When it comes to competition in the exchange space, Alan Gandelman is at the front line.
As the CEO of Americas Trading System Brasil (ATS Brasil), a joint-venture between Americas Trading Group (ATG) and NYSE Euronext, plans to launch a competitive equity exchange in Brazil early next year. Gandelman’s effort will offer a new alternative to the BM&F Bovespa exchange, the monopoly bourse for equities and derivatives.
“It’s very hard for us to talk about competition in Brazil because basically it doesn’t exist,” he said to John Lothian News’ Jim Kharouf at the FIA Boca Conference last month. “We are coming into this marketplace to introduce competition again into Brazil. We believe competition is the healthier way to have markets be where they should be.”
The exchange is going to start by offering cash equities, and it sees weaknesses in the BM&F Bovespa’s model.
“Despite the Brazilian exchange being seen as a liquid exchange, it’s not,” Gandelman said. “It may be liquid in notional volume and turnover, but its a highly concentrated market. Ten stocks represent about 45 percent of the overall volume.”
Gandelman adds that the total number of listings on the stock market is miniscule compared to other capital markets with just 317 listings. In his view, Brazil’s economy is large enough to support many more public companies. He added that ATS Brasil is also looking to move beyond cash equities.
In terms of technology, Gandelman believes his NYSE Technology platform will offer some new functionality to Brazilian investors.
“You’re going to see technology that will come with better execution, smart order routing…new trading strategies in terms of technology, which exist, but do not exist in Brazil,” he said.