CME Group and Bolsa Mexicana de Valores (BMV), a Mexico-based financial exchange operator, have entered into a strategic partnership that includes an order routing agreement for derivatives products.
As part of the equity portion of the agreement, CME Group has purchased shares in the Mexican exchange valued at $17m, or approximately 1.9% of outstanding BMV shares.
Additionally, the control trust of BMV has granted CME Group the right to nominate a member to BMV board of directors and the two exchange operators have signed a memorandum of understanding covering activities aimed at enhancing the partnership between the two exchanges.
Through the agreement, CME Group will become the exclusive exchange provider of derivatives order routing services to BMV outside Latin America, and BMV will be the exclusive exchange provider of derivatives order routing services to CME Group in Mexico. BMV’s derivative products are offered through its derivatives subsidiary, MexDer.
CME Group and BMV have also agreed to pursue potential joint initiatives including product development, marketing and customer education as well as clearing opportunities. Additionally, BMV, CME Group and its global preferred strategic partner Bm&fBovespa will initiate discussions about the aforementioned transaction and other commercial opportunities.
The order routing arrangement, which is scheduled to begin in 2011, will give BMV customers access to CME Group’s benchmark derivatives contracts including interest rates, foreign currencies, equity indexes, energy, metals and agricultural commodities. It will also give CME Group customers access to BMV’s interest rate and equity index derivatives.
Terry Duffy, executive chairman of CME Group, said: “Latin America is a key market for CME Group. We are pleased to announce this new partnership with BMV which furthers our global strategy to offer customers increased access to our products while, at the same time, allowing BMV to use the CME Globex trading network to increase distribution of their products in North America.”
Craig Donohue, CEO of CME Group, said: “In addition to providing CME Group customers with our own highly liquid products in interest rates, equities, foreign exchange, commodities, energy and metals, the order routing agreement announced today will soon broaden efficient access on or through our CME Globex electronic trading platform to financial markets in Brazil, Mexico, South Korea, Dubai and Malaysia.”
Luis Tellez, executive chairman and CEO of BMV, said: “With this operation BMV increases its presence in the international markets. Greater distribution capabilities are a key part of our strategy to attract more investors to Mexico. Allowing international investors an easier access into MexDer will improve liquidity and develop the local market. At the same time this agreement will provide Mexican investors with more tools to manage their portfolios.”