Brazil, China exchanges ink deal

China Financial Futures Exchange and Sao Paulo-based stock exchange BM&F Bovespa signed a memorandum of understanding in Sao Paulo on Sept 25, marking the first cooperation in financial exchanges between China and Brazil.

It took about one year for the two exchanges to map out the MOU, which outlined cooperation in information sharing, high-level dialogue, training and staff exchange.

"The MOU is an important step for both sides and we hope in the future we can achieve a major breakthrough in developing financial products jointly," said Hu Zheng, CEO of China Financial Futures Exchange (CFFEX). "Brazil is very experienced in financial futures exchange and China can learn a lot from further cooperations."

Hu's words were echoed by Edemir Pinto, CEO of BVMF, who hopes the agreement can further strengthen the relationship with the financial markets in China.

"The purpose is to explore all possibilities of concrete business between the two exchanges, taking advantage of the strong potential of the two markets and developing new channels for this long-term cooperation," said Pinto.

It is the first time for CFFEX to find an international partner in Latin America. The company was jointly founded with five other exchanges in China in 2006 in Shanghai with registered capital of $80 million.

CFFEX now has 10 global partners in Hong Kong, Singapore, the US and Europe, including the two most recently in Brazil and the United Arab Emirates. It just signed a data exchange agreement with CME Group Exchange in Chicago, one of the largest exchanges in the world, on Sept 24.

"The reason why we chose Brazil to be our first partner in this region is because of the rapidly increased trade between the two countries," Hu said. "When the commodity trade reached a certain level, it is natural for the development of financial products."

BVMF was jointly established by BM&F and Bovespa in 2008 and is now one of the five largest exchanges in the world and the only exchange in Brazil, with its trade volume covering about 80 percent of the entire market of South America.

"Chinese exchanges are our important partners in Asia," said Yao Honghui, the chief representative of BVMF in China. The exchange established an office in Shanghai in 2013, one of its three representative offices in other countries, to encourage potential cooperation with local exchanges and attract more Chinese investors.

"In the past three years, the trade volume of Chinese investors in BVMF increased by four times," said Yao. "More Chinese companies are entering the Brazilian market and establishing their factories in this country and we can help them better understand the local financial markets and provide necessary assistance."

China has been Brazil's largest trading partner since 2009 and the bilateral trade surpassed $90 billion in 2013. Brazil is currently China's ninth largest trade partner in the world and the largest in Latin America.

During the sixth BRICS summit in Brazil this July, the BRICS countries established their own developing bank aims to stimulate economic development of the member countries through jointly financial support. The bank will be based in Shanghai and Brazil will nominate the first chairman of the Board.

"Though China and Brazil are far from each other, the two countries enjoy a good foundation for cooperation. Both being new emerging markets, the two countries respect the interests of each other and the future for cooperation is quite promising," Yao added.

fanzhang@chinadailyusa.com