Investment Bank in Brazil
Futures & Options
J.P. Morgan is pleased to offer clients clearing and self execution on the BM&F Bovespa S.A. (BM&F Bovespa) via J.P. Morgan Corretora de Cambio e Valores Mibiliarios (JPMCCVM), our legal entity.
BM&F Bovespa is one of the largest exchange groups globally.
J.P. Morgan offers clients intra-day and after-hours electronic trading on BM&F Bovespa. the firm is also one of the first brokers to offer direct market access (DMA), to clients.
For additional information on the exchange, visit BM&F Bovespa.
- What is J.P. Morgan’s membership status on the exchange?
JPMCCVM is the J.P. Morgan legal entity maintaining the clearing and execution membership on the exchange and the J.P. Morgan entity for all client and legal documentation.
- What services are being offered?
Access to the exchange is offered on an execution-only, clearing-only or full-service basis. Give-ups are permitted on the exchange.
Access to the exchange is available on a DMA basis for execution via MORCOM eXtraTrade. Orders can also be accepted through J.P. Morgan’s Order Management System (OMS) and will be confirmed back electronically. Clients without access to MORCOM eXtraTrade can voice execute through J.P. Morgan’s sales desks.
- Are there any specific funding or margining requirements?
J.P. Morgan offers clients funding and margining through an offshore account structure, whereby clients do not have to place collateral in Brazilian real (BRL). J.P. Morgan will handle all currency conversions locally and convert back to the client’s currency of choice. Initial margin may be covered by Treasury bills and cash, although locally, in Brazil, a letter of credit will be posted on a client’s behalf by J.P. Morgan. There is a fee, charged in USD, which is calculated over its notional value and charged at the end of each month, based upon usage of any initial balance.
J.P. Morgan expects that it will usually call most clients for initial margin based on the exchange’s own minimums for the front month requirement, plus a requirement to satisfy default risk, which is calculated by J.P. Morgan’s Risk Management team.
- Which contracts are offered?
J.P. Morgan offers the following contracts:
FX: USD Future
Index: IBOVESPA Future
Interest Rate: One Day Interbank Deposit Futures Contract (DI)
All contracts mentioned are available on a full-service basis.
For additional information on product specifications and trading hours for individual contracts, visit BM&F Bovespa.
Should you have an interest in a contract not currently listed as part of J.P. Morgan’s offering please inform your J.P. Morgan contact. We would be happy to investigate adding new contracts.
- Will additional documentation be required?
Prior to transacting on this exchange, all clients will be required to complete an agreement with JPMCCVM. Offshore clients who are already documented with J.P. Morgan Securities plc (JPMS plc) or J.P. Morgan Securities LLC (JPMS) will be required to complete additional documentation with JPMCCVM.
Thereafter, offshore client transactions will flow through an omnibus account in Brazil maintained with JPMCCVM by JPMS. Clients will also need to complete a registration form with Banco ITAU (the local omnibus custody and legal representative).
Any daily variation margin and exchange fees for offshore clients may be settled in the client’s currency of choice. For onshore clients, the margin must be settled locally in Brazilian real (BRL), which will require a daily FX transaction on the account that will be managed by J.P. Morgan.
Effective October 20, 2009, the Brazilian government has levied a 2% tax on foreign inflows and money entering the country for investment in equity and fixed income instruments; this tax is aimed at slowing the appreciation of the BRL. The tax will be imposed on all money entering the market, including monies for direct investment purposes and for the coverage of any daily margin requirements. The amount due for tax purposes is calculated directly on the USD amount being converted to BRL; any monies remaining in BRL will not be impacted by the tax. Clients will be charged the tax on a daily basis, based upon the calculated FX transacted into BRL on that business day.