Brazilian Mercantile & Futures Exchange

On October 26, 1917, exporters, businessmen, and commodity producers founded the São Paulo Commodities Exchange (BMSP). This was the first Brazilian institution to offer forward trading. With the passage of time, BMSP established a rich tradition in the trade of agricultural commodities, especially coffee, live cattle, and cotton.

In July of 1985, the Mercantile & Futures Exchange (BM&F) was founded. Trading sessions commenced on January 31, 1986, and within a short time it attained a position of respect among the world’s major futures exchanges by offering derivatives on varied financial assets.
On May 9, 1991, BMSP and BM&F decided to unite their operations. This act brought together the tradition of the former and the dynamism of the latter creating what is now called the Brazilian Mercantile & Futures Exchange, which maintained BM&F as its title.
On June 30, 1997, another operational agreement took place, this time with the Brazilian Futures Exchange (BBF) of Rio de Janeiro, which was founded in 1983. The purpose of this agreement was to strengthen the domestic commodity market and consolidate BM&F as the major derivatives trading center in Mercosur.
On April 22, 2002, the BM&F Foreign Exchange Clearinghouse initiated its activities. Three days later, on April the 25th, BM&F acquired the rights to manage and operate a clearinghouse for government bonds, fixed-income securities and other securities issued by financial institutions from the Brazilian Clearing and Depository Corporation (CBLC). On the same day, it also acquired all of the Rio de Janeiro Stock Exchange (BVRJ) equity memberships, along with the rights to manage and operate the electronic system known as SISBEX. On November 12, 2002, BM&F negotiated an agreement with the Brazilian Federation of Banks (FEBRABAN), and with the Centralclearing of Clearing and Settlement S.A., in a move to cease all of the latter’s activities related to registration, clearing and settlement of trades involving public and private fixed-income securities, consequentially centralizing all of these activities at BM&F. The culmination of these events took place on May 14, 2004, when the BM&F Securities Clearinghouse was inaugurated and began its activities.
With these initiatives BM&F broadened its capacity to become the major clearinghouse in Latin America, providing an integrated set of asset, securities and derivatives clearing services, while at the same time offering economy of scale, competitive costs, and operating security. Moreover, the three BM&F Clearinghouses are ISO 9001 certified: The Derivatives Clearinghouse since October 1996, the Foreign Exchange Clearinghouse since June 2002, and the Securities Clearinghouse since March 2005.
On August 29, 2002, BM&F launched the Brazilian Commodities Exchange, which united the commodity exchanges from the states of Goiás, Mato Grosso do Sul, Minas Gerais, Paraná and Rio Grande do Sul, and from the city of Uberlândia, transforming these exchanges into regional operation centers. BM&F renders clearing and settlement services to this new exchange. The result was the creation of an integrated domestic market for agricultural commodities with modern price discovery mechanisms and an organized marketing structure. The Brazilian Commodities Exchange opened for trading on October 22, 2002. In 2004, another regional operation center was created in the state of Ceará and a field office linked to the Paraná operation center was opened in Florianópolis (state of Santa Catarina).
On January 29, 2004, the Central Bank of Brazil issued a resolution granting commodity and futures exchanges the right to constitute commercial banks in order to render settlement and custody services to the economic agents responsible for the transactions performed at those exchanges. This opened the way for the Exchange to establish the BM&F Settlement Bank which went into operation nine months later, on November 30, 2004.
On September 15, 2005, the Exchange launched the BM&F Carbon Facility as part of a joint initiative with the National Ministry of Development, Industry and Foreign Trade. The focus of this initiative is to develop a Brazilian carbon market that will provide incentives for the reduction of greenhouse gas emissions. The BM&F Carbon Facility is a state-of-the-art electronic system designed for the on-line registration of projects, which have the potential to generate carbon credits in accordance with the principles established by the Kyoto Protocol.