BM&FBOVESPA is a Brazilian company, created in 2008, through the combination of the SãoPaulo Stock Exchange (Bolsa de Valores de São Paulo) and the Brazilian Mercantile & Futures Exchange (Bolsa de Mercadorias e Futuros). It is the most important Brazilian institution for intermediate equity market transactions and the only securities, commodities and futures exchange in Brazil. BM&FBOVESPA further acts as a driver for the Brazilian capital markets. The BM&FBOVESPA volumes have more than quintupled in just six years and daily trading volumes are expected to hit 6.5 billion per day by end of 2011.

Access

Types of Direct Market Access (DMA) available for BM&FBOVESPA

• DMA 1- Customer trades on the Mega Bolsa System via brokerage house
• DMA-2 – Customer connects directly to the technology structure partnering with an authorized access provider or broker, such as CFN Services, GL-Net or Marco Polo to access the exchange, allowing them to trade through multiple brokers such as Link Investimentos
• DMA-3 – Client connects to the technology structure via a direct connection
• DMA-4- Client proximity hosts their infrastructure within the exchanges data center and connects to the exchange via a cross connect

The Brazilian regulatory landscape does not provide for naked access but instead there are regulatory requirements that all clients have to go through pre-trade credit controls. For the DMA 1 and DMA 2 models, the broker is responsible for checking orders against pre-defined limits, whereas with DMA 3 and DMA 4, the exchange provides the pre-trade credit control tool for the brokers to configure and control their customers’ limits

Tax Issues

In October 2009 a 2% tax to foreigners was introduced and the subsequent 1.5% tax added to American Depository Receipts (ADRs). BM&F BOVESPA believes that the government is not mulling further tax measures to kill the golden goose of capital markets. After all, it wants investors to pay for the country’s huge infrastructure needs. They include the stadiums, airports, local transportion and housing associated with the 2014 World Cup and 2016 Olympics as well as the $225 billion in pre-salt capitalization for Petrobras. In spite of tax implications of trading in Sao Paulo, BM&FBOVESPA has been seeing unprecedented increase in trading volumes from International firms.

Competition

According to John Rumsey, who states “Investors expect to see alternative trading platforms emerge to challenge BM&FBOVESPA and expect that their introduction will have a substantial impact on pricing. The regulator, the Comissão de Valores Mobiliários, is seen as keen to encourage the proliferation of new platforms and Brazilian legislation allows them.”

Brazil is a ripe market for investors looking to find new liquidity. With protections already in place that meet the standards of the Frank-Dodd Act, active lobbying to address tax issues for international traders, and the upcoming World Cup and Olympics, Brazil is not a market to avoid.

Summary

Take advantage of fully managed solutions from CFN Services’ Alpha Platform™, to receive the lowest latency connectivity from any global trading venue. Take away concerns about customs clearing, managing foreign country contracts, finding a broker or authorized access provider by letting the Alpha Alliance™ take care of as much or as little of those services that you require. Get in early to take advantage of the technology refresh program, which will provide existing Alpha Platform™ clients, the ability to shave microseconds off the already lowest latency available.

Link Investimentos Joins CFN Services’ Alpha Alliance ™ to provide lowest latency market access to BM&FBovespa Exchange

Herndon, VA (PRWeb).  July 27, 2011 — CFN Services, Inc., the leading provider of managed high-frequency trading enablement services, today announced the Alpha Alliance™, an innovative network of trading services firms delivering fully integrated and customizable solutions for the global electronic trading market.  The Alpha Alliance brings together best-of-breed trading technologies, applications, and services across the full trading life cycle, from analysis and decision-making, to risk management, execution, and settlement of the trade.

Alliance partners deploy their solutions on CFN ’s Alpha Platform™, a low latency trading infrastructure offering the highest performance for market data delivery and trade execution worldwide.  Technology partners rapidly deploy their applications and services on a proximity hosted platform as part of a comprehensive solution, improving application delivery performance while lowering costs and expanding access to new markets.

Alpha Alliance partners collaborate to develop full service enhanced, customized solutions that best advance the unique trading strategies of their clients. With access to the technical capabilities and market-specific expertise within the Alpha Alliance network, clients and business partners interact in completely new ways.  Trading firms ultimately benefit from having access to the market-leading solutions necessary to remain competitive in today’s rapidly evolving financial markets.

“CFN is very excited to play a pivotal role in taking automated trading solutions to the next level,” said Mark Casey, President of CFN Services. “Bringing the best technology, product and service firms together on one platform enables next-generation trading solutions capable of fully leveraging the rapid growth in global electronic trading. Alpha Alliance members are setting the standard for high performance trading.”

To find out now how Alpha Alliance can bring your trading solutions to the next level

About CFN Services in the Global Financial Markets
CFN Services is a leading provider of managed high-frequency trading enablement services, providing solutions that accelerate market data delivery and trade execution for some of the most sophisticated financial markets participants worldwide. CFN Services operates the low-latency  Alpha Platform™, a high performance low latency global infrastructure that accelerates trading performance for automated traders across key liquidity venues in the equities, options, futures, derivatives, and FX markets. CFN is the sponsor of the Alpha Alliance which is setting the standard for next generation infrastructure and providing leading edge trading solutions. For more information visit CFN Services website

About CFN Services

CFN Services provides high performance network and application delivery solutions for real-time, mission critical applications. Leveraging FiberSource^®, a global network optimization platform, CFN Services builds low-latency private cloud solutions to solve the performance challenges of latency and jitter in distributed IT environments. Whether the application and data are dispersed across town or around the globe, CFN Services deploys turnkey solutions within and between public and private data centers in North and South America, Europe, and Asia. For more information: http://www.cfnservices.com

Press Contacts:

Judy Misbin-May, CFN Services

+1-703-788-6633

judy.misbin-may@cfnservices.com

If you have not yet, it is time to add TSX into your trading strategy. CFN Services is offering full suite of low latency solutions to TSX; market data, connectivity, proximity hosting, hardware, network and server management in Toronto available.

Let us help you get to Toronto NOW

Algorithmic trading in financial markets has been the major driver for low-latency optical networking. However, new applications that could benefit from low latency networks are starting to emerge. (iStock)

Electronic trading leads the demand for low-latency connectivity because time is the ultimate factor in success. Electronic communications network (ECN) connectivity between exchanges, hosting centers, and high-frequency trading facilities delivers raw exchange feeds and transaction information to enable traders to grasp opportunities only available for fractions of a second. The classic saying “time is money” holds particular truth in today’s economy, and low latency has become a key differentiator in boosting network infrastructure and building a better bottom line.

When it comes to paying the premium for a low latency service or investing in their own low latency network, companies must ask themselves just how much might really be at stake. A study by Forex mt4 Brokers points to an experiment Commercial Network Services conducted that put this question to the test.

On April 26, 2009, the company restarted demo versions of its expert advisor (EA) automated trading systems with $25,000 of funds in each account to illustrate the importance of low latency to the online trader. In the most dramatic outcome, its New York City-based EA platform enjoyed a 284% larger profit compared to an identical platform in its West Coast data center, although the same New York-based broker controlled both. The EA managed to earn a $870 profit on a $25,000 account after nine days from the US West Coast data center, while the EA situated in the New York City data center earned a $2,475 profit during the same time period – nearly 3X more profit.

The profit variance was due to the proximity of the New York data center relative to the transcontinental latency encountered in communicating with the one on the West Coast. When it comes to latency, the shortest path between two points, say between Chicago and New York, would provide competitive differentiation in the same manner. If there are two network connection options between facilities and one is 10 ms faster—based on the lack of intermediary equipment and an optimized fiber route distance—the information traversing the shorter path will arrive more quickly and will be more useful in latency intolerant applications like market feeds.

Beyond financial applications

The value of low latency goes beyond the financial vertical into other applications and areas within telecommunications. Advancements in optimized WAN transmission modules and platforms are already starting to benefit these applications across a broad range of network operations, including:

• Cloud services: The prevalence of cloud services has gone well beyond webmail. The cloud is becoming a key aspect of dynamic business operations. On-demand, interactive Web-based applications require low-latency networks to deliver a high quality of experience — a necessity for the cloud service provider to ensure usability and eliminate poor service quality complaints.
• Consolidated data centers: Many enterprise networks have moved to a consolidated data center strategy to benefit from economies of scale for processing power, storage, and IT staffing. Information and data used across the enterprise needs to be networked (across the metro, region, and nation) and shared with a “LAN-like feel” now that they are physically consolidated in fewer data centers. Low-latency equipment enables efficient information distribution and reliable support for mission-critical applications.
• Remote business continuity and disaster recovery: Disk mirroring and synchronous replication of data between primary and secondary data centers with a requirement of (near) zero data loss, or a recovery point objective (RPO) near 0, are very latency intolerant. Every bit of extra distance between the primary and backup database is important, especially for regional network connections that move data outside the power grid, weather pattern, or flood zone.

Cloud-based services are just one of several applications that could benefit from new low-latency optical networks. (iStock)

This intensifying need for low latency across multiple markets and technologies hasn’t developed by mere coincidence. People are tired of waiting, and customers will do whatever they can to avoid it.

For example, at The O’Reilly Velocity 2009 Conference, representatives from Google Search and Microsoft’s Bing teams, Jake Brutlag and Eric Schurman respectively, co-presented results from their own independent latency experiments conducted on each site to illustrate the effects of latency on user activity. Bing found that a 2-sec slowdown reduced search queries by 1.8% and revenue per user by 4.3%. Google Search found that a 400-msec delay resulted in 0.59% fewer searches per user, a pretty significant influence for a delay that lasted less than a half of a second. Google Search also found that users performed 0.21% fewer searches even after the delay was removed, indicating a distinct relationship between slow user experience and longer-term consequences.

At the same conference, Shopzilla Vice President of Engineering Phil Dixon provided even more dramatic insight into the impact of latency on the bottom line. Shopzilla launched a year-long performance redesign that produced a 5-sec latency improvement (from ~7 sec to ~2 sec). The result was an astounding 25% increase in page views and a 7-12% increase in revenue. These findings further illustrate the positive effect low latency can have for boosting revenue numbers.

Winning the low-latency race

These examples illustrate the evolution of low-latency connectivity beyond linking the major global financial centers to providing a crucial backbone for general connectivity practices. Cloud services, such as online gaming and shopping, are prime examples.

The research from Google, Bing, and Shopzilla demonstrate that the key to connectivity is a combination of low-latency interconnection and proximity to the user. A network with multiple hubs really close to customers, along with low-latency connections between them, is the best model. Facilities in major cities like Seattle, Denver, Chicago, and Miami rather than a single facility that addresses all of North America can transition service-level agreements (SLAs) from 30-msec latency for the continent to less than 10 msec for the majority of cases.

With so much money on the line, speed and reliability are essential. Numerous companies therefore are making note of the measurable advantages associated with reducing latency. For traders and financial firms especially, ridding their services and private networks of latency is a primary focus; even equipment latency—measured in microseconds—is now evaluated to see just how low connection latency can go. Latency reduction is becoming an all-out race as new businesses and financial firms look to get an edge on the competition.

With so many developments in low-latency network infrastructure, who knows what else might be in store for the technology and telecommunications industries. In today’s economy, consumers need ever faster access to information because they can’t afford to wait and deal with lags or errors in their system. The demonstrated success that comes with reducing latency seems to prove that patience isn’t a virtue in the marketplace today, not when organizations have so much access to technology optimized for network efficiency.

The current push for ultra-low latency certainly seems to indicate that the trend towards nearly instantaneous information flows is here to stay as well. Networks will continue to evolve in time, but speed will always be a determinant factor. As network architects of all types begin to examine latency moving forward, the mantra seems to be: Go low or get left in the dust.

Jason Smith is Technical Solutions Marketing Manager for BTI Systems. He has more than 10 years of experience in telecommunications in roles including network planning, enterprise network consulting, managed services business development, and product marketing.

CFN Services, is your partner for propitiatory trading. CFN offers a Low Latency Global Exchange Platform, to help provide you all the elements you need for successful trade execution. Combining CFN Servcies’ Exchange Connectivity Offerings that will reach to over 100 data centers by 2011 and the CFN Ecosystem, the Global Exchange Platform provides support for pre-trade, risk maangement, execution and post trade activities. To learn more http://www.cfnservices.com/electronic_trading.asp

CFN Services has lowered their latency from NY – Sao Paulo; Chicago – Sao Paulo and DC- Sao Paulo.Contact CFN Now: http://www.cfnservices.com/freetrial/startnow.html

Electronic Trading Reaches Maturity in Brazil, Says Exchange by Wall Street & Technology

(http://www.wallstreetandtech.com/exchanges/showArticle.jhtml;jsessionid=ZI0QJTYV31XW1QE1GHRSKH4ATMY32JVN?articleID=226700036)

CEP platforms are increasingly connecting to Brazil’s BM&FBovespa, which is now the sixth largest derivatives market in the world with growth of 67% in the first quarter of 2010.

The Brazilian market continues to see strong growth in electronic trading, with hedge funds and high frequency firms in Brazil increasingly deploying volatility and arbitrage strategies.

“We are coming to a stage of great maturity in our markets, after three years working hard to promote electronic trading. As a result of this maturity level, we see more and more CEP tools ready to connect to our markets,” Marcio Castro, IT officer of trading systems at BM&FBovespa, tells WS&T.

“We are increasing [our capacity] in terms of latency and throughput. We have collocation available for all BM&F Bovespa markets. Last year, we doubled our capacity for the equities business,” he noted.

Customer Retention: The Power of Insight

Leveraging insurers’ reams of data to identify and pursue loyal customers

The Brazilian exchange is also working on a project with CME Group to build a new matching engine for Bovespa, Castro said.

Castro’s comments follow the announcement that Streambase’s Complex Event Processing (CEP) platform has been extended to connect to BM&FBOVESPA, Brazil’s derivatives and equities exchange and one of the world’s largest exchanges in market value.

This will allow StreamBase to provide algo trading firms with low-latency connectivity to the Brazilian exchange, enabling them to trade on an extensive range of Brazilian products and hedge their risk across international markets, according to BM&FBovespa.

Trading volumes on Bovespa, the cash exchange, and the BM&F derivatives exchange in have grown ten-fold in the last 10 years, while the stock exchange value has gone up four times, says Martin Koopman, an independent analyst to the securities industry who recently wrote a TABB Group report entitled “Latin American Electronic Trading: Caliente!”

In his report, Koopman noted that BM&FBOVESPA is now the sixth largest derivatives market in the world with growth of 67% in the first quarter of 2010.

“I found that locals are trading more,” he says. “You have a blend of institutions, a growing number of hedge funds and quite a sophisticated group of broker dealers. But now there is a lot of international interest in the [Brazilian] market too. Hedge funds are looking at it, high frequency firms in Brazil are deploying volatility and arbitrage strategies. You can collocate at both Bovespa and BM&F today. There’s low latency data available from the exchanges. So broker dealers and hedge funds are using low latency strategies. It’s a very exciting time,” he adds.

“Brazil is an interesting market,” Richard Tibbetts, CTO of Streambase, agrees. “There are parallels with the Canadian market and how its equity market has matured.”

Last week, StreamBase also announced a partnership with Sao Paulo, Brazil-based Alphastream, a provider of professional services and tools to building next- generation electronic trading systems.

Hamilton Araujo, managing director of Alphastream commented that StreamBase’s visual development environment would allow the company to work with customers – both business analysts and developers – to create “sophisticated strategies with an event-driven trading infrastructure.”