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Brazil: BM&FBOVESPA – News September 2011 – Nr.20

Launch of the first stage of the BM&FBOVESPA PUMATrading System

BM&FBOVESPA announces the conclusion of the first stage of development and integrated tests with the market of its new trading platform, named the BM&FBOVESPA PUMA Trading System. This is a multi-asset electronic trading platform that has been developed by BM&FBOVESPA and CME Group. BM&FBOVESPA PUMA Trading System will replace the Global Trading System (GTS), Mega Bolsa, BOVESPA FIX and SISBEX, integrating them into a single system with greater processing capacity, extremely low latency, and new functions. The implementation will occur in stages:

  • 1st Stage: Substitution of GTS (derivatives and spot foreign exchange);
  • 2nd Stage: Substitution of Mega Bolsa (equities and equity derivatives);
  • 3rd Stage: Substitution of BOVESPA FIX (fixed-income corporate securities) and SISBEX (government securities).

The Exchange implemented the BM&FBOVESPA PUMA Trading System in the spot foreign exchange market on August 29, 2011. The other stages will be executed in the following weeks, at dates to be announced at an opportune moment. As part of the GTS replacement effort, instruments will migratein four-stages. At each stage, orders sent to the Exchange for these contracts will be processed exclusively by the new system. The migration stages are:

  • 1st Migration: Spot foreign exchange contracts.
  • 2nd Migration: Agricultural derivatives.
  • 3rd Migration: Financial derivatives (interest rates, foreign exchange, inflation indices, gold etc.), except for derivatives based on stock indices.
  • 4th Migration: Derivatives based on stock indices.

Automated solution for market surveillance, operation and market oversight

BM&FBOVESPA and BOVESPA Market Supervision (BSM), the Brazilian self-regulatory organization in charge of inspecting and supervising transactions and trade authorizations, announced on September 15 that they will use NASDAQ OMX’s SMARTS Integrity market surveillance platform to monitor trading across their equities and commodities platforms. Using SMARTS Integrity, BM&FBOVESPA and BSM will have a comprehensive portfolio of alert scenarios for market behavior.

> More information

BM&FBOVESPA and BNDES present new portfolio for the Carbon Efficient Index

BM&FBOVESPA and BNDES announced on September 5 the composition of the theoretical portfolio of the Carbon Efficient Index, valid from September to December 2011. The ICO2 is an index composed of stocks in IBrX-50 index companies that have accepted involvement in the initiative, adopting transparent practices as regards greenhouse gas emissions (GGEs). The calculation of shares in the ICO2 index takes into consideration the greenhouse gas emissions and free float of companies.

The portfolio valid as of today can be viewed here.

New head of BM&FBOVESPA for UK

BM&FBOVESPA announces that Sergio Gullo has been hired as the new chief representative for BM&FBOVESPA in London. He will report to BM&FBOVESPA International Business Development Officer Lucy Pamboukdjian and be responsible for operations with the European, Middle Eastern and African markets. Sergio Gullo has been active in the financial market for more than 27 years. He was Business Development Manager in the United Kingdom for BGC Partners and has worked in financial institutions such as Banco Votorantim and Renaissance Capital, specializing in emerging markets and always in commercial areas with a focus on fixed income and structured products. He also held a wide range of positions at Lloyd’s TSB Bank for 19 years, in both Brazil and the UK.

New office in London

The BM&FBOVESPA office in London has moved to One New Change, 4th floor (London, EC4M, 9AF, United Kingdom). The London office may be contacted by e-mail at sgullo@bvmf.com.br and by telephone at (+44) 203 379 3978.

BM&FBOVESPA and Shenzhen Stock Exchange Sign Memorandum of Understanding

BM&FBOVESPA (BVMF) and the Shenzhen Stock Exchange (SZSE) signed on September 26 a memorandum of understanding (MOU) which includes personnel exchange, mutual training and information and experience sharing. Ms Song Liping, President of the Shenzhen Stock Exchange, and Mr. Edemir Pinto, CEO of BM&FBOVESPA, signed the MOU last month during the 5th International, Financial and Capital Market Conference in Campos do Jordão, in the state of São Paulo.

BM&FBOVESPA’s options and capital raising activity

According to the WFE (World Federation of Exchanges), BM&FBOVESPA is ranked as #1 in volume of Stock Options contracts trades and #4 in IPOs (Capital Raised). These and other regulated exchange industry numbers are available at: http://www.world-exchanges.org/statistics

Securities Lending

In August, the total number of securities lending transactions reached a record 141,721 compared to the previous record of 121,971 in May 2011 and to 114,989 in July. Financial volume was BRL 62.63 billion in August from BRL 52.16 billion the previous month.

Ibovespa and other index portfolios, valid for September-December 2011

BM&FBOVESPA has announced the Ibovespa theoretical index portfolio, which will be valid from September 5 to December 29, 2011, based on the closing of the September 2, 2011 trading session. The new portfolio now includes common shares in BR Malls and Cia Hering, which brings its total to 68 stocks in 63 companies.

> More information

BM&FBOVESPA launches app for Google Chrome web browser

BM&FBOVESPA announced on September, 16th that users of the Google Chrome web browser can download a free app that allows real time monitoring of the share prices of companies traded on BM&FBOVESPA and of the directions taken by the main capital market indexes. This tool allows users to customize their share portfolio, storing in the “Favorites” tab the companies that they wish to monitor daily. The app includes films that explain stock investment, wealth creation, and financial education. It also contains messages that are sent to the BM&FBOVESPA twitter channel @Info_BMFBOVESPA

To obtain the BM&FBOVESPA Google Chrome app, please access the Google Web Store and download the file at: https://chrome.google.com/webstore.

2011 EVENTS

Family Office Summit – Latin America

BM&FBOVESPA is currently sending invitations for this event promoted by the World Research Group and which will be held in São Paulo September 26-28. A BM&FBOVESPA representative is scheduled to talk about alternative investments. The summit will present current trends for optimizing effective strategies and alternative methods to produce investments for single and multi family offices in the Brazilian capital market. There will be a special networking session bringing together managers, single and multi family offices, advisors and consultants.

Location: Intercontinental São Paulo – Alameda Santos, 1123, São Paulo , SP.
Date: September 26-28, 2011.

> Full Agenda and Registration

2nd FX Growth Markets Series: Brazil – Profit & Loss

BM&FBOVESPA will join the Profit & Loss FX Growth Markets conference on October 20, 2011 at the Tivoli Hotel in São Paulo. Profit & Loss has been operating its highly successful series of Forex Network and FX Growth Markets conferences for more than 10 years, with regular annual events held in London, New York, Chicago, Singapore, Brazil, Mexico, Colombia, Chile, Shanghai and Toronto, and comes to Brazil for the second time. A BM&FBOVESPA representative will talk at the event.

Location: Tivoli Hotel São Paulo, São Paulo, Brazil
Date: October 20, 2011.

> Full Agenda

BM&FBOVESPA at Chicago’s FIA EXPO

BM&FBOVESPA will exhibit at FIA EXPO 2011. The event attracts approximately 5,000 people from more than 30 countries, from senior staff at brokerage firms and exchanges to floor traders, pension fund managers, corporate treasurers, CTAs and CPOs, and individual investors. BM&FBOVESPA staff will present the Exchange’s products, connectivity, DMA access via Globlex, co-location and others.

Location: Hilton Chicago, USA
Date: October 10-12, 2011

> More info

The World Cup of ETFs and Indexing Latin America

BM&FBOVESPA is lending its support to the World Research Group’s “World Cup of ETFs and Indexing Latin America.” The event aims at providing attendees with the best practices for ETFs use, as well as a comprehensive analysis of market structure, regulations and current and future opportunities. The expected audience includes pension funds, hedge fund managers and investors, investment advisors, financial consultants, and other market participants. A BM&FBOVESPA representative will talk about the Exchange’s ETF products.

Location: São Paulo (TBC)
Date: October 17-18, 2011.

> Full Agenda and Registration

Volumes and trades by Direct Market Access (DMA)

BM&F Segment
In August, BM&F* market segment transactions carried out through order routing via Direct Market Access (DMA) registered 41,417,494 contracts traded and 4,431,750 trades. In July, the volume reached 20,009,841 contracts traded and 2,417,398 trades.

The volumes registered by each access modality in the BM&F segment were as follows:

  • Traditional DMA – 17,540,231 contracts traded, in 1,306,241 trades, in comparison to 7,440,774 contracts and 797,002 trades in July;
  • Via DMA provider (including orders routed via the Globex System) – 14,088,756 contracts traded, in 435,281 trades, compared to 7,040,432 contracts and 258,881 trades in July;
  • DMA via direct connection – 4,210 contracts traded in 830 trades, against 3,691 contracts and 977 trades in July;
  • DMA via co-location – 9,784,297 contracts traded, in 2,689,398 trades, compared to 5,524,944 contracts and 1,360,538 trades in July.

In August, transactions carried out by foreign investors presented by CME to BVMF (who use the Globex-GTS order routing system or access BVMF markets via co-location) totaled 5,308,308 contracts traded, in 1,235,349 trades, compared to 2,897,744 contracts and 688,862 trades in July.

BOVESPA Segment
In August, order routing via DMA in the BOVESPA* segment totaled BRL 138,522,096,000.00 and 17,021,408 trades, from BRL 95,030,778,000.00 and 11,225,193 trades the previous month.

Trading volumes per type of DMA in the BOVESPA segment:

  • Traditional DMA – Volume of BRL 120,451,427,000.00 and 14,098,638 trades from BRL 87,674,861,000.00 and 10,091,956 in July;
  • DMA via co-location – Volume of BRL 16,691,370,000.00 and 2,755,498 trades from BRL 6,381,361,000.00 and 1,007,081 in July;
  • DMA via provider – Volume of BRL 1,379,299,000.00 and 167,272 trades from BRL 974,556,000.00 and 126,156 in July.

* Direct access to the BM&FBOVESPA market segments is carried out through DMA models 1, 2, 3 and 4. In model 1 or traditional DMA, the client accesses the GTS or Mega Bolsa through technological intermediation of a brokerage house. In model 2 or via DMA provider, the client does not use the technological intermediation of a brokerage house, but rather connects to the system through an authorized access provider. DMA via order routing with CME Globex is also a form of DMA model 2. In model 3, the client connects to the system through a direct connection. In model 4 or via co-location, the client installs its own computer within the Exchange’s facilities.

Notes:

The volumes registered by access modality include both buy and sell sides of a trade.

The volumes by access modality for both the BM&F and the BOVESPA market segments have been reported in a consolidated manner in the BM&FBOVESPA statements since May 2009.

MARKET RESULTS

BM&F Segment August 2011

Derivatives markets in the BM&F segment (including financial and commodities derivatives) totaled 78,606,873 contracts and BRL 5.23 trillion in volume in August, compared to 44,199,125 contracts and BRL 3.35 trillion in July. The daily average of contracts traded in the derivatives markets in August was 3,417,690, in contrast to 2,104,720 in July. Open interest contracts ended the last trading day of August with 37,821,302 positions, compared to 30,716,596 in July.

BOVESPA Segment August 2011

In August 2011, the equity markets (BOVESPA segment) financial volume totaled a record BRL 177.906 billion, in a record 16,234,673 trades, with daily averages of BRL 7.73 billion and a record 705,855 trades. This was in comparison to the prior total volume record of BRL 155.55 billion in October 2010, the prior total trades record of 11,172,707 in May 2011 and the prior daily average trades record of 544,88 in February 2011.

Source:BM&FBOVESPA, 20.09.2011

Filed under: BM&FBOVESPA, Brazil, FIX Connectivity, News, Trading Technology, , , , , , , , , , , , , , , , , , , , ,

Brazil: BVMF (BM&F BOVESP) News April 2011, Nr 25

Complete Version Numer 25, April 2011

BM&FBOVESPA launches the “Em Boa Companhia” (In Good Company) program
BM&FBOVESPA launched “Em Boa Companhia – Programa de Sustentabilidade com Empresas” (In Good Company – Sustainability Program with Firms) on April 14.

BM&FBOVESPA and Itaú Unibanco launch Financial Index ETF
IFNC ETF is a fund that tracks the BM&FBOVESPA Financial Index (IFNC). Named IT Now, the new ETF has Itaú Unibanco as its manager.

BM&FBOVESPA announces new selection process for Unsponsored Level 1 BDRs
The winner will issue 10 BDR programs that represent stocks issued by publicly-traded companies with headquarters overseas and with stocks traded in the United States.

More than USD 10 billion in public offerings and follow-ons in 2011
In the year to April 20, BM&FBOVESPA registered more than USD 10 billion in public offerings and follow-ons. There were six Initial Public Offerings (IPOs) in 2011.

BM&FBOVESPA launches the “Novo Valor” (New Value) website
A new website, related to the sustainability and social investment initiatives of the Brazilian exchange, has been available since February 28.

BM&FBOVESPA publishes March ISE report
The ISE Corporate Sustainability Index gained 3.82% in March and in 12 months (Apr/10 to Mar/11) accumulated 10.07% return, according to the monthly ISE bulletin.

“Closing Bells” from CNBC to be broadcast from BM&FBOVESPA trading floor
One of the most important economic journalism shows on U.S. TV, CNBC’s “Closing Bells”, will be broadcast live from the BM&FBOVESPA trading floor on April 25th.

Volumes and trades by Direct Market Access (DMA)
BOVESPA Segment (Equities): In March, BOVESPA* market segment transactions carried out through DMA via co-location registered a record financial volume of BRL 5,393,162,000.00 and a record 812,733 trades.
BM&F Segment (Derivatives): In March, BM&F* market segment transactions carried out through order routing via DMA registered 23,954,251 contracts traded and 2,023,194 trades.

MARKET RESULTS – BM&F Segment March 2011 (derivatives)
In March, derivatives markets (including financial and commodities derivatives) totaled 65,197,860 contracts and BRL 4.27 trillion in volume.

MARKET RESULTS – BOVESPA Segment March 2011 (equities)
In March, equity markets traded BRL 135.68 billion, in 10,321,974 trades, with daily averages of BRL 6.46 billion and 491,523 trades.

Source: BM&FBOVESPA, 20.04.2011

Filed under: BM&FBOVESPA, Brazil, News, , , , , , , , ,

Brazil – Measures to Curb Inflation in Limelight – Monthly Allocation- April 2011

International Scenario Might Calm the Market in April

March brought to Europe, Northern Africa and Asia, a number of serious events, such as the disaster in Japan, civil war in Libya and the fall of the Portuguese Cabinet, which affected most markets negatively. However, we expect the international scenario to improve in April for two main reasons. First, these events were of a non-recurring nature. Second, key indicators suggest economic recovery in China, US and Europe continues, despite all the social and political turmoil mentioned above, and the inflationary pressures.

Brazil – Monthly Allocation – April 2011 detailed report

All attention focuses on the next move by the Central Bank

Inflation continues at a high level, while economic activity also seems intense. Credit figures released in February were high, although there were doubts about the base of comparison, with Carnival holidays having been in February in 2010 and March in 2011. Data on credit suggests that average maturity terms for credit lines increased, which might explain part of this behavior, as it reduces the concern of an increase in the level of interest rate hikes.

This unabated inflation is evidence that Government action was not enough, indicating the need for further measures. We are still in the middle of the interest rate hike cycle intended to curb inflation. In April, we bet on a final 50 basis points hike for this ongoing move, to 12.25%, after which we believe the Central Bank will wait and see if it needs to increase rates further in the final part of the year. After this last move, it is likely that the CB will make use of alternative measures to continue its fight against inflation. We believe that the market mood will depend greatly on what it decides. If it announces further measures in April, we believe market tension should ease while, if it does nothing more, nervousness might prevail.

Another issue not likely to affect the short term, but which should appear more and more on the market’s radar, is the possibility of Moody’s rating agency upgrading the Brazilian sovereign risk. The agency suggested that it might do so by the end of the second quarter. Currently, Brazil remains at the lowest investment grade level, ten levels below the top of the range.

After the results season, and with this expectation of a tense local scenario, we have changed our portfolio for April. We increased the weight of Vale to 20 from 15% and made substitutions with the same weights: 1) Eletropaulo for Tractebel, with dividends already paid out, and 2) We substituted MRV and PDG for Even and EZ Tec because the first two reported reduced margins. Finally, we withdrew Telesp, as the share performed well and we see no short-term catalyst.

Source: BANIF, 01. April 2011

Filed under: BM&FBOVESPA, Brazil, Exchanges, Japan, Latin America, News, , , , , , , , , , , ,

Alternative Latin Investor Issue 7 November/December

Alternative Latin Investor Issue 7 November/December 2010 click here for a free issue Issue 7  

Content Index

Infrastructure
  • Investing in listed shares of Latin American Infrastructure Companies
Emerging Markets
  • Latin America vs. Asia
Agribusiness
  • Ahuacatl: A Fruite for the Ages
Art
  •  Latin American Art Gains Momentum in Europa
Commodities
  • Brazil’s Energy Industry in the Wake of New South
Philanthropy
  • One Economy: Leveraging the Power of Technology to Improve Lives
Profiles
  • ALI Speaks with Bertrand Delgado: Senior Analyst for Emerging Markets and Latin America at Roubini Global Economics
Real Estate
  • Finding and Entrance into Mexico’s Affordable Housing Construction Finance Market.
FOREX
  • Increasing Threat of Currency “WAR’s” to Ignite 4th Quarter FX Activity?
Renewable Energy
  • Argentina’s Energy Framework: Preparing for an Onslaught of Renewable Energy Investment
  • Winds of Change: Harnessing Wind Energy in Brazil
Regulations
  •  New Bills Proposed to Amend the Law on Finance Entities in Argentina
Opinion
  • How will Nestor’s Passing Affect Argentina
Ventures
  • ALI speaks with Element 360 Founder, Chad Martin

Source: Alternative Latin Investor 02.12.2010

Filed under: Argentina, Banking, Brazil, Central America, Chile, Colombia, Energy & Environment, Exchanges, Latin America, Mexico, Risk Management, Wealth Management, , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Brazil: BM&FBOVESPA Monthly News October 2010

Complete Version

 ETF financial volume grows in October
The financial volume registered in October by the seven BM&FBOVESPA Exchange-Traded Funds (ETFs) reached BRL 654.85 million, in contrast to BRL 646 million in September.
BM&BOVESPA 2010 third quarter earnings
Net revenues of BRL 486.9 million increased 27.1% year-over-year and EBITDA of BRL 336.4 million climbed 28.4% year-over-year, whereas EBITDA margin remained at 69.1%.
Important records set on BM&FBOVESPA in October
There were important BM&FBOVESPA records in October in terms of total financial volume, average daily volume and number of trades. There were also records in securities lending and live cattle markets.
Unprecedented studies into the Brazilian carbon market
The studies contain consolidated and contextualized information, which should contribute towards developing Brazil’s carbon market.
Public and private sectors discuss climate change in São Paulo seminar
Seminar seeks development of the carbon credit market and of other financial mechanisms that can help reduce the impact of climate change.
Latest BM&FBOVESPA IPOs
On October 25 and November 1 respectively, Brasil Insurance Participações e Administração S.A. and HRT Petroleo joined BM&FBOVESPA’s Novo Mercado
Five years of the ISE Corporate Sustainability Index
BM&FBOVESPA is promoting an international seminar to celebrate the 5th anniversary of its ISE Corporate Sustainability Index.
Volumes and trades by Direct Market Access (DMA) – BM&F Segment (Derivatives)
In October, BM&F Bovespa market segment transactions carried out through order routing via Direct Market Access (DMA) registered 17,469,654 contracts traded and 2,355,643 trades.
Volumes and trades by Direct Market Access (DMA) – BOVESPA Segment (Equities)
BOVESPA market segment transactions carried out through order routing via Direct Market Access (DMA) registered a financial volume of BRL 106,316,674,000.00 and 9,853,783 trades.
MARKET RESULTS – BM&F Segment October 2010
In October the derivatives market segment totaled 42,754,273 contracts and BRL 2.97 trillion in financial volume.
MARKET RESULTS – BOVESPA Segment October 2010
In October the equity markets segment traded a record BRL 154.5 billion in 10,220,821 trades, with daily averages of a record BRL 7.77 billion and a record 511,041 trades.

Filed under: BM&FBOVESPA, Brazil, Energy & Environment, Exchanges, Latin America, News, Trading Technology, , , , , , , , , , ,

Brazil: BM&F BOVESP Monthly News September 2010

BVMF NEWS – September 2010 Complete and Detailed Version

  • A new intraday price limit for the Brazilian equity market
    The final amendments to the Rules for Differentiated Corporate Governance Levels
  • · BM&FBOVESPA presents its first Greenhouse Gas Emissions Inventory
  • · ETF transactions grew 58% in August YoY
  • · Share lending hits record high
  • · BM&FBOVESPA participates in international events
    The exchange will participate in the FPL Mexican Briefing 2010. In this week, participates in City Week and Brazilian Chamber, both in London.
  • · Volumes and Trades by Direct Market Access (DMA)
  • · MARKET RESULTS – BM&F Segment August 2010

MARKET RESULTS – BOVESPA Segment August 2010

Filed under: BM&FBOVESPA, Brazil, Exchanges, Latin America, Mexico, News, Trading Technology, , , , , , , , , , , ,

Brazil: BM&FBOVESPA Monthly News August 2010

BVMF NEWS – August 2010 Complete and Detailed Version

  • CVM authorizes BM&FBOVESPA to implement new DMA modalities in the Bovespa segment
  • New Fee Policy for High-Frequency Traders (HFT)
  • BM&FBOVESPA presents new financial education campaign
  • Itaú Unibanco S.A. is selected to manage the Financial ETF
  • Reduction in the round lot for ETFs to facilitate the access of individual investors
  • Deadline extended for approval of amendments to the listing rules for the special listing segments
  • On August 13th BM&FBOVESPA announced its 2010 second quarter earnings
  • MARKET RESULTS – BM&F Segment July 2010
  • MARKET RESULTS – BOVESPA Segment July 2010

Filed under: BM&FBOVESPA, Brazil, Exchanges, Latin America, , , , , , , , , , , , , , , ,

Brazil: BM&FBOVESPA Monthly News July 2010

Proposed amendments to the listing rules for BM&FBOVESPA special listing segments
These proposals are subject to review by the listed issuers, who have until August 6 to comment. The revised listing rules are expected to take effect in November, after the closed hearing and final approval.
Offerings raise BRL 22.5 billion on BM&FBOVESPA in first seven months of 2010
This was double the proceeds raised in the corresponding period of 2009.
Brazilian presidential candidate Marina Silva meets with representatives of the international financial community in New York
The objective of this meeting is to discuss the guidelines for Brazil’s 2011 development plan. This event will be held at 10:30 a.m. on July 22, 2010 in New York City.
Volumes and Trades by Direct Market Access (DMA)
In June, the BM&F segment posted a trading volume of BRL 117,086,953,000 from 12,189,291 trades, in comparison with a volume of BRL153,982,431,000 and 14,667,970 trades in May.
BM&FBOVESPA, IDB and World Bank discuss challenges related to carbon financial instruments
The meeting allowed financial institutions to exchange experiences on the carbon markets in Latin America and the Caribbean (LAC).
Citigroup selected to manage process for Unsponsored Level I Brazilian Depositary Receipts
After the official opening of bid proposals, Citigroup Brazil is authorized to request the registration of 10 (ten) Brazilian Depositary Receipts.
Exchange Traded Funds (ETFs) attract even more individual investors
The participation of individual investors in ETFs rose from 15.5% in May to 23% in June. Volume totaled BRL515.30 million from 12,083 trades in June
Corporate Sustainability Index (ISE) completes five years with enhancements to portfolio
The companies listed on ISE are recognized for their high level of commitment to sustainability and social responsibility.
BM&FBOVESPA receives Investment Grade Rating From Moody’s
The upgrade reflects the company’s low level of financial leverage, key credit strength and good financial flexibility, which can be preserved even with long-term debt in its capital structure
MARKET RESULTS – BM&F Segment June 2010
The derivatives market segment totaled 43,313,807 contracts and BRL2.87 trillion in volume. Average daily trading volume in the derivatives markets was 2,062,562.
MARKET RESULTS – BOVESPA Segment June 2010
The equities market segment traded BRL122.6 billion in 8,371,028 trades, with daily averages of BRL5.84 billion and 398,620 trades.Complete Report BVMF NEWS July 2010


Filed under: BM&FBOVESPA, Brazil, Exchanges, Latin America, News, , , , , , , , , , ,

BM&F BOVESPA News June 2010

“Brazil Easy Investing” will allow foreign investors to order routing in their local currencies
BM&FBOVESPA and Chi-X Global are jointly developing an order routing software designed for the trading of Brazilian equities in foreign currencies.
Launch of five new Currency Futures Contracts in the BM&F segment for trading
Australian Dollar (AUD), Canadian Dollar (CAD), Japanese Yen (JPY), Pound Sterling (GBP) and Mexican Peso (MXN) contacts are authorized for trading.
DMA trading reaches historic levels in the BM&F segment
Derivatives trading via Direct Market Access (DMA) set a new record in May, with 20,949,961 contracts traded in 3,040,357 trades. Other records were set during the same period.
Bidding Process for the selection of a manager for the new financial ETF
Interested financial entities must submit their proposals by no later than July 19th. The winning bidder will be the entity that provides the highest value commitment.
Important agreement to stimulate the relationship between entrepreneurs and investors
The partnership of BM&FBOVESPA and São José dos Campos Technology Park hopes to establish a culture of entrepreneurship and innovation, through professional training.
Brazil elected as the most trustworthy country among the developing nations for doing business
A survey of investors from all over the world showed that they considered Brazil to be the developing country with the best corporative governance.
WFE Working Committee Meeting will be hosted by BM&FBOVESPA
BM&FBOVESPA will host the World Federation of Exchanges (WFE) Working Committee on July, 1st and 2nd, in São Paulo. Main topic to be discussed will be “Sustainable Investment”
Corporate Sustainability Index (ISE) completes five years with enhancements to the next portfolio
The companies listed on ISE are recognized for their high level of commitment to sustainability and social responsibility.
MARKET RESULTS – BM&F Segment May 2010
The derivatives market segment totaled 52,063,826 contracts and BRL3.57 trillion in volume. The average daily trading volume in the derivatives markets was 2,479,230.
MARKET RESULTS – BOVESPA Segment May 2010
The equities market segment reached a total volume of BRL152.93 billion, in 10.261.145 trades, setting a new record, with daily averages of BRL7.28 billion and 488,626 trades.

Source: BM&FBOVESPA, 30.06.2010

Filed under: BM&FBOVESPA, Brazil, Exchanges, Latin America, News, , , , , , , , , , , , , , , , ,

Brazil: BM&FBOVESPA Exchange news and events March 2010

SunGard Global Trading authorized as DMA provider

BM&FBOVESPA has authorized SunGard Global Trading to act as a provider of direct market access (DMA) for the BM&F segment (derivatives markets). SunGard offer brokerage houses and its clients an order routing system that allows direct trading of financial and agricultural derivatives traded at the Exchange. BVMF is also working with SunGard to develop a back-office solution for North American clients that trade agricultural and financial derivatives in Brazil.

Voluntary carbon credit market auction

BM&FBOVESPA will hold on 08 April 2010, a voluntary carbon credit market auction. A total amount of 180,000 voluntary carbon units from projects managed by the Social Carbon Company will be auctioned. The auction will be held in three sessions, with a lot traded per session. The initial bidding prices will be indicated by lots that vary in accordance to the vintages and are priced at BRL 10.00 to BRL 12.00 per unit. The first transaction will occur at 1:00 p.m. (Brazil Time) and will be carried out by BM&FBOVESPA’s Carbon Credit Trading System.

White paper on post-trade infra-structure

The Exchange divulged, on March 11th, a white paper entitled “BM&FBOVESPA’s Post-Trade Infra-Structure – Integration Challenges and Opportunities”. The document aims to stimulate debate among market participants, regulatory agents, and others interested in the integration of post-trade activities and systems (netting, settlement, central counterpart, and central depository). BVMF expects the participants to contribute to the consolidation of the path to be adopted in relation to integration opportunities. The white paper can be found at www.bmfbovespa.com.br, in Notices.

BM&FBOVESPA establishes new historic record in contracts traded and in ID futures

BM&FBOVESPA established on 18 March 2010 a new historic record in the total number of contracts traded in the derivatives segment, with 10,157,779 contracts. The previous record of 5,716,789 contracts was set on 17 March 2010. Trading of ID futures contracts also registered a historic record on 18 March 2010, reaching a mark of 6,093,795 contracts. The previous record of 4,544,750 contracts was also set on 17 March.

UN´s Principles for Responsible Investment

On March the 3rd, BM&FBOVESPA formalized its adherence to the Principles for Responsible Investment (PRI), a United Nations initiative developed by financial markets to promote responsible investment. The document was signed during the first international PRI meeting held in Brazil. BM&FBOVESPA intends to set an example for other investors to adhere to the principals and also stimulate listed companies to report their socio-environmental initiatives to the market.

BM&FBOVESPA announces earnings for fourth quarter of 2009

Net income of R$220.2 million increased 8.8% year-on-year, whereas adjusted net income of R$315.3 million. 4Q09 net revenues of R$424.8 million increased 19.5% from the same quarter one year ago (pro forma). In a comparison of the twelve months to December 2009, net revenues dropped 6.2% to R$1,502.5 million. 4Q09 operating expenses reached R$ 160.4 million, a 25.2% increase from 4Q081 (pro forma) and a 21.0% increase from 3Q09’s. In 2009, recurring expenses reached R$446.7 million, a 12.9% drop from 2008 (pro forma), as adjusted by expenses related to employee compensation in 1Q09 (R$ 18 million) and in line with the target of R$450.0 million for 2009. EBITDA totaled R$276.4 million for the fourth quarter, up 17.3% from 4Q08 (pro forma). Click here for full earnings release.

BM&FBOVESPA begins trading three new ETFs

As of 23 February 2010, BM&FBOVESPA began trading three new Exchange Traded Funds (ETFs): iShares Brazil Index IBrX-100 (BRAX11); iShares BM&FBOVESPA Consumption Index (CSMO11); and iShares BM&FBOVESPA Real Estate Index (MOBI11). The new ETFs are managed by BlackRock Brazil. The Exchange also offers four other ETFs, which track the Ibovespa, Small Cap, MidLarge Cap, and IBrX-50 indices. Click here for further information on BM&FBOVESPA’s ETFs.

Exchange’s new communication interface with Mega Bolsa

As of April 20, 2010, the Mega Direct, a new electronic communication interface, will become the only form of access for all automatic DMA connections to the Mega Bolsa, BVMF equities segment trading platform. The tool enables the insertion, modification, and cancelation of offers placed on the Mega Bolsa. The new interface performs up to tenfold faster than the current system.

Exchange’s meeting in São Paulo

BVMF hosted the Ibero-American Federation of Exchanges meeting in São Paulo on March 19. The objective of the event was to bring together member exchanges from Latin America, Portugal, and Spain to debate the latest market trends of the region. The themes discussed were the recent regional integration initiatives; regulation; and the development of the derivatives market in Latin America. The meeting also featured a presentation by BVMF on its current strategic partnerships with CME Group and Nasdaq OMX.

Carbon Efficient Index

BM&FBOVESPA will receive until March 31st comments and suggestions to improve the development of the calculation methodology of the new Carbon Efficient Index (ICO2). The creation of the new index was announced on December 15th, 2009, by the Exchange and the Brazilian Development Bank (BNDES), during the 15th United Nations Climate Change Conference (COP15), in Copenhagen.

Volumes and trades by Direct Market Access (DMA)

In February, derivatives market segment registered a total of 12,537,023 contracts traded via DMA*, with 1,485,032 trades carried out through the GTS trading platform. In January, the total was 9,917,768 contracts traded in 1,203,321 trades. In February, trading via DMA (including all DMA modalities) registered increases both in number of trades and contracts traded, establishing the following records: (1) a daily average of 696,501 contracts traded, compared to the previous record of 497,049 in October 2009; (2) the daily average of orders routed via the CME Globex – BM&FBOVESPA GTS reached 176,216 contracts, compared to the prior mark of 154,600 in October 2009.

Traditional DMA – 5,807,581 contracts traded, in 505,698 trades, in comparison to 4,590,025 contracts traded and 446,674 trades;

Via DMA Provider – 3,200,086 contracts traded, in 75,421 trades, in comparison to 2,723,958 contracts traded and 61,019 trades;

DMA via order routing with Globex (CME Group’s electronic trading platform) – 3,171,892 contracts traded, in 816,205 trades, in comparison to 2,284,904 contracts and 618,746 trades;

DMA via co-location – 357,464 contracts traded, in 87,708 trades, in comparison to 318,881 contracts traded, in 76,882 trades.

BM&FBOVESPA market performance – February 2010

BM&F Segment

Derivatives markets in the BM&F segment totaled 39,306,238 contracts and BRL 2.47 trillion in volume in February. That compares to 36,217,359 contracts and a volume of BRL 2.65 trillion in January. The daily average of contracts traded in the derivatives markets set a new record in February, with 2,183,679 contracts, in contrast to the previous record of 2,172,046 in March 2008.

Bovespa Segment

In February, equity markets (Bovespa segment) reached a total volume of BRL 118.06 billion, in 7,355,993 trades, with daily averages of BRL 6.55 billion and 408,666 trades, respectively. In January, total volume reached BRL 129.10 billion, 8,051,640 trades, with daily averages of BRL 6.79 billion and 423,771 trades, respectively.

Source: BM&FBOVESPA, 26.03.2010

Filed under: BM&FBOVESPA, Brazil, Chile, Colombia, Exchanges, Latin America, Mexico, News, Peru, Risk Management, Trading Technology, , , , , , , , , , , , , , , ,

BM&FBOVESPA Voluntary Carbon Credit Market Auction – Sale Will Offer 180,000 Carbon Credits Managed By The Social Carbon Company

The Brazilian Securities, Commodities and Futures Exchange – BM&FBOVESPA will hold on 08 April 2010, a voluntary carbon credit market auction. A total amount of 180,000 voluntary carbon units from projects managed by the Social Carbon Company will be auctioned.

The emission reductions were generated from 9 renewable biomass projects administered by the Social Carbon Company in ceramic factories. These plants are located in the Brazilian states of São Paulo (Panorama, Paulicéia), Pará (São Miguel do Guamá), Pernambuco (Lajedo, Paudalho), Sergipe (Itabaiana), Minas Gerais (Ituiutaba), and Rio de Janeiro (Itaboraí). The projects involve fuel switching to renewable biomass fuels like sugarcane bagasse, açai seeds, and rice husks, among others. The carbon credits have been validated by certified entities authorized by the United Nations Framework Convention on Climate Change (UNFCCC).

The auction will be held in three sessions, with a lot traded per session. The initial bidding prices will be indicated by lots that vary in accordance to the vintages and are priced at BRL 10.00 to BRL 12.00 per unit. The first transaction will occur at 1:00 p.m. (Brazil Time) and will be carried out by BM&FBOVESPA’s  Carbon Credit Trading System. The financial settlement will be coordinated by Liquidez DTVM brokerage house.

BM&FBOVESPA’s Carbon Credit Market

The Brazilian Exchange has previously organized two carbon credit auctions in 2007 and 2008. Both auctions offered Certified Emissions Reductions (CERs), held by the São Paulo Municipal Government, and generated by the Bandeirantes and São João landfill projects.

The objective of BM&FBOVESPA’s carbon market is to foment carbon credit trading in Brazil within an organized trading environment. It also provides Brazilian companies an opportunity to sell their GHG emission reduction projects in the country. The Exchange’s trading platform offers global participants a secure, transparent, and efficient trading atmosphere with competitive prices.

Source: MondoVisione, 26.02.2010

Filed under: BM&FBOVESPA, Brazil, Energy & Environment, Exchanges, Latin America, News, , , , , , , ,

Brazil: BM&FBOVESPA Exchange News and Events December 2009

BM&FBOVESPA and SunGard developing clearing and margin support for US Futures Commission Merchants

BM&FBOVESPA and SunGard are working to expand the automated clearing support for BVMF’s financial and agricultural futures and options exchange-traded derivatives — within SunGard’s GMI clearing and accounting solution. SunGard’s collaboration with BM&FBOVESPA will provide US-based FCMs with the ability to process and clear BM&FBOVESPA trades using GMI.

GMI’s new BM&FBOVESPA derivatives module is expected to be available in the second quarter of 2010 to help clients automate the process of loading trades, performing bookkeeping functions, and calculating margins and fees. GMI’s trade load functionality will help US FCMs to seamlessly import cleared trades from Brazil directly into their GMI systems. GMI will also provide clients with BM&FBOVESPA initial and variation margin calculations to help firms monitor daily charges and fees, and reconcile information.

 Stock index focused on carbon emissions

BM&FBOVESPA and the Brazilian Development Bank (BNDES) announced during the 15th United Nations Climate Change Conference (COP15), in Copenhagen, the development of the Carbon Efficient Index, that will be structured in 2010 based on the Brazil Index 50 (IBrX-50), which is composed by the 50 most traded stocks at BM&FBOVESPA. The objective of this index is to stimulate listed companies to reduce their emissions of greenhouse gases (GHG) and adopt environmental practices. The index will be weighed by the inventory of GHG emissions that result from all the activities associated to a company.

Stock index to measure financial sector

The Brazilian Securities, Commodities and Futures Exchange will begin, on 4 January 2010, to calculate and disclose the BM&FBOVESPA Financial Index, in real-time. This is the Exchange’s 15th stock index and it will trade under the ticker symbol IFNC. The IFNC index will measure the returns on stocks from the most representative companies of the Brazilian financial sector. These include banks, financial institutions, asset management firms, credit card issuers, insurance companies, among others.

 DMA trading volume increases in 2009

Direct Market Access (DMA) trading of the derivatives market segment at BM&FBOVESPA reached a total of 71,236,761 contracts traded, with 7,434,360 trades carried out through the GTS trading platform, from January to December (until 12/21). Currently, 42 brokerage houses are authorized by the Exchange to offer DMA access and 25 Independent Software Vendor (ISV) solutions have been certified. The volumes registered by access modality during 2009 are as follows:

Traditional DMA
46,583,083 contracts traded, in 4,649,949 trades.
DMA via order routing with CME Globex
14,063,583 contracts traded, in 2,415,164 trades.
Via DMA Provider
9,627,543 contracts traded, in 209,057 trades.
DMA via co – location
962,552 contracts traded, in 160,190 trades.

 The Bovespa Segment doubles its daily trading volume to 1.5 million transactions

The average daily volume of the Bovespa Segment has jumped from 750,000 to 1.5 million transactions. This increase is the direct result of the expansion of BM&FBOVESPA’s technological facility, which has increased its data processing capacity, enhanced its algorithms and established a new set of rules and calculations for the settlement process. This new model has reduced the volume of settlement transfers by 70%. In November the average daily trading volume was 381,225.

Mini contracts have a new risk management structure

BM&FBOVESPA has implemented a new risk management model for the Coffee, Live Cattle, US Dollar and Ibovespa futures mini contracts, which are traded on the WebTrading (WTr) platform. With the simplification of this new risk management model, several procedures have been changed, among which we highlight the utilization of settlement, risk management and collateral models that are identical to those utilized for the standard contracts, with no need to pledge collateral in advance when trading.

 Exchange’s contracts are among the most liquid in the world

According to the Futures Industry Association (FIA), BM&FBOVESPA offers two of the world’s most traded futures contract in the world. The U.S. Dollar Futures is currently ranked the number one exchange traded currency futures contract and the One-day Interbank Deposit Futures is the fifth highest traded interest rate futures contract. On the equity side, the Brazilian Exchange holds approximately 89% of Latin America’s derivatives market volume and is the 5th market in capital raising activity in 2009, according to the World Federation of Exchanges.

Trading costs has new web page for derivatives markets

BM&FBOVESPA has launched a new web page for its derivatives trading costs. The page provides the trading costs related to transactions carried out in the Exchange’s derivatives markets. Users can now search BVMF’s trading costs by market, commodity, modality, and expiration date. In order to access the new trading costs page, click here.

Flexible options on iShares Ibovespa Index Fund contracts

BM&FBOVESPA has authorized, as of 12/07/2009, Flexible Call and Put Options on iShares Ibovespa Index Fund (BOVA11) for trading. This new OTC derivatives contract allows financial institutions to structure an array of investment strategies for their clients like, protected capital, for example. For further information, click here

 BM&FBOVESPA market performance – November 2009

BM&F Segment
Derivatives markets in the BM&F segment (including financial and commodities derivatives) totaled 27,422,967 contracts and BRL 1.76 trillion in volume in November. That compares to 34,670,732 contracts and a volume of BRL 2.38 trillion in October. The daily average of contracts traded in the derivatives markets in November was 1,443,314, compared to 1,500,242 in the previous month.

Bovespa Segment
In November 2009, equity markets (Bovespa segment) reached a total volume if BRL 122.99 billion, in 7,243,282 trades, with daily averages of BRL 6.47 billion and 381,225 trades, respectively. In October, total volume reached BRL 154.25 billion, with 9,161,252 trades. October daily averages reached BRL 7.34 billion and 436,250 trades.

Source: BM&FBOVESPA, 25.12.2009

Filed under: BM&FBOVESPA, Brazil, Energy & Environment, Exchanges, Latin America, News, Trading Technology, , , , , , , , , , , , , , , , ,

BM&FBOVESPA And BNDES Announce Development Of Stock Index Focused On Carbon Emissions – Based On The IBrX-50 Index, The Carbon Efficient Index Will Weigh Companies’ GHG Emissions

The Brazilian Security, Commodities and Futures Exchange (BM&FBOVESPA) and the Brazilian Development Bank (BNDES) announced today, during the 15th United Nations Climate Change Conference (COP15), in Copenhagen, the development of the Carbon Efficient Index. The objective of this index is to stimulate listed companies to reduce their emissions of greenhouse gases (GHG) and adopt environmental practices. The index will be weighed by the inventory of GHG emissions that result from all the activities associated to a company.

The Carbon Efficient Index will be structured in 2010, based on the Brazil Index 50 (IBrX-50), which is composed by the 50 most traded stocks at BM&FBOVESPA, weighed by free float. The weight of each stock on the new index will be based on the company’s participation on the IBrX-50 index and also its GHG emissions efficiency. This is measured by the relation between these GHG emissions and the company’s revenue, the smaller this relation is, the greater the efficiency.

Therefore, companies with more GHG emissions efficiency, in relation to the other companies of the same sector in the portfolio, may have a bigger weight in the new index, in comparison to their participation in the IBrX-50 index. On the other hand, less efficient companies, in terms of GHG emissions, will have a reduced participation in the new index.

The index’s goal is to motivate the most heavily traded Brazilian companies to measure and manage their GHG emissions; to bring more transparency about these emissions; and create an investment opportunity for environmentally aware investors. Both BNDES and BM&FBOVESPA firmly believe that this collaboration will help foster a sustainable corporate environment and prepare companies for a future economy of low carbon emissions.

Source: MondoVisione, 16.12.2009

Filed under: BM&FBOVESPA, Brazil, Energy & Environment, Exchanges, Latin America, News, , , , , , , , , , , , ,

Brasil Mata Viva And Markit Announce Brazilian Environmental Alliance – 13 Million Pending Issuance Units Listed On Markit’s Environmental Register

Markit, a leading, global financial information services company, and Brasil Mata Viva, a Brazilian standards framework for certifying carbon credits from avoided deforestation and Reduced Emission from Deforestation and Degradation (“REDD”), today announced an alliance with a new environmental market in the Brazilian State of Goiás.

The market is being developed with the coordination of the consulting firm IMEI Consultoria e Treinamento Ltda (IMEI) and Bolsa de Títulos e Ativos Ambientais do Brasil (BTAAB – Environmental Bonds and Assets Exchange of Brazil), a Goiânia-based financial exchange for the trading of environmental-related credits. IMEI and BTAAB have selected Markit’s Environmental Registry as the registry system for carbon credits resulting from the State’s projects of avoided deforestation and REDD.

The listed credits will be created and validated in Brazil under the standards framework established by IMEI and BTAAB known as Brasil Mata Viva. Markit will provide the secure online registry facility for the efficient and transparent issuance of credits, as well as ownership transfer and retirement certification. The robust offering provided by Markit’s global environmental registry will help facilitate the sale and ongoing success of the Brasil Mata Viva Credits.

Maria Tereza Umbelino, Executive Director of IMEI, Consultoria e Treinamento Ltda, said: “This new alliance with Markit will provide credibility to the environmental assets created by the Brasil Mata Viva Program. Markit’s secure and transparent credit registry will faciliate the provision of and access to reliable information about the credits available to the market.”

Ary Santos, Superintendent of the Brazilian Institute of the Environment and Renewable Natural Resources (IBAMA) and a representative of the Ministry of Environment in the Brazilian State of Goiás, said: “Brasil Mata Viva has been working in cooperation with and along the guidelines required by the State’s forestry conservation and restoration program under our coordination (Prolegal). We support their work with Markit’s internationally recognized carbon registry and the transparency they bring to this program.”

Today, 13 million Pending Issuance Units (PIUs), which will be validated according to the Brasil Mata Viva standards framework, will be issued on Markit’s Environmental PIU Registry. PIUs represent a contractual right to an emission reduction credit that is in process of being verified. Large scale projects, particularly those related to REDD, can take long periods of time to generate their issued credits. The market uses PIUs to facilitate the sale and management of expected credits. These 13 million PIUs represent the saving or replacement of approximately 40,000 hectares of forest and managed lands in the state of Goiás.

Helen Robinson, Managing Director of Markit’s Environmental Registry, added: “The development of the Brasil Mata Viva Program and the creation of an exchange on which to buy and sell these carbon credits, confirms the commitment of Brazil in its focus on reducing emissions. Forestry preservation and restoration is a key focus in climate discussions and Markit is pleased to support this innovative program designed to protect Brazilian forests.”

Source:MondoVisione, 16.12.2009

Filed under: BM&FBOVESPA, Brazil, Energy & Environment, Exchanges, Latin America, News, Risk Management, , , , , , , , , , , , , ,

China:Wind Power Dilemma: Money Blows Away

Rapid, government-subsidized expansion of China’s wind power industry has led to excess capacity and investment waste.

(Caijing Magazine) A cold front swept across northern China’s Inner Mongolia region in early November, forcing a wind energy farm at Xilin Gol to curtail operations – even as a brisk breeze whistled through idle turbine blades.

“When that much wind is moving through, the generators can’t make electricity,” explained Ma Zhanxiang, vice president of the Inner Mongolia Electric Power Industry Association (EPIA). “Money just blows by.”

The turbines were forced to shut down not because the Mongolian wind was too strong, or for mechanical reasons, but because the system for distributing power from Xilin Gol and other wind farms built in recent years in northern China is simply too weak.

When cold weather arrives, wind farms have to compete for transmission space on a power distribution grid buzzing with electricity generated by the region’s coal-fired thermal heating plants, which fire up in winter to supply heating for local residents as well as electricity.

According to EPIA, Inner Mongolia’s installed wind power capacity approaches 3.5 gigawatts, and currently nearly one-third of that is sitting idle. The remaining two-thirds capacity is supplied by turbines that run erratically, shutting off and on according to demand.

“Wind power is too concentrated” in certain regions of China including Inner Mongolia, Ma said. “When there is wind, wind power plants need to generate electricity. But power grids get overwhelmed.” And that wastes money. Nationwide, some 5 million gigawatts of wind power generating capacity never made it to the grid during the first half of 2009. Since wind farm construction costs some 10,000 yuan per kilowatt, the total idle investment is worth about 50 billion yuan.

“The winter wind blows hard, but things aren’t easy for wind power,” Ma told Caijing.

Outside Inner Mongolia, wind power capacity is unevenly spread across sections of Gansu Province in the northwest, Heilongjiang and Jilin provinces in the northeast, and coastal areas such as Jiangsu Province.

With the exception of Jiangsu wind farms, most of the nation’s wind energy operators concentrate power generation at a grid terminus or in areas with high concentrations of thermal plant capacity. And factors such as local market demand, power grid links, wind farm expansions and capacity peaks contribute to the fact that equivalent full load hours (EFLH) are relatively rare for wind farms. An EFLH is equal to an annual power load divided by installed capacity.

Various experts have started weighing in with suggestions for reducing overcapacity and streamlining wind energy in China, which is government subsidized. For example, State Council researchers recently called for a “systematic” approach to promoting healthy development of the industry.

“Overcapacity in areas of high wind power concentration cannot be ignored,” a China Electricity Council (CEC) expert told Caijing.

Idle Power

Production restrictions at wind farms have become all too common. In the first half of the year, for example, nearly 150 million kilowatt hours of generated power went unused in the Guazhou and Yumen areas of Gansu because the grid could not absorb the power they produced. This represented 27 percent of Guazhou’s and 33 percent Yumen’s actual wind power production.

To better understand problems with power capacity loss and grid restrictions, a joint study was launched in June by the Society of Electrical Engineering’s Wind Power Committee and Tidal Power Committee. Investigators found power restrictions affecting 48 wind farms operated by the country’s seven largest wind power developers, which supply 50 percent of the nation’s wind power.

Installed capacity at affected wind farms totaled 4.4 million kw at the end of 2008, or more than 70 percent of the 6 million kw installed capacity at all plants operated by the seven companies. Grid restrictions cost 370 million kwh in lost power in 2008, which is an amount equal to 103 EFLHs.

Since these seven largest wind power developers supply 50 percent of the nation’s wind-generated electricity, grid restrictions could mean wind power losses in 2008 were as high as 740 million kwh nationwide, or close to 6 percent of the national wind power generating capacity of 12.8 billion kw. In the first five months of 2009, losses were about 620 million kwh – an EFLH of 140 hours, or more than 200 hours on an annual basis. As a result, electricity use restrictions through 2009 were expected to be even more pronounced, and could result in losses of more than 2 billion kwh for the full year.

National Development and Reform Commission (NDRC) data illustrates the seriousness of idle wind power capacity. From January to September 2009, NDRC said, wind farms with generating capacity of at least 6 megawatts produced 18.2 billion kwh of electricity nationwide – up 117 percent over the same period 2008. But that was only about 0.45 percent of all the electricity churned out by China’s major power plants, and was significantly less than wind power’s proportion of total installed capacity, which is 1.15 percent.

SOE Factor

Why is China suffering from imbalanced wind power capacity? Some point a finger at the state-owned enterprises (SOEs) that build and operate wind farms.

“Most wind power projects are owned by SOEs, while wind power equipment makers are mostly private and foreign-funded enterprises,” a CEC expert told Caijing. “This is an interesting phenomenon, and to a certain extent reflects the problems of wind power.”

CEC research said nearly all of China’s wind power producers are state-owned. In the seven provinces with major wind power development projects, central SOEs comprise 73 percent of the 92 wind power companies and control 81 percent of total installed capacity.

China began large-scale wind farm construction in 2005, and this year NDRC began arranging bids for wind power concessions. So far, bids have been completed for 15 projects, with each slated to provide more than 10 gigawatts.

Wind power is considered a crucial path for power industry SOEs seeking to expand installed capacity. And it’s a path encouraged by the government. For example, a worker at state-owned China Power Investment Corp. (CPI) told Caijing the government plans to more strictly control additional, large-scale thermal energy projects over the next two years. And the government has refused to approve any new major hydropower projects for the past two years.

“State-owned power generation companies are now striving to expand installed capacity through wind power,” the CPI worker said.

Moreover, wind power is the biggest recipient of 4.5 billion yuan in renewable energy subsidies that the government finances by adding an extra 0.002 yuan charge to each kilowatt of electricity sold nationwide.

The National Energy Board announced plans early this year to raise the wind power generation goal to 20 million kw next year and 100 million kw by 2020. The board also ordered the construction of wind power bases exceeding 10 megawatts in Gansu, Inner Mongolia, Jiangsu and Hebei Provinces within 10 years in accord with a government policy calls “build large bases, integrate with the grid.”

Meanwhile, turbine manufacturers are seizing opportunities by bumping up production capacity. According to statistics from Li Junfeng, deputy director of NDRC’s Energy Office, China today has more than 70 wind power equipment manufacturers, up from six in 2004. Installed capacity has also grown 25-fold, from 468,000 kilowatts in 2002 to 1.2 gigawatts at the end of 2008.

Too Much

But all that capacity is not necessarily indicative of a healthy industry. A glut of built turbine manufacturing plants and wind farms means too much wind power capacity for the demands of the grid.

Inner Mongolia’s situation is a clear example. Its installed capacity – 50 gigawatts — is the country’s largest, but the excess at wind farms has reached a crisis level. EPIA counts some 10 gigawatts in the region, including 3.49 gigawatts of wind power, as excess installed capacity.

Nevertheless, more power is on the way in Inner Mongolia: Projects representing hundreds of thousands of kilowatts in additional capacity are currently under construction.

Thermal power units provide much of the electricity that powers Inner Mongolia, raising unique challenges for its wind farms. For example, power grid scheduling is difficult, since the regional grid lacks the hydropower and natural gas power plants that help grid operators adjust power feeds when necessary to counteract the relative instability of wind power supplies. Rather, according to a wind power plant staffer in the region, grids can only rely on thermal power.

Additionally, field operations of wind power technology are not as simple as they look. Even China’s leading wind generator enterprise Goldwind (SZSE: 002202) cannot guarantee, from a technical perspective, that its turbines can operate in all weather.

New Ideas

China’s fast-growing renewable energy industry experienced a “policy braking” in August, when a State Council executive meeting chaired by Premier Wen Jiabao concluded the industry “tended toward excess” and needed a little cold water. A few days later, the 2009 List of Encouraged Imported Technologies and Technology Products was released by NDRC along with the ministries of commerce and finance. It removed import subsidies for polysilicon and wind turbines exceeding 2 megawatts.

On the sidelines of a recent hydropower development forum, National Energy Secretary and NDRC Vice Chairman Zhang Guobao was asked by Caijing to express his views on overcapacity in the alternative energy industry. Zhang evaded the question but said, “The State Council already has policies aimed at the overcapacity issue.”

At a State Council Information Office press conference in late September, Zhang said excess capacity was restricted to wind power equipment and did not extend to the wind power generation industry. “No one is sending out the message that China has too much wind power and needs to cut back,” he said.

Although a large amount of wind power never makes it to the grid, many local governments and enterprises are pushing ahead with zealous wind energy plans while SOEs turn to wind power for expanding installed capacity.

The government’s subsidies for alternative energy make this “equivalent to the state footing the bill for local governments and enterprises” to develop wind projects, said Fan Bi, deputy director of the Research Office of the State Council. Therefore, he said, existing subsidies and financial resources are relatively adequate for wind power development.

Fan has suggested China seek new ways to develop wind power. For starters, he thinks subsidy transparency should be improved, with monetary sources clarified, to prevent blind development. Second, concession bidding should be continued to distribute subsidies effectively and reduce on-grid wind power prices through competition. Eventually, the state could reduce subsidies and support for wind power.

The report also recommended China strengthen its wind power development plan, determine a reasonable scale for the industry, and reform the government approval process for wind power projects.

But other experts say wind power adjustments cannot be separated from China’s power industry reform, which is ongoing.

“There is still a fundamental need to deepen power industry reform,” an expert at the State Council Research Office told Caijing. “First, a separate pilot for transmission and distribution should be implemented, and work should be done on allowing grid companies to independently set prices, moving management of distribution network assets to the provincial level.

“In this way,” the expert said, “systematic reforms can be used to eliminate wind power overcapacity.”

Source: Cajing, 12.11.2009 By staff reporter Li Qiyan

Filed under: Asia, China, Energy & Environment, News, Risk Management, , , , , , , , , ,

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