Direct Edge to launch Brazilian exchange

Nov 21, 2011
<p>Emerging markets set to undergo same market fragmentation as Europe and North America</p>

Direct Edge, the US stock exchange, has announced plans to launch a new trading venue in Brazil.

Direct Edge Brazil will be based in Rio de Janeiro and is planned to open by the fourth quarter of 2012.

A second exchange in the country ‘will spur even greater investor participation through competition that drives innovation and price improvement,’ says William O’Brien, Direct Edge’s CEO, in a statement.

The location of the proposed trading firm is a coup for Rio, which in recent years has lost business to São Paulo.

‘The pending arrival of a world-class stock exchange can create opportunities for Rio’s young professionals, and will boost efforts to revitalize the financial sector in our city,’ says Eduarda La Rocque, the city’s finance secretary, in the statement.

The move underlines the allure of the fast-growing Brazilian market to overseas exchange groups.

BATS Global Markets is working with local asset manager Claritas on launching a new trading platform in the country.

In addition, IntercontinentalExchange, the derivatives exchange operator, has taken a 12.4 percent strategic stake in Brazilian clearing house Cetip.

Brazil’s market is currently dominated by the national exchange operator BM&FBovespa.

As new competitors move in, emerging markets look set to undergo the same market fragmentation that has already occurred in Europe and North America.

In Asia, Chi-X Global, another alternative trading platform, is targeting growth across markets including Australia, India, South Korea and Thailand.

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