(Reuters) ? U.S.-based stock exchange operator Direct Edge plans to open a bourse in Brazil in a move meant to tap the country's fast-growing financial sector, and to speed the splintering of marketplaces globally.
The privately-held company said on Monday it expects to launch the all-electronic exchange by the fourth quarter of next year, taking on Brazilian incumbent BM&FBovespa (BVMF3.SA), the world's third-largest exchange operator.
Direct Edge, whose owners include Goldman Sachs Group (GS.N), will trade all Brazilian equities, exchange-traded funds and depositary receipts, it said.
JPMorgan Chase & Co (JPM.N) and Citadel Investment Group are also among Direct Edge's shareholders. The company is one of a handful of private exchange operators that have managed to eat into the market shares of public, national exchanges in North America or Europe in the last five years.
The large banks and trading companies that run such exchanges, including BATS Global Markets and Chi-X Europe, want to pressure incumbents to keep trading fees low and to spur the development of better trading technology.
In the United States, Direct Edge matches about 10 percent of all cash equity trading, a thorn in the sides of incumbents
NYSE Euronext (NYX.N) and Nasdaq OMX Group Inc (NDAQ.O).
New Jersey-based Direct Edge plans to announce possible partnerships for a platform for clearing soon, Valor Economico newspaper said, citing Chief Executive Officer William O'Brien. The paper had earlier reported the new exchange.
Direct Edge is the second non-Brazil exchange operator seeking to enter a market where trading of derivatives, stocks and bonds is growing rapidly and becoming more sophisticated. BATS and local partner Claritas have announced plans to open a bourse in Brazil, further pressuring BM&FBovespa.
BM&FBovespa, which owns the CLBC clearinghouse, is likely reluctant to open its infrastructure to competitors.
The threat of competition has weighed on BM&FBovespa's share performance this year. The Sao Paulo-based exchange company is currently Brazil's sole registered bourse.
Other potential locally-based rivals could also seek authorization to operate in financial trading, Valor said.
The Bolsa de Valores Bahia Sergipe e Alagoas, known as Bovesba, could seek permission from regulators to start operations in the contract for difference, or CFD, markets, Valor said, citing executives. CFD is a type of swap that is very popular among UK-based investors, Valor added.
Bovesba has been shut since the end of the 1990s, Valor reported.
(Reporting by Guillermo Parra-Bernal and Jonathan Spicer; Editing by Lisa Von Ahn)
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