers) by offering options that raise aware-
ness of the importance of wellbeing.
Quality of Life Program
la3
The program has three pillars, comprising interlock-
ing activities in work-life balance (Mais Equilíbrio),
wellness (Mais Saúde), and leisure and culture (Mais
Lazer e Cultura). It completed two years in 2012,
proving that action taken to enhance employees'
well-being contributed significantly to improve-
ments in the workplace climate. The program in-
cludes Facilities Exchange (Bolsa Facilidades), which
facilitates access to goods and services that contrib-
ute to employee wellbeing through partnerships in
sports, culture, recreation and leisure.
Dorival Rodrigues Alves Center
34
35
background image
Pension plan: planning for the future
The company offers a defined-contribution pension
plan for voluntary participation by all employees.
The plan for employees of BM&FBOVESPA was rede-
signed in 2012, enabling 167 new participants to join.
The new rules allow employees and the sponsor to
invest more in the plan, which now offers more op-
tions. Employees who leave the company before
the specified retirement date can keep their plans
according to the rules stipulated by the bylaws or
cancel, in which case they can opt to transfer 100%
of the accumulated employee contributions based
on length of service or up to 90% of the accumu-
lated sponsor contributions; alternatively they can
withdraw 100% of the accumulated employee
contributions and up to 50% of the accumulated
sponsor contributions based on length of service.
It is important to note that the company has no
obligations relating to payments in addition to its
contributions as sponsor. Regular contributions
are booked under personnel expense for the pe-
riod during which they are due.
Health and safety
The company's workplace and operations present
a low level of risk to health and safety. All employ-
ees have access to a corporate health and dental
care plan, which also covers spouses and children
up to the age of 21, or 24 for university students. In
cases of serious illness requiring care not covered
by the plan, benefits may be granted on the basis
of an individual analysis.
la8
Employees can also use two outpatient clinics lo-
cated on the company's premises at Praça Antonio
Prado and Rua XV de Novembro, and staffed by
physicians and nurses every day of the week. The
focus is on occupational medicine but urgent care
is also available. The company also has discount
agreements with pharmacies.
To discuss matters relating to accident and occu-
pational disease prevention, the company has a
specialized service comprising a physician and oc-
cupational safety technician, as well as an Internal
capítulo
people management
5
Wellness Pillar (Mais Saúde)
Outpatient Clinics ­ The company's medical
staff provide healthcare services including
preventive action against diseases, promo-
tion of lifestyle changes and quality of life,
diagnosis and treatment, as well as counse-
ling in special cases. The number of medical
and nursing cases processed in 2012 totaled
11,478.
Fitness ­ To encourage its people to keep fit,
the company has an agreement with some
units of a chain of fitness centers, which grant
discounts on monthly membership fees and
waive enrollment fees for employees and in-
terns. Some 600 employees and interns make
use of this benefit.
Walking & Running Group ­ Periodic perso-
nalized training for employees and interns,
who must take a physical assessment before
participating. The company subsidizes 50% of
the fees charged by the outside sports coun-
selors who run this program.
Flu Vaccine ­ An annual flu vaccination cam-
paign is held to protect employees, interns
and contractors. Other forms of prevention
are reinforced in addition to vaccination. This
program benefited 1,375 people in 2012.
Checkup Program ­ Directors, managers and
senior specialists are encouraged to have
a checkup annually if aged 50 or more, and
every two years if aged 49 or less. The focus is
on preventing sickness and promoting well-
ness. In 2012 the program had 65 participants.
Support for Breastfeeding ­ This program
valorizes the role of women in society and the
labor market, as well as contributing to infant
development, through comfort and conve-
nience in a space reserved for female staff to
continue breastfeeding after they return from
maternity leave. The space was used by seven
employees in 2012.
Women's Health Week ­ In 2012 Women's He-
alth Week had 365 participants, who took in-
-company preventive medical examinations,
makeup courses, a relaxation workshop, and
short courses on feminine communication
and financial planning.
Tobacco Dependence Prevention & Treat-
ment
­ Launched in 2011, this program com-
pleted its first cycle in 2012 with impressive
numbers: 13 of the 17 original participants
concluded the program and ten have been
non-smokers for 11 months, for an effective-
ness rate of 77%.
Blood Donation Campaign ­ Conducted for
the second consecutive year in partnership
with the blood bank at Hospital Sírio Libanês;
93 employees participated.
Leisure & Culture Pillar (Mais Lazer e Cultura)
Exchange Kids ­ This program helps children
find out more about their parents' workplace,
with a full day of games, recreation and edu-
cational activities. The number of children who
participated in 2012 was 173. The theme was
the World of Games. They drew, made fancy
dress customs and scenery, and played games,
culminating in a great closing game at the end
of the day.
Dorival Rodrigues Alves Center
Mais Você ­ Personal counseling and support
from a multidisciplinary team (psychologist,
social worker, nutritionist, psychopedagogue,
lawyer, physical therapist, personal trainer,
among others) to help employees and their
families deal with difficulties at home, stress,
legal problems and parenting. Diets are offe-
red for specific situations (e.g. pregnancy, bre-
astfeeding, convalescence), as well as infor-
mation on physical fitness. The service is free,
confidential and available 24x7 by phone and
email. It processed 3,931 cases in 2012.
Espaço Dorival Rodrigues Alves ­ A new spa-
ce for use by employees, interns and other
professionals who work with the company
was unveiled to provide more equilibrium
and health with comfort and convenience.
The Dorival Rodrigues Alves Center covers
all three pillars of the Quality of Life Pro-
gram (work-life balance, wellness, and leisure
and culture), offering nutritional guidance,
psychological and medical counseling, mas-
sage and a mingling area.
Soccer Pitch ­ BM&FBOVESPA leases a soccer
pitch for use by all employees on weekends.
Some 50 people play soccer there on average
every Saturday.
Soccer Tournaments ­ The traditional Seven-a-
-Side Soccer Tournament attracted 200 partici-
pants in 2012. Awards were given to the teams
that finished in first, second and third place. Each
player won a medal and the teams each won a
trophy. The top goal scorer and the goalkeeper
who conceded the fewest goals also won awards.
Mother's Day and Father's Day ­ Cultural, lei-
sure and integration activities were part of the
commemorations for both dates in 2012. They
included exclusive theater performances for
mothers and fathers employed by the com-
pany, plus guests if they wished. Mother's Day:
300 people. Father's Day: 400 people.
Secretaries Day ­ In 2012 a workshop was held
with 42 secretaries participating. The subject
was "The Architecture of Speech" and it dis-
cussed the importance of communication in
everyday life.
36
37
background image
Workplace Accident Prevention Committee (CIPA)
with 18 members corresponding to 1.25% of the
total workforce.
la6
The CIPA's main functions are to map all workplace
hazards, observe and report risks of accidents, pro-
vide employees with guidance on accident pre-
vention, and organize the annual Internal Work-
place Accident Prevention Week (SIPAT). In 2012
the number of votes cast was 849, corresponding
to 61% of the workforce. Five members and four
alternates were elected.
la9
Compensation model
In line with its corporate objectives the company's
compensation model aims to assure market-com-
petitive pay levels, attract talent, and retain em-
ployees in the medium to long term.
Fixed compensation consists mainly of a salary ad-
justed annually by collective bargaining agreement
with the union that represents the employee's cat-
egory. Pay awards may also be granted for merit,
promotion or extra qualifications. Such awards are
generally granted to recognize and reward perfor-
mance and professional development on the basis
of regular individual performance assessments.
Variable compensation consists of semiannual
payouts in accordance with the company's profit
sharing program (PLR), which establishes poten-
tial monthly salary multiples depending on the
company's key performance indicators and the
employee's seniority and individual performance
assessment. All employees are eligible for variable
compensation under the rules of the PLR program.
Long-term compensation basically consists of
stock options granted under the company's Stock
Option Plan to align the interests of executives
with the company's objectives and foster retention
of key personnel.
Performance management
BM&FBOVESPA employs professionals in accor-
dance with its business philosophy as a public
company for which improving processes and de-
livering results are key priorities.
Performance assessment is a process in which
100% of the workforce take part, in line with the
personal development proposition established by
the company. The aim is to assure results based on
a commitment to merit, considering the planning
dimension (what) and the behavior expected for
each level and function (how). LA12
Each employee's individual performance assess-
ment consists of three structured formal conver-
sations with the employee's manager during the
year, one in the first quarter dealing with targets
(what) and competencies (how), and the others
in mid-year and at year-end for assessment and
recognition. The results in both dimensions deter-
mine the employee's eligibility for the individual
portion of the PRL program agreed with the union.
Measurement starts with self-assessment, which
enables employees to reflect on the challenges
faced during the period and record their percep-
tions. The self-assessments are analyzed by man-
agers and departmental meetings are then held to
provide feedback. After these meetings, employ-
ees access the performance management system
to acknowledge receipt of feedback and finalize
the process. They then prepare an individual de-
velopment plan.
In 2012 employees were invited to respond to a
satisfaction survey designed to capture more up-
to-date perceptions of the feedback received. The
number of voluntary respondents was 275, and
the issues raised will be addressed as part of the
leadership development program.
Training
In 2012 the company continued with its employee
training and development initiatives, delivering
485 actions in a range of training modalities with
3,479 participations and 1,302 employees trained,
for an average of 29.75 hours per employee. LA10
In-company and external face-to-face corporate
training consisted of 256 actions with 984 par-
ticipations, for an increase of 26% compared with
2011.
In external training 27 participations occurred in
conferences and other events held abroad, involv-
ing 23 participants.
Online training involved 27 actions and totaled
1,141 hours, corresponding to 0.75 training hours
per employee. The number of participations
reached 258, for an increase of 91.45% compared
with 117 in the previous year.
The company also invested in specific training for
leaders. The number of actions in 2012 totaled 44,
with 717 participations and an average of 27.59
training hours per employee.
capítulo
people management
5
The scope of the special induction program called
Por Dentro da Bolsa (Inside the Exchange) was ex-
tended in 2012 to train employees and interns in
the basic concepts that permeate the exchange
market, with the aim of ensuring the use of a single
language throughout the organization and provid-
ing an integrated understanding of its products and
services and how they are processed internally.
Constructed by Human Resources in partnership
with the BM&FBOVESPA Educational Institute, the
program has six modules including both online
content and face-to-face meetings. The first step is
a self-assessment enabling individuals to identify
Training
modality
No. of
employees
trained
No. of
participations
Total
training
hours
Total training
hours
Average
training hours
per employee
Leadership
training
In company
1,302
717
44
8,304
27,59
Corporate
training (all
employees)
In company
766
38
7,746
5,07
On line
224
27
1,141
0,75
External
218
218
6,045
3,96
Training
relating to the
company's
strategic
programs
In company
1,554
158
22,188
14,53
Total
1,302
3,479
485
45,424
29,75
gaps in their knowledge of the company. The num-
ber of participants in this stage was 863 in 2012.
The training modules to be used are identified on
the basis of these self-assessments and a review of
the requisite knowledge by the directors of the ar-
eas concerned.
Face-to-face training began in December with four
classes comprising a total of 70 participants. Face-
to-face training in all modules of the program will
take place in 2013.
Education Incentive Program
The Education Incentive Program facilitates access
to higher education (undergraduate and graduate
courses) and language courses for professionals
with growth potential. The number of participations
in 2012 was 248, of which 82 were in MBAs and oth-
er graduate courses, 34 in undergraduate courses,
and 132 in language courses (English and Spanish).
Training programs relating to strategic projects
Training programs were held during the course of
2012 to support the company's strategic projects,
38
39
background image
capítulo
people management
5
such as implementation of the BM&FBOVESPA
PUMA Trading System, the Clearinghouse Integra-
tion Project and the new CORE risk system.
These programs consisted of 158 technical train-
ing actions, mainly for IT staff, with 1,554 participa-
tions and an average of 14.53 hours per employee,
up 29.5% compared to 2011.
Support for the clearinghouse integration project
also included internal knowledge multiplication
training for teams, totaling 20.77 hours.
Human Rights
In 2012 the company continued to deliver on its
commitment to analyze and accredit suppliers in
accordance with its procurement policy, focusing
above all on the mitigation of risks relating to corpo-
rate image, labor claims, child labor and slave labor.
In addition, the company requires supplier clearance
certificates, credit checks with Serasa Experian, and
checks with the Office of the Comptroller General
(www.cgu.gov.br) and the Transparency Portal (www.
portaltransparencia.gov.br/ceis/SaibaMais). The stan-
dard service agreement contains clauses prohibiting
conditions analogous to slave labor. At end-2012 it
had 319 accredited suppliers, 178 of whom were clas-
sified by branch of activity. It should be noted that
56% of the suppliers analyzed and accredited could
pose some kind of human rights risk.
hr2
Although supplier evaluation focuses mainly on tax,
civil and labor law matters in the federal, state and
municipal spheres, the policy calls for notification of
the responsible manager if any violation of human
rights is detected, and for appropriate steps to be
taken. To verify these items, moreover, the company
requires prospective suppliers to complete a ques-
tionnaire prior to a visit to their premises to make
sure they have a procurement policy and an under-
age apprentice program in place.
hr6
As in previous years, BM&FBOVESPA registered no cas-
es of discrimination on grounds of ethnic origin, color,
gender, religion, ideology, nationality or social origin,
and received no reports of child labor or violation of
the rights of indigenous peoples in 2012.
hr4| hr7 | hr9
40
41
background image
BM&FBOVESPA is a pioneer
of social, environmental
and corporate governance
initiatives
World reference in sustainability
4.16 | 4.17
BM&FBOVESPA has been a pioneer in many aspects of
sustainability: in 2004 it was the first exchange in the
world to sign up to the UN Global Compact; in 2010 it
was the first exchange in any emerging-market country
to commit officially to the Principles for Responsible In-
vestment (PRI), an initiative led by institutional investors
from several countries in partnership with the UN Global
Compact and the UN Environment Program Finance
Initiative (UNEP-FI); and it was the first exchange in the
world to become a GRI organizational stakeholder, also in
2010. GRI is a network that sets internationally accepted
standards and develops strategic recommendations to
enhance sustainability reporting.
In addition, to encourage analysts to take socio-environ-
mental and corporate governance issues into account
in their assessments of stock prices and investment de-
cisions, at the start of 2011 the Exchange issued its first
Integrated Annual Report encompassing both financial
and non-financial information in a single document at a
meeting with the Brazilian Association of Capital Market
Analysts & Investment Professionals (Apimec).
In early 2012 BM&FBOVESPA adopted Report or Explain
guidance recommending that listed companies state
in the Reference Form whether they publish a regular
sustainability report and if not, why not. The first results
of the initiative were published during Rio+20, the UN
Conference on Sustainable Development held in June.
A new update in October resulted in more than 50 com-
panies announcing sustainability reports or explaining
their absence.
Also at Rio+20, BM&FBOVESPA, Nasdaq OMX, the Johan-
nesburg Stock Exchange, the Istanbul Stock Exchange
and the Egyptian Exchange signed a pledge to promote
long-term
responsible investment
and work for the re-
sustainability
4.1
6.
42
43
background image
porting of social, environment and corporate gov-
ernance information by companies listed on these
exchanges, within the scope of the UN's Sustain-
able Stock Exchanges initiative (SSE).
BM&FBOVESPA also participated in the 18th UN
Climate Change Conference, COP-18, held at Doha
(Qatar).
Recognition
Best Sustainable Stock Exchange 2012
BM&FBOVESPA won the Exchanges & Brokers
Award for the Best Sustainable Stock Exchange in
Latin America from World Finance, a leading finan-
cial magazine produced in London.
Sustainable Stock Exchanges ­ Progress Report
Alongside the Johannesburg Stock Exchange,
BM&FBOVESPA was named a world reference in
sustainability by Sustainable Stock Exchanges ­ A
Report on Progress, a publication commissioned by
Aviva Investors and supported by PRI, the Global
Compact and UNCTAD.
50 Empresas do Bem
In its May 30 issue, the business magazine IstoÉ
Dinheiro published 50 case studies showing how
some of the leading companies in Brazil have made
social and environmental responsibility a key part
of their business models. BM&FBOVESPA features
on the list of Empresas do Bem ("Companies for
Good") in the Partnership category, with its Corpo-
rate Sustainability Index (ISE) and Environmental &
Social Exchange (BVSA).
CDP Investors Brazil 2012
For the first time the report by the Carbon Dis-
closure Project (CDP) scored and ranked Brazil-
ian companies by their capacity to assess and
manage the impact of climate change on their
business activities. Of the 52 Brazilian compa-
nies that responded to the survey questionnaire,
BM&FBOVESPA ranked among the top ten in the
categories Disclosure and Performance.
CDP is an independent nonprofit organization that
holds the largest global collection of self-reported
corporate climate change data.
Sustainable development initiatives
Novo Valor website
Promoting sustainable development is a key prior-
ity for BM&FBOVESPA. One of the company's most
important sustainability initiatives is the Novo Val-
or website (
www.bmfbovespa.com.br/novovalor
),
which offers information on the Exchange's sus-
tainability and social investment indicators and
projects. The website engages with investors, com-
panies and brokerage houses to promote the sus-
tainable development of the capital markets, and
by extension of Brazil and the world.
"In Good Company" Corporate Sustainability Pro-
gram
In accordance with its guidelines and principles,
in 2012 the company maintained the Em Boa
Companhia ("In Good Company") Corporate
Sustainability Program to promote continuous
relations with business organizations through a
range of initiatives including the sharing of infor-
mation by means of newsletters and other publi-
cations and face-to-face meetings with experts in
sustainability.
Details of the sustainability projects implemented
by companies listed on BM&FBOVESPA can be
found at
www.bmfbovespa.com.br
/emboacom-
panhia. Private-sector initiatives contribute deci-
sively to Brazil's sustainable development.
Corporate governance and sustainability index-
es and funds
BM&FBOVESPA maintains a number of indexes
that track the performance of companies commit-
ted to best practice in social responsibility and sus-
tainability.
In 2012, in addition to maintaining the Special
Corporate Governance Index (IGC), the Corporate
Governance Trade Index (IGCT), the Special Tag
Along Index (ITAG), the Corporate Sustainability In-
dex (ISE) and the Carbon Efficient Index (ICO2), as
well as the IT Now ISE and IT Now IGCT exchange-
traded funds (ETFs), the Exchange launched the
Special Corporate Governance Index ­ Novo Mer-
cado (IGNM).
Governance
Special Corporate Governance Index ­ Novo
Mercado (IGNM)
­ Tracks a theoretical portfo-
lio comprising the stocks of companies that
voluntarily adopt high corporate governance
standards and are listed on the Novo Mercado
segment.
·
Special Corporate Governance Index (IGC)
­
Tracks companies listed on this segment and
since its launch has consistently outperformed
the Ibovespa.
·
Corporate Governance Trade Index (IGCT)
­
Tracks the stocks of IGC companies that meet
specific liquidity criteria, such as actively trad-
ing in at least 95% of trading sessions during
the previous 12 months.
·
Special Tag Along Index (ITAG)
­ Tracks a theo-
retical portfolio composed of stocks issued by
companies that offer minority shareholders
better terms than those required by law in the
event of a sale by majority shareholders.
·
IT Now ISE
­ Based on the Corporate Sustain-
ability Index (ISE), this exchange-traded fund
(ETF) tracks the return on a portfolio compris-
ing stocks issued by companies with a recog-
nized commitment to social responsibility and
sustainability.

IT Now IGCT
­ Based on the Corporate Gover-
nance Trade Index (IGCT), this EFT tracks the
stocks of companies that voluntarily adopt
high corporate governance standards (listed
on the Level 1, Level 2 and Novo Mercado seg-
ments) and meet the criteria for inclusion es-
tablished in its methodology.
Sustainability
Carbon Efficient Index (ICO2)
­ Tracks the
stocks of IBrX-50 companies that agree to par-
ticipate and undertake to submit greenhouse
gas inventory data for publication on the Em
Boa Companhia website (www.bmfbovespa.
com.br/emboacompanhia).
·
Corporate Sustainability Index (ISE)
­ Tracks
the return on a portfolio of stocks issued by
companies with a recognized commitment to
sustainability. Launched in 2005, the ISE has
become a benchmark for sustainable manage-
ment practices in Brazil and worldwide. Com-
panies must complete a specific questionnaire
in order to be included in the ISE's portfolio.
ISE upgrades
­ In 2012, as part of its permanent pur-
suit of excellence, the Exchange presented the main
points of the new base questionnaire for evaluation
of companies that apply for inclusion in the eighth
ISE portfolio. Among these was the addition of an
open-ended text field for each indicator in the ques-
tionnaire to enable companies to add any informa-
tion deemed necessary to the multiple-choice an-
swers. The new features are designed to increase
transparency in response to society's demands,
especially from analysts and investors. The number
of companies that authorized publication of their
answers to the ISE questionnaire on the Exchange's
website rose to 14, from eight in 2011.
BM&FBOVESPA and KPMG agreed to a pro bono
partnership to provide limited assurance on the
ISE process.
GIFE, an umbrella organization of charitable foun-
dations and corporate grantmakers in Brazil, and
IBRACON, the Brazilian Institute of Independent
Auditors, took seats on ISE's Board of Governors
(CISE). With representatives of nine institutions,
CISE is chaired by BM&FBOVESPA.
Survey on the Value of the ISE ­ Main Studies & Inves-
tor Perspectives
­ Commissioned by the Exchange
from the Getulio Vargas Foundation's Sustainabil-
ity Research Center (GVces), this study entitled
"Survey on the Value of the ISE ­ Main Studies & In-
vestor Perspectives" reviewed the history and cur-
rent status of sustainable and responsible invest-
ment (SRI), highlighting key trends in SRI, factors
that contribute to investment decisions and the
importance of transparency. The purpose was to
understand how the ISE can contribute to invest-
ment analysis and its potential value creation for
investors, companies and society.
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45
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The survey covered 12 pension funds with R$260
billion under management, or some 45% of the
estimated total assets held by pension funds in
Brazil. The survey findings, presented at a semi-
nar on "The Value of Indexes and Reports" held in
November 2012 on the occasion of the announce-
ment of the new ISE portfolio, showed that 75% of
the respondents used the questionnaire answered
by companies on applying for inclusion in the ISE
in their investment analysis, or planned to use it
in the next 12 months. The publication, which is
available at
www.isebvmf.com.br
, also compiled
and analyzed the findings of several other studies
of the subject produced in Brazil and elsewhere.
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6
2012 milestones
January
Report or Explain
BM&FBOVESPA begins recommending that
listed companies state in the Reference Form
whether they publish a regular sustainability
report or a similar document and if not, why
not. The numbers are announced at Rio+20.
Workshops in partnership with Global Re-
porting Initiative (GRI)
The Exchange partners with GRI to hold train-
ing workshops on the production of sustain-
ability reports to facilitate adoption of Report
or Explain. Five workshops are held, with a total
of 140 participants.
February
Integrated annual report published
For the second consecutive year BM&FBOVESPA
publishes an integrated annual report with fi-
nancial, social and sustainability results accord-
ing to GRI guidelines (level C GRI checked).
March
Environmental & Social Exchange (BVSA)
BVSA's scope is widened to include projects fo-
cusing on the eight Millennium Development
Goals (MDG) established by the UN. The site
becomes more interactive, with new functions
and 15 new projects.
ISE workshop
The proposals approved by the ISE's board are pre-
sented at the inaugural meeting of the 2012 ISE pro-
cess on March 6. Other announcements include the
2012 timetable of activities and events. The start of
the online public consultation to enhance the ques-
tionnaire is brought forward so that the results can
be used in workshops and discussions on Rio+20.
April
In Good Company Corporate Sustainability Pro-
gram
The first meeting of the year is held. The main items
on the order of business are the Report or Explain
initiative and the nature of sustainability reports,
why companies should publish them and future
tendencies. The event is attended by 74 people.
ISE workshop and online public consultation
Activities are conducted in partnership with the
Getúlio Vargas Foundation (FGV), including three
workshops to review the ISE questionnaire in the
seven dimensions evaluated. The online public con-
sultation takes place between March 6 and April 5.
May
Greenhouse gas inventory
BM&FBOVESPA publishes its 2011 greenhouse gas
inventory. GHG emissions totaled 2,843.3 metric
tons of carbon dioxide equivalent (MT CO2e). As
is typical for organizations in the financial services
sector, the Exchange's direct emissions (Scope 1)
are much lower than its Scope 2 and 3 emissions.
The company's GHG inventory was carried out
with the support of ICF International and checked
by KPMG. The data are available at
www.registro-
publicodeemissoes.com.br.
ISE face-to-face public consultation
A hearing takes place for public consultation re-
garding the 2013 ISE on May 21.
June
Agreement signed with São Paulo State Govern-
ment, its Department of the Environment and
its Environmental Agency (Cetesb)
to study and
propose institutional and regulatory measures re-
quired to develop the market for environmen-
tal assets.
First results of Report or Explain
The first results of the Report or Explain initiative
are announced at Rio+20: of the 448 companies
analyzed (base for the May 7, 2012, trading ses-
sion), 203 joined the initiative, and 71 of the 94
companies tracked by the IBrX Index took part.
Sustainable Stock Exchanges (SSE) commit-
ment
At Rio+20 BM&FBOVESPA, Nasdaq OMX, the Jo-
hannesburg Stock Exchange, the Istanbul Stock
Exchange and the Egyptian Exchange sign a
pledge to promote long-term responsible in-
vestment and work for the reporting of social,
environment and corporate governance infor-
mation by listed companies.
PRI in Person conference
BM&FBOVESPA participates in PRI in Person,
an annual responsible investment conference
hosted by PRI in Rio de Janeiro.
August
Individual meetings with ISE companies
Meetings are held with ISE 2012 participant
companies in partnership with FGV between
June and August.
October
52nd General Assembly and Annual Meeting
of the World Federation of Exchanges (WFE)
BM&FBOVESPA participates in a panel session
on sustainability at the WFE's annual meeting,
held in Taipei (Taiwan), as a follow-up initiative
to the agreement signed at Rio+20.
Extra update to Report or Explain data
As part of the campaign to encourage compa-
nies listed on BM&FBOVESPA to report sustain-
ability-related information voluntarily to stake-
holders, the data for October are compared
with the data for May, showing that the number
of companies publishing sustainability reports
or similar documents , and of companies who
do not do so but explain why not, has increased
12.64% in five months. In other words, 50 more
companies have joined the initiative.
November
2nd In Good Company meeting
The second seminar on "The Value of Indexes
and Reports" is held to present the 2013 ISE,
with 140 attendees. The novelty this year is a
partnership between BM&FBOVESPA and KPMG
to provide limited assurance on the ISE process.
ISE 2013 portfolio by numbers
100%
97%
92%
89%
100%
92%
43%
54%
of the companies in the portfolio have for-
mally inserted a commitment to
sustain-
able development
in their strategies.
have
programs to raise awareness and ed-
ucate the public
on sustainability.
have formally and publicly issued a
broadly
legitimated voluntary commitment to sus-
tainable development
involving all units,
subsidiaries and affiliates.
have an executive body or steering com-
mittee responsible for sustainability that
reports to top management.
have published
sustainability reports
in
the past year.
use the
GRI guidelines
as a basis for their
reports.
of the companies that use
variable com-
pensation for top management
(board of
directors and executive officers) link this
compensation to the company's socio-en-
vironmental performance.
of the companies that use
variable com-
pensation for line managers
also link this
compensation to the company's socio-en-
vironmental performance.
Sustainability Policy
The Sustainability Committee, chaired by the CEO,
approves the company's Sustainability Policy.
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47
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6
Management in synergy with the interests of so-
ciety and the planet
BM&FBOVESPA considers sustainability a new
management model that inspires the conduct of
business activities in synergy with the present and
future interests of society and the planet. The com-
pany is permanently committed to the mission of
inducing, promoting and practicing the concepts
and actions of economic, social and environmental
responsibility in order to contribute to sustainable
development.
December
COP-18
BM&FBOVESPA participates in the 18th UN
Climate Change Conference, COP-18, at Doha,
Qatar, from November 26 to December 7, as an
observer with the Brazilian delegation led by
the Ministry of Foreign Affairs. The conference
agreed to extend the Kyoto Protocol until 2020.
Social Responsibility Day
The Exchange donates part of the fees earned on
a day's equity trading to the private social invest-
ment projects listed on BVSA. In annual terms
50% of its donations are distributed equally to
all projects and 50% to the projects chosen by
brokerage houses via a voting hotsite.
Greenhouse gas emission offset
The Sustainability Committee approved the
2011 greenhouse gas emission offset amount-
ing to 2,843.3 metric tons of carbon dioxide
equivalent (MT CO2e).
The company's organizational structure includes a
Sustainability Department established with the aim
of ensuring this approach is an integral part of its
management of the business in four dimensions:
Management of natural resources ­ focusing
on ecoefficiency gains;
Products & services ­ building sustainability
into products and services in partnership with
business areas;
Governance ­ inducing best practice by the
market and integrating the concept into inter-
nal governance;
Relationships ­ stakeholder engagement.
Two other multidisciplinary spheres of gover-
nance manage sustainability in addition to the
department ­ the Sustainability Committee, re-
sponsible for strategic guidelines and approval
of macro-initiatives, and the Sustainability Task
Force, which proposes and manages the agenda.
The department's remit also includes managing
the social investment programs developed by the
BM&FBOVESPA Institute.
The Exchange has also put several important mea-
sures in place to promote ecoefficiency:
GHG inventory ­ BM&FBOVESPA conducted
its first inventory of greenhouse gas emissions
in 2010, based on data for 2009. Since 2010 the
GHG inventory has been verified by a third par-
ty in order to assure evolution of the process.
The 2012 inventory, based on data for 2011,
was conducted in partnership with ICF Inter-
national, a US-based consulting firm that spe-
cializes in climate change policy, and checked
by KPMG. The 2012 inventory has not yet been
produced, as the process will begin in January
2013. The findings will be published in May.
·
Selective waste collection and recycling ­ All
workstations and corridors on every floor of
BM&FBOVESPA's buildings have selective waste
collection bins to enable comprehensive recy-
cling. All materials including batteries are col-
lected for recycling. The money earned from
the sale of recycled material is donated to so-
cial projects chosen by employees, interns and
contractors. In 2012 the institution selected was
Instituto Tempo de Ajudar (ITA) in São Paulo.
·
Use of certified paper ­ All publicity mate-
rial, stationery and printing paper used by
BM&FBOVESPA are certified by the Forest
Stewardship Council (FSC).
·
Use of ecoefficient equipment ­ BM&FBOVESPA
uses only energy-efficient light bulbs, smart air
conditioning and next-generation elevators.
·
Green tech ­ Computer monitors that gener-
ate less heat and consume less energy are pri-
oritized, and servers are virtualized.
·
Bicycle parking ­ A
bicycle parking
facility
with lockers and changing rooms has been
opened as yet another initiative to reduce GHG
emissions. Employees are encouraged to make
sustainability part of their day-to-day routine
in this way.
·
Car pool and bicycle messengers ­ The
Caro-
na Solidária
("Solidarity Car Pool") Program
encourages employees to share their cars with
co-workers via the Caronetas ride sharing web-
site (
www.caronetas.com.br/bmfbovespa
). The
Exchange also uses bicycle messenger services
provided by Carbon Zero Courier.
Constant awareness raising and education of the
workforce are priorities for BM&FBOVESPA, which
regularly launches new initiatives for this purpose.
The 2012 highlight was the creation of a Sustain-
ability Chat for agile interaction with employees.
The company also has a long track record in so-
cial investment. This activity is managed by the
BM&FBOVESPA Institute.
BM&FBOVESPA Institute ­ engagement and part-
nerships for private social investment
Ec1
Private social investment activities are managed
by the BM&FBOVESPA Institute, a public-interest
civil society organization (OSCIP) whose mission
is to contribute to national development through
initiatives in education, welfare, culture, sports and
socio-environmental responsibility.
The São Paulo and Rio de Janeiro Job Training Asso-
ciation, the Environmental & Social Investment Ex-
change (BVSA), the Athletics Club, the Sports & Cul-
tural Center and the voluntary service program are
the pillars of the BM&FBOVESPA Institute. The com-
pany believes these concrete actions contribute sig-
nificantly to social inclusion and development.
The 2012 highlights included BVSA and the Athlet-
ics Club.
BVSA
With a format similar to a stock exchange, BVSA
offers a portfolio of rigorously selected social and
environmental projects run by NGOs throughout
Brazil for online donation in a secure and transpar-
ent virtual environment.
In 2012 BVSA's scope was extended to include
projects that focus on the eight Millennium De-
velopment Goals established by the UN: eradicate
extreme poverty and hunger, achieve universal
primary education, promote gender equality and
empower women, reduce child mortality, im-
prove maternal health, combat HIV/AIDS, malaria
and other diseases, ensure environmental sus-
tainability, and develop a global partnership for
development.
The website (
www.bvsa.org.br
) is more interactive
and has new functions such as the possibility of
donating from overseas. Eleven projects are cur-
rently available for donation. BVSA is officially sup-
ported by UNESCO.
The launch event was attended by Jorge Chediek
of the United Nations Development Program
(UNDP) and singer Daniela Mercury, the program's
godmother.
BM&FBOVESPA Athletics Club
The BM&FBOVESPA Athletics Club fosters social in-
clusion, develops new talent and is a home for pro-
fessional athletes who constantly represent Brazil
in major international competitions.
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6
The Club's partnerships advanced in 2012. Pão de
Açúcar, a longstanding partner, extended its spon-
sorship of 20 athletes to institutional sponsorship
of the Club, covering its medical and technical staff
as well as all athletes. A new partnership began
with Caixa Econômica Federal, which also became
an institutional sponsor.
Besides the partnerships mentioned, the City of
São Caetano do Sul renewed its longstanding
sponsorship. This partnership earned 11 titles at
the São Paulo Interior Open Games and is also sup-
ported by Nike.
In 2012 the Club celebrated its tenth anniversary
by unveiling a brand-new Training Center in São
Caetano do Sul on land granted by the city. At a to-
tal cost of some US$10 million, this is the first train-
ing center in Brazil designed as a smart building,
with an integrated complex comprising an indoor
gymnasium, outdoor track and complete facilities
for the athletes (weight room, physical therapy, nu-
trition, psychology, changing rooms, press room,
administrative offices and storerooms).
As a sustainable building, its gymnasium's founda-
tions were strengthened with demolition material
from the old gym that previously existed on the
site, it has a pervious parking lot, and stormwater
runoff is collected and used to water the gardens
and clean the floors. It has a selective waste collec-
tion point, and air conditioning is not required in
the training areas.
In 2012 the BM&FBOVESPA Athletics Club won the
Brazil Trophy for the 11th consecutive year.
In addition, its athletes accounted for a third of the
track and field participants at the London Olym-
pics. Twelve of the 36 athletes entered by the Bra-
zilian Athletics Confederation belong to the Club,
including Fabiana Murer, Marílson Gomes dos
Santos and Mauro Vinícius Hilário da Silva, known
as Duda. The Brazilian Olympic delegation also
included the Club's head coach, doctor, physical
therapist and psychologist.
Social investment actions
Cultural and sport initiatives in Paraisópolis
Fifth Library Week
The staff of libraries and other institutions in the
Paraisópolis community hold this annual event to
stimulate residents to read and take part in cultur-
al activities. In 2012 the theme was Afro-Brazilian
culture, and 1,500 children, youngsters and pro-
fessionals engaged in social projects and public
school teachers participated.
Seventh Culture Show
A grand science and culture expo organized by the
main social organizations and public schools in the
area, this event is supported by the BM&FBOVESPA
Institute, which is also on the Organizing Commit-
tee. In 2012 the theme was "I change the world ­
be the change you want to see in the world". The
number of participants totaled 5,376.
BM&FBOVESPA Sports & Culture Center's First
Olympiad
Six hundred children from the Paraisópolis com-
munity took part in educational, cultural and sport-
ing activities, as well as "green initiatives" such as
a campaign to collect batteries, tree planting and
distribution of seedlings. The event also included
an exhibition of photographs.
IBM lectures
IBM volunteers presented a series of lectures with
the aim of arousing the interest of young people in
mathematics, engineering, science and technical
careers. Thirty-five youngsters from the Job Train-
ing Association and the Sports & Cultural Center
took part.
SENAI Knowledge Olympics
Three youngsters from the Job Training Associa-
tion participated in the gardening contest. Two
won gold medals and went through to the interna-
tional stage scheduled for 2013, as well as a bronze
medal from WorldSkills Americas.
Voluntary service
In Action Day
In Action is the BM&FBOVESPA Institute's program
to promote engagement by employees as volun-
teers in social projects. In 2012 the focus was on
painting walls and gardening at Icrim (Instituto de
Apoio à Criança e ao Adolescente com Doenças
Renais), which helps the families of children with
kidney disease, and Abrace (Associação Brasileira
para o Adolescente e a Criança Especial), which
helps children with special needs. Sixteen people
participated in the physical transformation of
these spaces, including employees, interns, con-
tracts and their families.
Book Club
Volunteers from the Exchange worked with young
multipliers from Instituto Fernand Braudel to en-
courage children to read at the BM&FBOVESPA
Sports & Cultural Center in Paraisópolis, reading
stories or books in circles organized by age group.
Three volunteers and 25 children or young adults
took part in each meeting on average.
Lunch with volunteers
Annual lunch hosted by the CEO of the Exchange,
who is also the president of BM&FBOVESPA Insti-
tute, to celebrate with volunteers and recognize
the time and energy they donate during the year.
The launch event was attended by Daniela Mercury, the program's godmother
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51
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Name
Scope
2012
2011
2010
Environmental &
Social Investment
Exchange (BVSA)
Reproduces stock
exchange environment,
connecting donors to
Brazilian NGOs' social and
environmental projects.
R$473,000
donated to 15
listed projects.
R$543,000
donated to 13
listed projects.
R$64,000
donated to 16
new projects first
listed in January
2012.
R$645,000
donated to 19
listed projects.
BM&FBOVESPA
Sports & Cultural
Center
Located in Paraisópolis
(SP), provides sports, arts
and culture for 6-18 year
olds to foster integral
development and houses
Norberto Bobbio Library
with some 2,500 titles.
Average of 800
children and
adolescent users,
with 1,045 book
loans to 232
people.
Average of 800
children and
adolescent users,
with 930 book
loans to 309
people.
Average of 800
children and
adolescent users,
with 2,415 book
loans to 694
people.
BM&FBOVESPA
Job Training
Association
Vocational training and
personal development for
low-income youth in São
Paulo and Rio de Janeiro
to enhance employability.
217 participants
in São Paulo and
287 in Rio de
Janeiro.
252 participants
in São Paulo and
287 in Rio de
Janeiro.
251 participants
in São Paulo and
269 in Rio de
Janeiro.
Philanthropy
Institutional support for
civil society organizations
in health and social
service.
20 institutions
received
R$438,000.
27 institutions
received
R$582,000.
69 institutions
received
R$1,35 million.
Programs and projects 2012
so1
Name
Scope
2012
2011
2010
BM&FBOVESPA
Athletics Club
Contributes to national
development through
social inclusion and
training for high-
performance athletes.
Team of 79
athletes.
Out of 36 athletes
entered for the
London Olympics,
12 were from the
Club, including
Fabiana Murer
and Marílson
Gomes.
Eleventh
consecutive win
of Brazil Trophy,
plus two Brazilian
and two South
American records.
Team of 89
athletes,
including Fabiana
Murer and
Marílson Gomes.
Tenth consecutive
win of Brazil
Trophy, Interior
Open Games and
Regional Games.
Team of 111
athletes.
Ninth consecutive
win of Brazil
Trophy, Interior
Open Games and
Regional Games;
silver medal in
Youth Olympics.
ornerstone
of Training
center unveiled
at São Caetano
do Sul (SP).
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6
Future actions and commitments
Sustainability Policy
BM&FBOVESPA's Sustainability Policy was drawn up
and approved by the Sustainability Committee in
2012. In 2013 it proceeds to the Board of Directors for
approval and dissemination throughout the company.
Voluntary Service Program
In 2013 BM&FBOVESPA will draw up a voluntary
service policy for employees, interns and contrac-
tors to bolster activities in the area.
Voluntary commitment by stock exchanges
Work will continue and intensify to assure broader
engagement with sustainability-related issues by
the World Federation of Exchanges (WFE).
GRI Stakeholder Council
BM&FBOVESPA will broaden its action to promote
transparency and disclosure of non-financial infor-
mation through a significant new representative
position: the Exchange has been elected to serve
a three-year term on the GRI Stakeholder Council.
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BM&FBOVESPA's growth
has always been driven by
technological innovation
and the introduction of
products and services
that provide liquidity and
security for all investors
Operating efficiency
The company believes strongly in the development and
growing sophistication of its markets. It has therefore in-
vested in new technology, products and services to offer
investors and participants instruments that are more ef-
fective and secure.
The highlights in 2012 were the process of migration
from Mega Bolsa to the BM&FBOVESPA PUMA Trading
System, the market launch of the clearinghouse integra-
tion program, and new product and service launches.
PUMA Trading System
The multi-asset trading platform developed in part-
nership with CME Group is one of the linchpins of
BM&FBOVESPA's growth, since it will replace all existing
trading systems. In 2012, as planned, migration of trad-
ing in equities and equity derivatives from Mega Bolsa
was supported by mock trading sessions, in which all
market participants were required to participate, with
the aim of validating and certifying the solutions that in-
teract with the PUMA Trading System, as well as internal
and external testing.
Development of the PUMA Trading System continues.
It will replace not only Mega Bolsa but also GTS (deriva-
tives and spot foreign exchange), integrating them into a
single platform with high processing capacity and very
low latency.
market
strengthening
7.
RELATÓRIO ANUAL
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ANNUAL REPORT
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12
RELATÓRIO ANUAL
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12
ANNUAL REPORT
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12
RELATÓRIO ANUAL
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Clearinghouse integration
In 2012 BM&FBOVESPA intensified work on the inte-
gration of its existing clearinghouses ­ for equities,
derivatives, bonds and foreign exchange ­ into a
new unified platform that will be extremely secure
and robust, based on a faster data processing archi-
tecture with the capacity to process more than 10
million trades per day and calculate risk in real time.
One of the highlights of this project is CORE (Close-
Out Risk Evaluation), a system developed to mini-
mize the risks to which a central counterparty is
exposed and maximize efficiency and robustness.
Clearing activities involve several areas of the Ex-
change, such as settlement, risk control, collateral
management, fees, the central securities deposi-
tory, registration, the integrated broker manage-
ment system (Sinacor) and IT. This means the proj-
ects are interrelated and occur simultaneously.
In 2013 the development stage will be completed
and migration from the derivatives clearinghouse
to the new structure will begin. Migration of the
equities clearinghouse is scheduled for 2014.
Pre-Trade Risk Control
In 2012 BM&FBOVESPA developed a tool called
Pre-Trade Risk Control to control the risks associ-
ated with high-frequency trading (HFT). This tool
will be used to avoid events such as the 2010 "flash
crash" on US stock exchanges.
OTC platform
The over-the-counter (OTC) market is growing
rapidly and generating indirect demand for ex-
change-traded products. In line with this trend
BM&FBOVESPA developed new functionality in
partnership with US-based application software
provider Calypso Technology, Inc., to make OTC
trading more agile and flexible at costs that meet
market expectations.
IPOs and follow-on offerings
For the equity market BM&FBOVESPA offers four
special listing segments: Novo Mercado, Corpo-
rate Governance Levels 1 and 2, and Bovespa Mais,
each with specific corporate governance require-
iShares UTIL Public Utilities Brazil Index Fund
IT Now IDIV Dividend Index Fund
IT Now IMAT Basic Materials Index Fund
BDRs
In 2012, 30 new Unsponsored Level I BDR
programs were launched, ten each by Banco
Bradesco, Citibank and Deutsche Bank. LAN Air-
lines traded under a Sponsored Level III BDR.
Derivatives
Cash-Settled Futures Contracts Referencing
the Sensex Index (Bombay Stock Exchange),
the FTSE/JSE Top40 (Johannesburg Stock Ex-
change), the Hang Seng Index (HK Exchange),
and the Micex Index (MICEX-RTS).
Cash-Settled Soybean Futures Contract at the
Price of the CME Group Mini-Sized Soybean Fu-
tures Contract
S&P 500 Futures Contract Settled in Cash to the
CME Group S&P 500 Quotation
Market makers
Market makers are participants who undertake to
guarantee minimum liquidity and facilitate price
discovery for a certain number of assets accredited
for this purpose, playing a key role in the efficiency
of the capital markets.
In 2012 BM&FBOVESPA held competitive biddings
to select market makers for:
The S&P 500 Futures Contract Settled in Cash
to the CME Group S&P 500 Quotation
Options on the Stocks of BM&FBOVESPA S.A.
­ Bolsa de Valores, Mercadorias e Futuros
(BVMF3) and Usinas Siderúrgicas de Minas
Gerais S.A. ­ Usiminas (USIM5)
Options on the Stock of Companhia Siderúr-
gica Nacional (CSNA3)
Options on the Stocks of OGX Petróleo e Gás
Participações S.A. (OGXP3) and Itaú Unibanco
Holding S.A. (ITUB4)
Options on the Stocks of Banco Bradesco S.A.
(BBDC4), Gerdau S.A. (GGBR4) and Banco do
Brasil S.A. (BBAS3)
Options on Ibovespa Index (IBOV)
capítulo
MArkEt StrEngthEning
7
ments in addition to the mandatory standards pro-
vided for by Brazilian corporation law (Lei das SAs).
In 2012 three initial public offerings (IPOs) were held,
two on Novo Mercado and one on the traditional
segment, as well as nine follow-up offerings, seven
on Novo Mercado, one on Level 1 and one on Level 2.
The number of companies listed on Bovespa Mais
reached three when Senior Solution joined the
two companies already listed, Nutriplant and De-
senvix Energias Renováveis.
Products and services
In 2012 BM&FBOVESPA's focus in fixed income was
on facilitating access to the bonds issued by the
National Treasury, offering new functionality for
investors in Tesouro Direto and incentives to bro-
kerage houses that distribute this product.
In the variable income markets, the company en-
hanced its securities lending system (BTC), intensified
its market maker programs for options on other secu-
rities with high liquidity, and launched new indexes
and Brazilian Depository Receipt (BDR) programs.
Cross-listing of products licensed by other ex-
changes, especially derivatives, developed further
in 2012 with the launch of futures contracts with
CME Group and indexes for BRICS exchanges (Bra-
zil, Russia, India, China and South Africa).
New product launches
Indexes
Corporate Governance Index ­ Novo Mercado
(IGNM)
FTSE/JSE Index (Johannesburg Stock Exchange)
Hang Seng Index (Hong Kong Exchange)
Micex Index (Micex-RTS)
Real Estate Investment Fund Index (IFIX)
Sensex Index (Bombay Stock Exchange)
Unsponsored BDR Index ­ Global (BDRX)
ETFs
Caixa ETF Ibovespa Index Fund
iShares ICO2 Carbon Efficient Index Brazil Index
Fund
Market development events
Third Brazil-China Capital Markets Forum
BEST Europe 2012
Third Forum on Capital Markets Ombudsmen
Seminar for Issuers, Investors and Self-Regulatory
Organizations: Prospects for the New Market
Seminar on Clearinghouse Integration and the
New CORE Risk System
FIAB Seminar: Exchanges and Market Populariza-
tion Initiatives for Retail Investors
Seminar on Prospects for Small Caps
Seminar on Prospects for Agribusiness in 2012 and
2013
Seminar on the Mergers & Acquisitions Committee
(CAF)
Opening Remarks Seminar on Clearinghouse Integration and the
New CORE Risk System
56
57
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BM&FBOVESPA invests
in financial education
programs for a variety
of audiences
Conscious investment
BM&FBOVESPA takes knowledge to millions of people
through face-to-face courses and educational pro-
grams, broadcast and online TV programs, and social
networks, making the Brazilian exchange one of the
largest in the world's exchange industry in terms of ed-
ucational activities.
To address the challenge of making the equity market
more accessible to all Brazilians who want to be part-
ners in national growth, and to foster a culture of long-
term investment, BM&FBOVESPA offers a range of pro-
grams in which information and financial education
are the key words.
Based on the conviction that a successful financial future
is built with information and education from an early age,
BM&FBOVESPA targets young people with some of its ac-
tivities, such as the programs Educar ("Educating") and
Dinheiro no Bolso ("Money in Your Pocket"). For adults
it offers face-to-face and online courses, simulators, and
a weekly financial education program on TV Cultura, a
public broadcaster.
Main programs
Visits to the Exchange ­ Raymundo Magliano Filho Visitor
Center
Located on the ground floor of the building on Rua XV
de Novembro, the Visitor Center welcomes 450 people a
day on average. Visitors watch a 3D institutional video,
presentations and a mock trading session. The number
of visitors totaled 92,819 in 2012.
8.
education and
marketing the
markets
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BM&FBOVESPA Goes Where You Are
Visits to institutions (companies, universities, asso-
ciations), trade shows and other events to dissemi-
nate information about the investment options
offered by the Exchange. In 2012 the program
completed ten years and benefited 6,402 people.
BM&FBOVESPA Challenge
A competition that simulates the capital markets
for students of public and private high schools
throughout São Paulo State. The project has in-
volved more than 13,000 people since its creation.
In 2012 the number of schools enrolled reached
401 and the number of participants was 1,039.
capítulo
EducAtiOn And MArkEting thE MArkEtS
8
Simulator
Participants
Futures
82,554
Folhainvest
821,318
Uol Invest
217,096
SimulAção
164,110
Exame
21,692
Banco do Brasil*
21,905
Valor Econômico*
6,028
Tesouro Direto
275,160
Total
1,609,863
*Launched in October and December 2011 respectively.
Financial Education TV
Aired every Saturday by TV Cultura, a public broad-
caster, with an average audience of 86.625 view-
ers. The program's website recorded 146,211 visits
in 2012.
Courses and institutional presentations
In addition to Educar, the company offers online
courses on personal finance and the stock market,
as well as institutional presentations. The tables
below show the numbers of participants in 2012.
Institutional presentation attendees
High school students
2,290
University students
6,402
Companies
4,360
General public
781
Total
13,833
Participants in course on "How to invest in shares"
Total
8,114
Participants in online courses
Financial Education & Personal
Finance
89,587
Stock Market
63,804
Total
153,391
Participants in online chats
Total
919
Women in Action
This program encourages women to use the in-
vestment options offered by the Exchange. The
web portal presents spreadsheets to control ex-
penditure, educational videos and forums. In 2012
it published 106 articles and recorded 59,364 visits.
Simulators
The Exchange has created simulators in partner-
ship with several institutions to enable anyone to
learn how to invest in stocks, bonds or derivatives,
and how to diversify and grow a portfolio. The user
receives a virtual amount of cash and can simulate
securities trades in real time, create an investment
portfolio, and win prizes.
Money in Your Pocket
This TV program in competition format for young
people produced by Futura channel in partnership
with BM&FBOVESPA encourages the new genera-
tions to consume consciously and manage their
assets responsibly, transmitting concepts in eco-
nomics, finance, investment, the stock market,
credit and entrepreneurship in an attractive and
playful manner.
Educar
This program delivers lectures and financial educa-
tion courses free of charge to different audiences
of children, youth and adults. Its 346 courses had
16,890 participants in 2012.
Exchange Kids
Financial education portal for children and videos
aired on the Futura TV channel. In 2012 the portal had
8,582 registered children and recorded 9,688 visits.
BVMF TV and social networks
The Exchange's website offers a large number of
videos with information on its products, local and
international events, and many other services. It
also offers high-quality financial education con-
tent. BVMF TV recorded 6,148,520 direct hits in
2012, as well as 132,525 via MSN and 102,231 via
YouTube.

The Exchange also increased its social network
presence in 2012, ending the year with 186,274
followers on Facebook, Twitter and LinkedIn.
Several free apps can be downloaded from
BM&FBOVESPA's website with information on its
markets, real-time indexes, stock quotes, commod-
ities and futures, as well as charts and news. The
apps are also available on social networks.
Publications
BM&FBOVESPA produces several electronic bulle-
tins with information on its markets and indexes.
Users can register to receive email notifications
when bulletins are available on the website.
The Exchange also periodically publishes informa-
tional leaflets about its markets and services, sup-
porting material for the various courses it offers,
and the Nova Bolsa magazine.
N
o
14/ 2012
www.bmfbovespa.com.br/revista
investidores
POR QUE OS BRASILEIROS
NÃO POUPAM MAIS
ENTREVISTAS
MIGUEL ANGEL BRODA,
CONSULTOR E ECONOMISTA
LUIS FERNANDO PORTO,
DIRETOR PRESIDENTE DA
LOCAMERICA
ensAio
INVESTIR, CONSUMIR E SER FELIZ!
N
o
16/ 2012
www.bmfbovespa.com.br/revista
ENTREVISTA
BERNARDO GOMES,
PRESIDENTE DA SENIOR
SOLUTIONS
REGULAÇÃO
POLÊMICA
NO SETOR ELÉTRICO
INVESTIdORES
MULHERES, CADA VEZ
MAIS INVESTIDORAS
CONTRAPONTO
FLORÊNCIO DE ABREU,
A RUA DAS FERRAGENS
LANÇAMENTO DO COMITÊ DE AQUISIÇÕES
E FUSÕES (CAF): UM LARGO PASSO PARA
FORTALECER O MERCADO
NelsoN eizirik
CAF
DAviD kershAw
loNDoN sChool oF
eCoNomiCs AND PolitiCAl
sCieNCe
BArBArA mustoN
tAkeover PANel
mArCio GueDes
ANBimA
mAuro CuNhA
AmeC
AlexANDre PiNheiro
Cvm
sANDrA GuerrA
iBGC
eDemir PiNto
Bm&FBovesPA
60
61
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Fica Mais
This incentive program enabling investors to score
points and exchange them for products and servic-
es ended the year with 4,597 new members, 1,347
referrals, 224 referrals accepted, and 75,782 hits.
Cultural Space
The Cultural Space is an exhibition area for art of all
tendencies and styles where visitors can appreci-
ate works by renowned Brazilian and international
artists as well as historical exhibitions. The number
of people who visited the Center, located on the
ground floor of the building at Praça Antonio Pra-
do, totaled 5,734 in 2012.
BM&FBOVESPA Educational Institute
Education is an indispensable factor for the devel-
opment of the Brazilian market. BM&FBOVESPA
has always invested significantly in educational
projects designed to increase the general public's
knowledge of its business and the impact of the
markets it operates on society.
In line with the company's strategy of fostering a cul-
ture of long-term investment and its commitment
to bring investors and issuers together in a single
environment, in addition to acting as the main ex-
change operator in Brazil, the BM&FBOVESPA Edu-
cational Institute began offering professionals in
the financial services industry two MBA courses in
2012: an MBA in Capital Markets and Derivatives,
and an MBA in Financial Risk Management.
capítulo
EducAtiOn And MArkEting thE MArkEtS
8
With recognized experience, the Educational In-
stitute develops courses with varying degrees of
depth and breadth, as well as specific training to
trade in the markets managed by the Exchange.
The Institute seeks to introduce course participants
to the most innovative elements in knowledge of
the financial markets and business management.
It has its own faculty of experts and an infrastruc-
ture of classrooms and study labs. Its library has a
large collection and computerized access to facili-
tate the work of researchers.
Operating segments
Financial markets
­ Education, training and spe-
cialization for professionals in the financial servic-
es industry (brokerage houses, banks, investment
funds and companies). The offering also includes
specific training courses to operate the systems
managed by the Exchange and to impart the skills
required to perform in compliance with the stan-
dards of excellence demanded by the markets.
Investors
­ Dedicated to the formation of conscious
investors, who learn to trade all the products avail-
able in the equity and fixed-income markets.
Businesses and entrepreneurs
­ Established to fos-
ter entrepreneurial culture and support the sus-
tainable growth of business organizations of all
sizes and levels of maturity, whether publicly or
privately held, especially those that pursue inno-
vation as a competitive advantage.
Solutions for companies
­ Specializing in the edu-
cation and training of professionals who operate
in the markets managed by BM&FBOVESPA, the
Educational Institute offers a range of products
tailored to the needs of companies and staff, in-
cluding face-to-face, distance and mixed delivery
courses, training sessions, seminars, presentations,
and 100% customized in-company training.
Certification
­ The BM&FBOVESPA Educational
Institute offers certification of brokerage house
professionals in back office, risk management,
compliance, trading, sales and technology. This
certification is one of the requirements of the Op-
erational Qualification Program (PQO).
The number of participants in the courses deliv-
ered by the Educational Institute totaled 7,104 in
2012.
Courses/programs
Participants
Face-to-face
3,086
Online
3,149
In-company (face-to-
face and online)
869
Total
7,104
62
63
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environmental
performance
9.
Water and energy
consumption, management
of greenhouse gas emissions
and waste reduction are
closely monitored by
BM&FBOVESPA
BM&FBOVESPA constantly develops projects that aim
not only to reduce costs but also to mitigate its internal
and external impacts.
Sustainable practices are a major priority for the com-
pany, demonstrating that this is an economically viable
option.
Water and energy consumption, management of green-
house gas emissions and waste reduction are constantly
monitored by the company in its everyday activities.
Greenhouse gas emissions (GHG)
In 2010 BM&FBOVESPA produced its first inventory of
greenhouse gas emissions using 2009 data in response
to the Carbon Disclosure Project (CDP). The 2011 inven-
tory using 2010 data was completed in 2012. The 2012
inventory will be available in May 2013.
The process has evolved to include emissions attribut-
able to the BM&FBOVESPA Institute and offices of the
Brazilian Commodities Exchange. The 2011 inventory
was produced with the support of ICF International, a US-
based consulting firm that specializes in climate change
policy, and checked by KPMG. In addition, to assure full
disclosure the company posted its GHG inventory to the
National Public Registry, an initiative of Brazil's GHG Pro-
tocol Program, winning a Gold Seal for filing a complete
inventory verified by a third party (
www.registropubli-
codeemissoes.com.br
).
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Based on this inventory BM&FBOVESPA identified the
three main sources of indirect GHG emissions ­ air
travel, electricity consumption and employee com-
muting ­ and took steps to minimize their impact.
In 2012 the company maintained and monitored
the initiatives implemented in the previous year,
especially the measures taken to reduce air travel,
such as installing telepresence rooms and telecon-
ferencing instead of holding face-to-face meetings,
to ban employee use of contract taxis to commute
between 10 pm and 5 am and/or outside the met-
ropolitan area, and to outsource printing services,
with the removal of 82 printers to leave only 29 in
the building on Rua XV de Novembro. Documents
are printed on both sides of the page and in mono-
chrome unless color is absolutely essential. Em-
ployees must touch a proximity reader with their ID
badge to release print jobs, which are deleted from
the queue after 60 minutes to avoid waste.
BM&FBOVESPA prioritizes green IT, consisting
mainly of the use of monitors that generate less
heat and consume less energy, and server virtu-
alization, whereby one powerful server is divided
into multiple virtual environments to do the work
of several others. This reduction in the number of
servers saves not only electricity but also other
energy-hungry resources, such as air conditioning,
batteries and generators. The impact of this initia-
tive can be gauged from the comparatively small
number of servers needed to operate the business.
For the fourth consecu-
tive year the company
is publishing an inte-
grated annual report
according to GRI guide-
lines, featuring financial
results alongside socio-
environmental data and
information on corpo-
rate governance, sus-
tainability and manage-
ment best practice.
capítulo
EnVirOnMEntAl PErFOrMAncE
9
Environmental performance indicators
Indirect energy consumption by primary energy
source (in gigajoules)
en4
Energy source
2012
2011
2010
Electricity
81,478
79,696
69,052
Energy saving due to conservation and efficiency
improvements (in gigajoules)
en5
2012
2011
2010
Deactivation of
extra bulbs on
stairs in Praça
Antonio Prado
and Rua XV
de Novembro
buildings
210
210
210
Deactivation of an
elevator in Praça
Antonio Prado
building during off-
peak hours
21
21
21
Rules on weekend
use of air
conditioning
92
92
119
Total
323
323
350
Total volume of water withdrawn by source
en8
2012
2011
2010
Total water
consumption
(m3/year)
39,479
41,659
40,503
Note: Sole source is water utility (Sabesp).
Direct and indirect GHG emissions and electricity consumption ­ Scope 1 & 2
(in metric tons of CO2)
en16 | en19 | en20
2011
2010
2009
Generators
42,82
28,47
46,29
LPG
0,88
0,70
­
Natural gas
6,09
5,17
11,76
Fire extinguishers
1,53
24,94
0,24
Cooling gas
282,36
86,60
323,75
Own fleet
12,33
9,68
7,31
Electricity
675,79
1,024,10
453,31
Total direct and indirect emissions
(tCO2e)
1,021,80
1,179,66
842,66
Notes
The 2012 GHG inventory has not yet been produced. The process is scheduled to begin in January 2013, with finalization due in May.
Cooling gas consumption in 2011, amounting to 282.36 tCO2e, consisted entirely of R-22 refrigerant, which is classed as a GHG but not included
in the Kyoto Protocol because it was already covered by the Montreal Protocol as an ozone-depleting CFC.
BM&FBOVESPA does not emit any ozone-depleting NOx or SOx.
en20
Indirect GHG emissions ­ Scope 3 (in metric tons of CO2)
en17
2011
2010
2009
Air travel
1,358,78
1,242,30
434,55
Third-party logistics
3
38,33
7,11
Employee commuting
509,71
386,13
240,76
Taxis
72,81
65,80
52,71
Mileage refunds
2,22
2,58
-
Total indirect emissions (tCO2e)
1,946,52
1,735,14
735,13
Note: The 2012 GHG inventory has not yet been produced. The process is scheduled to begin in January 2013, with finalization due in May.
66
67
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capítulo
EnVirOnMEntAl PErFOrMAncE
9
Notes
Copiers and printers are leased. Toner cartridges are returned to the leasing company, which is responsible for final disposal.
Bulbs are counted by unit, not by weight.
Batteries are left in electronic waste collection and recycling bins belonging to C&A stores, which send them to contractors who specialize in
decontamination.
Healthcare waste from outpatient clinics is collected by the municipal government, which is also responsible for incineration.
Correct disposal: batteries and bulbs are sent to firms that specialize in decontamination before disposal.
This type of waste was not counted in 2010.
Total weight of waste by type and disposal method
en22
Non-hazardous waste (in metric tons)
Type
2012
2011
2010
Disposal
Weight (t)
Disposal
Weight (t) Disposal
Weight (t)
Restaurants,
organic & non-
recyclable (WCs)
Landfill
110,5143
Landfill
100,4
Landfill
78,6
Recycling
Sold
81,065325
Sold
82,0
Sold
73,4
Total
142,3
182,4
152,1
Initiative
Description
Result
Taxi policy
Policy restricting use of taxis
implemented on Dec. 12, 2011
CO2 emissions reduced from
86.04t (493,048.1 g per km) in 2011
to 66.38t (380,037,4 g per km) in
2012
Outsourcing of printing
Removal of 82 old printers and
replacement by 29 in Rua XV de
Novembro building in Sep. 2012
Saving of 390,918 pages (21,962
in color and 368,956 in gray scale)
between Sep. 5 and Dec. 31, 2012
Main initiatives to mitigate environmental impact of
products and services in 2012
en18 | en26
Hazardous waste (in metric tons)
Type
2012
2011
2010
Disposal
Weight (t) Disposal
Weight (t)
Disposal
Weight (t)
Toner cartridges
(units)
Returned
219
Returned
292
Returned
-
Bulbs (units)
Decontaminated
6,969
Correct
disposal
1,835
Correct
disposal
2,863
Total (units)
5,439
2,127
2,863
Batteries
Correct disposal
0,08736
Correct
disposal
0,08
Correct
disposal
-
Outpatient
clinics
Incinerated
0,0333
Incinerated 0,01895
Incinerated -
Total
0,06286
0,09895
0
In 2011 there were no fines or non-monetary sanctions for non-compliance with environmental laws and
regulations.
en28
68
69
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BM&FBOVESPA sees
product and new
technology investments
as determinants in
strengthening its strategic
position
operational
and financial
performance
10.
Macroeconomic conditions
The year of 2012 was yet another year marked by global
economic instability. This scenario led to a low growth of
the main economies of the Eurozone and USA, as well as
a slowdown in China. In Brazil, despite the disappointing
performance in terms of the economy growth, the high-
light is the important economic structural changes un-
locked by the plunge in real interest rates, which closed
the year at levels comparable to those of the principal
emerging market economies.
The significant change in baseline interest rates is expect-
ed to change savings behavior as well, driving people to
seek new investment opportunities and diversify from
traditional investments as savings accounts, treasury bills
and money market mutual funds. The new scenario has
unveiled opportunities for investments in lesser-known
instruments which until recently the average saver
would hardly ever consider and are more akin to capital
market investments, as is the case of real estate invest-
ment funds (REITs), of exchange-traded funds (ETFs) and,
potentially, also the stock market.
Factors as the prospective change in the savings be-
havior of individuals, coupled with the need to spur
economic growth in the coming years, which should
happen primarily through heavy investments in infra-
structure, place the domestic capital markets in a key
position both to help enable and to capture the growth
opportunities that lay ahead.
Another focal point of attention is the exchange
rate policy. Differently from developments up until
mid-2011, when the Brazilian Government adopted mac-
roprudential measures to arrest the appreciation of the
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capítulo
OPErAtiOnAl And FinAnciAl PErFOrMAncE
10
Brazilian real versus the U.S. dollar, in 2012 the ex-
change rate reversed course and the Brazilian real
depreciated driving the Government to remove or
ease some of the previous measures. One such ac-
tion, of particular potential impact for the capital
markets and the company, came in December 2011
when the Government, in an about move, removed
the 2% IOF tax charged on inflows for investments
in equity securities and equity-based derivatives.
Strategic positioning and operating highlights
In the last several years Brazil has undoubtedly risen
to prominence on the world stage as an important
emerging market economy, which had a positive
impact over the markets managed by the company.
More recently, however, heightened volatility and
economic uncertainty set in by the ongoing global
economic crisis has tested the health and integrity
of markets across the world. All of which proved also
that Brazil has a solid financial and capital markets,
which have the Exchange as a pillar of good gover-
nance, transparency and safety.
Additionally, Brazilian economy awaked to a new
reality of low interest rates, compared to the histor-
ical level. This enhances the prospects for growth
of the domestic capital markets, as lower interest
incomes are likely to help swell the flow of money
directed to the stock market, and should boost the
attractiveness of the stock market as a source of
funds for prospective issuers.
BM&FBOVESPA strategic plan calls for actions
to build up on the development of the domes-
Source: Central Bank of Brazil
Benchmark Rate (Selic rate) ­ (%)
Exchange Rate ­ R$/US$
tic capital markets at the same time as safety,
integrity and stability is set to increase. In 2010,
the company put into place a substantial capital
expenditure plan which will achieve R$1.2 bil-
lion by 2014. With this plan the Exchange aims
to take the technology infrastructure for trading
and post-trading activities to a new, higher and
more sophisticated standard. Highlights of the
plan include the new trading platform known as
BM&FBOVESPA Puma Trading SystemTM, the inte-
gration of the four clearing houses, the develop-
ment of CORE (or Closeout Risk Evaluation), and
finally, the construction of a new Data Center and
the development of a new OTC platform for fixed-
income and other derivatives.
Regarding the products and market development,
in line with the evolution and sophistication of
retail investors, which is becoming more sophisti-
cated and demanding a better risk-return balance,
the company keeps its action of investing in finan-
cial education to a wider variety of investors with
different investment objectives and risk appetites.
The 2012 highlights were the continued growth of
the Tesouro Direto, higher volumes negotiated in
ETFs, and an outstanding performance of trading
in REITs. In the derivatives markets, certain futures
contracts began to trade under our cross-listing
arrangement with the CME Group, thus widening
the investment opportunities in this direction.
As for the operating performance, both Bovespa
and BM&F segments presented growth, which in
the Bovespa segment was driven primarily by in-
crease in turnover velocity
1
, whereas growth in the
BM&F segment was pushed mainly by increase in
average daily volume traded in Brazilian-interest
rate contracts. In addition, the average rate per con-
tract (RPC) climbed both as a result of the increase in
volumes traded in longer-maturity Brazilian-interest
rate contracts and because the RPC for FX contracts,
that was positively influenced by the depreciation
of the Brazilian real against the U.S. dollar.
In 2012, the management proved its commitment
towards controlling costs and expenses. In Au-
gust, the company announced a reduction in its
adjusted opex
2
guidance to an interval between
R$560 ­ R$580 million from R$580 ­ R$590 mil-
lion previously, having closed the year quite near
the lower endpoint of the revised interval. As for
2013, the opex budget is in the same level of 2012.
Moreover, the company maintained its steadfast
commitment towards returning higher rates for
shareholders by consistently declaring payouts in
the equivalent of [100%] of the net income.
The BM&FBOVESPA shares (BVMF3) had an out-
standing performance, increasing 42.9% over the
course of 2012 (in the same period, the Ibovespa
moved up 7.4%). The sound performance is ex-
plained primarily by the strong financial results
and good operating performance, and the positive
perception of the market over the strategy and ini-
tiatives implemented by the company aiming to
strengthen its competitive advantages.
As a result, BVMF3 stocks closed the year as the
9th most actively traded in the market, with daily
average financial value traded at R$137.9 million
and average volume of 17.6 thousand daily trades.
BM&FBOVESPA's market capitalization at the year-
-end was R$27.7 billion, which made our Exchange
the third largest worldwide by market cap.
Finally, the management believes in the company´s
potential and understands the important role that
it performs as a driver of strength and sophisti-
cation in the Brazilian capital markets, being sure
that the investments in products and technology
are determinants to improve the quality of the ser-
vices the company offers, as well as to increase the
transparency and consistency of the Brazilian capi-
tal markets.
Operating performance
Bovespa Segment
The average daily trading value (ADTV) in the
stock market and the equity derivatives markets
(options and forwards) jumped 11.7% year-over-
year, which established a new all-time record for
the segment. The analysis of average daily trading
volume for the last five years (2008 ­ 2012) shows
compound annual growth rate (CAGR) of 7.0%.
The cash market performance was the primary driv-
er of the year-over-year surge in average daily trad-
ing volume, explained mainly by increase in turn-
over velocity, since the average capitalization of the
stock market rose only slightly from the earlier year.
Turnover velocity climbed to 69.8% from 64.2% one
year ago, with direct positive impact on cash market
volumes prompted mainly by heightened volatility,
increased demand for more sophisticated products
from market participants and significant volumes
traded on Ibovespa options expiry dates. Foreign
investors led the climb in turnover velocity and ac-
counted for the larger portion of the overall volume,
prodded, among other things, by the shift in policy
which in December 2011 led the Government to re-
move the IOF tax on inflows for investments in eq-
uity securities and equity-based derivatives, which
was limiting these investors move. The effects of the
remove were materialized in 2012.
The average stock market capitalization was prac-
tically stable, climbing 2.2% year-over-year. The
highlights includes the Consumer and Utilities
Source: Central Bank of Brazil
Turnover velocity for the year is defined as the ratio of annualized
turnover (value) of stocks traded on the cash market over a twelve-
month period to average market capitalization for the same period.
The operating expenses have been adjusted to eliminate expenses
with depreciation, provisions, the stock options plan and taxes re-
lated dividends received from the CME Group, in addition to a trans-
fer of restricted funds to BM&FBOVESPA Market Supervision (BSM).
The purpose of these adjustments is to measure operating expenses
after eliminating expenses with no impact on cash flow and non-
recurring expenses.
1
2
jan-11
mar
-11
ma
y
-11
jul-11
sep
-11
no
v
-11
jan-12
mar
-12
ma
y
-12
jul-12
sep
-12
no
v
-12
14.00
12.00
10.00
8.00
6.00
4.00
2.00
-
12.50
7.25
jan-11
mar
-11
ma
y
-11
jul-11
sep
-11
no
v
-11
jan-12
mar
-12
ma
y
-12
jul-12
sep
-12
no
v
-12
2.50
2.25
2.00
1.75
1.50
2.06
72
73
background image
capítulo
OPErAtiOnAl And FinAnciAl PErFOrMAncE
10
Exchange average market capitalization and turnover velocity
*Includes Capital Goods and Services e Information Technology.
sectors, which presented a considerable increase,
although this last sector would have had an even
better performance if it was not for November
2012, when it presented a strong decrease given
certain regulatory changes. On the other hand, it
was verified an average market capitalization de-
crease on the Oil, Gas and Biofuels and Basic Ma-
terials sectors, that includes Petrobras, which fell
15.1%, and Vale, that decreased 19.8%. Both com-
panies are the most tradable in the market.
The average daily value traded on the options mar-
ket went up by 1.4% over 2011. The performance
highlights were options on ten stocks and options
year, largely due to a plunge in the number of mo-
tivated retail investors.
A measurement of volumes by investor category
to overall volume shows foreign investors still in
the lead and having accounted for 40.0% of the to-
tal volume for 2012, followed by local institutional
investors with 32.0% of the overall yearly volume,
while retail investors accounted for 18.0% of the
volume (versus 21.0% in 2011).
Additionally, the average daily value traded by for-
eign investors moved up 30.0% year-over-year due
Evolution in number of trades (In thousands)
Markets
2008
2009
2010
2011
2012
CAGR
2008-2012
Var.
2012/2011
Cash
195,1
270,6
349,8
476,5
653,0
35,3%
37,1%
Forward
2,2
1,3
1,6
1,1
1,0
-18,8%
-15,5%
Options
47,8
60,4
79,3
89,6
126,4
27,5%
41,1%
Total
245,1
332,3
430,6
567,2
780,4
33,6%
37,6%
ADTV evolution (in R$ billions)
ADTV evolution (in R$ millions)
Markets
2008
2009
2010
2011
2012
CAGR
2008-2012
Var,
2012/2011
Cash
5,162,3
4,943,7
6,031,6
6,096,3
6,861,3
7,4%
12,5%
Forward
177,8
96,5
147,4
118,0
103,4
-12,7%
-12,4%
Options
180,2
245,0
307,9
276,3
280,1
11,7%
1,4%
Total
5,525,5
5,286,8
6,488,6
6,491,6
7,250,7
7,0%
11,7%
on Ibovespa, all of which are part of our ongoing
options market maker program. The average daily
value traded in these options soared 44.8% year-
over-year to R$74.6 million, from 51.5 million in
2011. However, this climb was counterbalanced by
sliding volumes traded in option on Petrobras and
Vale options, which traditionally have been the
top traded options and combined accounted for a
10.3% year-over-year fall in average daily volume
traded in options.
The average daily number of trades increased 37.6%
year-over-year. The analysis of average daily number
of trades for the last five years (2008-2012) shows a
Average market capitalization by sector (In R$ billions)
Industry Classification
2011
Total Part.
(%) 2011
2012
Total Part.
(%) 2012
Var.
2012/2011
Construction and Transportation
120,08
5,1%
121,07
5,0%
0,8%
Consumer
412,14
17,4%
548,37
22,7%
33,1%
Financial
607,95
25,7%
641,25
26,5%
5,5%
Basic Materials
409,23
17,3%
335,19
13,9%
-18,1%
Oil, Gas and Biofuels
394,82
16,7%
330,80
13,7%
-16,2%
Telecommunications
146,84
6,2%
135,14
5,6%
-8,0%
Utilities
222,57
9,4%
247,24
10,2%
11,1%
Others*
51,95
2,2%
57,92
2,4%
11,5%
Total
2,365,57
2,416,98
2,2%
CAGR of 33.6%, attributable primarily to the greater
sophistication of market participants and increased
high frequency trading (HFTs) activity, which despite
being highly quantitative uses small orders, driving
down the average ticket per trade. It´s important to
note that in preparation of the future growth, the
throughput capacity of BM&FBOVESPA´s trading
systems far exceeds current volumes.
The average number of active investors in the
Bovespa segment fell 3.3% compared to 2011, to
603.9 thousand from 624.7 thousand in the prior
5.5
2008
5.3
2009
6.5
2010
6.5
2011
7.3
2012
: +11.7%
CAGR: +7.0%
2.04
2008
1.83
2009
2.33
2010
2.37
2011
2.42
2012
69.8%
64.2%
63.8%
66.6%
63.2%
Average Market Capitalization (BRL trillions)
Turnover Velocity (%)
74
75
background image
primarily because of more active high frequency
trading activity, which are predominantly foreign
investors, whose daily traded volume increased
R$0.35 billion; and to IOF tax on inflows removed
in December 2011.
The net flow of foreign investments into equity and
equity derivatives markets closed the year at positive
R$7.2 billion mainly as a result of R$5.4 billion
worth of primary market-seeking inflows. Twelve
equity offerings implemented over 2012 (3 IPOs, 9
follow-on offerings) grossed aggregate proceeds
worth R$13.2 billion.
Two products from Bovespa segment that are
showing high growth are the ETFs and exchange-
traded REITs, both with strong appeal for the retail
investor. The volume of trading in the ETFs spiked
138.1% year-over-year to a ADTV of R$115.9 mil-
lion, which accounted for 1.7% of the cash mar-
ket volume, versus 0.8% in the prior year). There
are currently fifteen exchange-traded index funds
listed on the exchange, with BOVA11 (an index ETF
which tracks the Bovespa Index) being the most
actively traded among them.
The volume of trading in REITs has been climbing
steadily in recent years. The number of listed funds
went to 93 in 2012 from previous 66 in 2011. The
number of investors that has shares of these funds
increased to 97.1 thousand in 2012 from 35.3
thousand in the year before, registering a 175.3%
high, while the daily average traded value grew
up 299.6% year-over-year, to R$14.6 million from
R$3.7 million one year ago (in December 2012, the
average daily traded value reached R$50.3 million).
The volume of high frequency trading hit a daily av-
erage of R$1.4 billion (buy and sell sides
3
) in 2012,
climbing 24.2% year-over-year to account for 9.4%
of the overall traded volume (versus 8.5% in the prior
year). This growth is explained primarily by the fact
that new investors were registered in this category
of traders, which has been rising steadily over time.
BM&F Segment
The average daily traded volume (ADV) in deriva-
tives markets from BM&F segment climbed 7.3%
compared to 2011, hitting, yet again, an all-time
record of 2.9 million trades. Additionally, the aver-
age rate per contract climbed 7.7% year-over-year,
the favoring an increase revenues from trading
fees. An analysis of average daily trading volume
for the most recent five-year period (2008 ­ 2012)
shows a CAGR of 16.4%, which evidences the high
potential for growth of this market.
Brazilian-interest rate contracts make up the most
actively traded contract group in the segment, such
that the average daily volume traded in these con-
tracts accounted for the larger share (66.4%) of the
overall trading volume in 2012. This daily average for
Brazilian-interest rate contracts went up 7.2% year-
over-year, shooting a 2008 ­ 2012 CAGR of 25.0%.
This performance is explained by a combination of
factors, prime among which are the increase in do-
mestic credit availability, particularly fixed-rate lend-
ing; the greater portion of fix interest-bearing govern-
ment debt relative to total public debt; and volatility
effects mainly between March and May of 2012.
The average daily volume traded in FX contracts
kept a virtually flat line from the prior year. This lack
of movement is attributable mainly to toned down
volatility when compared to the year-ago period
(see the table below) and the IOF tax charged on
increases in short dollar exposures.
Exchange Rate Volatility (R$/US$)
Moreover, the average daily volume traded in in-
dex-based contracts climbed 16.1% compared to
2011, reaching a daily average of 143.1 thousand
contracts, primarily due to more active trading
activity by local institutional investors, which ac-
counted for a 42.3% year-over-year rise in average
daily volume (40.1% of the overall volume versus
32.5% one year earlier), underlining the greater so-
phistication of this investor category.
The average RPC for the segment moved up 7.7%
in comparison to 2011. This increase in mainly ex-
plained by:
In calculating high frequency volume for either segment we take
into account both the buy and sell sides of the trade (a division of
total volume by two).
3
capítulo
OPErAtiOnAl And FinAnciAl PErFOrMAncE
10
Bovespa Segment - Distribution of average daily trading value (ADTV) by investor category (In R$ billions)
Bovespa Segment - Equity offerings (In R$ billions)
* The figures for 2010 do not include the oil reserves assignment Brazil's Government agreed with Petrobras, which however was not extended to the investing
public. Should this portion of the proceeds be computed, the aggregate of capital raised through equity offerings in 2010 would climb to R$149.2 billion.
Bovespa Segment - Average daily volume traded in ETFs (In R$ millions)
Bovespa Segment - Net flow of foreign investments into the equities markets (In R$ billions)
Foreign
Institutional
Retail
1.3
2.3
2.9
Companies and others
Financial Institutions
2012
2011
2010
2009
2008
1.4
2.2
2.3
1.7
2.2
1.9
1.6
1.4
1.8
1.5
1.5
2.0
0.4
0.2
0.4
0.1
0.5
0.2
0.6
0.1
0.6
0.1
Secondary Market
9.1
2008
(15.5)
(24.6)
22.7
2009
43.2
20.5
22.4
2010
28.3
6.0
8.7
2011
7.4
(1.4)
5.4
2012
7.2
1.8
Public O ers
Total
IPOs
34.3
2008
45.9
2009
74.4
2010*
18.0
2011
2012
13.2
70.1
2007
30.4
2006
13.9
2005
8.8
2004
4.5
4.3
5.4
8.5
15.4
15.1
55.6
14.5
7.5
26.8
23.8
22.2
11.2
63.2
7.2
10.8
3.9
9.2
Follow on
18.6
2009
28.5
2010
48.7
2011
115.9
2012
: 138.1%
CAGR: 84.0%
76
77
background image
A 9.3% year-over-year rise in average RPC for
Brazilian-interest rate contracts, that went to
R$1.004 in 2012 versus R$0.918 in 2011, due
mainly to a greater concentration of dealings
in longer maturity contracts (5th maturity on),
which have higher prices; and
A 16.4% year-on surge in average RPC charged
for trades in FX contracts, coupled with a 7.9%
jump in average RPC for U.S. dollar-denomi-
nated interest rate contracts, in either case ex-
plained by 17.6% average year-over-year ap-
preciation of the Brazilian real against the U.S.
dollar
4
, since the rates for these contracts are
denominated in U.S. dollars.
An analysis of segment volumes by investor cate-
gory shows financial institutions toned down trad-
ing activity by 3.2% year-over-year accounting for
34.5% of the overall yearly volume (versus 38.1%
one year ago), whereas trading by institutional in-
vestors increased 11.5% from the earlier year to ac-
count for 34.0% of the overall yearly volume (ver-
sus 32.5% previously).
BM&F Segment - ADV per contract group (In thousands of contracts)
2008
2009
2010
2011
2012
CAGR
(2008-12)
Var.
2012/2011
Interest Rates in R$
789,5
843,5
1,683,6
1,797,2
1,925,7
25,0%
7,2%
FX Rates
535,9
447,1
540,6
495,5
493,9
-2,0%
-0,3%
Stock Indices
87,8
80,0
89,4
123,3
143,1
13,0%
16,1%
Interest Rates in US$
96,2
78,3
89,7
145,2
149,8
11,7%
3,2%
Commodities
14,9
10,2
12,9
13,2
11,2
-6,9%
-15,2%
Minicontracts
40,5
52,6
75,6
114,4
165,7
42,3%
44,8%
OTC
12,4
9,3
12,9
11,7
9,2
-7,3%
-21,8%
Total
1,577,2 1,521,0 2,504,7 2,700,6 2,898,7 16,4%
7,3%
Moreover, high frequency traders
accounted for
6.6% of the overall volume for the segment with
daily average of 365.9 thousand contracts (buy
and sell sides) for the year. High frequency average
daily volume traded shot up 19.4% year-over-year.
Securities lending
The Securities Lending keeps growing, showing
an increase of 5.9% of the monthly average open
interest contracts between 2011 and 2012. Securi-
ties lending is used by more sophisticated traders
that develop and implement strategies in the stock
market as takers and by investors that searches for
an additional pay as lenders of the financial assets,
keeping the rights over an eventual payout given
by the issuing company.
Tesouro Direto
Tesouro Direto is a platform for the trading of gov-
ernment bonds through the Internet, which has
been developed along with Brazilian Treasury. The
volume of Tesouro Direto dealings has been grow-
ing strongly every year. The average volume under
custody soared 48.4%, to R$9.0 billion in 2012 from
R$6.1 billion in 2011, whereas the average number
of retail traders jumped to 84.3 thousand from 64.4
thousand previously, a 30.9% year-on-rise.
The keen interest retail investors have shown for
doing business in the Tesouro Direto platform and
Year-over-year exchange rate variation is calculated as the average
fluctuation of the PTAX exchange rate as at the end of December
2010 through end-November 2012, as these rates provide the basis
on which to calculate average RPC for the months of January 2011
through December 2012, respectively. The PTAX rate is compiled and
released at the close of business on a daily basis by the Central Bank.
4
capítulo
OPErAtiOnAl And FinAnciAl PErFOrMAncE
10
Bovespa Segment - Evolution of HFT average daily trading value (buy + sell sides in R$ billions)
Bovespa Segment - Evolution of trading in REITs ­ Average daily traded value
Exchange Rate Volatility (R$/US$)
BM&F Segment ­ ADV and average RPC
0.6
2008
0.9
2009
1.5
2010
3.7
2011
2012
14.6
25.3
11.9
7.8
4.1
2.2
ADTV (R$ MM)
Mkt Cap (R$ BN)
ADTV (Foreigners)
ADTV (Individuals)
ADTV (Institutionals)
% of overall market
0.5
2010
4.3%
1.1
2011
8.5%
2012
1.4
9.4%
0.2
0.2
0.2
0.6
0.3
0.2
1.0
0.3
0.1
1.6
2008
1.5
2009
2.5
2010
2.7
2011
2012
2.9
1.191
1.106
1.134
1.365
1.524
ADTV (millions)
RPC (BRL)
35%
30%
25%
20%
15%
10%
5%
0%
jan-11
f
eb
-11
mar
-11
apr
-11
ma
y
-11
jun-11
jul-11
aug-11
sep
-11
oc
t
-11
no
v
-11
dec
-11
jan-12
f
eb
-12
mar
-12
apr
-12
ma
y
-12
jun-12
jul-12
aug-12
sep
-12
oc
t
-12
no
v
-12
dec
-12
Vol-DOL (R$/US$) Var. Margin
78
79
background image
for trades in REITs suggests these investors have
-
nancial investments, a trend that should be rein-
forced in a lower interest rate scenario.
Financial performance
2.8
Revenues
Gross revenues for the year ended December 31,
2012, amounted to R$2,289.0 million, rising 8.2%
year-over-year due primarily to revenue increases
in the equity and derivatives market.
§ Revenues from trading and clearing fees of
Bovespa segment: climbed 7.2% year-over-year
totaling R$1,034.0 million, and accounted for
45.2% of total revenues. This rise is explained by
an increase of 11.7% in trading volume for the
segment, which, however, was partially coun-
terbalanced by a 2.2% margin drop (to 5.676
bps from 5.793 bps one year earlier) attribut-
able to higher volumes of high frequency and
day trading, once both are charged lower fees.
§ Revenues from trading and clearing fees of
BM&F Segment - Distribution of ADV by investor category (buy + sell sides in millions of contracts)
Evolution of dealings on the Tesouro Direto platform
BM&F Segment - Average RPC (in R$)
2008
2009
2010
2011
2012
Var.
2012/2011
Interest Rates in R$
1,140
0,979
0,889
0,918
1,004
9,3%
FX Rates
2,062
2,161
1,928
1,894
2,205
16,4%
Stock Indices
2,142
1,619
1,564
1,614
1,524
-5,6%
Interest Rates in US$
1,257
1,357
1,142
0,941
1,015
7,9%
Commodities
3,585
2,307
2,168
2,029
2,239
10,4%
Minicontracts
0,162
0,176
0,128
0,130
0,116
-10,8%
OTC
2,355
1,655
1,610
1,635
1,769
8,2%
Total
1,524
1,365
1,134
1,106
1,191
7,7%
BM&F segment: increased 13.9% compared to
2011, totaling R$865.9 million, and accounted
7.3% lift in overall trading volume for the seg-
ment and the 7.7% jump in average rate per
contract.
§ Other revenues: accounted for 17.0% of the to-
tal revenue, reaching R$389.1 million, a slight
fall of 0.5% from the year-ago, as a result primar-
ily of changes in revenue line items unrelated to
trading and clearing activities, as follows:
- Securities lending: revenues of R$77.1 million
(3.4% of gross revenues) went up 4.1% year-
over-year due mainly to a 5.9% year-on rise in
positions at year-end, achieving R$32.0 billion
at 2012 year-end.
- Depositary/Custody: totaled R$102.8 million
(4.5% of gross revenues), up 12.5% in relation to
2011, explained mainly by an increase of 3.5% in
average number of custody accounts and 2.6%
-
dy, not including custody of ADRs and custody
Average open interest positions and number of lending transactions
BM&F Segment - Evolution of HFT ADV (buy + sell sides in R$ billions)
CAPÍTULO
OPERATIONAL AND FINANCIAL PERFORMANCE
10
Foreign
Institutional
Financial Institutions
1.9
1.9
1.4
2012
Central Bank
Companies
Retail
2011
2010
2009
2008
2.0
1.7
1.2
2.0
1.4
1.1
1.3
0.7
0.6
1.4
0.7
0.6
0.2
0.1
0.2
0.1
0.2
0.1
0.2
0.1
0.3
0.1
2011
305.9
6.0%
Minicontracts
Equities
FX
96.5
55.5
186.1
% in Overall Volume
BRL Interest Rates
109.7
52.2
124.9
93.9
42.9
88.4
28.6
16.9
21.2
12.8
19.1
27.8
2012
365.9
6.6%
2010
238.0
4.8%
2009
66.7
2.2%
16.9
2008
12.7
2009
20.5
2010
30.2
2011
2012
31.9
Monthly Average Open Interest (BRL billions)
27.5
2008
36.3
2009
42.3
2010
64.4
2011
2012
84.3
9.0
6.1
3.9
2.9
1.8
Average Number of Investors (thousands)
Average Assets under Custody (R$ billions)
80
81
background image
services provided to foreign investors. In addi-
tion, revenues from fees related to custody of
Tesouro Direto soared 30.1% year-on-year.
- Vendors: reached R$67.7 million (3.0% of
gross revenues), a 4.0% increase over 2011.
Although the number of customers accessing
BM&FBOVESPA market data shrank, this climb
is attributable mainly to appreciation of the
U.S. dollar versus the Brazilian real, as roughly
40.0% of these revenues derive from foreign
customers whose payments are denominated
in foreign currency.
- Other revenues: amounted to R$19.8 million
(0.9% of gross revenues), a fall of 50.6% year-
on-year due primarily non-recurring revenues
recognized as 2011 came to a close
5
.
Expenses
Expenses totaled R$763.1 million in 2012, a de-
crease of 6.6% year-over-year. However, we should
note the comparability of this line item has been
hampered because of the transfer to BSM of R$92.3
million in 2011, worth of restricted funds (Guaran-
tee Fund).
The adjusted expenses, as detailed in the table be-
low, amounted R$563.5 million, down 3.6% from
the year before due primarily to the company´s
cost control efforts.
The principal changes in expense line were:
Personnel: expenses reached R$353.9 million,
a slight increase 0.6% over 2011, mainly due to:
- The expenses with healthcare plan provi-
sion that totaled R$27.5 million;
- The expenses with stock options plan, that
fell 39.8% compared to 2011, to R$32.3
million from R$53.6 million earlier; and
- An increase of the capitalize expenses
with personnel, engaged with certain on-
going technology projects that the com-
pany is working on. In 2012, the amount
capitalized were R$18.3 million higher
than in 2011.
The line item comprising income tax and social
contribution plus deferred income tax and social
contribution totaled R$585.5 million, where current
income tax and social contribution totaled R$67.3
million, including R$60.2 million in the line item "re-
coverable tax provision" related to tax paid overseas
and recognized under equity in results of investee.
In addition, deferred income tax and social contri-
bution totaled R$518.2 million, and break down as
follows:
Recognition of deferred tax liabilities of
R$539.1 million related to temporary differenc-
es attributable to amortization of goodwill for
tax purposes, with no impact on cash flow; and
Recognition of deferred tax assets amounting
to R$20.9 million related to temporary differ-
ences and reversal of deferred tax liabilities.
Main line items of the Consolidated Balance
Sheet as of December 31, 2012
Assets
As of December 31, 2012, BM&FBOVESPA´s total
assets was of R$24,147.1 million, an increase of
2.4% year-over-year. Cash and cash equivalents,
including short- and long-term financial invest-
ments, totaled R$3,850.6 million and accounted
for 15.9% of total assets. Non-current assets to-
taled R$20,610.8 million, where long-term receiv-
ables (including long-term financial investments
that totaled R$573.6 million) amount to R$808.9
million, the investments amount to R$2,928.8 mil-
Depreciation and amortization
: totaled R$93.7
million, up 24.6% year-over-year and in line
with the increase in investments implemented
in previous years.
Communications
: amounted R$17.6 million, a
23.2% decrease over the previous year, corre-
lated with the company´s efforts to cut down
the mailing expenses for delivery of custody
account statements and execution confirma-
tion slips to investors.
Marketing and promotion
: amounted R$19.3
million, a fall of 50.1% year-over-year due primar-
ily to the reprioritization of marketing campaigns
for the year and cuts in advertising expenses.
Taxes
: totaled R$42.3 million soaring 174.9%
from the year-ago, due mainly to taxes paid
on income from dividends earned from CME
Group (R$37.2 million in 2012 versus R$9.9 mil-
lion in 2011).
Others
: amounted R$64.6 million, a 36.0%
year-over-year jump due primarily to a R$15
million transfer to BSM as funding for their
2013 expense.
Equity in results of investees
BM&FBOVESPA´s net share of gain from the equi-
ty-method investment in CME Group shares went
down 32.0% over 2011, totaling R$149.3 million,
where R$60.2 million were provisioned as recover-
able tax paid abroad by the investee (CME Group).
Interest income, net
Net interest income for the year hit R$208.9 million,
down 25.6% from 2011, due primarily to a 16.9%
decline in interest revenue resulting from the de-
crease in interest rates paid on financial invest-
ments. In addition, net interest income was nega-
tively influenced also by a 14.8% year-on increase
in interest expenses, which rose to R$88.4 million
in 2012, due to an appreciation of the U.S. dollar
against the Brazilian real (most the interest ex-
penses correlates with debt under global senior
notes issued in a July 2010 cross-border offering).
Income tax and social contribution
Income before taxes totaled R$1,659.8 million,
as compared to R$1,588.2 million in 2011, a 4.5%
climb over the prior year.
lion, property and equipment totaled R$361.0 mil-
lion and intangible assets were R$16,512.2 million.
Intangible assets consist primarily of goodwill re-
lated to expectations of future profitability in con-
nection with the acquisition of Bovespa Holding.
Goodwill has been tested for impairment in De-
cember 2012 and, pursuant to the valuation report
prepared by an independent specialist firm, no ad-
justments to carrying value were required.
Liabilities and Shareholders' Equity
Current liabilities accounted for 6.9% of total li-
abilities at R$1,660.6 million in 2012, a 14.0% de-
crease over 2011. This drop is due primarily to a fall
in total cash collateral pledged by market partici-
pants (to R$1,134.2 million in 2012 from R$1,501.0
million in the prior year). Noncurrent liabilities
closed the year at R$3,072.6 million and consist
primarily of R$1,242.2 million worth of debt issued
abroad (global senior notes issued in a US$612
million bond offering in July 2010) plus deferred
income tax and social contribution amounting to
R$1,739.6 million.
Shareholders' equity of R$19,413.9 million went up
0.8% over 2011, consisting mainly of capital stock
totaling R$2,540.2 million and capital reserves of
R$16,037.4 million.
Other financial information
Capital expenditures
BM&FBOVESPA capitalized investments on the order
of R$258.4 million in 2012, including R$231.7 million
Adjusted expenses (in R$ millions)
2012
2011
Var.
Expenses
763,1
816,7
-6,6%
(-) Depreciation
93,7
75,2
24,6%
(-) Stock Option
32,3
53,6
-39,8%
(-) Tax on dividends from the CME Group
37,4
9,9
278,3%
(-) Provisions
36,2
1,1
3,234,4%
(-) Contribution to MRP
-
92,3
-
Adjusted Expenses
563,5
584,5
-3,6%
Non-recurring revenues recognized as 2011 came to a close include
R$22.6 million worth of reversed provision for contingencies and legal
obligations and collection of credits held against a bankrupt estate.
5
capítulo
OPErAtiOnAl And FinAnciAl PErFOrMAncE
10
82
83
background image
related to investments in technology infrastructure
and IT resources, whereas R$26.6 million refer to in-
vestments in other projects, including modernization
and improvements of the company´s infrastructure.
2013 Adjusted Opex Budget and 2013­2014 Capex
Budget
In December 2012 the company announced the
2013­2014 capex budget and the 2013 adjusted
opex budget, as follows: (i) the 2013 budget for
adjusted operating expenses has been set within
an interval between R$560 million and R$580 mil-
lion, which is in line with the adjusted expense
target of the revised 2012 budget guidance; while
(ii) the capex budget for 2013 has been set within
an interval between R$260.0 million and R$290.0
million, and for 2014 an interval between R$170.0
million and R$200.0 million.
Payouts
Up to December, 2012, the board of directors de-
clared a payout that amounted R$685.6 million,
relative to the first nine month of 2012. Moreover,
at the coming Annual Shareholders' Meeting it will
be set to submit to shareholders an additional pay-
out proposal in the equivalent of R$388.7, related
to 2012 exercise, which should total 100% of the
net income attributable for BM&FBOVESPA share-
holders for the year ended December 31, 2012.
Share buyback program
The buyback transactions over the course of 2012
totaled 1.7 million shares (average price per share
of R$9.40). This repurchase was authorized within
the scope of the buyback program started June 16,
2011 and ended June 30, 2012 that totaled 60.0
million shares, of which in 2011 was repurchased
29.6 million shares, and in 2012, 31.3 million shares
(at average R$9.22 per share).
Additionally, on June 26, 2012, the board of direc-
tors authorized a new buyback program for a total
up to 60 million shares. The new program is set to
end on June 28, 2013.
Value Added Statement
BM&FBOVESPA increased its wealth generation
and distribution capacity for its wide range of pub-
capítulo
OPErAtiOnAl And FinAnciAl PErFOrMAncE
10
Financial
Statements
lics in 2012, distributing BRL 2,375.2 million, which
was 5.6% more than in 2011. The highlight was BRL
1,074.3 million distributed to shareholders in the Ex-
change in 2012, up 56.7% on the previous year.
ec1
For additional information about the company and
the markets that it operates, see the Reference Form
in the BM&FBOVESPA Investor Relations website at
http://ri.bmfbovespa.com.br
and in the Brazilian Se-
curities Commission (CVM) at
www.cvm.gov.br.
84
85
background image
Financial StatementS
Balance Sheet at December 31, 2012
(In thousands of reais)
BM&FBOVESPA
Consolidated
Assets
Notes
2012
2011
2012
2011
Current
3.387.845
3.348.607
3.536.282
2.401.134
Cash and cash equivalents
4 (a)
36.326
63.716
43.642
64.648
Financial investments
4 (b)
3.093.547
3.080.853
3.233.361
2.128.705
Accounts receivable
5
55.093
45.061
56.849
46.514
Other receivables
6
4.654
11.491
4.141
11.767
Taxes recoverable and prepaid
19 (d)
180.442
130.093
180.458
132.058
Prepaid expenses
17.783
17.393
17.831
17.442
Non-current
20.487.000
20.035.052
20.610.832
21.188.788
Long-term receivables
603.951
542.883
808.868
1.767.411
Financial investments
4 (b)
371.231
367.600
573.636
1.589.058
Deferred income tax and social contribution
19
132.286
80.550
132.286
80.550
Judicial deposits
14 (g)
97.510
94.178
97.822
95.048
Other receivables
6
-
555
2.200
2.755
Prepaid expenses
2.924
-
2.924
Investments
3.014.319
2.785.455
2.928.820
2.710.086
Interest in associates
7 (a)
2.893.632
2.673.386
2.893.632
2.673.386
Interest in subsidiaries
7 (a)
120.687
112.069
-
-
Investment property
7 (b)
-
-
35.188
36.700
Property and equipment
8
356.579
352.590
360.993
357.164
Intangible assets
9
16.512.151
16.354.124
16.512.151
16.354.127
Goodwill
16.064.309
16.064.309
16.064.309
16.064.309
Software and projects
447.842
289.815
447.842
289.818
Total assets
23.874.845
23.383.659
24.147.114
23.589.922
BM&FBOVESPA
Consolidated
Liabilities and equity
Notes
2012
2011
2012
2011
Current
1.409.279
1.745.088
1.660.609
1.929.946
Collateral for transactions
17
1.134.235
1.501.022
1.134.235
1.501.022
Earnings and rights on securities in custody
10
43.975
39.038
43.975
39.038
Suppliers
60.333
56.038
60.562
56.409
Salaries and social charges
73.588
59.310
74.492
59.995
Provision for taxes and contributions payable
11
27.502
31.008
28.358
31.814
Income tax and social contribution
-
-
2.564
4.486
Interest payable on debt issued abroad and loans
12
36.882
33.566
36.882
33.566
Dividends and interest on own capital payable
1.845
4.177
1.845
4.177
Other liabilities
13
30.919
20.929
277.696
199.439
Non-current
3.067.648
2.397.571
3.072.623
2.402.485
Debt issued abroad and loans
12
1.242.239
1.138.659
1.242.239
1.138.659
Deferred income tax and social contribution
19
1.739.644
1.204.582
1.739.644
1.204.582
Provision for contingencies and legal obligations
14
58.232
54.330
63.207
59.244
Post-retirement health care benefit
18 (c)
27.533
-
27.533
-
Equity
15
19.397.918
19.241.000
19.413.882
19.257.491
Capital and reserves attributable to shareholders of
BM&FBOVESPA
Capital
2.540.239
2.540.239
2.540.239
2.540.239
Capital reserve
16.037.369
16.033.895
16.037.369
16.033.895
Revaluation reserves
21.946
22.532
21.946
22.532
Revenue reserves
577.884
804.025
577.884
804.025
Treasury shares
(484.620)
(521.553)
(484.620)
(521.553)
Carrying value adjustments - other comprehensive
income
316.397
128.257
316.397
128.257
Additional dividend proposed
388.703
233.605
388.703
233.605
Retained Earnings
19.397.918
19.241.000
19.397.918
19.241.000
-
-
15.964
16.491
Non-controlling interest
Total liabilities and equity
23.874.845
23.383.659
24.147.114
23.589.922
86
87
background image
Financial StatementS
Statement of Income
Period ended December 31, 2012
(In thousands of reais, unless otherwise stated)
BM&FBOVESPA
Consolidated
Notes
2012
2011
2012
2011
Revenue
20 2.034.839 1.872.767 2.064.750 1.904.684
Operating expenses
(742.581)
(792.821)
(763.080)
(816.664)
Administrative and general
Personnel and related charges
(341.957)
(339.728)
(353.880)
(351.608)
Data processing
(99.220)
(100.619)
(102.805)
(104.422)
Depreciation and amortization
(91.944)
(73.428)
(93.742)
(75.208)
Outsourced services
(48.641)
(49.330)
(51.434)
(51.803)
Maintenance in general
(10.013)
(9.895)
(10.809)
(10.588)
Communications
(17.464)
(22.731)
(17.635)
(22.959)
Promotion and publicity
(18.758)
(38.100)
(19.280)
(38.609)
Taxes
(41.909)
(15.083)
(42.294)
(15.385)
Board and committee members' compensation
(6.634)
(6.262)
(6.634)
(6.262)
Contribution to the Mecanismo de Ressarcimento
de Prejuízos
17
(e)
-
(92.342)
-
(92.342)
Sundry
21
(66.041)
(45.303)
(64.567)
(47.478)
Equity in results of investees
7
157.652
225.710
149.270
219.461
Finance results
22
206.260
277.538
208.851
280.729
Finance income
294.291
352.957
297.217
357.720
Finance expenses
(88.031)
(75.419)
(88.366)
(76.991)
Income before taxation of profit
1.656.170
1.583.194
1.659.791
1.588.210
Income tax and social contribution
19
(c)
(581.880)
(535.195)
(585.535)
(539.681)
Current
(63.659)
(44.936)
(67.314)
(49.422)
Deferred
(518.221)
(490.259)
(518.221)
(490.259)
Net Income
1.074.290
1.047.999
1.074.256
1.048.529
Attributable to:
Shareholders of BM&FBOVESPA
1.074.290
1.047.999
1.074.290
1.047.999
Non-controlling interest
(34)
530
Net income per share attributable to shareholders (in R$
per share)
15
(h)
Basic
0,556512
0,537789
Diluted
0,555066
0,536588
Statement of Comprehensive Income
Period ended December 31, 2012
(In thousands of reais)
BM&FBOVESPA
Consolidated
2012
2011
2012
2011
Profit for the year
1.074.290
1.047.999
1.074.256
1.048.529
Valuation adjustments
188.140
216.937
188.140
216.937
Exchange variation on investment in foreign associate
240.676
297.278
240.676
297.278
Hedge of net investment in foreign operation
(102.632)
(128.275)
(102.632)
(128.275)
Tax effects on hedge of net investment in a foreign operation
34.895
43.613
34.895
43.613
Exchange variation on investment in foreign associate
15.180
4.321
15.180
4.321
Mark to market of financial assets available for sale
21
-
21
-
Total comprehensive income for the year
1.262.430
1.264.936
1.262.396
1.265.466
Attributable to:
1.262.430
1.264.936
1.262.396
1.265.466
Shareholders of BM&FBOVESPA
1.262.430
1.264.936
1.262.430
1.264.936
Non-controlling interest
(34)
530
88
89
background image
Financial StatementS
Statement of Changes in Shareholders' Equity
Period ended December 31, 2012
(In thousands of reais)
Attributable to the shareholders of BM&FBOVESPA
Revenue reserves (Note 15(e))
Revaluation
Treasury
Aditional
Capital
reserve
shares
Valuation
dividends
Retained
Non-controlling
Total
Note
Capital
reserve
(Note 15(c))
Legal
Statutory
(Note 15(b))
Adjustments
proposed
earnings
Total
interests
equity
At December 31, 2010
2.540.239
16.662.480
22.971
3.453
844.205
(613.903)
(88.680)
32.000
-
19.402.765
16.283
19.419.048
Exchange variation on foreign investment
-
-
-
-
-
-
297.278
-
-
297.278
-
297.278
Hedge of net investment, net of taxes
-
-
-
-
-
-
(84.662)
-
-
(84.662)
-
(84.662)
Other comprehensive income of foreign associate
-
-
-
-
-
-
4.321
-
-
4.321
-
4.321
Total comprehensive income
-
-
-
-
-
-
216.937
-
-
216.937
-
216.937
Effect of ownership increase
-
-
-
-
-
-
-
-
-
-
(322)
(322)
Realization of revaluation reserve - subsidiaries
-
-
(439)
-
-
-
-
-
-
(439)
-
(439)
Repurchase of shares
15(b)
-
-
-
-
-
(606.889)
-
-
-
(606.889)
-
(606.889)
Disposal of treasury shares - exercised options
18
-
(40.260)
-
-
-
57.284
-
-
-
17.024
-
17.024
Cancellation of treasury shares
15(b)
-
(641.955)
-
-
-
641.955
-
-
-
-
-
-
Recognition of stock option plan
18
-
53.630
-
-
-
-
-
-
-
53.630
-
53.630
Approval/payment of additional dividends proposed
15(g)
-
-
-
-
(406.086)
-
-
(32.000)
-
(438.086)
-
(438.086)
Net income
-
-
-
-
-
-
-
-
1.047.999
1.047.999
530
1.048.529
Appropriation of net income
Dividends
15(g)
-
-
-
-
-
-
-
233.605
(535.546)
(301.941)
-
(301.941)
Interest on own capital
15(g)
-
-
-
-
-
-
-
-
(150.000)
(150.000)
-
(150.000)
Constitution of statutory reserve
-
-
-
-
362.453
-
-
-
(362.453)
-
-
-
At December 31, 2011
2.540.239
16.033.895
22.532
3.453
800.572
(521.553)
128.257
233.605
-
19.241.000
16.491
19.257.491
Exchange variation on investment in foreign associate
-
-
-
-
-
-
240.676
-
-
240.676
-
240.676
Hedge of net investment in foreign operation
-
-
-
-
-
-
(67.737)
-
-
(67.737)
-
(67.737)
Comprehensive income in foreign affiliate
-
-
-
-
-
-
15.180
-
-
15.180
-
15.180
Mark to market of financial assets available for sale
-
-
-
-
-
-
21
-
-
21
-
21
Total Comprehensive income
-
-
-
-
-
-
188.140
-
-
188.140
-
188.140
Effect of ownership increase
-
-
-
-
-
-
-
-
-
-
(493)
(493)
Realization of revaluation reserve - subsidiaries
-
-
(586)
-
-
-
-
-
586
-
-
-
Repurchase of shares
15(b)
-
-
-
-
-
(16.303)
-
-
-
(16.303)
-
(16.303)
Disposal of treasury shares - exercised options
18
-
(28.832)
-
-
-
53.236
-
-
-
24.404
-
24.404
Recognition of stock option plan
18
-
32.306
-
-
-
-
-
-
-
32.306
-
32.306
Approval/payment of dividends of 2011
15(g)
-
-
-
-
(226.727)
-
-
(233.605)
-
(460.332)
-
(460.332)
Net income for the period
-
-
-
-
-
-
-
-
1.074.290
1.074.290
(34)
1.074.256
Appropriation of net income:
Dividends
15(g)
-
-
-
-
586
-
-
388.703
(984.876)
(595.587)
-
(595.587)
Interest on own capital
15(g)
-
-
-
-
-
-
-
-
(90.000)
(90.000)
-
(90.000)
At December 31, 2012
2.540.239
16.037.369
21.946
3.453
574.431
(484.620)
316.397
388.703
-
19.397.918
15.964
19.413.882
90
91
background image
Financial StatementS
Statement of Cash Flows
Period ended December 31, 2012
(In thousands of reais)
BM&FBOVESPA
Consolidated
2012
2011
2012
2011
Cash flows from operating activities
Net income for the year
1.074.290
1.047.999
1.074.256
1.048.529
Adjustments for:
Depreciation and amortization
91.944
73.428
93.742
75.208
Profit on sale of property and equipment
(202)
(1.102)
(202)
(1.116)
Software and projects write-off
3.620
7.795
3.620
7.795
Deferred income tax and social contribution
518.221
490.259
518.221
490.259
Equity in results of associates
(157.652)
(225.710)
(149.270)
(219.461)
Variation in Non-controlling interest participation
-
-
(493)
(322)
Expenses related to the stock option plan
32.306
53.630
32.306
53.630
Interest expense
80.199
69.412
80.199
69.412
Provision for losses in accounts receivable
1.156
1.086
1.156
1.086
Variation in financial investments and collateral for transactions
(383.112)
160.964
(456.021)
159.982
Variation in taxes recoverable and prepaid
9.847
37.891
11.797
36.772
Variation in accounts receivable
(11.188)
3.905
(11.491)
3.799
Variation in other receivables
7.179
1.191
8.203
1.684
Variation in prepaid expenses
(3.314)
(8.397)
(3.313)
(8.437)
Variation In judicial deposits
(3.332)
(2.289)
(2.774)
(2.670)
Variation in earnings and rights on securities in custody
4.937
4.247
4.937
4.247
Variation in Suppliers
4.295
(24.737)
4.153
(24.419)
Variation in provision for taxes and contributions payable
(3.506)
7.325
(3.456)
7.833
Variation in provisions for income tax and social contribution
-
(2.586)
(1.922)
(1.090)
Variation in salaries and social charges
14.278
(3.867)
14.497
(4.356)
Variation in other liabilities
37.291
(3.810)
105.558
(16.706)
Variation in provision for contingencies
3.902
(1.470)
3.963
2.654
BM&FBOVESPA
Consolidated
2012
2011
2012
2011
Net cash provided by operating activities
1.321.159
1.685.164
1.327.666
1.684.313
Cash flows from investing activities
Proceeds from sale of property and equipment
2.046
4.983
2.103
5.030
Payment for purchase of property and equipment
(67.377)
(45.504)
(67.557)
(46.070)
Dividends received
124.470
32.907
124.470
32.907
Proceeds from sale of assets not held for use
-
195
-
195
Capital increase in subsidiaries
-
(1.433)
-
-
Pay of softwares and projects
(191.815)
(168.582)
(191.815)
(168.582)
Net cash used in investing activities
(132.676)
(177.434)
(132.799)
(176.520)
Cash flows from financing activities
Disposal of treasury shares - stock options exercised
24.404
17.024
24.404
17.024
Repurchase of shares
(16.303)
(606.888)
(16.303)
(606.888)
Changes in borrowings
-
(857)
-
(857)
Interest payed
(75.723)
(67.819)
(75.723)
(67.819)
Payment of dividends/ interest on own capital
(1.148.251)
(888.622)
(1.148.251)
(888.622)
Net cash used in financing activities
(1.215.873)
(1.547.162)
(1.215.873)
(1.547.162)
Net decrease in cash and cash equivalents
(27.390)
(39.432)
(21.006)
(39.369)
Cash and cash equivalents at the beginning of the year
63.716
103.148
64.648
104.017
Cash and cash equivalents at the end of the year
36.326
63.716
43.642
64.648
92
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Financial StatementS
BM&FBOVESPA
Consolidated
2012
2011
2012
2011
1 - Revenues
2.256.736
2.082.106 2.289.023 2.115.983
Trading and/or settlement system
1.899.881
1.724.947 1.899.881 1.724.947
Other operating revenues
356.855
357.159 389.142 391.036
2 ­ Goods and services acquired from third parties
260.137
358.320 266.530 368.201
Expenses (a)
260.137
358.320 266.530 368.201
3 ­ Gross value added (1-2)
1.996.599
1.723.786 2.022.493 1.747.782
4 - Retentions
91.944
73.428 93.742 75.208
Depreciation and amortization
91.944
73.428 93.742 75.208
5 ­ Net value added produced (3-4)
1.904.655
1.650.358 1.928.751 1.672.574
6 ­ Value added transferred from others
451.943
578.667 446.487 577.181
Equity in results of investees
157.652
225.710 149.270 219.461
Finance income
294.291
352.957 297.217 357.720
7 ­ Total value added to be distributed (5+6)
2.356.598
2.229.025 2.375.238 2.249.755
8 - Distribution of value added
2.356.598
2.229.025 2.375.238 2.249.755
Personnel and payroll charges
341.957
339.728 353.880 351.608
Board and committee members' compensation
6.634
6.262 6.634 6.262
Income tax,rates and contributions (b)
Federal
817.538
736.463 822.993 742.622
Municipal
28.148
23.154 29.109 23.743
Finance costs
88.031
75.419 88.366 76.991
Interest on own capital and dividends
1.074.290
685.546 1.074.290 685.546
Profit retained
-
362.453
- 362.453
Non-controlling interest
-
- (34) 530
Statement of Value Added - Supplementary Information
Period ended December 31, 2012
(In thousands of reais)
(a) Operating expenses (excludes personnel, board compensation, depreciation and taxes and fees)
(b) Including: taxes and rates, PIS, COFINS, ISS and income tax and social contribution (current and deferred).
94
95
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notes to the financial statements
at December 31, 2012
(All amounts in thousands of reais, unless
otherwise stated)
Notes to the
Financial
Statements
1. Operations
BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros (BM&FBOVESPA) is a pub-
licly- traded corporation whose objective is to carry out or invest in companies en-
gaged in, the following activities:
· Management of organized securities markets, promoting for the organization, op-
eration and development of free and open markets for the trading of any types of
securities or contracts, that have as reference or objective financial assets, indices,
indicators, rates, goods, currencies, energy, transportation, commodities and other
assets or rights directly or indirectly related to thereto, for spot or future settlement;
· Maintenance of appropriate environments or systems for carrying out purchases,
sales, auctions and special operations involving securities, notes, rights and assets,
in the stock exchange market and in the organized over-the-counter market;
· Rendering services of registration, clearing and settlement, both physical and fi-
nancial, internally or through 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 applicable legislation and its own regulations;
· Rendering services of central depository and custody of fungible and 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 BM&FBOVESPA and the participants in the
markets directly or indirectly managed by it;
· Providing technical, administrative and managerial support for market develop-
ment, 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 related activities authorized by the Brazilian Securi-
ties 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 pertinent
regulations.
RELATÓRIO ANUAL
20
12
ANNUAL REPORT
20
12
RELATÓRIO ANUAL
20
12
ANNUAL REPORT
20
12
RELATÓRIO ANUAL
20
12
96
97
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notes to the financial statements
BM&FBOVESPA organizes, develops and provides for the operation of free and open securities markets, for
spot and future settlement. Its activities are carried out 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).
BM&FBOVESPA develops technology solutions and maintains high performance systems, providing its cus-
tomers with security, agility, innovation and cost effectiveness. The success of its activities depends on the
ongoing improvement, enhancement and integration of its trading and settlement platforms and its ability
to develop and license leading-edge technologies required for the good performance of its operations.
The subsidiary Bolsa Brasileira de Mercadorias is engaged in the registration and settlement of spot, forward
and options transactions involving commodities, assets and services for physical delivery, as well as securi-
ties representing these products, in the primary and secondary markets.
With the objective of responding to the needs of customers and the specific requirements of the market, 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 margin for transactions.
The subsidiaries BM&FBOVESPA UK Ltd. located in London and BM&F USA Inc., located in the city of New York
(USA), and a representative office in Shanghai (China) represent BM&FBOVESPA abroad through relationships
with other exchanges and regulators, as well as assisting in the procurement of new clients for the market.
2. Preparation and Presentation of the financial information
This financial statement was approved by the Board of Directors of BM&FBOVESPA on February 19, 2013.
The financial statements were prepared and are presented in accordance with accounting practices adopt-
ed in Brazil, in compliance with the provisions contained in the Brazilian Corporate Law, and embody the
changes introduced through the Laws 11,638/07 and 11,941/09, complemented by the pronouncements,
interpretations and guidelines of Accounting Pronouncements Committee ­ CPC, approved by resolutions
of the Federal Accounting Council ­ CFC and rules of Brazilian Securities Commission ­ CVM.
The preparation of financial statements information requires the use of critical accounting estimates
and also the exercise of judgment by management in the process of applying the accounting policies of
BM&FBOVESPA. Those areas that require higher degrees of judgment and have greater complexity, as well as
areas where assumptions and estimates are significant to the consolidated financial statements information
are disclosed in Note 3 (x).
(a) Consolidated financial statements information
The consolidated financial statements information are prepared and presented in accordance with account-
ing practices adopted in Brazil, including the pronouncements, interpretations and guidelines of the Ac-
counting Pronouncements Committee (CPCs) and in accordance with International Financial Reporting
Standards ­ IFRS, issued by the International Accounting Standards Board - IASB
The consolidated financial statements information include the balances of BM&FBOVESPA and its subsidiar-
ies, as well as special purpose entities comprising investment funds, as follows:
Ownership %
Subsidiaries and controlled entities
Banco BM&FBOVESPA de Liquidação e Custódia S.A. ("Banco BM&FBOVESPA")
100.00
Bolsa Brasileira de Mercadorias
51.39
Bolsa de Valores do Rio de Janeiro ­ BVRJ ("BVRJ")
86.95
BM&F USA Inc.
100.00
BM&FBOVESPA UK Ltd.
100.00
Investment funds:
Bradesco Fundo de Investimento Multimercado Letters
BB Pau Brasil Fundo de Investimento Renda Fixa
HSBC Fundo de Investimento Renda Fixa Longo Prazo Eucalipto
Araucária Renda Fixa Fundo de Investimento
(b) Unconsolidated financial statements information
The unconsolidated financial statements information of the BM&FBOVESPA are prepared in accordance with
accounting practices adopted in Brazil, as issued by the Accounting Pronouncements Committee (CPC) and
are published together with the consolidated financial statements information.
In the unconsolidated financial statements information (BM&FBOVESPA), subsidiaries using recorded on the
equity method. The same adjustments are made both in the individual and consolidated financial state-
ments information to achieve the same result and net assets attributable to controlling shareholders.
3. Significant Accounting Practices
a. Consolidation
The following accounting policies are applied in preparing the consolidated financial statements infor-
mation.

Subsidiaries
Subsidiaries are all entities over which BM&FBOVESPA has the power to govern the financial and op-
erating policies, generally accompanied by a participation of more than half of the voting rights (vot-
ing capital). The existence and effect of potential voting rights currently exercisable or convertible are
considered when assessing whether BM&FBOVESPA controls another entity. Subsidiaries are fully con-
solidated from the date on which control is transferred to BM&FBOVESPA. Consolidation is discontinued
from the date on which control ends.
Intercompany transactions, balances and unrealized gains on transactions between group companies
are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of impair-
ment of the assets transferred. The accounting policies of subsidiaries are altered where necessary to
ensure consistency with the practices adopted by BM&FBOVESPA.
98
99
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notes to the financial statements
Associates
Associates are all entities over which BM&FBOVESPA has significant influence but not control. Invest-
ments in associates are recorded on the equity method and are initially recognized at the cost of each
purchase. BM&FBOVESPA's investment in associates includes goodwill identified on acquisition, net of
any accumulated impairment.
The share of BM&FBOVESPA in the post-acquisition profits or losses of associates is recognized in the state-
ment of income and its share in post-acquisition changes in other comprehensive income recognized in
other comprehensive income. The cumulative post-acquisition changes are adjusted against the carrying
value of the investment. When the share of BM&FBOVESPA in the losses of an associate equals or exceeds
its investment in the associate, including any other receivables, BM&FBOVESPA does not recognize further
losses, unless it has incurred obligations or made payments on behalf of the associate.
Unrealized gains arising from transactions between BM&FBOVESPA and its associates are eliminated to
the extent of the participation of BM&FBOVESPA in the associates. Unrealized losses are also eliminated
unless the transaction provides evidence of impairment of the assets transferred. The accounting poli-
cies of associates have been altered where necessary to ensure consistency with the practices adopted
by BM&FBOVESPA.
b. Revenue recognition
Revenues from the trading and settlement systems are recognized upon the completion of the transac-
tions or the provision of the service, under the accrual method of accounting. The amounts received as
annual fees, as in the cases of listing of securities and certain contracts for sale of market information, are
recognized pro rata monthly over the contractual term.
c. Cash and cash equivalents
The balances of cash and cash equivalents for cash flow statement purposes comprise cash and bank
deposits.
d. Financial instruments
(i) Classification and measurement
BM&FBOVESPA classifies its financial assets in the following categories: at fair value through profit or
loss, loans and receivables 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.
Considering the nature and objective of BM&FBOVESPA and its financial investment portfolio, these are
classified as financial assets at fair value through profit or loss, designated at inception.
Financial assets measured at fair value through profit or loss
Financial assets measured at fair value through profit or loss are financial assets held for active and
frequent trading (derivative financial instruments classified as current assets) or assets designated by
the entity, at inception as measured at fair value through profit or loss at inception (other financial in-
struments (Note 4)). Gains or losses arising from the changes in fair value of financial instruments 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 loans and receivables of BM&FBOVESPA comprise customer receiv-
ables. Loans and receivables are recorded at amortized cost, based on the effective interest rate method,
reduced by any impairment losses.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives which are classified in this category or not classi-
fied in any other. Available-for-sale financial assets are recorded at fair value. Interest on available-for-
sale securities, calculated based on the effective interest rate method, is recognized in the statement of
income as finance income. The amount relating to the changes in fair value is recorded in comprehen-
sive income and is transferred to the statement of income when the asset is sold or becomes impaired.
Management periodically monitors its outstanding positions and possible risks of impairment of finan-
cial assets. Therefore, based on the nature of these assets (mostly highly liquid government securities),
BM&FBOVESPA has no significant impairment history.
The carrying amount of financial assets is reduced directly for impairment. Subsequent recoveries of
amounts previously written off are recognized in results.
Fair value
Fair values of investments with public quotations are based on current market prices. For financial assets
without an active market or public quotation, BM&FBOVESPA determines fair value through valuation
techniques.
(ii) Derivative instruments
Initially, derivatives are recognized at fair value on the date the derivative agreement is signed and, sub-
sequently, they are measured at fair value, with the changes in fair value recognized in the statement of
income, except when the derivative is recorded as a net investment hedge.
(iii) Hedge of net investments
Any gain or loss on the hedging instrument related to the effective portion of the hedge is recognized
in other comprehensive income. The gain or loss related to the ineffective portion is recognized imme-
diately in the statement of income.
Gains and losses accumulated in other comprehensive income are transferred to the income statement
when the hedged foreign operation is partially disposed of or sold.
100
101
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notes to the financial statements
(iv) Hedge effectiveness analysis
BM&FBOVESPA adopts the Dollar offset method as the methodology for retrospective effectiveness test
on a cumulative and spot basis. For prospective analysis, BM&FBOVESPA uses stress scenarios applied to
the range of 80% to 125%.
e. Accounts receivable, other receivables and allowance for doubtful accounts
Accounts receivable are amounts receivable for fees and services in the normal course of activities of
BM&FBOVESPA. If the collection is expected in one year or less (or another period that meets the normal
cycle of BM&FBOVESPA), the accounts receivable are classified as current assets. Otherwise, they are
presented as noncurrent assets.
Receivables are initially recognized at fair value and adjusted by a provision if necessary.
f. Prepaid expenses
Prepaid expenses mainly relate to software maintenance contracts and insurance premiums, and are
amortized over the life of the contracts.
g. Non-current available for sale assets
Non-current assets are classified as available for sale when their carrying amount is recoverable, mainly
through a sale, and when this sale is practically certain. These assets are measured at the lower of the
carrying amount and the fair value less costs to sell.
h. Intangible assets
Goodwill
Goodwill represents the positive difference between the amount paid and / or payable for the acquisi-
tion of a business and the net fair value of assets and liabilities of the acquiree. Goodwill on acquisitions
is recorded in "intangible assets". If the difference is negative, representing a negative goodwill, it is rec-
ognized as a gain in income at the date of acquisition. Goodwill is tested annually for impairment, and
indications of possible impairment are reassessed in shorter periods. Goodwill is stated cost less accu-
mulated impairment losses. Recognized impairment losses on goodwill are not subsequently reversed.
Goodwill is allocated to Cash Generating Units (CGUs) for purposes of impairment testing. The allocation
is made to the CGUs that should benefit from the business combination in which the goodwill arose.
Software and projects
Software licenses acquired are capitalized and amortized over their estimated useful life, at the rates
mentioned in Note 9.
Costs of software development or maintenance are expensed as incurred. Expenditures directly associ-
ated with the development of identifiable and unique software, controlled by BM&FBOVESPA and which
will probably generate economic benefits greater than the costs for more than one year, are recognized
as intangible assets.
Amortization expense is recognized in the statement of income unless it is included in the carrying
amount of another asset. In such cases, amortization of intangible assets used for development activi-
ties is included as part of the cost of the other intangible asset.
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.
i. Step acquisition of associate
The cost of an associate acquired in steps is measured as the total of the amounts paid in each transaction.

The gains or losses previously recognized in comprehensive income, while the investment was classified
as available for sale, are reversed against the investment account, which is restated to cost.
Goodwill is calculated at each step of acquisition as the difference between the acquisition cost and the
fair value of net assets in proportion to the interest acquired.
The total book value of the investment is tested for impairment, by comparing the carrying value with its
recoverable amount (proceeds from sale, net of selling cost or value in use, whichever is greater) when
the requirements of the CPC 38/IAS 39 indicate a potential impairment.
j. Property and equipment
Recorded at cost of acquisition or construction, less accumulated depreciation. Depreciation is calculat-
ed on the straight-line method and takes into consideration the estimated useful lives of the assets, and
their residual value. At the end of each year, the residual values and useful lives of assets are reviewed
and adjusted if necessary.
Subsequent costs are included in the carrying amount or recognized as a separate asset, as appropriate,
only when it is probable that future economic benefits will be obtained and the cost of the item can
be measured reliably. All other repairs and maintenance are recorded in the statement of income, as
incurred.
Depreciation expense is recognized in the statement of income unless it is included in the carrying
amount of another asset. Depreciation of fixed assets used for development activities is included as part
of the cost of the related intangible asset.
k. 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 CPC 25/IAS 37.
·
Contingent assets - These are not recognized in the financial statements information, except when
management has full control over their realization or when there are secured guarantees or favor-
able court decisions to which no further appeals are applicable, such that the gain is virtually cer-
tain. Contingent assets with realization considered probable, where applicable, are only disclosed in
the financial statements information.
102
103
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notes to the financial statements
·
Contingent liabilities - These are recognized taking into account: the opinion of legal advisors; the
nature of the lawsuits; similarity with previous cases and prior court decisions recognized whenever
the loss is evaluated as probable, an outflow of resources for the settlement of the obligations, and
the amounts 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
information, and those classified as remote are neither recognized nor disclosed.
·
Legal obligations ­ These result from tax lawsuits in which BM&FBOVESPA is challenging the valid-
ity or constitutionality of certain taxes and charges, recognized at full amount under discussion.
·
Other provisions - Provisions are recognized when BM&FBOVESPA has a present obligation, legal
or constructive, as a result of past events, it is probable that an outflow of resources will be required
to settle the obligation, and a reliable estimate of the amount can be made.
l. Judicial deposits
Judicial deposits are related to tax, civil or labor contingencies and are adjusted by inflation rate and
presented in non-current assets.
m. Collateral for transactions
Comprises amounts received from market participants as collateral for default or insolvency. Amounts
received in cash are recorded as liabilities and other collateral are managed off-balance. Both types of
collateral received are not subject to interest or any other charges.
n. Other assets and liabilities
These are stated at their known and realizable/settlement amounts plus, where applicable, related earn-
ings and charges and monetary and/or exchange rate variations up to the balance sheet date.
o. Impairment of assets
Assets that have an indefinite life, such as goodwill, are not subject to amortization and are tested annu-
ally for impairment, and evidences of impairment are reviewed in shorter periods. The assets subject to
amortization are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying value may not be recoverable. An impairment loss is recognized at the amount by which
the asset's carrying amount exceeds its recoverable amount, and indications of possible impairment
are reassessed in shorter periods. This latter amount is the higher of the fair value of an asset less selling
costs and the value in use.
For purposes of evaluation of impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows (Cash Generating Units (CGU). The non-financial assets, except good-
will, which have suffered impairment are reviewed subsequently to analyze a possible reversal of the
impairment at the balance sheet date.
p. Leases
Leases of property and equipment in which BM&FBOVESPA substantially assumes all ownership risks
and benefits are classified as finance leases. These finance 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 over the shorter of the lease or their
useful lives.
A lease in which a significant portion of the ownership risks and benefits remains with the lessor is clas-
sified as an operating lease. Operating lease payments (net of all incentives received from the lessor) are
charged directly to profit or loss.
q. Employee benefits
(i) Pension obligations
BM&FBOVESPA maintains a defined contribution retirement plan, with voluntary participation available
to all employees. The Company has no obligations to make additional payments as a sponsor. The regu-
lar contributions are included in the personnel costs in the period when they are owed.
(ii) Share-based remuneration (stock options)
BM&FBOVESPA maintains a long-term remuneration plan, structured by options granted to purchase the
Company´s shares under the Stock Option Plan. The objective is to give to the employees of BM&FBOVESPA
and its subsidiaries the opportunity to become shareholders of BM&FBOVESPA, obtaining a greater align-
ment between their interests and the shareholders' interests as well as allow BM&FBOVESPA and its sub-
sidiaries to attract and keep their management and employees. The fair value of options granted is recog-
nized as an expense during the vesting period (the period during which the specific vesting conditions
must be met), which typically is the period in which the service is provided. At the balance sheet date,
BM&FBOVESPA reviews its estimates of the number of options that will vest based on the established con-
ditions. BM&FBOVESPA recognizes the impact of any changes to the original estimates, if any, in the in-
come statement, with a counter-entry to a capital reserve in shareholders' equity.
(iii) Profit sharing
BM&FBOVESPA has semi-annual variable remuneration, organized and paid in cash through the Profit
Sharing Program (PLR). The program defines the potential multiple of monthly salary, based on individ-
ual performance indicators, which consider factors specific to each function (job level), and indicators
of the overall performance of BM&FBOVESPA, aiming to align the remuneration of employees with the
short and medium-term results of the Company. The provision for the related expense is recognized in
income on an accrual basis.
(iv) Other post-employment obligations
BM&FBOVESPA offers post-retirement healthcare benefits to employees who have acquired this right
until May 2009. The right to these benefits is conditional upon continued employment until the retire-
ment age and the completion of a minimum service period. The expected costs of these benefits are
accumulated over the period of employment or the expected utilization of the benefit, using actuarial
calculations which consider life expectancy of the group in question, increase in costs due to age and
medical inflation, inflation and discount rate. Deducted from these costs are the contributions that par-
ticipants make according to the specific rule of the Health Care Plan. The actuarial gains and losses calcu-
lated on the extension of medical care to retirees are recognized in income in accordance with the rules
104
105
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notes to the financial statements
of IAS 19 and CPC 33 - Employee Benefits, based on actuarial calculation prepared by an independent
actuary, according to Note 18 (c). These obligations are measured, annually, by qualified independent
actuaries.
r. Borrowings
Borrowings are initially recognized at fair value, upon receipt of the funds, net of transaction costs. Sub-
sequently, they are presented at amortized cost. Any difference between the funds raised (net of trans-
action costs) and the amount repayable is recognized in the income statement over the period of the
loans, using the effective interest rate method.
s. Foreign currency translation
The items included in financial statements information for each of the consolidated companies of
BM&FBOVESPA are measured using the currency of the primary economic environment in which the
entity operates ("functional currency"). The financial statements information are presented in Brazilian
reais, which is the functional currency of BM&FBOVESPA.
Transactions in foreign currencies are translated into Brazilian Reais using the exchange rates prevailing
on the transaction dates. The foreign exchange gains and losses arising from the settlement of these
transactions and of the translation, at the exchange rates at the end of period, of assets and liabilities in
foreign currencies, are recognized in the income statement, except when deferred in equity relating to
a hedge of a net foreign investment.
Exchange differences on the net investments in foreign operations, which have a functional currency
different from that of BM&FBOVESPA are recorded under "Valuation Adjustments" in other comprehen-
sive income of BM&FBOVESPA, and are only taken to the statement of income when the investment is
sold or written off. For equity method, unrealized gains in subsidiaries and affiliates are eliminated.
t. Taxes
BM&FBOVESPA is a for-profit business corporation and accordingly its results are subject to certain taxes
and contributions.
(i) Current and deferred income tax and social contribution
Current and deferred income tax and social contribution are calculated at 15% with an additional 10%
on taxable income (surtax) which exceeds R$240 for income tax and 9% for social contribution and rec-
ognizes that compensation for tax losses is limited to 30% of net income.
Income tax and social contribution expense of the period comprise current and deferred taxes. Taxes on
profit are recognized in the income statement, except to the extent that they relate to items recognized
directly in equity or other comprehensive income. In this case, the tax is also recognized in equity or
other comprehensive income.
Income tax and social contribution deferred taxes are calculated on tax losses for income tax, the nega-
tive basis of social contribution and the r temporary differences between the bases of calculation of tax
assets and liabilities and the carrying amounts in the financial statements information.
Deferred tax assets are recognized to the extent that it is probable sufficient future taxable profit will
be available to offset temporary differences and/or tax losses, considering projections of future income
prepared based on internal assumptions and future economic scenarios which may, accordingly, not
materialize as expected.
Deferred tax liabilities are recognized in relation to all temporary differences that will result in amounts
to be added in the calculation of taxable income for future years, when the value of the asset or liability
is recovered or settled.
The deferred income tax and social contribution are determined using tax rates (and tax laws) enacted,
or substantively enacted, at the balance sheet date, and should be applied when the deferred tax asset
is realized or when the deferred tax liability is settled.
The amounts of Income tax and social contribution assets and liabilities are offset only when there is a le-
gally enforceable right to offset current tax assets against current tax liabilities and/or when the income
tax and social contribution assets and liabilities relate to the income tax and social contribution levied
by the same tax authority on the taxable entity or different taxable entities where there is an intention
to settle the balances on a net basis.
(ii) Other Taxes
The other taxes charged over trading, clearing and settlement fees and other services were calculated
at the rates of 1.65% for PIS and 7.60% for Cofins, and are recorded as an adjustment to revenue in the
income statement.
Banco BM&FBOVESPA calculates the contributions to PIS and to COFINS at the rates of 0.65% and 4%,
respectively, and CSLL at 15%.
The subsidiaries Bolsa Brasileira de Mercadorias and BVRJ are not-for-profit entities and pay contribution
to PIS at the rate of 1% on payroll.
BM&FBOVESPA and its subsidiaries pay ISS over the services rendered at rates ranging from 2% to 5%
depending on the nature of the service.
u. Earnings per share
For purposes of disclosure of earnings per share, basic earnings per share is calculated by dividing the
profit attributable to shareholders of BM&FBOVESPA by the average number of outstanding during the
period. Diluted earnings per share is calculated similarly, except that the quantity of outstanding shares
is adjusted to reflect the outstanding shares with potentially dilutive effects, under the stock option plan
(Note 15(h)).
v. Distribution of dividends and interest on capital
The distribution of dividends and interest on capital to shareholders of BM&FBOVESPA is recognized as
a liability in the financial statements at year end, based on the bylaws. Any amount above the minimum
is accrued only on the date it is approved by the shareholders at a General Meeting. The tax benefit over
the interest on own capital is recorded in the income statement.
106
107
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notes to the financial statements
w. Segment information presentation
Operating segments are presented in a manner consistent with the internal reports provided to the Ex-
ecutive Board, which is responsible for the main operational and strategic decisions of BM&FBOVESPA.
x. Critical accounting estimates and judgments
i. Equity method of accounting
BM&FBOVESPA applies the equity method for its investments when it has the ability to exercise sig-
nificant influence. The judgment of BM&FBOVESPA regarding the level of influence over the investment
takes into account key factors such as the percentage of interest, representation on the Board of Direc-
tors, participation in defining policies and business strategies and material transactions between the
companies. With respect to the investment in CME Group, its financial statements are originally prepared
in accordance with the accounting principles generally accepted in the United States (USGAAP) and are
adjusted to the Brazilian accounting practices before applying the equity method.
ii. Impairment
BM&FBOVESPA performs, annually or when required, tests of impairment, specifically related to good-
will and other non-financial/non-current assets, according to the accounting policy described in Note
3(o). The sensitivity analyzis are presented in note 7.
iii. Classification of financial instruments
BM&FBOVESPA classifies in financial assets in the categories of (i) measured at fair value through profit
or loss and (ii) available for sale. The classification depends on the purpose for which the financial assets
were acquired. Management determines the classification of financial assets at initial recognition. The
basis for the original classification of financial instruments is described in Note 3(d).
iv. Stock option plan
BM&FBOVESPA offers a stock option plan to its management and employees and service providers. The
fair value of these options is recognized as an expense over the period in which the right is acquired.
Management reviews the estimated amount of options that will achieve the conditions for vesting and
subsequently recognizes the impact of changes in initial estimates, if any, in the statement of income,
and in equity, as shown in Note 3(q).
v. Post-retirement health care
The obligations for the health care plan depend on actuarial calculations that use a series of assump-
tions, which are disclosed in Note 18(c). Changes in assumptions could affect the carrying value of the
obligations for the health care plan.
4. Cash and Cash Equivalents and Financial Investments
a. Cash and cash equivalents
BM&FBOVESPA
Details
2012
2011
Banks - deposits in domestic currency
62
113
Banks - deposits in foreign currency
36,264
63,603
Total
36,326
63,716
COnSOLIDATED
Details
2012
2011
Banks - deposits in domestic currency
305
363
Banks - deposits in foreign currency
43,337
64,285
Total
43,642
64,648
Cash and cash equivalents are held with top tier financial institutions in Brazil or abroad. Deposits in
foreign currency are primarily in U.S. dollars.
b. Financial Investments
The breakdown of financial investments by category, nature and time to maturity is as follows:
BM&FBOVESPA
Details
Without
maturity
Up to 3
months
More than 3 and
up to 12 months
More than 12 months
and up to 5 years
Morethan 5
years
2012
2011
Financial assets
measured at fair
value through
profit or loss
Financial
investment
funds (1)
2,581,259
-
-
-
- 2,581,259 3,025,217
Interest account -
Foreign deposits
34,457
-
-
-
- 34,457 1,448
Securities purchased
under resell
agreements (2)
-
-
-
-
- - 2,423
Federal Government
Securities
Financial Treasury
Bills
- 93,699
283,903
371,137
27 748,766 408,508
National
Treasury Bills
-
-
88,531
18
- 88,549 -
National Treasury
Notes
-
-
-
49
-
49 -
Other investments (3) 11,012
686
-
-
- 11,698 10,857
108
109
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notes to the financial statements
BM&FBOVESPA
Details
Without
maturity
Up to 3
months
More than 3 and
up to 12 months
More than 12 months
and up to 5 years
Morethan 5
years
2012
2011
Total financial
investments
2,626,728
94,385
372,434
371,204
27 3,464,778 3,448,453
Short term
3,093,547
3,080,853
Long term
371,231
367,600
COnSOLIDATED
Details
Without
maturity
Up to 3
months
More than 3
and up to 12
months
More than 12
months and up
to 5 years
More than
5 years
2012
2011
Financial assets
measured at fair
value through
profit or loss
Financial investment
funds (4)
214,813
-
-
-
-
214,813
207,890
Interest account -
Foreign deposits
34,457
-
-
-
-
34,457
2,404
Securities purchased
under resell
agreements (2)
- 2,207,606
27,973
-
-
2,235,579
1,810,960
Federal Government
Securities
Financial Treasury
Bills
- 131,676
469,039
519,565
19,161
1,139,441
1,538,559
National Treasury
Bills
- 1,500
88,531
22,818
-
112,849
85,812
National Treasury
Notes
-
-
-
49
-
49
-
Other investments (3)
11,012
1,679
-
-
-
12,691
11,394
Financial assets
available for sale
Federal Government
Securities
Financial Treasury Bills
-
12,121
32,904
10,852
-
55,877
58,370
National Treasury Bills
-
50
-
898
-
948
2,374
National Treasury
Notes
-
-
-
293
-
293
-
-
12,171
32,904
12,043
-
57,118
60,744
Total financial
investments
260,282
2,354,632
618,447
554,475
19,161
3,806,997
3,717,763
Short term
3,233,361
2,128,705
Long term
573,636
1,589,058
(1) Refers to investments in financial investment funds, which the portfolios mainly comprise investments in federal government
bonds and repurchased agreements that have the CDI as their profitability benchmark. The consolidated balances of invest-
ment funds are presented according to the nature and maturity of the portfolio in proportion of the net assets.
The net assets of the investment funds included in the consolidation are: (i) Bradesco FI Multimercado Letters - R$1,820,865
(2011 - R$2,245,045); (ii) BB Pau Brasil FI Renda Fixa ­ R$ 201,652 (2011 - R$176,081); (iii) HSBC FI Renda Fixa Longo Prazo Euc-
alipto ­ R$ 106,947 (2011 - R$100,284); (iv) Araucária Renda Fixa FI ­ R$ 235,954 (2011 - R$215,312); (v) Megainvest FICFI Renda
Fixa ­ R$256,145 at December 31, 2011.
(2) Issued by first-tier banks and backed by Brazilian government bonds;
(3) The Refers mainly to investments in gold.
(4) The primary non exclusive investment fund is Bradesco Empresas FICFI Referenciado DI Federal, in the amount of R$ 214,783
(2011 - R$ 207,890).
The government bonds are held in custody at the Special System for Settlement and Custody (SELIC), the
units of investment funds are held in custody with their respective managers and the shares are in the cus-
tody of BM&FBOVESPA's Equity and Corporate Debt Clearinghouse.
There was no reclassification of financial instruments between categories during the year.
Fair value
BM&FBOVESPA applies CPC40/IFRS7 for financial instruments measured at fair value, which requires disclo-
sure of fair value measurements by level for the following hierarchy:
Quoted prices (unadjusted) in active markets for similar assets or liabilities (level 1);
Derived from quoted prices included in Level 1, either directly (as prices) or indirectly (level 2);
Valuations that are not based on market data (unobservable) (level 3);
The fair value of the main financial instruments is calculated as follows:
Investment funds ­ based on the value of the unit determined on the last business day prior to the balance
sheet date, as disclosed by the corresponding fund Manager.
Federal government securities ­ based on the amounts and prices disclosed by the Brazilian Association of
Financial and Capital Market Institutions (ANBIMA) or, when these are unavailable, on the price defined by
management which best reflects the sales value, determined based on information obtained from other
institutions.
Securities purchased under agreements to resell ­ are recorded daily in accordance with the market price of
the security.
Financial assets at fair value through profit and loss and derivative financial instruments are classified as
level 1, ie, have quoted prices (unadjusted) in active markets.
During the three months period there was no impairment recorded on the financial assets available for sale.
l
l
l
260,282 2,342,461
585,543
542,432
19,161
3,749,879
3,657,019
110
111
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notes to the financial statements
Derivative financial instruments
Derivative financial instruments comprise future interest rate contracts (DI1) and are stated at their market
values, These contracts are included in the fund portfolios which were consolidated (Note 2(a)) and are used
to cover fixed interest rate exposures, swapping fixed interest rate for floating (CDI). Even though these
derivatives are designed to provide protection, management has opted not to apply hedge accounting in
respect to them.
The net result between the derivative transactions and the related financial instrument refers to the short
position in future interest rate contracts, with market value of R$ 5,121 (2011 - R$394), and are presented as
part of the finance result ­ Finance income/(expenses), The amounts related to the positive/negative daily
adjustments are presented in Other receivables/liabilities, respectively.
The DI1 contracts have the same maturity dates as the fixed interest rate contracts to which they relate.
Financial risk management policy
BM&FBOVESPA´s policy for cash investments favors alternatives with very low risk, highly liquid and with
sovereign risk, whose overall performance is tied to the Selic rate / CDI, resulting in a significant proportion
of federal government securities in its portfolio, purchased directly, via repurchase agreements backed by
government bonds and also through exclusive and non-exclusive funds.
Sensitivity analysis
The table below presents the net exposure of all financial instruments (assets and liabilities) by market risk
factors, classified in accordance with its rates:
Exposure to Risk Factors (Consolidated)
2012
2011
Risk factor
Risk
Percentual
Percentual
Floating Interest Rate
Lower CDI rate
95.40%
99.29%
Fixed interest rate
Higher fixed rate
3.59%
0.07%
Foreign exchange
Higher dollar exchange rate
0.68%
0.38%
Gold price
Lower gold price
0.32%
0.26%
Inflation
Lower inflation rate
0.01%
0.00%
100.00%
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 BM&FBOVESPA's transactions.
· Floating-rate position
As a financial investment policy and considering the need for immediate liquidity with the least possible
impact from interest rate fluctuations, BM&FBOVESPA maintains its financial assets and liabilities indexed to
floating interest rates.
We present in the table below the possible impacts in the profit or loss of a change of 25% and 50% from the
probable scenario for the CDI rate, for the next three months.
Effect on profit or loss
Scenario
Scenario
Scenario
Scenario
Scenario
Risk factor
-50%
-25%
Probable
25%
50%
Financial Investments
CDI/Selic
28,452
42,410
56,197
69,817
83,276
Index rates
CDI/Selic
3.47%
5.20%
6.93%
8.67%
10.40%
· Fixed-rate position
Part of BM&FBOVESPA´s financial investments earn fixed interest rates and this results in a net exposure to
such rates. However, in terms of percentage, in view of the amounts involved, the effects on the portfolio are
not considered material.
Exchange rate risk
This arises from the possibility that fluctuations in exchange rates in connection with the acquisition of
services, product sales and financial instruments could have an impact on the related domestic currency
amounts.
In addition to the amounts payable and receivable in foreign currencies, including interest payments on
the senior unsecured notes in the next six month period, BM&FBOVESPA has third-party deposits in foreign
currency to guarantee the settlement of transactions by foreign investors and also own funds in foreign
currency abroad, At December 31, 2012 the net foreign currency exposure amounted to R$26,455 negative
(R$4,938 at December 31, 2011), The effects on the portfolio are not considered material.
Liquidity risk
The following table shows the main financial liabilities of BM&FBOVESPA by maturity, represented in its en-
tirety by non-derivative financial liabilities, on an undiscounted cash flows basis:
Without
maturity
Less than
1 year
From 1 to
2 years
From 2 to
5 years
More than
5 years
Collateral for transactions
1,134,235
Issuance of debt abroad (1)
69,740
69,740
209,410
1,462,325
(1) Values converted into R$ using closing the rate of R$/USD
Credit Risk and capital management
BM&FBOVESPA prefers very low risk investments, where more than 99% of the allocation of assets is linked
to government securities with rating's set by Standard & Poor's and Moody's of "a-" and "Baa2", respectively,
112
113
background image
notes to the financial statements
for long-term issues in local currency and characterized as investment grade, in order to obtain high liquid-
ity and sovereign risk, with overall performance linked to the Brazilian prime rate (interbank interest rate).
The issue of Senior Notes (Note 12) was linked to increasing our participation in CME and the creation of a
strategic partnership between the companies, In addition, it serves as a natural hedge for the USD exposure
generated by the increased investment in CME Group.
5. Accounts Receivable
The breakdown of accounts receivable is as follows:
BM&FBOVESPA
Details
2012
2011
Trading, other fees receivable
13,379
11,068
Annuity
5,323
4,732
Vendors ­ Signal broadcast
11,282
9,385
Trustee and custodial fees
21,588
16,010
Other accounts receivable
10,207
10,181
Provision for doubtful accounts
(6,686)
(6,315)
Total
55,093
45,061
Consolidado
Details
2012
2011
Trading, other fees receivable
14,432
11,850
Annuity
5,323
4,732
Vendors ­ Signal broadcast
11,282
9,385
Trustee and custodial fees
21,588
16,010
Other accounts receivable
10,910
10,852
Provision for doubtful accounts
(6,686)
(6,315)
Total
56,849
46,514
The amounts presented above are primarily denominated in Brazilian reais, approximately 90% is of the re-
ceivables fall due within 90 days, At December 31, 2012, the amounts overdue for more than 90 days totaled
R$ 6,742 (2011 - R$6,838).
The provisioning methodology, as approved by the management, is based on the analysis of the historical
behavior of incurred losses. Therefore, on the overdue amount for defined ranges of days past due, accord-
ing to the historical behavior, an estimated loss percentage has been assigned, which is intended to reflect
incurred losses.
Changes in the provision for impairment are as follows:
BM&FBOVESPA e Consolidado
At December 31, 2010
5,892
Aditions
2,807
Reversals
(1,721)
Write-off
(663)
At December 31, 2011
6,315
Aditions
2,162
Reversals
(1,006)
Write-off
(785)
At December 31, 2012
6,686
6. Other Receivables
Other receivables comprise the following:
BM&FBOVESPA
2012
2011
Current
Advances to employees (1)
1,986
1,572
Amounts receivable - related parties (note 16)
2,272
7,794
Warehouse
-
1,378
Outros
396
747
Total
4,654
11,491
não-circulante
Other
-
555
Total
-
555
Consolidated
2012
2011
Current
Advances to employees
2,026
1,672
Amounts receivable - related parties (note 16)
975
7,169
Warehouse
-
1,378
Foreign Exchange transactions (Banco BM&FBOVESPA)
737
682
Other
403
866
Total
4,141
11,767
non-current
Brokers in liquidation (1)
2,200
2,200
Other
-
555
Total
2,200
2,755
Balance of accounts receivable from brokers in judicial liquidation, which considers the guarantee represented by the equity
certificates pledged by the debtor.
114
115
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notes to the financial statements
7.
Investments
a. Investments in subsidiaries and associates
Investments in subsidiaries and associates comprise the following:
Investees
Adjusted
equity
Total
shares
Adjusted net
income
%
Ownership
Investment
2012
Investment
2011
Equity
2012
Equity
2011
Subsidiaries
Banco BM&FBOVESPA de Liquidação e Custódia S.A.
55,143
24,000
5,494
100
55,143
49,628
5,494
4,693
Bolsa Brasileira de Mercadorias
15,721
403
(1,247)
51,39
8,079
8,720
(641)
709
Bolsa de Valores do Rio de Janeiro - BVRJ
63,771
115
3,899
86,95
55,449
52,059
3,390
1,071
BM&F USA Inc.
937
1,000
200
100
937
646
200
(527)
BM&FBOVESPA UK Ltd.
1,079
1,000
(61)
100
1,079
1,016
(61)
303
120,687
112,069
8,382
6,249
Affiliate
CME Group, Inc. (1)
43,781,783
331,835
3,234,952
5,1
2,893,632
2,673,386
89,074
156,474
Income tax recoverable (2)
-
-
60,196
62,987
2,893,632
2,673,386
149,270
219,461
Total
3,014,319
2,785,455
157,652
225,710
Summary of key financial information of subsidiaries and associates:
Details
Banco
BM&FBOVESPA
Bolsa Brasileira de
Mercadorias
Bolsa de Valores do Rio
de Janeiro - BVRJ
BM&F USA
Inc.
BM&FBOVESPA
UK Ltd.
CME Group,
Inc.
Assets
304,908
18,533
69,328
972
1,446
79,414,906
Liabilities
249,765
2,811
5,557
35
366
35,470,051
Revenue
10,645
2,523
4,004
1,850
1,285
5,955,985
Changes in Investments:
Subsidiaries
Affiliate
Investiments
Banco
BM&FBOVESPA
Bolsa Brasileira de
Mercadorias
Bolsa de Valores do Rio
de Janeiro - BVRJ
BM&F USA
Inc.
BM&FBOVESPA
UK Ltd.
CME Group,
Inc.
Total
At December 31, 2010
44.935
8.011
51.427
348
-
2.248.325
2.353.046
Equity
4,693
709
1,071
(527)
303
156,474
162,723
Exchange rate (3)
-
-
-
74
31
297,173
297,278
Reflex effect on affiliate
-
-
-
-
-
4,321
4,321
116
117
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notes to the financial statements
Subsidiaries
Affiliate
Investiments
Banco
BM&FBOVESPA
Bolsa Brasileira de
Mercadorias
Bolsa de Valores do Rio
de Janeiro - BVRJ
BM&F USA
Inc.
BM&FBOVESPA
UK Ltd.
CME Group,
Inc.
Total
Realization of the Revaluation
Reserve
-
-
(439)
-
-
-
(439)
Capital Increase
-
-
-
751
682
-
1,433
Dividends Received
-
-
-
-
-
(32,907)
(32,907)
At December 31, 2011
49,628
8,720
52,059
646
1,016
2,673,386
2,785,455
Equity
5,494
(641)
3,390
200
(61)
89,074
97,456
Exchange rate (3)
-
-
-
91
124
240,462
240,677
Reflex effect on affiliate
21
-
-
-
-
15,180
15,201
Dividends Received
-
-
-
-
-
(124,470)
(124,470)
At December 31, 2012
55,143
8,079
55,449
937
1,079
2,893,632
3,014,319
(1) In July 2010, with the acquisition of a 3,2% interest in CME Group for the amount of R$1,075,119, increasing the ownership
interest from 1,8% to 5%, BM&FBOVESPA began to recognize the investment on the equity method in accordance with CPC
18/IAS 28, because management understands that the qualitative aspects of the relationship between the two companies
indicate the existence of significant influence of BM&FBOVESPA over CME Group.
The fair value of the investment at December 31, 2012, based on the market price of shares, is R$1,757,944. Considering that
the market value of CME is lower than the carrying value, the management of BM&FBOVESPA performed an impairment test
for November 30, 2012. The result of the test did not reveal the need for recognition of impairment on the investment in CME
Group.
For the impairment test, the management of BM&FBOVESPA used the discounted cash flow method. Based on expectations
for growth in markets where CME operates, the projected cash flow considered revenues and expenses related to its activities
in nominal US Dollars.
The operational flows were projected for period of December 2012 to December 2017. The cash flows were projected into
perpetuity using the growth rate expected for nominal GDP in U.S. long-term, of 4.91% a year. The pre-tax discount rate used
to calculate the present value of projected flows was 11.85% per year.
The two main variables that affect the value in use calculated for the investment are the discount rates and growth in perpetu-
ity. Sensitivity analyzes show that an increase of 0.90 percentage points (90bps) in the discount rate before tax (from 11.85% to
12.75% per year) would reduce the value in use by 12%, while a reduction of 0.25 percentage points (25bps) in the perpetuity
growth rate (from 4.91% to 4.66% per year) would reduce the value in use by 5%. The variations of the parameters affecting the
value in use for the purposes of this sensitivity analysis were determined based on a standard deviation of discount rates in the
last four years (which better reflect the current capital structure of CME Group), for the first, and of a standard deviation of the
average of 30 years of changes in real U.S. GDP, for the second. The value in use has a lower sensitivity to variations in projected
net revenue. Considering a reduction in average annual revenue growth by 10% in the period from 2013 to 2017, the value in
use would be reduced by 4 %. None of these three scenarios, analyzed separately, resulted in values below the carrying value
of the investment at December 31, 2012.
(2) Refers to recoverable tax paid by the foreign affiliate, according to Law 9,249/95 and Normative Instruction 213/02 of the Fed-
eral Revenue Secretariat of Brazil.
(3) In July 2010, BM&FBOVESPA issued debt abroad to protect part of the translation risk on the investment in CME (hedge of net
investment) through the designation of a non-derivative financial instrument (debt issuance abroad) as a hedge, as presented
in Note 12, We present below the sensitivity analysis to exchange rate variations for the non-hedged portion of the invest-
ment in CME Group:
Impact on other comprehensive income
Falling dollar
Higher dollar
-50%
-25%
31/12/2012
25%
50%
Exchange rate
1,0218
1,5326
2,0435
2,5544
3,0653
Exchange variation on
foreign investment in foreign
associate
(895,815)
(185,675)
240,676
1,234,604
1,944,743
Exchange variation on hedge
of foreign net investment
394,403
81,748
(102,632)
(543,563)
(856,219)
Tax effect of exchange
variation on hedge of foreign
net investment
(134,097)
(27,794)
34,895
184,811
291,114
Efeito líquido
(635,509)
(131,721)
172,939
875,852
1,379,639
b. Investment property
This category comprises properties owned by the subsidiary BVRJ - Bolsa de Valores do Rio de Janeiro
rented, which are depreciated according to the estimated useful life of the asset of 25 years.
Consolidated
At December 31, 2010
38,212
Depreciation
(1,512)
At December 31, 2011
36,700
Depreciation
(1,512)
At December 31, 2012
35,188
118
119
background image
notes to the financial statements
8. Property and Equipment
BM&FBOVESPA
Buildings
Furniture and fixtures
Computer-related equipment
Facilities
Other
Construction in progress
Total
At December 31, 2010
120,037
14,619
143,908
41,148
29,951
12,737
362,400
Aditions
115
2,371
18,103
5,402
5,469
13,985
45,445
Disposal
(597)
(67)
(282)
4
(815)
-
(1,757)
Transfer to investment property
(553)
-
-
-
-
-
(553)
Transfer (Note 9)
183
1,224
6,373
5,191
759
(4,918)
8,812
Depreciation
(2,210)
(2,137)
(50,514)
(4,709)
(2,187)
-
(61,757)
At December 31, 2011
116,975
16,010
117,588
47,036
33,177
21,804
352,590
Aditions
-
1,142
26,786
1,233
1,533
36,683
67,377
Disposal
(21)
(39)
(348)
-
(1,436)
-
(1,844)
Transfer (Note 9)
-
-
(848)
18
-
758
(72)
Reclassification/Adjustments
4,001
3,474
3,686
12,359
1,060
(24,438)
142
Depreciation
(3,011)
(2,837)
(46,361)
(6,010)
(3,395)
-
(61,614)
At December 31, 2012
117,944
17,750
100,503
54,636
30,939
34,807
356,579
At December 31, 2012
Cost
221,333
48,569
333,073
78,333
77,060
34,807
793,175
Accumulated Depreciation
(103,389)
(30,819)
(232,570)
(23,697)
(46,121)
-
(436,596)
net amount
117,944
17,750
100,503
54,636
30,939
34,807
356,579
At December 31, 2011
Cost
217,367
43,714
334,027
64,676
77,170
21,804
758,758
Accumulated Depreciation
(100,392)
(27,704)
(216,439)
(17,640)
(43,993)
-
(406,168)
net amount
116,975
16,010
117,588
47,036
33,177
21,804
352,590
Consolidated
Buildings
Furniture and fixtures
Computer-related equipment
Facilities
Other
Construction in progress
Total
At December 31, 2010
121,649
14,760
144,027
41,640
32,321
12,737
367,134
Aditions
115
2,388
18,137
5,412
5,560
13,985
45,597
Disposal
(598)
(92)
(312)
4
(817)
-
(1,815)
Transfer to investment property
(553)
-
-
-
-
-
(553)
Transfer (Note 9)
182
1,224
6,373
5,192
759
(4,918)
8,812
120
121
background image
notes to the financial statements
Consolidated
Buildings
Furniture and fixtures
Computer-related equipment
Facilities
Other
Construction in progress
Total
Depreciation
(2,296)
(2,179)
(50,553)
(4,785)
(2,198)
-
(62,011)
At December 31, 2011
118,499
16,101
117,672
47,463
35,625
21,804
357,164
Aditions
-
1,159
26,878
1,233
1,604
36,683
67,557
Disposal
(22)
(56)
(368)
-
(1,455)
-
(1,901)
Transfer (Note 9)
-
-
(848)
18
-
758
(72)
Reclassification/Adjustments
4,001
3,474
3,686
12,359
1,060
(24,438)
142
Depreciação
(3,098)
(2,894)
(46,422)
(6,075)
(3,408)
-
(61,897)
Saldos em 31 de dezembro de 2012
119,380
17,784
100,598
54,998
33,426
34,807
360,993
Em 31 de dezembro de 2012
Custo
223,669
49,052
334,064
79,373
79,638
34,807
800,603
Depreciação acumulada
(104,289)
(31,268)
(233,466)
(24,375)
(46,212)
-
(439,610)
Saldo contábil líquido
119,380
17,784
100,598
54,998
33,426
34,807
360,993
Em 31 de dezembro de 2011
Custo
219,703
44,236
334,930
65,717
79,695
21,804
766,085
Depreciação acumulada
(101,204)
(28,135)
(217,258)
(18,254)
(44,070)
-
(408,921)
Saldo contábil líquido
118,499
16,101
117,672
47,463
35,625
21,804
357,164
During the period, BM&FBOVESPA incorporated, as part of the cost of development projects, the amount
of R$8,757 (2011 ­ R$ 10,475) related to the depreciation of equipment used in developing these projects.
Properties with a carrying value of approximately R$38,973 were pledged as collateral in lawsuits,
BM&FBOVESPA is not allowed to assign these assets as collateral for other lawsuits or sell them.
The depreciation of fixed assets considers the expected useful lives of those, Annual rates of depreciation of
fixed assets at December 31, 2012 and December 31, 2011:
Buildings
2,5%
Furniture and fixtures
10%
Computer devices and equipment
10 a 25%
Facilities
10%
Telephone system
20%
Other
11% a 33%
9. Intangible Assets
Goodwill
The goodwill of R$16,064,309 is attributed to expected future profitability, supported by an economic and
financial appraisal of the investment, According to the guidelines of CPC 01/IAS 36, the goodwill must be
tested annually for impairment, or more frequently when there are indicators that impairment may have
occurred, Goodwill is stated at cost less accumulated impairment losses, Impairment losses recognized on
goodwill are not reversed.
BM&FBOVESPA uses external and independent experts to assist in measuring the recoverable amount of the
asset (ie, its value in use). The report submitted by the experts did not reveal the need for adjustments to the
value of goodwill at December 31, 2012.
Based on expectations of growth of the Bovespa segment, the projected cash flow considers revenues and
expenses related to activities of the segment (CGU ­ Bovespa). The period of projection of these flows ex-
tends from December 2012 to December 2022. The perpetuity is obtained by extrapolating the 2022 cash
flow by an equivalent expected long-term growth rate for nominal GDP of 8.37% per year.
The management uses a projection period of ten years based on the perception that the Brazilian capital
market, in the equity segment, should experience sustained growth until reaching maturity in the long-term.
122
123
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notes to the financial statements
To determine the present value of the projected flow, the experts used an average pre-tax discount rate
of 16.60% per year from December 2012 until December 2016. Afterwards, the discount rate stabilizes at
15,75% a year, capturing the inflationary expectations of the period.
The two main variables that affect the value in use calculated are the estimated discount rates and growth in per-
petuity. The management of BM&FBOVESPA conducted sensitivity analysis to determine the impacts of changes
in these variables on the calculated value in use. The discount rate equivalent before taxes for the entire period is
15.92% per year, and an increase of 1.10 percentage points (110bps) in this rate (from 15.92% to 17.02% per year)
would reduce the value in use by 13%. Regarding the growth rate in perpetuity, a reduction of 0.50 percentage
point (50bps) in the rate (from 8.37% to 7.87% per annum) would reduce the value in use by 5%. The variations of
the parameters affecting the value in use for the purposes of this sensitivity analysis were determined based on a
standard deviation of discount rates in the last five years, for the first, and of a standard deviation of the average of
10 years of changes in real Brazilian GDP, for the second. The value in use has a lower sensitivity to changes in net
revenue. Considering a reduction in average annual revenue growth by 16% in the period between December
2013 and December 2022, the value in use would be reduced by 15%. None of these three scenarios, analyzed
separately, resulted in values below the carrying value of the investment at December 31, 2012.
Software and projects
BM&FBOVESPA
Consolidado
Custo de softwares gerados
internamente em desenvolvimento
Softwares gerados internamente -
Projetos concluídos
Softwares
Total
Total
At December 31, 2010
63,931
9,582
78,065
151,578
151,594
Aditions
126,894
43
66,791
193,728
193,728
Write-off
(7,997)
(107)
(2,069)
(10,173)
(10,172)
Transfer (Note 8)
(55,496)
46,992
(308)
(8,812)
(8,812)
Amortization
-
(3,360)
(33,146)
(36,506)
(36,520)
At December 31, 2011
127,332
53,150
109,333
289,815
289,818
Aditions
186,884
-
41,181
228,065
228,065
Write-off
-
(3,620)
-
(3,620)
(3,620)
Transfer (Note 8)
(803)
-
875
72
72
Reclassification/Adjustments
(55,331)
53,114
2,306
89
89
Amortization
-
(12,148)
(54,431)
(66,579)
(66,582)
At December 31, 2012
258,082
90,496
99,264
447,842
447,842
At December 31, 2012
Cost
258,082
103,118
292,680
653,880
653,880
Accumulated Amortization
-
(12,622)
(193,416)
(206,038)
(206,038)
net Amount
258,082
90,496
99,264
447,842
447,842
At December 31, 2011
Cost
127,332
57,082
242,796
427,210
428,424
Accumulated Amortization
-
(3,932)
(133,463)
(137,395)
(138,606)
net Amount
127,332
53,150
109,333
289,815
289,818
124
125
background image
notes to the financial statements
The balance comprises costs for the acquisition of licenses and development of software and systems, with
amortization rates of 10% to 33% per year, and expenditures for the implementation and development in
progress of new systems and software.
BM&FBOVESPA incorporated, as part of the cost of development projects, the amount of R$ 27,492 (2011 ­
R$ 14,360) related to the depreciation of equipment used in developing these projects.
The ongoing projects refer, mainly, to the development of a new electronic negotiation platform for differ-
ent kinds and classes of assets and the construction of a new business and IT architecture to support the
post-trade infrastructure.
10. Earnings and Rights on Securities in Custody
These comprise dividends and interest on capital received 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
BM&FBOVESPA
Details
2012
2011
Taxes and contributions withheld at source
8,935
14,175
PIS/Cofins
16,426
14,973
ISS (Municipal service tax)
2,141
1,860
Total
27,502
31,008
Consolidated
Details
2012
2011
Taxes and contributions withheld at source
9,607
14,816
PIS/Cofins
16,548
15,100
ISS (Municipal service tax)
2,203
1,898
Total
28,358
31,814
12. Issuance of debt abroad and loans
On 2010 BM&FBOVESPA concluded the issuance of senior unsecured notes, with face value of US$612 mil-
lion, priced at 99,635% of nominal value, resulting in a net inflow of US$609 million (equivalent at the time
to R$1,075,323), The interest rate is 5,50% per year, payable half-yearly in January and July, and the principal
amount is due on July 16, 2020, The effective rate was 5,64% per year, which includes the discount and other
costs related to issuance.
The updated balance of the borrowing on December 31, 2012 is R$1,279,121 (R$1,172,225 at December
31, 2011), which includes the amount of R$36,882 (R$33,566 at December 31,2011) of accrued interest, The
proceeds from the offering were used to purchase shares of the CME Group at that same date.
The notes have an early partial or total redemption clause, at the option of BM&FBOVESPA, for the greater
of: (i) principal plus interest accrued to date and (ii) interest accrued to date plus the present value of the
remaining cash flows, discounted at the rate applicable to U,S, Treasuries for the remaining term plus 0,40%
per annum, (40 basis points).
These notes have been designated as a hedging instrument for the part equivalent of US$612 million (notional) of
the investment in CME Group Inc, (Note 7), in order to hedge the foreign exchange risk, Thus, the BM&FBOVESPA
has adopted hedge accounting for net investment in accordance with the provisions of CPC 38/IAS 39.
Accordingly, BM&FBOVESPA prepared the formal designation of the hedges by documenting: (i) the objec-
tive of the hedge, (ii) type of hedge, (iii) the nature of the risk being hedged, (iv) the hedged item, (v) the
hedging instrument, (vi) the correlation of the hedge and the hedged item (retrospective effectiveness test)
and (vii) the prospective test.
The application of the effectiveness tests described in Note 3 (d) (iv) did not reveal ineffectiveness during
the period ended at December 31, 2012.
The fair value of the debt, calculated using market data, is R$1,418,205 at December 31, 2012 (R$ 1,190,534
at December 31, 2011) (Source: Bloomberg).
13. Other liabilities
BM&FBOVESPA
Details
2012
2011
Custody agents
5,348
4,848
Amounts payable - related parties (Note 16)
15,051
358
Third parties services
2,119
7,931
Payable preferred shares
1,838
1,839
Amounts to be transferred - Direct treasury
1,974
-
Other
4,589
5,953
Total
30,919
20,929
Details
2012
2011
Custody agents
5,348
4,848
Amounts payable ­ related parties (Note 16)
15,000
140
Demand deposits (1)
62,941
59,165
Liabilities for securities purchased under
resell agreements (2)
175,125
118,350
Third parties services
2,354
8,138
Payable preferred shares
1,838
1,839
Amounts to be transferred - Direct treasury
1,974
-
Foreign exchange transactions (Banco BM&F)
6,365
-
Other
6,751
6,959
Total
277,696
199,439
126
127
background image
notes to the financial statements
(1) Refer to deposits held by corporations at Banco BM&FBOVESPA with the sole purpose for settlement of clearing operations
held within the BM&FBOVESPA and Selic - Special System for Settlement and Custody pursuant to Central Bank Circular Letter
No, 3196 of July 21, 2005.
(2) Refers to repurchase agreements of Banco BM&FBOVESPA, maturing at January 02, 2013 (2011 ­ January 02, 2012) and backed
by Financial Treasury Bills (LFT) and National Treasury Bills (LTN).
14. Provisions and contingent liabilities and assets
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 in the
course of their normal operating activities.
The lawsuits are classified by their probability of loss (probable, possible or remote), based on an evalu-
ation by BM&FBOVESPA and its legal advisors, using parameters such as previous judgments and the
history of loss in similar litigation.
The lawsuits in which the loss is evaluated as probable mainly comprise the following:
·
Labor claims mostly related to filed by ex-employees of BM&FBOVESPA and employees of out-
sourced service providers, on account of alleged noncompliance with labor legislation;
·
Civil proceedings, mainly relate to aspects of civil liability for losses and damages of BM&FBOVESPA
and its Subsidiaries;
·
Tax cases are mainly relate to the incidence of PIS and Cofins on (i) BM&FBOVESPA revenues and (ii)
receipt of interest on equity own Capital.
c. Legal obligations
These are almost entirely proceedings in which BM&FBOVESPA seeks exemption from social security
additional contributions on payroll and payments to self-employed professionals.
d. Changes in balances
The activity in provisions for contingencies and legal obligations may be summarized as follows:
BM&FBOVESPA
Civil
Labor
Legal
obligations
Tax
Total
At December 31, 2010
4,202
5,795
33,023
12,780
55,800
New provisions
31
1,224
5,522
-
6,777
Reversals
(61)
(91)
(11,276)
-
(11,428)
Reassessment of contingent risks

Price-level restatement
(100)
(497)
-
-
(597)
420
690
1,310
1,358
3,778
At December 31, 2011
4,492
7,121
28,579
14,138
54,330
New provisions
247
5,879
4,552
-

10,678
Provision expenditure (1)

(22)
(83)
(7,609)
-
(7,714)
Reversals
(4)
(940)
-
-
(944)
Reassessment of contingent risks
-
(1,551)
-
-
(1,551)
Price-level restatement
248
884
1,599
702
3,433
At December 31, 2012
4,961
11,310
27,121
14,840
58,232
Consolidated
Civil
Labor
Legal
obligations
Tax
Total
At December 31, 2010
4,245
6,196
33,023
13,126
56,590
New provisions
3,624
1,717
5,522
-

10,863
Reversals
(107)
(568)
(11,276)
-
(11,951)
Reassessment of contingent risks
(100)
(193)
-
-
(293)
Price-level restatement
586
763
1,310
1,376
4,035
At December 31, 2011
8,248
7,915
28,579
14,502
59,244
New provisions
247
6,327
4,552
-

11,126
Provision expenditure (1)

(22)
(104)
(7,609)
(367)
(8,102)
Reversals
(4)
(1,344)
-
-
(1,348)
Reassessment of contingent risks
-
(1,688)
-
-
(1,688)
Price-level restatement
727
944
1,599
705
3,975
At December 31, 2012
9,196
12,050
27,121
14,840
63,207
128
129
background image
notes to the financial statements
(1) The provision expenditure of the legal obligations refers to the unfavorable decision to BM&FBOVESPA in the lawsuit which
discussed the legality of the charge for workplace accident insurance (SAT) (Note 14 (g)).
Considering the provision´s characteristics, the timing of the cash disbursements, if any, cannot be pre-
dicted.
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, mostly related to claims filed by ex-employees of BM&FBOVESPA and employees of
outsourced service providers, on account of alleged noncompliance with labor legislation. The lawsuits
classified as possible losses December 31, 2012 total R$41,881 in BM&FBOVESPA (R$58,841 at December
31, 2011) and R$ 41,917 on a consolidated basis (R$60,849 at December 31, 2011);
·
Civil proceedings mainly relate to aspects of civil liability for losses and damages. The total amount in-
volved in the lawsuits classified as possible losses at December 31, 2012 total R$95,812 in BM&FBOVESPA
and on a consolidated basis (R$70,102 at December 31, 2011);
This amount is at December 31 2012 and December 31, 2011 almost entirely related to the possibility
of being required to deliver shares of BM&FBOVESPA (surviving Company of the merger with BM&F
S,A,), corresponding to the shares resulting from the conversion of the membership certificate of a com-
modities broker in the former BM&F, or indemnify the corresponding amount, if the cancellation of the
certificates in the former BM&F is found to be illegal, as alleged by a commodities broker in bankruptcy.
The main tax cases of BM&FBOVESPA and its subsidiaries refer to the following questions:
(i) Classification of the formers BM&F and BOVESPA, in the period prior to the demutualization as
taxable individuals of the Contribution to Social Security Financing ("COFINS"), which is the subject
of two declaratory actions of absence or relationship of the legal and tax in the face of the Federal
Government, in which the old companies plead the non-incidence of such social contribution on
revenue arising from the exercise of the activities for which they were established, these revenues
do not fall within the concept of invoicing. The amount involved in the aforementioned proceedings
as of December 31, 2012 is R$50,836 (R$48,332 at December 31, 2011).
(ii) charge of Income Tax Withholding ("IRRF") related to the calendar year 2008, since the RFB un-
derstands that BM&FBOVESPA would be responsible for withholding and payment of income tax
levied on the supposed capital gains earned by non-resident investors in Bovespa Holding SA, due
to the merger of shares of this Company into BM&FBOVESPA. The amount involved in that process,
on December 31, 2012 is R$ 153,935
(iii) Challenging, as the successor of Bovespa Holding S.A., the deductibility, for purposes of calculat-
ing the income tax and social contribution taxes of expenses paid by the Company for the commission
of intermediary institutions of responsible for the distribution of the secondary public offering of its
shares, held in 2007, and claiming the liability for the payment of IRRF on the payments made to the
intermediaries who participated in the tender offer. The amount involved in that administrative pro-
cess, on December 31, 2012 is R$ 117,797, classified as follows: (i) R$ 109,676 as a chance of possible
loss, and (ii) R$ 8,121, relating to the isolated fine for not withholding IRRF, as chance of remote loss.
(iv) Supposed incidence of social security contributions on options granted under the Plan of Stock
Options of BM&F S.A., assumed by the Company and exercisable by the beneficiaries of the Plan, in
the years of 2007 and 2008, as well as an isolated fine due for not collecting IRRF allegedly due on
those options. The questioning of the RFB is based on the understanding that options to purchase
shares granted to employees have a salary nature, as a payment for services rendered. The amount
involved in these administrative proceedings, on December 31, 2012, is (i) R$ 81,118, related to so-
cial security contributions allegedly due, classified as a possible loss, and (ii) R$ 43,202, related to
isolated fine for not withholding income tax, classified as a remote loss.
(v) supposed differences in payment of IRPJ and CSLL stemming from questioning the limits of de-
ductibility of interest on capital credited by BM&FBOVESPA in favor of its shareholders in 2008. The
total amount involved in the administrative process is R$ 110,675, including interest and fine.


The total amount involved in tax cases classified as possible is R$ 537,333 in the Company and Con-
solidated (R$76,697 on December 31, 2011).
f. Remote losses
BM&FBOVESPA, as successor of the former BOVESPA, and the subsidiary BVRJ are defendants in an ac-
tion for tangible 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 tangible damages and pain and suffering claimed, the plaintiffs ask
that BVRJ and BM&FBOVESPA be sentenced in proportion to their responsibilities, On December 18,
2009, a sentence was published in which the claims made by the plaintiffs were considered completely
unfounded, BM&FBOVESPA and its legal advisors consider that the chances of loss in this lawsuit are
remote.
BM&FBOVESPA received, on November 29, 2010, an assessment notice from the Federal Revenue Ser-
vice of Brazil («RFB»), demanding the payment of income tax (R$301,686 of principal, plus fines and in-
terest) and social contribution (R$108,525 of principal, plus fines and interest) representing the amount
of those taxes that, in the view of the RFB, BM&FBOVESPA underpaid in the years 2008 and 2009 with
respect to the amortization for tax purposes of the goodwill generated upon the merger of Bovespa
Holding SA, approved at the General Assembly of Stockholders on May 8, 2008, During October 2011,
the RFB Judgement Office in São Paulo issued a decision on the challenge presented by BM&FBOVESPA,
maintaining, in substance, the assessment notice, BM&FBOVESPA appealed to the Board of Tax Appeals
on November 21, 2011, which will render a final administrative decision on the legality of amortization
130
131
background image
notes to the financial statements
of goodwill for tax purposes, Based on the advice of its lawyers, BM&FBOVESPA considers that the risk
of loss associated with this tax matter is remote and will continue to amortize the goodwill for tax pur-
poses, as provided for by law.
BM&FBOVESPA, as the successor of the Bolsa de Mercadorias e Futuros- BM&F («BM&F») and as disclosed
in its Form of Reference (item 4,3), is defendant in civil public actions and class actions proposed in order
to investigate the practice of possible acts of administrative impropriety, and to receive compensation
for alleged damages to the federal treasury as a result of transactions conducted by the Central Bank of
Brazil in January 1999 in the U,S, Dollar futures market run by the former BM&F, On March 15, 2012, the
sentences on those demands at first instance convicted most of the defendants in those cases, among
them, BM&F, The total amounts of the penalties reach R$ 7,005 million, from which, according to one of
the decisions, may be deducted the gains that the Central Bank of Brazil obtained by reason of the non-
use of international reserves, amounting to R$ 5,431 million, BM&FBOVESPA was also ordered to pay a
civil penalty in the amount of R$ 1,418 million, The figures were measured as of January 1999 and should
be adjusted for inflation, plus interest, and plaintiffs, legal fees, Based on the opinion of its internal and
external lawyers, BM&FBOVESPA believes in the total dismissal of these actions and has not provided in
its financial statements for any amount related to such lawsuits, in