INTERVIEW-Brazil's CVM may ask BM&FBovespa to share clearing with rivals
* CVM's mandate is to preserve market safety, Pereira says
* Sharing possible if analyses favor a single clearing structure
* BM&FBovespa controls almost all equity trading in Brazil
RIO DE JANEIRO, July 8 (Reuters) - Brazil's government could urge the nation's sole financial bourse BM&FBovespa SA to share clearing and depositary services with rivals if studies determine that is the most efficient option for market participants, the head of securities regulator CVM said on Monday.
Rio de Janeiro-based CVM wants to make sure any decision helps preserve the current level of market oversight and optimal market functioning, CVM President Leonardo Pereira said in an interview. If the best market arrangement implies the existence of a single so-called post-trading structure, CVM may "eventually" ask BM&FBovespa to share those services with rivals.
Under current rules, BM&FBovespa enjoys a near monopoly on all trading, clearing and settlement services for most locally traded shares. Likewise, trading transactions in Brazil are settled through a central counterparty clearinghouse, a complex and capital-intensive venture that has for years helped drive potential newcomers away from BM&FBovespa's turf.
"Regardless of the market structure, we need to make sure markets remain safe," Pereira said.
There are no rules in place requiring BM&FBovespa to sell or rent clearing services. BM&FBovespa Chief Executive Officer Edemir Pinto said in May that the São Paulo-based bourse is unlikely to share clearing, custody and settlement facilities with potential rivals until at least 2015, when the integration of its four separate post-trading facilities would be ready.
Shares of BM&FBovespa shed 10 percent of their value this year, partly fueled by concerns that the CVM may allow other exchanges to enter the country as early as next year. Last year the stock surged 48 percent on optimism that competition would take longer than that to win approval from the CVM.
An independent study on competition in the market structure industry, commissioned by the CVM last year, found that lack of competition is unlikely to cause harm in the medium-term. It proposed a self-imposed regime of price monitoring and benchmarking by BM&FBovespa, incentives to improve access to BM&FBovespa's clearing, and ways to enhance market supervision and regulation.
Pereira's remarks come a few weeks after American Trading Systems Brasil requested permission to open a financial exchange in the country. The company, known as ATS Brasil, is in advanced talks with potential partners to help fund the new enterprise, Chief Executive Alan Gandelman told Reuters at the time.
ATS Brasil is 80 percent-owned by Americas Trading Group, a Rio de Janeiro-based trading systems operator, and 20 percent-owned by NYSE Euronext, which would be ATS Brasil's main technology provider.
A new bourse in Brazil would let ATS and peers like DirectEdge challenge BM&FBovespa.
($1 = 2.26 Brazilian reais)
(Writing by Guillermo Parra-Bernal; Editing by Jan Paschal)