Brazilian central counterparty (CCP) BM&FBovespa processed 121,284 securities lending transactions in July, beating June’s total of 108,422 by 12,862.
The transactions were worth BRL 57.08 billion ($2.5 billion), compared to BRL 51.74 billion ($2.3 billion) in June, the CCP reported.
The Brazilian CCP also launched BM&FBovespa Clearinghouse on 18 August, to bring greater robustness and competitiveness to the country’s financial and capital markets.
The new post-trade infrastructure will act as a single platform for exchange-traded and OTC derivatives, equities and corporate bonds, spot FX, and federal government bonds. Previously, all of these markets used separate clearinghouses.
BM&FBovespa Clearinghouse will also use the Closeout Risk Evaluation (CORE) risk management system.
CORE simulates thousands of possible price trajectories for assets, contracts and collateral in investors’ portfolios, through different modeling techniques that complement each other, providing more robust risk calculation.
It assesses the market, liquidity and cash flow risk of mult-imarket and multi-product portfolios in an integrated manner, encompassing exchange-traded and OTC contracts. It also incorporates the effects of clearing and risk diversification in investors’ portfolios, making collateral allocation more efficient, according to BM&FBovespa.
“Sometimes the market goes for several years without any changes. In this case we’ll leap forward several years in a single day,” commented BM&FBovespa CEO Edemir Pinto.
“The single clearinghouse and CORE represent a revolution in modernity, security and efficiency in central counterparty and risk management services. As was the case with the Brazilian Payment System (SPB), the market will be divided into before and after the new clearinghouse and CORE.”
Cícero Vieira, COO of BM&FBovespa, added: “This pioneering project will result in one of the most secure and sophisticated clearing systems in the world. The new clearinghouse will reduce the market’s back-office costs and make trade settlement and the allocation of collateral more efficient. It will also bring greater flexibility and reduce time frames for the launch of new products.”
The project’s first phase will see the migration of the financial and commodity derivatives markets to the new clearinghouse.
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