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Brazil to offer depository receipts in US stocks.

BM&F Bovespa, the domestic Brazilian equities and derivatives exchange, has launched Brazilian depository receipts (BDRs), giving local investors the chance to trade US companies.

From 5 October, 10 unsponsored level one BDRs -- which are derivatives based on individual underlying stocks -- will be available for trading on BM&F Bovespa. These comprise Apple, Google, Bank of America, ArcelorMittal, Goldman Sachs, Avon Products, Wal-Mart Stores, Exxon Mobil, McDonalds and Pfizer. Issuance of the receipts will be handled by Deutsche Bank.

Unlike sponsored depository receipts, Brazil's DR offering will not be transferable with the underlying stock.

Financial institutions, investment funds, portfolio managers and stock consultants that have been authorised by national regulator the Brazilian Securities and Exchange Commission will all be able to trade the new product. Trading will take place on BM&F Bovespa's over-the-counter market.

The launch of BDRs is another sign of Brazil's ambition to expand the services it offers local investors. In January, the exchange teamed up with Nasdaq OMX, allowing Brazilian brokers to send orders for cash equities traded in Nasdaq OMX through a contractual relationship with a North American broker dealer.

BM&F Bovespa also linked with market centre operator Chi-X Global in June to launch Chi-FX Brazil, enabling foreign institutions to trade Brazilian equities in their own base currency.

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Publication:The Trade
Date:Sep 24, 2010
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