Direct Edge Petitions Brazilian Regulator to Open Exchange Landscape

CVM is requesting comments and suggestions over the possibility of allowing competition in its capital markets. Direct Edge, one of the largest US equity exchanges, submitted a 21-page response outlining its position.

"Direct Edge greatly appreciates the opportunity to offer its thoughts to CVM regarding the consultation," says William O'Brien, CEO at Direct Edge. "We believe that Brazil already has one of the world's premier capital markets, and are excited by the prospect of adding additional value to brokers and investors as a new exchange entrant. While introducing competition requires certain regulatory transitions to ensure continued efficiency and investor protection, we believe that CVM is taking a thoughtful and deliberative approach and is focused on the relevant subject matter."

Market Openings
Interest in South American markets has grown considerably in recent years, but CVM is far from the first regulator to consult extensively on opening up markets to competition. Australia, in recent years, allowed Chi-X to establish an alternative bourse to the dominant Australian Securities Exchange. In Europe, too, the Markets in Financial Instruments Directive allowed the equities landscape to fragment, with traditional national exchanges finding themselves in competition with multilateral trading facilities, crossing networks and other alternative trading systems.

Given buoyant conditions in the region despite halting performances this year, though, the possibility of opening the landscape is likely to attract intense interest, particularly from US exchange groups, given their geographical proximity.