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EXTRAORDINARY SHAREHOLDERS

MEETING OF BM&FBOVESPA
5/20/2016

So Paulo
April 15, 2016
Dear Shareholder,
On behalf of the Board of Directors, it is my pleasure to invite you to attend the Extraordinary
General Meeting of BM&FBOVESPA S.A. Bolsa de Valores, Mercadorias e Futuros
convened for May 20, 2016, at 3:00 p.m., exceptionally not at its head offices but at 275 Rua
XV de Novembro, Centro, in the city of So Paulo, So Paulo State, in accordance with the
Notice of Meeting to be published in the So Paulo State Official Gazette (Dirio Oficial do
Estado de So Paulo ) on April 16, 2016, and the daily newspaper Valor Econmico on April
18, 2016.
In this introductory letter I would like to make some brief but important points about the
EGMs main focus, to which most of the decisions on which you will be asked to vote will be
related.
The combination of BM&FBOVESPAs operations with those of CETIP S.A. Mercados
Organizados (CETIP) will create a world-class financial market infrastructure company of
major systemic significance, prepared to compete in an increasingly sophisticated and
challenging global marketplace while enhancing the security, solidity and efficiency of the
Brazilian market.
Integration of the companies activities will significantly strengthen the combined entitys
business model and extend its revenue diversification, while enabling financial institutions,
custodians, registrars, asset managers and brokerage houses to consolidate their
processes and back-office systems, significantly reducing costs and operational risks
throughout the financial system, and enhancing efficiency in interactions with the
supervisory authorities for the financial and capital markets.
In light of the companies complementarity, their combination will mean gains for customers,
market participants, investors, and corporates that require funding to invest or financial
instruments to manage their risks. In addition to cost efficiencies, one of the main benefits
of the new venture will be enhanced capital efficiency for customers, given the possibility of
using over-the-counter and exchange-traded derivatives in one and the same central
counterparty.
Particularly important for our own shareholders is the expectation that combining the
activities of the two companies will increase revenue diversification and capture synergies
estimated at 10% of the combined organization by the third year, strengthening the new

companys strategic position in the long run.


In this context we invite you to participate in this event that will transform the history not just
of BM&FBOVESPA but also of Brazils financial and capital markets. Approval of the
proposals detailed in the present document is necessary for the transaction to be formally
implemented, and also for the new combined company to be managed so as to capture the
countless business opportunities that will present themselves, without relinquishing the
values shared by both companies, especially excellence in technology, operation and risk
management, as well as prudence and financial robustness.
The EGM will be asked to approve the merger into BM&FBOVESPA of Companhia So
Jos Holding (formerly Netanya Participaes e Empreendimentos S.A.) (the Holding
Company). This merger will be necessary in the context of a corporate reorganization
designed to implement the combination. After the corporate events to be implemented
concurrently with this EGM, the new merged entity will hold 100% of CETIPs shares.
Absorption of the Holding Company will be effected by means of the issuance of new shares
of stock in BM&FBOVESPA, which will thereby increase its free float and welcome CETIPs
former shareholders into its ownership structure.
The EGM will also be asked to approve a number of amendments to the companys bylaws
made necessary by the combination with CETIP, as well as other alterations deemed
relevant above all from the governance standpoint.
Allow me to bring to your notice, in particular, that as part of the transaction we propose to
increase the maximum number of members of the Board of Directors from 11, as stipulated
by the present bylaws, to 13 for the next two years. This proposal has already been
announced to the market. The two additional seats on the Board will be filled by members
of CETIPs current management, who will bring to our Board their valuable knowledge of
CETIPs business, while also strongly supporting the process of integration of our two
companies.
I also want to stress that we are proposing the adaptation and enhancement of
BM&FBOVESPAs already successful corporate governance model to encompass the overthe-counter and credit operation support businesses that will be absorbed by virtue of the
combination with CETIP. This includes formalizing in the bylaws the existing Securities
Intermediation Industry Committee and the recently created Product & Pricing Committee,
both of which are forums for discussions with the market on some of the matters that are
most important to the company.
We believe these are the most significant changes proposed, although there are others that
we believe to be desirable and that reinforce BM&FBOVESPAs commitment to the

continuous improvement of its management, to enhanced risk mitigation, to the attraction of


top talent, and to the development of the markets in which it operates.
Moving on from these general remarks, please note that the topics to be discussed and
voted on at the EGM are listed in the Call Notice and in the attached document, which
contains Managements proposals and general guidance on the participation of
shareholders in the meeting. Both this document and the Call Notice are being issued to the
market today.
This meeting is an opportunity to discuss and vote on the matters presented for deliberation,
and effective participation by shareholders will ensure that the requisite decisions are wellinformed and conscientiously made.
Management is committed to facilitating and encouraging shareholder participation in
general meetings. With this goal in mind, and to reinforce its commitment to fostering best
practice in corporate governance, for this EGM BM&FBOVESPA will voluntarily make
available a postal voting system in accordance with CVM Instruction 481/2009, as amended.
You will find a detailed explanation of how you can vote by postal ballot in the attached
document.
In addition, as it has done in recent shareholder meetings BM&FBOVESPA will again offer
an electronic proxy voting system that can be accessed by registering at
www.assembleiasonline.com.br. This procedure is also explained in detail in the attached
document.
You are cordially invited to read the document carefully, as well as others relating to the
EGM that have been placed at your disposal at the companys head offices and posted on
its Investor Relations website (www.bmfbovespa.com.br/ri/), on the companys main website
(www.bmfbovespa.com.br), and on the website of CVM, the Brazilian Securities
Commission (www.cvm.gov.br).
Yours truly,

Pedro Pullen Parente


Chairman of the Board of Directors

Contents
CLARIFICATIONS AND GUIDANCE ..................................................................... 6
A.
PARTICIPATION IN THE EXTRAORDINARY GENERAL MEETING ........... 7
A.1.
Guidance for Personal Attendance ......................................................... 9
A.2.
Guidance for Participation by Postal Ballot ........................................... 9
A.2.1. Postal Voting Via Service Providers Distance Voting System ........... 10
A.2.2. Delivery of Postal Ballot Papers Directly to The Company ................... 10
A.3.
Guidance for Proxy Voting ..................................................................... 11
A.3.1.
Electronic Proxies ............................................................................... 11
A.3.1.1.
Shareholders not yet registered with Assembleias Online .......... 11
A.3.1.2.
Shareholders already registered with Assembleias Online ......... 12
A.3.2.
Physical Proxies .................................................................................. 13
A.3.2.1. Preregistration ....................................................................................... 17
A.4. Public Proxy Solicitations ........................................................................... 17
B.
MANAGEMENTS PROPOSAL ................................................................... 17
B.1. Items to be discussed at the Extraordinary General Meeting of
BM&FBOVESPA................................................................................................... 18
C.
Additional Information and Documents Pertaining to the Items to be
Discussed at the Extraordinary General Meeting of BM&FBOVESPA ............ 24

MANAGEMENTS PROPOSALS AND GUIDANCE ON


PARTICIPATING IN BM&FBOVESPAS EXTRAORDINARY
SHAREHOLDERS MEETING ON MAY 20, 2016
CLARIFICATIONS AND GUIDANCE
This document contains information about the matters to be deliberated on the basis of
Managements proposals and relating to the activities integration between the Company and
CETIP S.A. Mercados Organizados (CETIP), according to Material Facts released to the
market on 4/8/2016 and 4/15/2016, as well as clarifications and guidance on participation in
the Extraordinary Shareholders Meeting (EGM) of BM&FBOVESPA called for May 20,
2016.
The aim of this initiative is to reconcile the practices adopted by the Company to ensure
timely and transparent communication with its shareholders and with the requirements of
Law 6.404, dated December 15, 1976, as amended (the Corporation Law), and CVM
Instruction 481, dated December 17, 2009, as amended (CVM Instruction 481).
Thus BM&FBOVESPA hereby convenes an Extraordinary Shareholders Meeting as
follows:
Date: May 20, 2016
Venue: Rua XV de Novembro, 275,
Centro, So Paulo/SP Brazil
Time: 3:00 p.m.
The order of business for the EGM is as follows:
(1)

Approval of the investment, by BM&FBOVESPA, at Companhia So Jos Holding


(actual denomination of Netanya Empreendimentos e Participaes S.A.) (the
Holding Company) company which shares, at totally amount, are BM&FBOVESPAs
property, at amount represented by R$9,257,820,000.00;

(2)

Examination, discussion and approval of the terms and conditions of the merger and
justification agreement for the merger of the shares issued by CETIP into the Holding
Company followed by the merger of the Holding Company into BM&FBOVESPA,

pursuant to the Merger and Justification Agreement signed on April 15, 2016, by the
managements of BM&FBOVESPA, CETIP and the Holding Company (the
Transaction) (the Merger and Justification Agreement);
(3)

Ratification of the engagement of Apsis Consultoria e Avaliaes Ltda. (Federal


Taxpayer no. CNPJ/MF 08.681.365/0001-30) to prepare an valuation report of the
book value of Holding Companys net worth, for the purposes of merging the Holding
Company into BM&FBOVESPA (the Valuation Report);

(4)

Approval of the Valuation Report;

(5)

Approval of the proposed Transaction, according to the Merger and Justification


Agreement;

(6)

Authorization, required to merge with the Holding Company, for an increase in the
companys registered social capital, to be subscribed and paid for by the directors of
the Holding Company, and subsequent amendment of its corporate bylaws (once the
Final Quantity of BM&FBOVESPA Shares per Common Share in the Holding
Company has been defined, as objectively determined by application of the formula
specified in Annex 2.2 to the Agreement and Plan of Merger, and the final number of
shares in BM&FBOVESPA to be issued as a result of the Holding Companys merger
into BM&FBOVESPA), including authorization for the Board of Directors to define the
exact quantity of shares to be issued and the respective financial amount when the
Transaction is consummated;

(7)

Approval of the amendments to and the consolidation of the Companys bylaws.

Managements proposals for the above agenda, together with information on each item, are
set out in Section B.1 of this document.

A.
PARTICIPATION IN THE EXTRAORDINARY
MEETING

SHAREHOLDERS

Participation by shareholders in the Companys general meetings is of paramount


importance.
Please note that the EGM cannot begin without the presence of shareholders representing
at least two-thirds (2/3) of the companys registered share capital If in either case the

required quorum is not reached, the company will publish a new Call Notice announcing a
new date for the EGM to be held on second call, in which case there is no legally established
quorum.
Shareholders may participate in person, by duly constituted proxy, or by remote voting form
in accordance with CVM Instruction 481.
For the purpose of shareholder participation, the following documents must be filed
originals or authenticated copies will be accepted:

Individuals

Shareholders ID with photograph or proxys ID


with photograph and respective proxy form, as
applicable

Legal entities

Most recent constitutional documents (articles of


association or incorporation, bylaws etc.) and
power of attorney proving right to represent
shareholder

Investment funds

Legal representatives ID with photograph

Most recent consolidated fund bylaws

Constitutional documents of fund administrator or


manager, as applicable, proving compliance with
funds voting policy and power of attorney proving
right of representation

Legal representatives ID with photograph

Note: The company will not require sworn translations of documents originally written in
Portuguese, English or Spanish, or documents in other languages accompanied by a
translation into any of these three languages. Accepted identification (ID) documents
include Brazilian identity cards (RG, RNE), Brazilian drivers licenses (CNH), passports,
and officially recognized professional or association membership cards; all must bear the
holders photograph.

A.1. Guidance for Personal Attendance


Shareholders who wish to attend the companys Extraordinary Shareholders Meeting in
person are kindly requested to come to 275 Rua XV de Novembro on May 20, 2016, from
2:30 p.m., bearing the above documents.

A.2. Guidance for Participation by Remote Voting Form


Although the matters to be deliberated are not suited to voting by remote voting form, the
Company will voluntarily adopt the remote voting system established by article 21-A of CVM
Instruction 481, as amended by CVM Instruction 561/15. In 2016, special procedures for
remote voting system established by CVM Deliberation 741/2015 will apply to the Company
shareholders meetings in addition to the procedures established by CVM Instruction 481.
As of now, therefore, shareholders may send voting instructions for the EGM agenda:
(i)

by instructions sent to their custody agent (if the agent provides this service) on
completion of the remote voting form, in the case of shareholders who hold shares
deposited with a central securities depository; or

(ii)

by completing the remote voting form and sending it directly to the Company in
accordance with the instructions in Attachment I to this document, in the case of
all shareholders.

With the exception provided for in CVM Instruction 481 related to the depository institutions
which issue Depositary Receipts abroad, specially to the shares which are base to issue the
Depositary Receipts, in the event of any divergence between a remote voting form received
directly by the Company and voting instructions contained in the consolidated voting map
sent by the central securities depository for the same federal taxpayer number (CNPJ or
CPF), the voting instructions contained in the voting map will prevail and the form received
directly by the Company will be disregarded.
Shareholders may change their voting instructions as many times as they deem necessary
during the voting period. The last voting instruction will be considered in the Companys
voting map.
Once the voting period is closed, shareholders may no longer change the voting instructions

already sent. Any shareholder who considers a change necessary must attend the EGM
personally, bearing the required documents described above, and ask for the voting
instructions sent by remote voting form to be disregarded.

A.2.1. Remote Voting Via Service Providers Remote Voting System


Shareholders who opt to exercise their voting rights by form through a service provider must
transmit voting instructions to their custody agent in accordance with the rules established
by the custody agent, and the custody agent will then deliver the shareholders votes to
BM&FBOVESPAs Central Securities Depository. To this end, such shareholders should
contact their custody agent to find out what procedures have been established for them to
issue remote voting instructions, and also to be told what documents and other information
are required.
In accordance with CVM Instruction 481, as amended, shareholders voting instructions
must arrive at their custody agent not later than seven (7) days before the EGM, i.e. by May
13, 2016 inclusive, unless a different deadline is set by the custody agent.
Also in accordance with CVM Instruction 481, BM&FBOVESPAs Central Securities
Depository will ignore a shareholders voting instructions it receives via a custody agent if
they conflict with instructions issued with the same federal taxpayer number (CNPJ or CPF).

A.2.2. Delivery of Remote Voting Form Directly to The Company


Shareholders who opt to exercise their voting rights by form may choose instead to send
their remote voting form directly to the Company. If so, they must deliver the following
documents to BM&FBOVESPAs Investor Relations Department at Rua XV de Novembro,
275, 5 andar, Centro, CEP: 01013-001, So Paulo/SP Brazil:
(i)

a physical copy of Attachment I hereto, completely filled out, initialed and signed;

(ii)

authenticated copies of the documents described in the chart in item A above, as


applicable.

Shareholders who prefer to do so may scan the above documents mentioned in (i) and (ii)
and send them by email to ri@bmfbovespa.com.br, in which case they must also mail the
original remote voting form paper and authenticated copies of the required accompanying
documents by May 18 to BM&FBOVESPA at Rua XV de Novembro, 275, 5 andar, Centro,

CEP: 01013-001, So Paulo/SP Brazil.


When the Company receives the above documents mentioned in (i) and (ii), it will notify the
shareholders concerned and tell them whether or not the documents have been accepted
in accordgance with CVM Instruction 481, as amended.
If any remote voting form is sent directly to the Company and not completely filled out or not
accompanied by the required documents as per item (ii) above, it will be disregarded and
the shareholder concerned will be notified by an email message sent to the address
furnished in item 3 of the remote voting form.
The documents mentioned in (i) and (ii) must be filed and time-stamped at the Company not
later than two (2) days before the date of the EGM, i.e. by May 18, 2016 inclusive. Remote
voting form received by the Company thereafter will be disregarded.

A.3. Guidance for Proxy Voting


A.3.1.

Electronic Proxies

To facilitate and encourage participation by its shareholders, BM&FBOVESPA will again


offer an online proxy voting system (Assembleias Online) through which shareholders can
vote by proxy through the proxy holders designated by the company on all items of the
agenda for the General Meeting, by means of a valid private digital certificate or the Brazilian
Public Key Infrastructure (ICP-Brasil), in accordance with Provisional Measure (Medida
Provisria) 2200-2, dated August 24, 2001.
To vote via the internet, shareholders must register at www.assembleiasonline.com.br and
obtain a digital certificate free of charge. The procedure for this is detailed below and may
be followed as of today.
Proxies granted via the electronic platform will be distributed to three proxy holders
designated by the company as detailed in A.3.2 below.

A.3.1.1.

Shareholders not yet registered with Assembleias Online

Step 1 Registration on the portal:


a) Go to www.assembleiasonline.com.br, click on Registration and Certificate and select
the appropriate profile (individual investor or institutional investor);

b) Complete the registration form, click on Register, and confirm the details. You will then
access the Instrument of Agreement, Ownership and Liability, which must be printed,
initialed on all pages, and signed. The signature must be notarized.
Shareholders who already own a digital certificate issued by ICP-Brasil may simply register
and digitally sign the Instrument of Agreement, in order to be entitled to vote online via the
Assembleias Online portal. In this case, skip Step 2 and go straight to Step 3.
Step 2 Validate registration and receive private digital certificate:
a) The shareholder will receive an email message from Assembleias Online with a list of the
documents required to validate registration, including the Instrument of Agreement. All
documents must be mailed to Assembleias Online at the postal address supplied in the
email message.
b) Assembleias Online checks that the documentation is all in order and sends another email
message detailing the procedure for issuance of the Assembleias Online Digital Certificate.
c) Once the digital certificate has been issued, the shareholder can vote online in
BM&FBOVESPAs General Meeting.
Step 3 Electronic proxy form:
a) Having completed the previous steps, shareholders exercise their right to vote by
electronic

proxy

by

logging

on

to

www.assembleiasonline.com.br,

selecting

BM&FBOVESPAs General Meeting, voting, and digitally signing the proxy form;
b) Shareholders will receive a receipt confirming their votes by email from Assembleias
Online.
Shareholders can electronically appoint proxies via Assembleias Online between May 2,
2016 and 6:00 p.m. on May 19, 2016.

A.3.1.2.

Shareholders already registered with Assembleias Online

Shareholders who have previously performed Steps 1 and 2 of A.3.1.1 above should check
the validity of their digital certificate. Digital certificates that have expired must be renewed
in order to for the holders to vote.

To renew a digital certificate issued by Certisign, the shareholder must log on to


Assembleias Online, choose Registration & Certificate on the header menu, and go
through the digital certificate renewal procedure.
Once the validity of the digital certificate is confirmed, shareholders will be accredited to
appoint proxies via Assembleias Online by following the instructions on the website
(www.assembleiasonline.com.br) and in Step 3 of A.3.1.1 above.

A.3.2. Physical Proxies


Straightforward conventional proxy voting also remains available via physical proxy.
In this case, according to Corporation Law, article 126, paragraph 1, proxies appointed by
individual shareholders to vote in a General Meeting must have been constituted less than
a year previously and must be either (i) a shareholder, (ii) a lawyer, (iii) a financial institution,
or (iv) an executive officer of the Company.
In the case of institutional shareholders, in compliance with the decision of a plenary meeting
of CVM, the Brazilian Securities Commission, on November 4, 2014, (Processo CVM
RJ2014/3578) the company does not require proxies to be either (i) a shareholder in the
company, (ii) a lawyer, (iii) a financial institution, or (iv) an executive officer of the company.
However, such shareholders must be represented in accordance with their constitutional
documents.
For shareholders who cannot be represented by proxies of their own choice, the company
offers three proxy holders who can represent them in strict conformity with the voting
instructions issued by the shareholder concerned:
1) To vote FOR the resolutions or proposals on the agenda:
Filipe Rodrigues Alves Teixeira de Deus, Brazilian, single, lawyer, domiciled at Praa
Antonio Prado, 48, in the city and state of So Paulo, identity card no. RG 34.159.732-6
SSP/SP, federal taxpayer no. CPF/MF 339.407.608-03.
2) To vote AGAINST the resolutions or proposals on the agenda:
rico Rodrigues Pilatti, Brazilian, single, lawyer, domiciled at Praa Antonio Prado, 48,
in the city and state of So Paulo, bar association no. OAB/SP 235.366, federal taxpayer

no. CPF/MF 221.402.578-20.


3) To ABSTAIN on the resolutions or proposals on the agenda:
Andr Grunspun Pitta, Brazilian, married, lawyer, domiciled at Praa Antonio Prado,
48, in the city and state of So Paulo, bar association no. OAB/SP 271.183, federal
taxpayer no. CPF/MF 316.939.698-66.
To assist shareholders in proxy voting, we offer the proxy form template shown below.
The Company will not require shareholders or their legal representatives to have signatures
notarized on proxy forms or to have proxy forms consularized, and will not require sworn
translation for proxy forms and documents originally written in or translated into Portuguese,
English or Spanish
PROXY FORM TEMPLATE

PROXY APPOINTMENT FORM


I, [SHAREHOLDERS NAME], [ID AND OTHER DETAILS] (Grantor), being a
shareholder in BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e
Futuros (Company), hereby appoint the following as my proxies:
Filipe Rodrigues Teixeira de Deus, Brazilian, single, lawyer, domiciled at Praa
Antonio Prado, 48, in the city and state of So Paulo, identity card no. RG
34.159.732-6 SSP/SP, federal taxpayer no. CPF/MF 339.407.608-03, to vote
FOR the resolutions or proposals on the agenda in accordance with the express
instructions established below by me as Grantor;
rico Rodrigues Pilatti, Brazilian, single, lawyer, domiciled at Praa Antonio
Prado, 48, in the city and state of So Paulo, bar association no. OAB/SP 235.366,
federal taxpayer no. CPF/MF 221.402.578-20, to vote AGAINST the resolutions
or proposals on the agenda in accordance with the express instructions
established below by me as Grantor;
Andr Grunspun Pitta, Brazilian, married, lawyer, domiciled at Praa Antonio
Prado, 48, in the city and state of So Paulo, bar association no. OAB/SP 271.183,
federal taxpayer no. CPF/MF 316.939.698-66, to ABSTAIN on the resolutions or
proposals on the agenda in accordance with the express instructions established
below by me as Grantor.
I hereby grant the above proxies power of attorney to attend the Extraordinary
General Meeting (EGM) of the company called for May 20, 2016, at 3:00 p.m.,
exceptionally not at its head offices but at 275 Rua XV de Novembro, in the city

of So Paulo, So Paulo State, to sign the minutes and shareholder attendance


register, and to examine, discuss and vote on proposals and resolutions on my
behalf as Grantor, in strict conformity with the instructions established below
regarding each item of the agenda.
Agenda
(a)
to approve the investment by BM&FBOVESPA in Companhia So Jos
Holding (Holding), whose shares are, at the present date, wholly owned by the
Company, in the amount indicated in the Management Proposal, through the
subscription of new shares;
For ( ) Against ( ) Abstain( )
(b)
to examine, discuss and approve the provisions and conditions of the
protocol and justification of merger of the shares issued by CETIP S.A.
Mercados Organizados (CETIP) into Holding, followed by merger of Holding into
BM&FBOVESPA, entered into on April 15, 2016 by and among the managements
of the Company, CETIP and Holding (Transaction) (Merger and Justification
Agreement);
For ( ) Against ( ) Abstain( )
(c)
to ratify the appointment of the specialized company Apsis Consultoria e
Avaliaes Ltda. (CNPJ/MF No. 08.681.365/0001-30), to be in charge of
preparation of the valuation report at book value of the net worth of Holding, for
merger of Holding into the Company (Appraisal Report of the Holding);
For ( ) Against ( ) Abstain( )
(d)

to approve the Appraisal Report of the Holding;

For ( ) Against ( ) Abstain( )


(e)
to approve the Transaction proposed under the Merger and Justification
Agreement;
For ( ) Against ( ) Abstain( )
(f)
to authorize, in connection with the merger of Holding, the Companys
capital increase to be subscribed and paid-in by the managers of Holding, with
subsequent amendment to its by-laws (after definition of the Final Quantity of
BM&FBOVESPA Shares per Common Share of Holding, as objectively
determined by applying the formula set forth in Exhibit 2.2 to the Merger and
Justification Agreement and, therefore, the final number of shares of
BM&FBOVESPA to be issued as a result of the Holding Merger);
For ( ) Against ( ) Abstain( )
(g) to approve the amendment to and restatement of the Companys By-Laws
for adjustments including but not limited to the following ones, in addition to
those regarding wording, renumbering and cross reference:

A) In connection with approval of the Transaction, which shall be conditioned

to approval of the Transaction by the government authorities:


a. to amend the wording of article 3, items vii and viii; of the main
provision of article 22; 28, paragraph 1; and article 35, indent h;
and
b. to include paragraph 9 in article 22; new indents d and e and
paragraph 2 in article 30; new indent d in article 45, the new article
51 and its paragraphs and article 84;
For ( ) Against ( ) Abstain( )
B) Other proposals of amendment, which shall generate effects right
after approval by the Brazilian Securities Commission, pursuant to
CVM Instruction No. 461/07:
a. to adapt the wording of the main provision of article 10; article 16,
indent k; article 23, paragraph 3; article 30, indent c; article 35,
indent f paragraph 3; and of new article 53, main provision and sole
paragraph, indent f;
b. to include indent m in article 16; indent x in article 29; new indent
e in article 38; paragraph 4 in article 35; new indent f and the sole
paragraph in article 38; new indent c in article 45; new article 50 and
its paragraphs; new article 80; and new article 82; and
c. to restate the amendments to the bylaws approved in this Special
Shareholders Meeting and in the Special Shareholders Meetings held
on 4/10/2012, 5/26/2014 and 4/13/2015.
For ( ) Against ( ) Abstain( )
(h)
to authorize the Company's managers to perform all acts required for
consummation of the Transaction.
For ( ) Against ( ) Abstain ( )
The power of attorney hereby granted shall be used exclusively for attendance of
the Extraordinary General Meeting on first call, and if necessary on second call,
and for voting as instructed above, with no rights or obligations to take any action
other than that required to carry out the aforementioned mandate. The above
proxies are hereby authorized to abstain from discussing or voting on any matter
regarding which in their opinion they have not received sufficiently specific
instructions.
This instrument of proxy appointment shall be valid only for the general meetings
of the company cited herein, whether held on first or second call.

[City], [month] [day], [2016]


_____________________________

[Signature]
For: [name]
[job title]

A.3.2.1. Preregistration
Documents accompanying physical proxy forms, as per A and A.3.2 above, may be
filed with BM&FBOVESPA at its head offices up to the scheduled time for the General
Meeting to begin.
However, please file these documents as soon as possible as of May 2, 2016, in order to
facilitate shareholder access to the General Meeting.
The documents must be delivered to BM&FBOVESPA, Department of Investor Relations,
Rua XV de Novembro, 275, 5 andar, Centro, CEP: 01013-001, So Paulo/SP, Brazil, email: ri@bmfbovespa.com.br.

A.4. Public Proxy Solicitations


Any shareholder who represents one half of one per cent (0.5%) of the Companys
registered share capital or more may post a public proxy solicitation on the Assembleias
Online system, in accordance with Corporation Law and CVM Instruction 481.
Public proxy solicitations must be accompanied by a draft power of attorney as well as the
information and other documents required by CVM Instruction 481, especially in Annex 23,
and delivered to BM&FBOVESPA, Daniel Sonder, Chief Financial Officer, Praa Antonio
Prado, 48, 7 andar, Centro, CEP: 01010-901, So Paulo/SP, Brazil.
In accordance with the applicable legal rules, the Company will answer to public proxy
solicitations submitted by shareholders within two (2) business days, giving them the same
visibility on the Assembleias Online system as the other documents published by the
company.
Neither the company nor Management shall be held liable for the veracity of the information
contained in public proxy solicitations by shareholders.

B.

MANAGEMENTS PROPOSAL

The Management of BM&FBOVESPA submits the proposal described below to the


Extraordinary Shareholders Meeting to be held on May 20, 2016.

B.1. Items to be discussed at the Extraordinary Shareholders Meeting of


BM&FBOVESPA
BM&FBOVESPAs Management clarifies that the matters presented in this proposal to
shareholders are part of the proposed corporate reorganization to combine the Companys
activities with CETIP, which will result in ownership by BM&FBOVESPA of all the shares
issued by CETIP in accordance with the terms and conditions negotiated in the terms and
conditions established by Merger and Justification Agreement of merge the shares issued
by CETIP into Holding Company, all of whose shares belong to BM&FBOVESPA at this time
(and will still belong to it at the time of the merger with CETIPs shares), followed by the
merger of the Holding Company into BM&FBOVESPA, executed on 4/15/2016 by the
managements of BM&FBOVESPA and CETIP.
The Transaction will comprise the following steps described in the Merger and Justification
Agreement, all of which are interdependent, and its consummation will be subject, among
other conditions, to the applicable corporate approvals and to (i) approval by CADE, Brazils
antitrust authority; (ii) approval by CVM, the Brazilian Securities Commission; and (iii)
submission to and appreciation by the Central Bank of Brazil:
(a)

a capital increase for the Holding Company by means of the issuance of new

registered no-par shares of common stock, which will be fully subscribed and paid for by
BM&FBOVESPA in Brazilian currency not later than the Transaction Consummation Date
(as defined at item 3.2 of the Merger and Justification Agreement) (the Holding Company
Capital Increase);
(b)

on the same date, as an interdependent act subsequent to the Holding Company

Capital Increase, absorption by the Holding Company of all shares issued by CETIP for their
economic value, resulting in the Holding Companys issuance of redeemable common and
preferred shares to the CETIP shareholders to whom the absorbed shares belong (the
CETIP Shareholders), with one (1) common share and three (3) preferred shares in the
Holding Company being transferred for each common share issued by CETIP (considering
the number of shares in CETIPs registered share capital and the adjustments mentioned in
2.1 of the Merger and Justification Agreement), pursuant to item 4.1 of the Merger and
Justification Agreement (the Absorption of CETIP Shares). After the Transaction is
consummated, CETIP will conserve its legal personality and assets, and there will be no
legal succession;

(c)

on the same date, as an interdependent and subsequent act to the Absorption of

CETIP Shares, redemption of all preferred shares issued by the Holding Company, where
payment for redemption of every three preferred shares issued by the Holding Company will
consist of the Redemption Value for Every Three Redeemable Preferred Shares in the
Holding Company (as objectively determined by application of the formulas stipulated in
Annex 2.2 to the Agreement and Plan of Merger) (the Redemption). Following their
redemption, the Holding Companys preferred shares will be cancelled against the capital
reserve;
(d)

on the same date, as an interdependent act subsequent to the Redemption,

absorption of the Holding Company by BM&FBOVESPA for the book value of the Holding
Companys net worth (after allowing for the effects of the Holding Company Capital Increase,
the Absorption of CETIP Shares and the Redemption), resulting in extinction of the Holding
Company and succession by BM&FBOVESPA to all the Holding Companys assets, rights
and obligations, which in turn will result in migration of the CETIP Shareholders to
BM&FBOVESPAs shareholder base (the Absorption of the Holding Company).
The main terms of the Transaction, as required by CVM Instruction 481, article 20-A, are
described in Attachment II to this proposal.
The proposals for deliberation described in items below are interdependent legal
transactions to be performed in concatenated stages. No single stage can be efficacious
unless all the others are, with the sole exception of the proposed amendments to the
corporate bylaws that are not related to the Transaction with CETIP. Thus if the EGM should
reject any of the proposals in items below, or if the necessary corporate approvals are not
obtained, or if the conditions established in the Merger and Justification Agreement are not
fulfilled, then no matters approved by the EGM will produce effects, with the sole exception
of the proposed amendments to the corporate bylaws that are not related to the Transaction
with CETIP.
Item 1

Investment in the Holding Company

The article 16, indent (j) of BM&FBOVESPAs Bylaws requires the approval of a general
meeting of shareholders for any decision to invest in another company if the amount of the
investment exceeds the Reference Value (defined as 1% of net worth according to the
financial statements for the previous financial year).

As

established

by

the

Merger

and

Justification

Agreement,

the

increase

in

BM&FBOVESPAs ownership interest in the Holding Company via investment of


R$9,257,820,000.00, an amount three times greater than the Reference Value, is one of the
necessary stages to implement the Transaction.
In light of this amount, the EGM is asked to deliberate on BM&FBOVESPAs investment in
the Holding Company of an amount corresponding to the Holding Company Capital Increase
by subscribing new shares.
Item 2

Approval of the Merger and Justification Agreement

Articles 224 and 225 of the Corporation Law require a description of the conditions and
justification for a merger in the Merger and Justification Agreement entered into by the
managements of the companies involved.
Therefore, based on the clarifications in this document and the provisions of the Corporation
Law, Management proposes approval in its entirety of the Merger and Justification
Agreement signed on April 15, 2016, by and between the managements of
BM&FBOVESPA, the Holding Company and CETIP, and consequently approval of the
Transaction. The Merger and Justification Agreement constitutes Attachment II.1 to this
document.
Item 3

Ratification of the Engagement of the entity which elaborated the


Valuation Report

In compliance with the applicable legislation, Management proposes ratification of its


engagement of Apsis Consultoria e Avaliaes Ltda. (federal taxpayer no. CNPJ/MF
08.681.365/0001-30) as an entity which was responsible to prepare a Valuation Report of
the Holding Companys net worth (the Holding Company Valuation Report). The
information required by CVM Instruction 481, article 21, constitutes Attachment III to this
document.
Item 4

Approval of the Holding Company Valuation Report

Apsis Consultoria e Avaliaes Ltda. has produced the Holding Company Valuation Report,
taking into account the effects of the Holding Company Capital Increase and the Absorption
of CETIP Shares in accordance with the Merger and Justification Agreement.

In compliance with article 227 of the Corporation Law, which requires approval of the
Valuation Report by a general meeting, Management proposes approval of the Holding
Company Valuation Report based on the book value of the Holding Companys net worth
as at December 31, 2015. The Holding Company Valuation Report constitutes Attachment
II.4 to this document.
Item 5

Approval of the Transaction

After the EGM having deliberated the above items, which are stages toward approving the
Transaction, Management proposes approval of the Transaction in accordance with the
terms and conditions set out in the Merger and Justification Agreement, resulting in the
Holding Companys merger into BM&FBOVESPA.
If the EGM approves the Transaction, the Management of BM&FBOVESPA proposes that
its executives be authorized to perform any additional acts that may be necessary to
consummate the Transaction.
Item 6

Approve a Capital Increase for BM&FBOVESPA

In compliance with article 227 (1) of the Corporation Law, if the acquiring companys general
meeting approves the Merger and Justification Agreement it must authorize a capital
increase to be subscribed and paid for by the acquired company using its net worth.
Therefore, if the Transaction is approved, Management proposes authorization of a capital
increase for BM&FBOVESPA to be subscribed and paid for by the directors of the Holding
Company, in an amount of R$11,295,468,000.00, upon the version of the Holding's
shareholders' equity
Management also proposes that the EGM determine the Board of Directors that, once
defined the final quantity of BM&FBOVESPAs shares to be issued, according to the formula
established at Attachment 2.2 of the Merger and Justification Agreement, it shall register
and disclosure that amount, and, as a consequence, the number of shares in which the
capital stock of BM&FBOVESPA will be shared, submitting an amendment to Article 5 of
Companys Bylaws to the first General Meeting to be held after this register.
Item 7

Approve amendments to BM&FBOVESPAs Corporate Bylaws

Management also proposes to amend BM&FBOVESPAs Corporate Bylaws as follows in


order to enhance its governance structure and implement adjustments deriving from the
Transaction, in addition to wording amendments, renumbering and references, in terms of
the proposed items listed below:
A) Deriving of the approval of the Transaction, all of them will be conditioned to the
competent Authorities approvals:
i.

to amend the wording of Article 3, indents vii e viii, Delimiting the expansion
of the Company's scope to the activities strictly related to the development and
greater healthiness of the market;

ii.

to amend the Article 22, main provision and to include the Article 84, to
increase the maximum number of members of BM&FBOVESPAs Board of
Directors from 11 to 13;

iii.

To include paragraph 9 to Article 22 and to amend Article 28, first paragraph,


to align the Companys governance with major market customers, holders of
access authorization.;

iv.

To include new indents d and e and the second paragraph to Artcile 30,
alignment to the constitution of Products and Pricing Committee;

v.

To adapt the wording of indent h of Article 35 to established the applicable


rules of pricing policy products; and

vi.

To include new indent d to Article 45, as well as new Article 51 and its
paragraphs to established the composition and responsibilities of Products
and Pricing Committee.

B) Other proposed amendments, all of them will produce effects after Brazilian
Securities Exchange Comission, according CVM Instruction 461/07:
i.

To adapt the wording of article 10, caput, to the wording established by CVM

Instruction no 358-02, as amended by CVM Instruction no 568-15;


ii.

To change the wording of article 16, letter "k" in order to establish objective

criteria to its application

iii.

To include the letter "m" in Article 16 in order to amend the wording of the new

Article 53, sole paragraph , letter "f" , considering the rules established by CVM
Instruction no 567-15
iv.

To amend Article 23, paragraph 3 to make it compatible with the recently

adaptations implemented on CVM Instruction no 481-09, by CVM Instruction no


561-15 ;
v.

To include the letter "x" in Article 29 in order to adequate with Article 24, indent

"vi" of CVM Instruction no 461-07;


vi.

To change the wording of Article 30, letter "c" , and include the new letter "e"

in the Article 38 in order to align to what is already practiced by the Company,


bearing in mind the existing delegation of the authority to approve the operational
rules, by the Board of Directors to the Executive Officers;
vii.

To amend the letter "f" and the paragraph 3 of Article 35, as well as include in

it the new paragraph 4, in order to expressly provide in the Bylaws that the CEO
shall create the Credit Risk Technical Committee, as advisory committee to the
CEO;
viii. To include the new letter "f" and the sole paragraph in the Article 38, in order
to provide the faculty of the Executive Board to delegate the authority to deliberate
on the recommendations of the Market Risk Technical Committee and the Credit
Risk Technical Committee, to the respective committes itselves.
ix.

To include the new letter c to the Article 45, as well as the new Article 50 and

paragraphs in order to the make the already existing Intermediation Industry


Committee to become a statutory committee.
x.

To change the wording of the new Article 53, caput, to make clear that at

least 2 of the 4 members of the Finance and Risk Committee shall be independent
members of the Board.
xi.

To include the new Article 80 providing for the existence of a statutory

compensation (as a complement to any D&O insurance coverage) in terms usually


adopted by large scale corporates, being applicable to the Administrators aiming to

offer complete protection against direct damage which they might be incurred in the
exercise of his functions, to the current and future Administrators of
BM&FBOVESPA and its subsidiaries, including CETIP, when it became a wholly
owned subsidiary of the Company, with the usual caveats applied;
xii.

To include the Article 82 by virtue of the decision of the Brazilian Supreme

Court on sealing donations to electoral campaigns ; and


xiii. to consolidate the statutory amendments approved at this EGM, as well as the
prior amendments approved at the EGMs held on April 10th, 2012, May 26th 2014
and April 13th, 2015.
Noted that BM&FBOVESPAs Board of Directors currently has 11 members. If the proposal
in item A.ii above is approved, the new members will be elected only after the regulatory
approvals for the Transaction have been obtained from the competent authorities. The new
members will be nominated by CETIPs Board of Directors from among its current
independent board members and/or statutory directors, approved by BM&FBOVESPAs
Nomination & Governance Committee and Board of Directors (which may request the
substitution of no more than one nominee by another independent board member or
statutory director of CETIP), and in due course submitted to election by a general meeting
of BM&FBOVESPA.
The information required by article 11 of CVM Instruction 481 constitutes Attachment IV to
this document, and the consolidated version constitutes Attachment V.

C.
Additional Information and Documents Pertaining to the Items to be
Discussed at the Extraordinary General Meeting of BM&FBOVESPA
If the Transaction is approved and consummated, (a) BM&FBOVESPA will become the
holder of all shares issued by CETIP, and (b) assuming that on the Transaction
Consummation Date (as defined in item[3.2 of the Merger and Justification Agreement)
CETIPs total capital is represented by 264,883,6101 shares of ex-treasury common stock,
and subject to the provisions of Section 2 of the Merger and Justification Agreement,

Estimative whereas, in the date of the consummation of the transaction, there will be 264,883,610
shares of CETIP (considering the total of 262,978,823 shares, excluding 3,513,011 treasury stocks
and including 5,417,798 shares resulting from the early vesting of stock option plans). The number
of outstanding shares of CETIP may vary until the date of consummation of the transaction.

CETIPs shareholders will receive the following for every share of common stock in CETIP
they hold on the date in question:
(a)

a cash portion in Brazilian currency amounting to R$30.75 and adjusted in

accordance with the Merger and Justification Agreement, to be paid in a lump sum, no later
than forty days from the date on which the last of the conditions listed in items 3.1(a), (b)
and (c) of the Merger Agreement is met; and
(b)

0.8991 of a share of common stock issued by BM&FBOVESPA, adjusted in

accordance with the Merger and Justification Agreement.


Any fractions of shares in BM&FBOVESPA deriving from the Absorption of the Holding
Company will be grouped into whole numbers and then sold on the spot market managed
by BM&FBOVESPA after the Transaction is consummated, in accordance with a notice to
shareholders that will be published at the appropriate time. The proceeds of this sale will be
transferred net of taxes and fees to the former CETIP shareholders who owned the fractions
concerned in proportion to their participation in each share sold.
The following documents are at the disposal of shareholders at the companys head offices,
on its investor relations portal (www.bmfbovespa.com.br/ri), and on the websites of
BM&FBOVESPA

(www.bmfbovespa.com.br)

and

CVM,

the

Brazilian

Securities

Commission (www.cvm.gov.br):
Remote voting form
Call Notice
Minutes from the meeting of the Board of Directors that approved the
Merger and Justification Agreement and the Transaction
Annex 20-A to CVM Instruction 481
Merger and Justification Agreement, with annexes
Information on the responsible for the Valuation Report, in compliance with
Annex 21 of CVM 481
Comparative chart showing proposed amendments to bylaws
Consolidated version of the Bylaws

Questions and requests for additional information should be addressed to the Investor
Relations Department, by telephone on +55 11 2565-4418, 2565-4834 or 2565-4729, or by
email at ri@bmfbovespa.com.br.

ATTACHMENTS

ATTACHMENT I
Remote Voting
Form

REMOTE VOTING FORM EXTRAORDINARY SHAREHOLDERS


MEETING OF BM&FBOVESPA TO BE HELD ON 5/20/2016
1.
2.
3.
4.

Shareholders name
Shareholders CNPJ or CPF
Email address for the company to send confirmation that it has received the
postal ballot paper
Instructions on how to cast your vote

This remote voting form must be completed by you as a shareholder if you opt to vote
by remote voting in accordance with CVM Instruction 481, as amended.
In this case the above fields must be completed with the shareholders full name and
federal taxpayer number (CNPJ or CPF), and an email address for contact.
In addition, for this form to be considered valid and the votes recorded here to be
counted in the quorum for the respective General Meeting:
- all fields below must be correctly completed;
- all pages must be initialed;
- you, the shareholder, or your legal representative(s), as applicable, must sign at
the end in accordance with the relevant legislation;
- signatures and other required documentation do not need to be notarized or
consularized.

5. Instructions for sending your form


If you opt to exercise your voting rights by remote voting form, you may: (i) complete
this form and send it directly to the company; or (ii) transmit instructions for completion
of the form to an appropriately qualified service provider, as follows:
5.1. Remote voting via service provider remote voting system
If you opt to exercise your voting rights through a service provider, you must transmit
your voting instructions to your custody agent in accordance with the rules established
by the custody agent, and your custody agent will then deliver your votes to

BM&FBOVESPAs Central Securities Depository. Please contact your custody agent to


find out what procedures have been established for you to issue remote voting
instructions, and also to be told what documents and other information are required
from you for this purpose.
You must send your voting instructions to arrive at your custody agent not later than
seven (7) days before the General Meeting, i.e. by 5/13/2016 (inclusive), unless a
different deadline is set by your custody agent.
Also in accordance with CVM Instruction 481, BM&FBOVESPAs Central Securities
Depository will ignore voting instructions it receives from any custody agent if they
conflict with instructions received from a shareholder with the same federal taxpayer
number (CNPJ or CPF).
5.2. Delivering your form paper directly to the company
When you opt to exercise your voting rights by form, you may choose instead to send
your remote form paper directly to the company. If so, you must deliver the following
documents to BM&FBOVESPAs Investor Relations Department at Rua XV de
Novembro, 275, 5 andar, Centro, CEP: 01013-001, So Paulo/SP Brazil:
(i)

a physical copy of this form completely filled out, initialed and signed;

(ii)

authenticated copies of the following documents:

(a) For individuals:

Personal ID with a photograph of you;

(b) For legal entities:

a copy of the most recent constitutional documents (articles of


association or incorporation, bylaws etc.) and power of attorney proving
its legal right to represent the shareholder;

the legal representatives ID with photograph.

(c) For investment funds:

a copy of the funds most recent consolidated bylaws;

a copy of the fund administrator or managers constitutional documents,

as applicable, proving compliance with the funds voting policy and


power of attorney proving its legal right to represent the shareholder;

the legal representatives ID with photograph.

If you prefer, you may also digitize this form paper and the above documents and send
them by email to ri@bmfbovespa.com.br, in which case you must also mail the original
form paper and the authenticated copies of the other required documents to
BM&FBOVESPA at Rua XV de Novembro, 275, 5 andar, Centro, CEP: 01013-001,
So Paulo/SP Brazil, until 5/18/2016.
The company will not require sworn translations of documents originally written in
Portuguese, English or Spanish, or documents in other languages accompanied by a
translation into any of these three languages. Accepted identification (ID) documents
include Brazilian identity cards (RG, RNE), Brazilian drivers licenses (CNH),
passports, and officially recognized professional or association membership cards; all
must bear the holders photograph.
Once the company has received your form and the required accompanying
documentation, the company will notify you and tell you whether or not they have been
accepted in accordance with CVM Instruction 481, as amended.
If this form is sent directly to the company and not completely filled out or not
accompanied by the required documents as per item (ii) above, it will be disregarded
and you will be notified by an email message sent to the address furnished in item 3
above.
This form and the required accompanying documents must be filed and time-stamped at
the company not later than two (2) days before the date of the General Meeting, i.e. by
5/18/2016 (inclusive). Forms received by the company thereafter will be disregarded.
Voting instructions for the Extraordinary Shareholders Meeting
6. To approve the investment by BM&FBOVESPA in Companhia So Jos Holding
(Holding), whose shares are, at the present date, wholly owned by the Company,
in the amount indicated in the Management Proposal, through the subscription of
new shares;
[ ] Approve [ ] Reject [ ] Abstain
7. To examine, discuss and approve the provisions and conditions of the merger and

justification agreement for the merger of the shares issued by CETIP S.A.
Mercados Organizados (CETIP) into Holding, followed by merger of Holding
into BM&FBOVESPA, entered into on April 15, 2016 by and among the
managements of the Company, CETIP and Holding (Transaction) (Merger and
Justification Agreement)

[ ] Approve

[ ] Reject

[ ] Abstain

8. To ratify the appointment of the specialized company Apsis Consultoria e


Avaliaes Ltda. (CNPJ/MF No. 08.681.365/0001-30), to be in charge of preparation
of the valuation report at book value of the net worth of Holding, for merger of
Holding into the Company (Appraisal Report of the Holding);

[ ] Approve

[ ] Reject

[ ] Abstain

9. To approve the Appraisal Report of the Holding;


[ ] Approve [ ] Reject [ ] Abstain
10. To approve the Transaction proposed under the Merger and Justification
Agreement;

[ ] Approve

[ ] Reject

[ ] Abstain

11. To authorize, in connection with the merger of Holding, the Companys capital
increase to be subscribed and paid-in by the managers of Holding, with subsequent
amendment to its by-laws (after definition of the Final Quantity of
BM&FBOVESPA Shares per Common Share of Holding, as objectively determined
by applying the formula set forth in Exhibit 2.2 to the Merger and Justification
Agreement and, therefore, the final number of shares of BM&FBOVESPA to be
issued as a result of the Holding Merger);

[ ] Approve

[ ] Reject

[ ] Abstain

12. To approve the amendment to and restatement of the Companys By-Laws for
adjustments including but not limited to the following ones, in addition to
those regarding wording, renumbering and cross reference:
A) In connection with approval of the Transaction, which shall be
conditioned to approval of the Transaction by the government
authorities:
a. to amend the wording of article 3, items vii and viii; of the
main provision of article 22; 28, paragraph 1; and article 35,
indent h; and
b. to include paragraph 9 in article 22; new indents d and e
and paragraph 2 in article 30; new indent d in article 45, the
new article 51 and its paragraphs and article 84;

[ ] Approve

[ ] Reject

[ ] Abstain

B) Other proposals of amendment, which shall generate effects right after


approval by the Brazilian Securities Commission, pursuant to CVM
Instruction No. 461/07:
a. to adapt the wording of the main provision of article 10; article
16, indent k; article 23, paragraph 3; article 30, indent c;
article 35, indent f paragraph 3; and of new article 53, main
provision and sole paragraph, indent f;
b. to include indent m in article 16; indent x in article 29; new
indent e in article 38; paragraph 4 in article 35; new indent
f and the sole paragraph in article 38; new indent c in
article 45; new article 50 and its paragraphs; new article 80; and
new article 82; and
c. to restate the amendments to the bylaws approved in this
Special Shareholders Meeting and in the Special Shareholders
Meetings held on 4/10/2012, 5/26/2014 and 4/13/2015.

[ ] Approve

[ ] Reject

[ ] Abstain

13. To authorize the Company's managers to perform all acts required for
consummation of the Transaction.
[ ] Approve

[ ] Reject

[ ] Abstain

14. Do you wish to set up a Supervisory Board (Conselho Fiscal) pursuant to Law
6404 (1976), article 161?
[ ] Yes [ ] No
15. If this General Meeting is held on second call, do the above voting instructions
also apply to the decisions to be made during the meeting held on second call?
[ ] Yes [ ] No

[City], [date]
__________________________________________

Signed by [Shareholders name]

ATTACHMENT II
Information About
the Mergers

ATTACHMENT II INFORMATION ABOUT THE MERGERS


(in accordance with Annex 20-A of CVM Instruction 481/09)

1.

Merger and Justification Agreement, pursuant to articles 224 & 225 of Law 6404 (1976)

The agreement and plan to merge CETIP S.A. Mercados Organizados (CETIP) into
Companhia So Jos Holding (the Holding Company), followed by the merger of the Holding
Company into BM&FBOVESPA S.A. Bolsa de Valores, Mercadorias e Futuros
(BM&FBOVESPA and the Merger and Justification Agreement) is to be found in
Attachment II.1 to this Proposal.
2. Other agreements, contracts and pre-contracts governing the exercise of voting rights or
the transfer of shares issued by the companies subsisting after or resulting from the
transaction, either held on file at the companys head office or to which the controlling
shareholder in the company is a party
None.
3.

Description of the transaction, including:

a.

Terms and conditions

The corporate reorganization (Transaction) will comprise the following interdependent stages:
(a) An increase in the Holding Companys capital by means of the issuance of new registered
no-par shares of common stock, which will be fully subscribed and paid for by
BM&FBOVESPA in Brazilian currency not later than the Transaction Consummation Date
(as defined below), for a total issue price of R$9,257,820,000.00, a part of which to be defined
by the general meeting will be allocated to the constitution of a capital reserve (Holding
Company Capital Increase);
(b) on the same date, as an interdependent act subsequent to the Holding Company Capital
Increase, absorption by the Holding Company of all shares issued by CETIP at their
economic value, resulting in the Holding Companys issuance of redeemable common and
preferred shares to the CETIP shareholders to whom the absorbed shares belong (the CETIP
Shareholders), with one (1) redeemable common share and three (3) redeemable preferred
shares in the Holding Company being transferred for each common share issued by CETIP
(considering adjustments mentioned in item 2.1 of the Merger and Justification Agreement),
pursuant to item 4.1 of the Merger and Justification Agreement (Absorption of CETIP
Shares). After the Transaction is consummated, CETIP will conserve its legal personality
and assets, and there will be no legal succession;
(c) on the same date, as an interdependent act subsequent to the Absorption of CETIP Shares,
redemption of all preferred shares issued by the Holding Company, where payment for
redemption of every three preferred shares issued by the Holding Company will consist of
the Redemption Value for Every Three Redeemable Preferred Shares in the Holding
1

Company (Redemption). Following their redemption, the Holding Companys preferred


shares will be cancelled against the capital reserve; and
(d) on the same date, as an interdependent act subsequent to the Redemption, absorption of the
Holding Company by BM&FBOVESPA at the book value of the Holding Companys net
worth (after allowing for the effects of the Holding Company Capital Increase, the
Absorption of CETIP Shares and the Redemption), resulting in extinction of the Holding
Company and succession by BM&FBOVESPA to all the Holding Companys assets, rights
and obligations, which in turn will result in migration of the CETIP Shareholders to
BM&FBOVESPAs shareholder base (Absorption of the Holding Company).
If Suspensive Conditions are implemented, any company may notify the others regarding such
implementation, and the companies will issue a notice to the market indicating at least the date
on which the Transaction will be consummated, including the date on which CETIPs shares will
cease trading. This date, which will correspond to the fifth business day following
implementation of the Suspensive Conditions, will be the reference date for the purposes of
defining the holders of CETIP shares who will receive BM&FBOVESPA shares (Transaction
Consummation Date).
b.

Obligations to indemnify
i.

The directors and officers of any of the companies involved

None.
ii.

If the transaction is not consummated

CETIP will be entitled to receive compensation from BM&FBOVESPA in the amount of


R$250,000,000.00 as payment of pre-estimated damages in the event that the Transaction is not
concluded for any of the reasons stipulated in Section 7.6 of the Merger and Justification
Agreement.
c.

Table comparing rights, advantages and restrictions on shares in the companies involved
or resulting companies before and after the transaction
Before and after the Transaction there will only be shares of common stock issued by CETIP
and shares of common stock issued by BM&FBOVESPA; they will conserve the same rights
and advantages, which at this time are as follows:

BM&FBOVESPA
Right to dividends:

Right to vote:
Description of restricted
vote:

Convertibility:

Shareholders are entitled to receive dividends and/or interest on equity,


which together must correspond to at least 25% of the companys net income
in the financial year, adjusted in compliance with the applicable legislation.
Full, except for the restriction described next.
According to article 7 of BM&FBOVESPAs Corporate Bylaws, although one
common share corresponds to the right to one vote on resolutions proposed
at general meetings, no single shareholder or group of shareholders may cast
votes that exceed 7% of the total number of shares issued by the company.
No.
2

Conditions for
convertibility and effects
on share capital :
Right to reimbursement of
capital:
Description of
characteristics of capital
reimbursement:

Restriction on circulation:
Description of restriction:
Conditions for altering
the rights assured by
share ownership:

Other relevant
characteristics:

Not applicable.

Yes.
Right to withdraw: Shareholders who dissent from certain decisions made by
a general meeting may withdraw from the company by redeeming their
shares at book value, provided the terms and exceptions established by the
Corporation Law are observed.
Redemption: According to the Corporation Law, the companys shares may
be redeemed by a decision of shareholders representing at least 50% of the
companys share capital at an extraordinary general meeting.
Liquidation: In the event of the companys liquidation, shareholders will be
reimbursed in proportion to their holdings in its share capital after payment
of all the companys obligations.
No.
Not applicable.
According to the Corporation Law, neither our Corporate Bylaws nor the
resolutions approved by shareholders at general meetings may deprive
shareholders of the following rights: (i) the right to participate in profit
distribution; (ii) the right to participate, in proportion to the amount of shares
held, in the distribution of any remaining assets in the event of the companys
liquidation; (iii) the right of preference (first refusal) in subscribing newly
issued shares, convertible debentures and subscription bonuses (warrants),
except under certain circumstances specified in the Corporation Law; (iv) the
right to oversee and monitor management of the business in the manner
specified by the Corporation Law; and (v) the right to withdraw from the
company in the conditions specified by the Corporation Law.
According to the Corporation Law, the rules governing the Novo Mercado
premium listing segment, the applicable regulatory framework and the
companys bylaws, a tender offer must be held if the company is taken private
or delists from the Novo Mercado, and if any shareholder or group of
shareholders acquires: (i) a direct or indirect holding equivalent to 30% or
more of the total number of shares issued by the company; or (ii) other
ownership rights including usufruct, when acquired for a consideration, that
bestow voting rights over shares issued by the company representing more
than 30% of its capital.

CETIP
Right to dividends:

Right to vote:

The Corporation Law and the companys bylaws require payment of a mandatory
dividend to shareholders unless the distribution of mandatory dividends is
suspended if management informs the general meeting that distribution is
incompatible with the companys financial situation. The mandatory dividend is
equivalent to a minimum percentage of net income booked for the previous
financial year and adjusted in accordance with the Corporation Law. The
companys bylaws require this percentage to be twenty-five per cent (25%) of net
income as per the individual financial statements, adjusted in accordance with
article 202 of the Corporation Law. The mandatory dividend can be paid in the
form of dividends or interest on equity, which can be booked net of withholding
tax as part of the mandatory dividend.
Full, except for the restriction described next.
3

Description of restricted
vote:

Convertibility:
Conditions for
convertibility and effects
on share capital:
Right to reimbursement
of capital:
Description of
characteristics of capital
reimbursement:
Restriction on
circulation:
Description of
restriction:
Conditions for altering
the rights assured by
share ownership:

Other relevant
characteristics:

According to article 5 of the companys bylaws, although each share of common


stock in the company bears the right to one vote to approve or reject resolutions
at general meetings of shareholders, no shareholder or group of shareholders
may have voting rights in excess of 20% of the number of shares in the companys
total share capital, except in the circumstances specified in article 88 of the bylaws.
No.
Not applicable.

Yes.
Capital reimbursement rights apply in the event of withdrawal, liquidation and
redemption. The characteristics of reimbursement in each case are described in
18.10 of the companys reference form.
No.
Not applicable.
If the acquiring shareholder fails to discharge the obligations imposed,
particularly the mandatory holding of a tender offer when the shares acquired
represent 15% of the companys capital or more, including compliance with the
lead times (i) to file for prior authorization from CVM, (ii) to hold the tender offer
or file to register the tender offer with CVM, as the case may be, and (iii) to
respond adequately to any questions or demands from CVM, then the companys
board of directors must call a general meeting, at which the shareholder in
question must not vote, to deliberate suspension of the shareholders rights, as
provided for in the companys bylaws, without prejudice to the acquiring
shareholders liability for losses and damages to the other shareholders due to
failure to discharge the obligations imposed by the companys bylaws.
The companys shareholders have preemptive rights to subscribe shares for
capital increases in proportion to their percentage holding at the time, except
when granting or exercising options. They also have preference rights (first
refusal) in subscribing convertible debentures and subscription bonuses
(warrants) issued by the company. They are allowed at least thirty days from
publication of the notice to shareholders regarding a capital increase to exercise
their rights, which can be sold by the shareholders concerned.
In accordance with article 172 of the Corporation Law, the board of directors may
revoke these preemptive rights or allow less time for them to be exercised in
capital increases via issuance of shares, convertible debentures and subscription
bonuses in takeover tender offers.

The shares issued by the Holding Company will be cancelled when the Transaction is consummated,
and (i) preferred shares will be cancelled after Redemption, while (ii) common shares will be
cancelled by Absorption of the Holding Company.
d.

Approval by debenture holders or other creditors


None with regard to BM&FBOVESPA.
With regard to CETIP, it will be proposed that CETIPs general meeting approve redemption
of the debentures held by those debenture holders who wish to redeem them if CETIP has
4

not obtained a waiver, in accordance with the first paragraph of article 231 of the Corporation
Law, during a period of six months from the date on which the minutes from the general
meeting on the Transaction are published.
e.

Assets and liabilities that will be comprised in each portion of the companys equity in
the event of a stock split
Not applicable.

f.

Intent of the resulting companies to register as issuers


Not applicable.

4.

Business plans, especially regarding the scheduling of specific corporate events

After consummation of the Transaction, the companies will continue to operate as before.
BM&FBOVESPA will remain a public company and CETIP will become a wholly-owned
subsidiary of BM&FBOVESPA, given the length of time required for integration of the businesses
that BM&FBOVESPAs experience has shown to be essential. CETIPs registration as a public
company will persist after consummation of the Transaction until BM&FBOVESPA decides
otherwise. CETIPs shares will cease trading on the Novo Mercado segment of BM&FBOVESPA
when the Transaction is consummated.
5.

Analysis of the following aspects of the transaction:

a.

Description of the main expected benefits, including synergies, tax benefits and strategic
advantages:
The aim of the Transaction is to create a world-class market infrastructure company of high
systemic importance and prepared to compete in an increasingly sophisticated and
challenging global marketplace while enhancing the security, solidity and efficiency of the
Brazilian market.
Integration of the companies activities will significantly strengthen the combined entitys
business model by increasing revenue diversification, providing financial institutions,
custodians, registrars, asset managers and brokerage houses with the means to consolidate
their processes and back-office and treasury systems, significantly reducing costs and
operational risks throughout the financial system, and assuring efficiency gains in
interactions with the supervisory authorities for the financial and capital markets.
In light of the companies complementarity, their combination will mean gains for customers,
market participants, investors, and companies that need funding to invest or financial
instruments to manage their risks. The combination will also mean enhanced capital
efficiency for customers, given the possibility of using over-the-counter and exchange-traded
derivatives in one and the same central counterparty, together with other securities and
financial assets.

b.

Costs

The managements of BM&FBOVESPA and the Holding Company estimate that the costs of
the Transaction for these companies will amount to approximately R$50 million, including
expenses with publications, auditors, appraisers, lawyers and other professionals engaged
as advisors for the Transaction.
The management of CETIP estimates that the costs of the Transaction for CETIP will be
approximately R$50 million, including expenses with publications, auditors, appraisers,
lawyers and other professionals engaged as advisors for the Transaction.
c.

Risk Factors
The market value of BM&FBOVESPAs common stock at the time of the Transactions
consummation may differ significantly from its price on the date on which the Merger and
Justification Agreement was signed. Although the Merger and Justification Agreement
establishes mechanisms for treating a specified level of fluctuation in the price of
BM&FBOVESPAs common stock, the price may change owing to a range of factors that are
beyond the companies control, including changes in their businesses, operations,
projections, timetables, regulatory issues, market conditions, general economic conditions,
and conditions in the industry. BM&FBOVESPA and CETIP cannot desist from the Merger
and Justification Agreement in response to changes in the price of either companys common
stock.
The success of the Transaction will depend partly on the companies ability to realize
opportunities for growth and cost savings as a result of combining the businesses of
BM&FBOVESPA and CETIP. However, there is no certainty that these opportunities and
savings will be successful. If these goals are not successfully achieved, the expected benefits
of the Transaction may not fully materialize or may take longer to materialize than foreseen.
BM&FBOVESPA and CETIP operate independently and will continue to do until the
Transaction is consummated. Both companies will face major challenges in consolidating
functions, integrating their organizations, processes and operations in an optimal and
efficient manner, and retaining personnel. Integrating the companies will be a complex,
lengthy task, and the managements of both companies will have to devote substantial
resources and efforts to it. The integration process and other sensitivities of the Transaction
may result in challenges for each of the companies in their respective business activities, and
these may adversely affect their ability to maintain relationships with customers, suppliers,
employees and others with whom the companies interact, or adversely affect the
materialization of the benefits expected from the Transaction.

d.

If the transaction is with a related party, what alternatives could have been used to achieve
the same objectives? State the reasons for which such alternatives were ruled out.
Not applicable.
Exchange ratios were negotiated among independent parties, as described in item f.ii, and
there will be no right of withdrawal, as noted in itemErro! Fonte de referncia no encontrada..
Nevertheless, for information purposes only and because it will be the controlling
shareholder in the Holding Company on the date of Absorption of the Holding Company,
BM&FBOVESPA also commissioned from KPMG Corporate Finance Ltda. the appraisal
6

report provided for in article 264 of Law 6404/76, valuing both companies net worth at
market prices according to the same criteria and on the same date.
e.

Exchange Ratio
Absorption of CETIP Shares: Shareholders in CETIP will receive one new redeemable
registered no-par common share and three new redeemable registered no-par preferred
shares in the Holding Company (considering the adjustments mentioned in the next item)
for every common share in CETIP (considering the adjustments mentioned below).
The ratio according to which CETIP shares are exchanged for common and preferred shares
in the Holding Company as a result of the Absorption of CETIP Shares will be adjusted
proportionally for any and all stock splits, reverse stock splits and bonus issues involving
CETIP shares as of September 30, 2015. Any Holding Company stock splits will not affect the
exchange ratio established by this Merger and Justification Agreement.
Absorption of the Holding Company: CETIP Shareholders (who at that time will be Holding
Company shareholders) will receive the Final Quantity of BM&FBOVESPA Shares per
Holding Company Common Share (objectively determined by application of the formulas
specified in the Merger and Justification Agreement), and BM&FBOVESPAs Board of
Directors will recognize and disclose the exact number of shares effectively issued.

f.

In transactions involving parent companies, subsidiaries or companies under common


control
i.

Exchange ratio calculated according to article 264 of Law 6404 (1976)


Not applicable.
Exchange ratios were negotiated among independent parties, as described in item f.ii,
and there will be no right of withdrawal, as noted in item. Nevertheless, for
information purposes only and because it will be the controlling shareholder in the
Holding Company on the date of Absorption of the Holding Company,
BM&FBOVESPA also commissioned from KPMG Corporate Finance Ltda. the
appraisal report provided for by article 264 of Law 6404/76, valuing both companies
net worth at market prices according to the same criteria and on the same date.

ii.

Detailed description of the process of negotiation of the exchange ratio and other
terms and conditions of the transaction
The exchange ratio was negotiated among independent parties, and the managements
of BM&FBOVESPA and CETIP individually engaged world-class investment banks to
assist the respective boards of directors in the process of informed decision making
with regard to the financial parameters for the Transaction.

iii.

If the transaction was preceded in the last 12 months by acquisition of control or of


a share in a control block: (a) Comparative analysis of the exchange ratio and price
paid for acquisition of control; (b) Reasons for any differences in appraisals of the
transactions
7

Not applicable.
iv.

Give reasons to justify why the exchange ratio is commutative, describing the
procedures and criteria used to assure the commutativity of the transaction; or if the
exchange ratio is not commutative, detail the payment or equivalent measures used
to assure adequate compensation.
The exchange ratio was negotiated among independent parties, and the managements
of BM&FBOVESPA and CETIP individually engaged world-class investment banks to
assist the respective boards of directors in the process of informed decision making
with regard to the financial parameters for the Transaction.

6. Copies of the minutes of all meetings of the board of directors, supervisory board and
special committees that discussed the transaction, including any dissenting votes
The minutes from the meeting of BM&FBOVESPAs Board of Directors that approved the Merger
and Justification Agreement are to be found in Attachment II.2 to this Proposal.
7. Copies of studies, presentations, reports, opinions or appraisal reports by the companies
involved in the transaction, placed at the disposal of the controlling shareholder during any
stage of the transaction
The Appraisal Reports are to be found in Attachment II.3 to this Proposal.
7.1.

Identify any conflicts of interest between the financial institutions, companies and
professionals responsible for producing the documents mentioned in item 7 and the
companies involved in the transaction
None.

8. Draft bylaws or amendments to the bylaws of the companies resulting from the
transaction
BM&FBOVESPAs draft bylaws are to be found in Attachment II.4 to this Proposal. CETIPs
bylaws will not be amended.
9. Financial statements used for the purposes of the transaction in accordance with the
specific rule
BM&FBOVESPAs audited financial statements and those of the Holding Company and CETIP
for the year ending December 31, 2015, are to be found in Attachment II.5 of this Proposal.
10. Pro forma financial statements drawn up for the purposes of the transaction in accordance
with the specific rule
The pro forma financial statements are to be found in Attachment II.6 to this Proposal.
11. Document containing information on any companies that are directly involved and are
not publicly held

Waived because the Holding Company has no assets or liabilities of any kind.

12. Description of the capital and control structure after the transaction, pursuant to item 15 of the reference form
As described above, the Transaction will take place in stages, starting with the Absorption of CETIP Shares by the Holding Company.
Absorption of the Holding Company by BM&FBOVESPA will follow immediately. In this manner, the CETIP Shareholders will become
shareholders in BM&FBOVESPA at the end of the Transaction. With its consummation, the Holding Company will be extinguished and CETIP
will become a wholly-owned subsidiary of BM&FBOVESPA, which will own all the shares issued by CETIP.
At this time it is not possible to state precisely how many shares issued by BM&FBOVESPA and CETIP there will be on the Transaction
Consummation Date. The estimates below are based on the numbers of BM&FBOVESPA and CETIP shares outstanding at this time, and on the
assumption that CETIPs current shareholders will hold 11.8% of BM&FBOVESPAs registered share capital after the Transaction is
consummated, as foreseen by the Material Event Notice issued on April 8, 2016.
Item 15.1 and 15.2 of the Reference Form
A) CETIP

a) Corporate Name

BM&FBOVESPA S.A. Bolsa de Valores,


Mercadorias e Futuros

b) Nationality

c) Federal
Taxpayer No.
(CNPJ)

Brazil

09.346.601/0001-25

Treasury shares

--

--

TOTAL

--

--

d) No. of Shares Held

e) Percent Holding

i) Name &
g)
Taxpayer No.
j) Date of Last
Shareholder
(CPF) of Legal Alteration
Common Preferred
Total
Common
Preferred
f) Total
Agreement
Representative
Transaction
Not
259,465,812
259,465,812 98.66% Not applicable 98.66%
No
Not applicable Consummation
applicable
Date
Transaction
Not
3,513,011
3,513,011
1.34%
Not applicable 1.34%
No
Not applicable Consummation
applicable
Date
Transaction
Not
262,978,823
262,978,823 100.00% Not applicable 100.00%
No
Not applicable Consummation
applicable
Date

10

B) BM&FBOVESPA
c) No. of Shares Held

b)
Nationality

Common

Funds managed by OppenheimerFunds, Inc.

Foreign

133,741,768

Funds managed by Vontobel Asset Management, Inc.

Foreign

129,910,260

a) Corporate Name

Capital World Investors


Funds managed by BlackRock, Inc.

Foreign
Foreign

113,003,600
92,434,646

Other

1,291,071,678

Treasury shares

28,567,548

Total

1,815,000,000

d) Percent Holding

Preferred

Total

Not
applicable
Not
applicable
Not
applicable
Not
applicable
Not
applicable
Not
applicable
Not
applicable

Not
applicable
Not
applicable
Not
applicable
Not
applicable
Not
applicable
Not
applicable
Not
applicable

f)
g) Date of
Shareholder
Last
e) Total
Agreement Alteration

Common

Preferred

7.37

Not applicable

7.37

No

10/8/2015

7.16

Not applicable

7.16

No

2/42013

7.67

Not applicable

7.67

No

3/11/2016

5.09

Not applicable

5.09

No

8/11/2015

71.14

Not applicable

71.14

No

3/11/2016

1.57

Not applicable

1.57

Not
applicable

3/11/2016

100

Not applicable

100

(1) Consolidated information on several funds and vehicles incorporated in different countries.

11

Item 15.3. of Reference Form


CETIP
Date of last alteration
Transaction Consummation Date
No. of individual shareholders
0
No. of corporate shareholders
1
No. of institutional investors
0
Total no. of investors
1
Shares outstanding
Shares outstanding means all of the issuers shares except those held by the controlling
shareholder, persons linked to the controlling shareholder, and executives and officers of the
issuer, as well as treasury shares.
No. of common shares
No. of preferred shares
Treasury shares
Total

259,465,812
0
3,513,011
262,978,823

98.66%
0%
1.34%
100%

BM&FBOVESPA
Date of last alteration
Transaction Consummation Date
No. of individual shareholders
49,458
No. of corporate shareholders
1,305
No. of institutional investors
3,431
Total no. of investors
4,194
Shares outstanding
Shares outstanding means all of the issuers shares except those held by the controlling
shareholder, persons linked to the controlling shareholder, and executives and officers of the
issuer, as well as treasury shares.
No. of common shares
No. of preferred shares
Treasury shares
Total

2,024,589,305
0
28,567,548
2,053,156,853

98.6%
0%
1.4%
100%

12

Item 15.4 of Reference Form

Items 15.5, 15.6, 15.7 and 15.8 of Reference Form


Not applicable
13. Number, class and type of securities issued by each company involved in the transaction
and held by any other company involved in the transaction or related persons, as defined in
the rules on public share offerings
At this time BM&FBOVESPA holds 1,200 registered no-par common shares in the Holding
Company; these shares constitute 100% of the Holding Companys share capital.
14. Are any of the companies involved in the transaction or related persons, as defined in the
rules on public share offerings, exposed to derivatives referenced to securities issued by
another company involved in the transaction?
No.
15. Report all transactions with securities issued by the companies involved in the transaction
performed in last six months by the persons indicated below:
For information on CETIP, see CETIPs Management Proposal published on this day.
With regard to BM&FBOVESPA:
(a) Companies involved in the Transaction:
(i) and (ii) Private purchase and sale:
None except 15 (b) below.
(iii) Purchase in regulated markets:
None.
13

(iv) Sale in regulated markets:


Last six months Oct. 2015-Mar. 2016
Company
i. Private purchase
Average price

10.70

No. of shares involved

4,337,546

Monetary value involved

46,429,217.72

Percentage of total shares of same class and

0.239%

type
Other relevant conditions

Stock Grant Plan

(b) Parties related to the companies involved in the transaction:


(i) Private purchase
Last six months Oct. 2015-Mar. 2016

Average price
No. of shares involved
Security involved
Percentage related to
class and type of the
security
Other relevant
conditions

Board of
Directors

Executive Officers

Audit
Committee

Total

n.a.
n.a.
n.a.

10.7066
1,208,389
12,937,680.67

n.a.
n.a.
n.a.

10.7066
1,208,389
12,937,680.67

n.a.

0.667% ON

n.a.

0.667% ON

n.a.

Stock Grant Plan

n.a.

Stock Grant Plan

(ii) Private sale


None.
(iii) and (iv) Purchase and sale in regulated markets
None.
16. Document in which the independent special committee submitted its recommendations
to the Board of Directors, if the transaction was negotiated in accordance with CVM Guidance
Opinion 35 (2008).
Not applicable.

14

ATTACHMENT
II.1
Merger and
Justification
Agreement

FREE TRANSLATION

MERGER AND JUSTIFICATION AGREEMENT OF CETIPS SHARES BY COMPANHIA SO


JOS HOLDING, FOLLOWED BY THE MERGER OF COMPANHIA SO JOS HOLDING BY
BM&FBOVESPA
The management of the companies qualified below, as well as the relevant companies qualified
below:
(a)
BM&FBOVESPA S.A. BOLSA DE VALORES, MERCADORIAS E FUTUROS, publicly held
company with head offices in the City of So Paulo, State of So Paulo, at Praa Antnio Prado, 48,
7th floor, Postal Code 01010-901, enrolled with the Brazilian National Taxpayers Registry
(CNPJ/MF) under No. 09.346.601/0001-25 (BM&FBOVESPA);
(b)
CETIP S.A. MERCADOS ORGANIZADOS, publicly held company with head offices in
the City of Rio de Janeiro, State of Rio de Janeiro, at Av. Repblica do Chile, 230, 11th floor, Postal
Code 20031-919, enrolled with the CNPJ/MF under No. 09.358.105/0001-91 (CETIP); and
(c)
COMPANHIA SO JOS HOLDING (current corporate name of NETANYA
EMPREEENDIMENTOS E PARTICIPAES S.A.), privately owned company with head offices in
the City of So Paulo, State of So Paulo, at Praa Antnio Prado, 48, Postal Code 01010-901,
enrolled with the CNPJ/MF under No. 23.791.728/0001-84 (Holding and, along with
BM&FBOVESPA and CETIP, the Parties or Companies),
For the reasons and with the purposes further detailed herein, the Parties agree to enter into,
pursuant to articles 224 and 225 of Law No. 6.404/76, this merger agreement (Merger
Agreement) whose purpose is (a) the merger of CETIPs shares into the Holding, whose shares are
on the present date (and will be on the date of approval of the merger of CETIPs shares) all held by
BM&FBOVESPA, and (b) the subsequent merger of the Holding into BM&FBOVESPA, both of
which shall be submitted to approval of their relevant shareholders, convened in an extraordinary
general shareholders meeting, according to the following terms and conditions:
1. Description of the Transaction, Motivation or Purpose and Intention of the Companies.
1.1. The Companies shareholders will be asked to approve a corporate reorganization, whose steps
are detailed further below (Transaction), and that shall result: (a) in the ownership by
BM&FBOVESPA of all the shares issued by CETIP; and (b) assuming that the total common stock
of CETIP is represented, on the Date of Completion of the Transaction (as defined below), by
264,883,6101 common shares, ex-treasury shares, and subject to the provisions of Section 2, on the
receipt, by the shareholders of CETIP, for each share of common stock issued by CETIP that they
own in such date, of:

Estimated considering that on the Date of Consummation of the Transaction there will be 264,883,610
common shares of CETIP (considering a total of 262,978,823 shares, excluding 3,513,011 treasury shares and
including 5,417,798 shares deriving from the early vesting of stock option plans). The number of CETIPs
outstanding shares may vary until the Date of Consummation of the Transaction.
1

(a) a cash portion in local currency in the amount of R$30.75 (the Original Reference Value of
the Cash Portion), adjusted under the terms provided in this Merger Agreement (after
the adjustments, the Redemption Value for Every Three Redeemable Preferred
Shares of the Holding), to be paid in a lump sum, in a single installment, no later than
forty (40) days counted as of the day on which the fulfilment of the last of the conditions
listed in items 3.1(a), (b) and (c) is observed (Financial Settlement Date); and
(b) 0,8991 of a share of common stock issued by BM&FBOVESPA (Reference Exchange
Ratio), adjusted under the terms provided in this Merger Agreement (after the
adjustments, the Final Amount of BM&FBOVESPA Shares for each Common Share
of the Holding).
1.2. The Transaction shall comprise the following steps, all interdependent, and whose completion
shall be subject to the applicable corporate approvals and observance of the condition precedent
(condio suspensiva) referred to in item 3.1 below, provided that all the steps shall occur on the
same date:
(a)

capital increase of the Holding, upon the issuance of 794,650,830 new common shares,
nominative and with no par value, which shall be fully subscribed and paid in by
BM&FBOVESPA, in local currency, until the Date of Completion of the Transaction, at the
total issuance price of at least R$7,920,019,939.00, of which a portion, to be defined in the
general meeting, shall be assigned to the creation of a capital reserve (Capital Increase of
the Holding);

(b)

on the same date, as a subsequent and interdependent act of the Capital Increase of the
Holding, merger of the totality of the shares issued by CETIP by the Holding, by its
economic value, resulting in the issuance, by the Holding, in favor of the shareholders of
CETIP owners of the merged shares (Shareholders of CETIP), of common and
redeemable preferred shares issued by the Holding, provided that each common share
issued by CETIP shall be exchanged for 1 common share and 3 redeemable preferred shares
issued by the Holding (considering the the adjustments mentioned in item 2.1), pursuant to
item 4.1 (Merger of CETIPs Shares). After the completion of the Transaction, CETIP
shall preserve its own legal identity and net worth, and no legal succession shall exist;

(c)

on the same date, as a subsequent and interdependent act of the Merger of CETIPs Shares,
redemption of the totality of the preferred shares issued by the Holding, upon payment, for
every 3 redeemed preferred shares issued by the Holding, of the Redemption Value for
Every Three Redeemable Preferred Shares of the Holding (Redemption). Once redeemed,
the preferred shares of the Holding shall be cancelled against the capital reserve; and

(d)

on the same date, as a subsequent and interdependent act of the Redemption, merger of the
Holding by BM&FBOVESPA, by the book value of the Holding (already considered the
effects of the Capital Increase of the Holding, the Merger of CETIPs Shares and the
Redemption), with the consequent extinction of the Holding and the succession, by
BM&FBOVESPA, of all of its assets, rights and obligations, with the consequent migration

of the Shareholders of CETIP to the capital stock of BM&FBOVESPA (Merger of the


Holding).
1.2.1. Although the steps provided in item 1.2 occur subsequently to one another, all of them are
part of a single legal transaction, with the assumption that each of the steps will not be effective,
individually, without the other steps also being effective and having, in its entirety, been
implemented, which means that the Transaction shall not be partially approved at the general
meetings of the Companies or partially implemented.
1.3. It is sought, with the Transaction, the creation of a of a world-class market infrastructure
company, of high systemic importance, prepared to compete in an increasingly sophisticated and
challenging global marketplace, enhancing the security, solidity and efficiency of the Brazilian
market.
1.3.1. The combination of the activities of the Companies shall strengthen significantly the business
model of the combined entity, to the extent that it shall broaden the level of diversification of
revenues, allowing the financial institutions, custodians, indenture agents, resource managers and
brokers the consolidation of their processes and back-office systems and treasury, with significant
reduction of the costs and operational risks for the whole financial system, as well as gaining
efficiency in the interaction with the financial and capital markets oversight bodies.
1.3.2. Considering the complementarity of the Companies, their combination will be positive to
clients, participants of the market, investors and companies that need resources to invest or
financial instruments to manage their risks. The combination shall also result in greater capital
efficiency for clients, given the possibility of using OTC or exchange-traded derivatives in a same
central counterparty (CCP), together with other securities and financial assets.
1.3.3. As a result of the Transaction described herein, the number of outstanding shares of
BM&FBOVESPA shall be added to the number of shares issued in favor of the Shareholders of
CETIP after the merger of the Holding (to be determined by the formula described on Schedule 2.2.
on the Financial Settlement Date). In view of the nature of disperse control of BM&FBOVESPA and
CETIP, this new issuance should keep the liquidity of the shares of BM&FBOVESPA among the
most liquid shares of the Brazilian market. After the conclusion of the Transaction, CETIP shall no
longer be negotiated and its shareholders shall become holders of shares of BM&FBOVESPA,
observing the exchange ratio set forth in this Merger Agreement.
1.3.4. The pro forma financial information prepared in compliance with the third paragraph of
article 10 of the Normative Ruling CVM 565 already reflect the relevant changes in the financial
situation of BM&FBOVESPA and of CETIP occurred as of the presentation of the most recent
financial statements of the Companies until this date.
1.4. After the completion of the Transaction, the Companies shall continue to dedicate to its
activities, maintaining BM&FBOVESPAs registry of publicly held company, and, considering the
necessary period to promote the integration of the businesses that the experience of
BM&FBOVESPA has demonstrated as essential, becoming CETIP a wholly-owned subsidiary of

BM&FBOVESPA. CETIPs registry as a publicly held company shall be kept after the Transaction
until further deliberation by BM&FBOVESPA. The shares issued by CETIP shall no longer be
negotiated in the segment of the Novo Mercado of BM&FBOVESPA upon completion of the
Transaction.
2. Calculation and Adjustments of the Exchange Ratio of CETIP-Holding, of the Redemption Value
for Every Three Redeemable Preferred Shares of the Holding and of the Final Amount of
BM&FBOVESPA Shares for each Common Share of the Holding
2.1. The exchange ratio of the shares issued by CETIP for common and preferred shares issued by
the Holding, deriving from the Merger of CETIPs Shares shall be proportionally adjusted by any
and all stock splits, reverse stock splits and bonus issuances of shares of CETIP occurred as of
September 30, 2015. Split of shares of the Holding shall not impact the exchange ratio determined
in this Merger Agreement.
2.2. The (i) Redemption Value for Every Three Redeemable Preferred Shares of the Holding (to be
paid for every 3 shares of the Holding redeemed by means of the Redemption) and (ii) Final
Amount of BM&FBOVESPA Shares for each Common Share of the Holding (to be delivered to each
common share issued by the Holding deriving from the Merger of the Holding) shall be objectively
determined by the application of the formula provided in Schedule 2.2.
2.3. Regardless of the provisions set forth above and for the purposes of reference only, the
adjustments set forth in item 2.1 and the formulas set forth in Schedule 2.2 reflect the assumptions
listed below, provided that, in case there are differences between (i) certain interpretation of the
description below and (ii) the objective result of the formulas set forth in Schedule 2.2 and/or the
adjustments set forth in item 2.1 above, the description set forth below shall be disregarded, being
applicable solely the adjustments set forth in 2.1 and the formulas set forth in Schedule 2.2:
(a)

The Original Reference Value of the Cash Portion will be subject to adjustment by the
variation in the CDI rate verified (a) between April 08, 2016 and the Financial Settlement
Date, including the last day. For purposes of this Merger Agreement, CDI rate shall mean
the interest of the interbank deposit certificate calculated by the daily average of the
interbank deposits referred to as DI Rate Extra Group Transactions expressed as
annual percentage based on a year of 252 days published daily by CETIP.

(b)

The Original Reference Value of the Cash Portion will be (i) reduced in the amount of any
dividends, interest on capital and other distributions declared and paid by CETIP between
November 4, 2015, and the date of determination the shareholder base (ex-date) up to the
Financial Settlement Date, including the last day; and (ii) deducted, if applicable, by the
amount of any withholding tax that may be due solely deriving from the Redemption.

(c)

The Reference Exchange Ratio will be adjusted to reflect any dividends, interest on capital
and other distributions declared and paid by BM&FBOVESPA also between November 4,
2015, and the date of determination the shareholder base (ex-date) up to the Financial

Settlement Date, including the last day (BM&FBOVESPAs Distributions), so that the
product of (i) a new exchange ratio (Distributions Adjusted Exchange Ratio) and (ii)
the result of subtracting (x) R$11.40 minus (y) BM&FBOVESPAs Distributions, is always
kept constant at R$10.25.
(d)

Subject to the provisions set forth in item 2.1, the Reference Exchange Value, the
Distributions Adjusted Exchange Ratio and the Original Reference Value of the Cash
Portion shall also be adjusted for any and all stock splits, reverse stock splits, conversions,
repurchases, bonus issuances and stock issuances that may occur in respect to any of the
Companies as of April 8, 2016.

(e)

For the purposes of the reduction in the Original Reference Value of the Cash Portion and
the determination of the Distribution Adjusted Exchange Ratio as per items (b), (c) and (d)
above, the following rules shall be observed: (a) the dividends, interest on capital and
other distributions declared and paid between November 4, 2015 and April 8, 2016 shall be
adjusted by the CDI as of the respective payment date until April 8, 2016, including the
last day; and (b) the dividends, interest on capital and other distributions declared and
paid as of April 8, 2016 until the Financial Settlement Date shall be adjusted to present
value by the CDI variation between the relevant payment date and April 8, 2016.

(f)

BM&FBOVESPA declared distributions of R$ 0.1765 per share on November 13, 2015 and of
R$ 0.2525 per share on December 10, 2015. CETIP declared distributions of R$ 0.3326 per
share on November 4, 2015, of R$ 0.0994 per share on December 18, 2015, of R$ 0.3194 per
share on March 2, 2016 and of R$ 0.0843 per share on March 15, 2016.

(g)

Considering that part of the payment regulated under the Transaction will be made by
means of BM&FBOVESPAs shares, items (h) through (l) below describe additional
adjustment mechanisms for the Distribution Adjusted Exchange Ratio and the Original
Reference Value of the Cash Portion, designed to mitigate uncertainty about the value of
the Transaction.

(h)

It has been established that the value to be received by the Shareholders of CETIP in
addition to the Original Reference Value of the Cash Portion shall not, in any
circumstance, be lower than R$11.25 (Minimum Unit Value) or higher than R$17.76
(Maximum Unit Value).

(i)

For the purposes of the adjustment mechanisms established in items (j) through (l) below,
the value of a share of BM&FBOVESPA common stock will be calculated on the basis of
the average price for the 30 trading sessions prior to the date of the last of the approvals of
the Transaction listed in items 3.1(a), (b) and (c) (Average Closing Price).

(j)

In case the product of the Distribution Adjusted Exchange Ratio times the Average Closing
Price per share of BM&FBOVESPA common stock is higher than the Maximum Unit
Value, the Original Reference Value of the Cash Portion will be maintained and the
Distribution Adjusted Exchange Ratio will be proportionally reduced (Reduced

Exchange Ratio) so that the product of the Reduced Exchange Ratio multiplied by the
Average Closing Price is always the Maximum Unit Value;
(k)

If the product of the Distribution Adjusted Exchange Ratio, multiplied by the Average
Closing Price, is lower than the Minimum Unit Value, the Original Reference Value of the
Cash Portion will be raised by an additional cash amount (Additional Cash Amount) to
be calculated as follows, subject to item (l) below: the Additional Cash Amount will
correspond to the amount required for the Minimum Unit Value to be obtained by adding
(x) the Distribution Adjusted Exchange Ratio multiplied by the Average Closing Price, and
(y) the Additional Cash Amount.

(l)

The portion paid in local currency shall not, under any circumstances, exceed 85% of the
total amount due by BM&FBOVESPA in cash and in stocks to CETIPs shareholders on the
Financial Settlement Date. Therefore, if by calculating the Additional Cash Amount and
adding it to the Original Reference Value of the Cash Portion adjusted by the distributions
and the CDI variation in accordance with items (a), (b), (d) and (e), the cash portion
corresponds to more than 85% of the total per CETIPs share, then the Additional Cash
Amount will be limited to the amount required to keep the cash portion at the limit of 85%
of the total per CETIPs share. In this case, the Distribution Adjusted Exchange Ratio will
be raised, such as, based on the new exchange ratio (Increased Exchange Ratio), the
result of R$11.25 per share will be reached by adding: (x) the Increased Exchange Ratio
multiplied by the Average Closing Price, and (y) the Additional Cash Amount.

3. Conditions Precedent and Completion of the Transaction.


3.1. Subject to the provisions set forth in item 3.2 below, the completion of the Transaction shall be,
pursuant to the terms of article 125 of the Brazilian Civil Code, subject to (Conditions
Precedent):
(a)

the approval of the Transaction by the Economic Defense Administrative Council CADE;

(b)

the approval of the Transaction by the Brazilian Securities and Exchange Commission
CVM, pursuant to the terms of its applicable rules; and

(c)

the submission and analysis of the Transaction by the Central Bank of Brazil, pursuant to
the terms and limits of the applicable rules.

3.2. Once the Conditions Precedent are fulfilled, any of the Companies may communicate the
others of such fulfillment of the Conditions Precedent and the Companies shall disclose a notice to
the market indicating, at least, the date on which the Transaction shall be completed, including the
date on which the shares issued by CETIP will cease to be traded. This date, which shall
correspond to the 5th business day counted as of the fulfillment of the last Condition Precedent,
shall be the date of reference for the definition of the shareholders of CETIP that will receive the
shares issued by BM&FBOVESPA (Date of Completion of the Transaction).

3.3. On the business day immediately prior to the Date of Completion of the Transaction, the board
of directors of BM&FBOVESPA shall meet to (i) certify, as objectively determined by the use of the
formulas included in Schedule 2.2, the Final Amount of BM&FBOVESPA Shares for each Common
Share of the Holding, which shares shall be issued as a result of the Merger of the Holding; and (ii)
register that the Transaction shall be completed as of the Date of Completion of the Transaction.
4. Exchange Ratio, Reference Date, Appraisal, Capital Increase and Right of Withdrawal
4.1. It is proposed that, as a result of the Merger of CETIPs Shares, new common shares and new
redeemable preferred shares issued by the Holding be issued in favor of the shareholders of CETIP
(considering the adjustments mentioned in item 2.1), all nominative and with no par value, in
exchange for the common shares of CETIP held by them, in the ratio of 1 common share and 3
redeemable preferred shares issued by the Holding for every common share issued by CETIP
(considering the adjustments mentioned in item 2.1). Therefore, there is no need to regulate fraction
of shares in this step of the Transaction.
4.1.1. The new common shares issued by the Holding shall be entitled to the same rights and
privileges ascribed to the current common shares issued by the Holding and held by
BM&FBOVESPA and shall participate in the results of the fiscal year in course as of its issuance
date. The new preferred shares issued by the Holding will not have voting rights, shall have
priority in the repayment of capital in case of liquidation, without premium, and shall be
automatically redeemed on the Date of Completion of the Transaction, without need, therefore, for
special meeting, and shall be paid, for every 3 redeemed preferred shares issued by the Holding,
the Redemption Value for Every Three Redeemable Preferred Shares of the Holding (objectively
determined by the use of the formulas provided in Schedule 2.2).
4.1.2. There is no need to refer to the right of withdrawal of the shareholders that hold the shares
issued by CETIP that do not vote in favor of the Merger of CETIPs Shares, that refrain from voting
or that do not attend the relevant extraordinary shareholders meeting, once CETIP does not fall
within the requirements of article 137, item II of Law No. 6.404/76 and article 9 of the Normative
Ruling CVM 565. Considering that, on the date of the extraordinary shareholders meeting of the
Holding that deliberates about the Merger of CETIPs Shares, BM&FBOVESPA shall be the sole
shareholder of the Holding, there is also no need to refer to the right of withdrawal of the
shareholders of the Holding as a result of this step of the Transaction.
4.2. Immediately thereafter, it is proposed, as a result of the Merger of the Holding, the issuance, in
favor of the former shareholders of CETIP (at such moment already shareholders of the Holding),
new common shares issued by BM&FBOVESPA, all nominative and with no par value, in exchange
for the common shares issued by the Holding held by them. Then, for every common share issued
by the Holding, the Final Amount of BM&FBOVESPA Shares for each Common Share of the
Holding (objectively determined by the use of the formulas provided in Schedule 2.2) will be
issued, being the board of directors of BM&FBOVESPA responsible for recognizing and disclosing,

pursuant to item 3.3 and the terms of this Merger Agreement, the exact number of shares actually
issued.
4.2.1. The eventual fractions of shares issued by BM&FBOVESPA deriving from the Merger of the
Holding shall be grouped into whole numbers in order to then be sold in a lump sum in the market
managed by BM&FBOVESPA after the completion of the Transaction, pursuant to the terms of the
notice to the shareholders timely disclosed. The amounts obtained in such sale shall be made
available liquid from fees to the former shareholders of CETIP that hold the relevant fractions,
proportionally to their stake in each share sold.
4.2.2. The new shares issued by BM&FBOVESPA shall be entitled to the same rights and privileges
assigned to the common shares issued by BM&FBOVESPA and shall participate in the results of the
fiscal year in course as of its issuance date.
4.2.3. Considering that, on the date of the extraordinary shareholders meeting of the Holding that
deliberates about its merger by BM&FBOVESPA, BM&FBOVESPA shall be the sole shareholder of
the Holding, there is also no need to refer to the right of withdrawal as a result of this step of the
Transaction.
4.3. The reference date of the Transaction shall be December 31, 2015 (Reference Date).
4.4. The management of BM&FBOVESPA, on behalf of BM&FBOVESPA and the Holding, has
engaged (a) KPMG Corporate Finance Ltda. (KPMG) to proceed with the appraisal and to
determine the economic value of the shares issued by CETIP that will be merged by the Holding,
already considering the effects of the Capital Increase of the Holding (Appraisal Report of
CETIPs Shares); and (b) Apsis Consultoria e Avaliaes Ltda. (APSIS) to proceed with the
appraisal and to determine the book value of the net equity of the Holding that will be transferred
to BM&FBOVESPA as a result of the Merger of the Holding, already considering the effects of the
Capital Increase of the Holding, of the Merger of CETIPs Shares and of the Redemption
(Appraisal Report of the Holding). The Appraisal Report of CETIPs Shares and the Appraisal
Report of the Holding form Schedule 4.4 of this Merger Agreement.
4.5. The Merger of CETIPs Shares will result in the increase of the net equity of the Holding in an
amount supported by the Appraisal Report of CETIPs Shares, part of which shall, in accordance
with the definition of the general meeting, be allocated for the creation of a capital reserve and the
balance allocated to the capital stock.
4.6. The Merger of the Holding shall result, in turn, in the increase of the net equity of
BM&FBOVESPA in amount equivalent to the portion of the net equity of the Holding that
corresponds to the investment of the shareholders of CETIP in the Holding, after the Redemption,
of which part shall be allocated to the capital stock of BM&FBOVESPA and part allocated to the
creation of a capital reserve in accordance with the definition of the general meeting. The shares
issued by the Holding that are held by BM&FBOVESPA at the time of the Merger of the Holding
shall be extinguished. The equity variations calculated as of the Reference Date until de date on
which the Merger of the Holding is completed shall be allocated to BM&FBOVESPA.

4.7. Notwithstanding that the exchange ratios have been negotiated between BM&FBOVESPA and
CETIP, independent parties, and that the right of withdrawal is not applicable, as mentioned in
item 4.2.3, BM&FBOVESPA, for informative purposes and considering that, on the date of the
Merger of the Holding, will be the controlling shareholder of the Holding, also requested KPMG
the prepare an appraisal report pursuant to article 264 of Law No. 6.404/76, to appraise both net
worth in accordance with the same criteria and on the same date, at market value (Appraisal
Report of the Net Equity at Market Value). The Appraisal Report of the Net Equity at Market
Value is attached as Schedule 4.7 of this Merger Agreement.
4.8. Pursuant to articles 227, paragraph 1 of Law No. 6.404/76, (i) the appointment of KPMG shall
be ratified by the General Shareholders Meeting of the Holding that deliberates on the Merger of
CETIPs Shares, and (ii) the appointment of APSIS shall be submitted to ratification of the General
Shareholders Meeting of BM&FBOVESPA that deliberates on the Merger of the Holding.
4.9. KPMG and APSIS represent that (i) there is no conflict or community of interests, current or
potential, with the shareholders of the Companies, or, even, regarding the Merger of CETIPs
Shares or the Merger of the Holding, as applicable; and (ii) the shareholders or managers of the
Companies have not directed, limited, made difficult or practiced any acts that have or may have
harmed the access, use or knowledge of the information, assets, documents or work methodology
relevant for the quality of their conclusions. KPMG and APSIS have been appointed for the works
described herein, considering the broad and notorious experience that both specialized companies
have in the preparation of appraisal reports of such nature.
4.10. BM&FBOVESPA and the Holding, as applicable, shall bear with all the costs related to the
engagement of KPMG and APSIS for the preparation of the Appraisal Report of CETIPs Shares,
the Appraisal Report of the Holding and the Appraisal Report of the Net Equity at Market Value,
as applicable.
4.11. The management of BM&FBOVESPA and CETIP, individually, engaged the advice of
investment banks of international recognition to assist the relevant Board of Directors in the
informed decision making process regarding the financial parameters of the Transaction. Such
financial institutions have not indicated any conflict for the issuance of the support reports or
fairness opinions.
4.12. The management of BM&FBOVESPA and CETIP have also prepared the pro forma financial
information of the companies that subsist, as if such companies already existed, taking into account
the Reference Date, prepared in accordance with Law No. 6.404/76, and with the rules of the
Brazilian Securities and Exchange Commission and submitted to reasonable assurance by
independent auditor registered with the Brazilian Securities and Exchange Commission.
5. Corporate Approvals
5.1. The effectiveness of the Merger of Shares of CETIP, of the Redemption and of the Merger of the
Holding shall depend on the completion of the following acts, all interdependent and with its

effects subject to the fulfillment of the Conditions Precedent, which shall all occur tentatively on the
same date:
(a)

extraordinary general shareholders meeting of CETIP to, in this order, (i) approve the
waiver of the public offer for the acquisition of shares issued by CETIP, set forth in Article
88 of the Bylaws of CETIP within the scope of the Transaction; (ii) approve the Merger
Agreement; (iii) approve the Transaction; (iv) authorize the subscription, by its managers, of
the new shares to be issued by the Holding; and (v) in case CETIP has not obtained the
waiver by the debenture holders and always according to the provisions set forth in item
7.1.2(g), ensure, in the terms set forth by the first paragraph of article 231 of Law 6.404/76, to
CETIPs debenture holders that wish, during the six-month term counted as of the date of
publishing of the minutes of the shareholders general meetings related to the Transaction,
the redemption of the debentures they own;

(b)

extraordinary general shareholders meeting of the Holding to, in this order, (i) approve the
Increase in the Capital Stock of the Holding; (ii) approve the Merger Agreement; (iii) ratify
the appointment of KPMG; (iv) approve the Appraisal Report of CETIPs Shares; (v)
approve the creation of a new class of preferred shares, according to item 4.1.1 above; (vi)
approve the Merger of CETIPs Shares; (vii) approve the increase in the capital stock to be
subscribed and paid-in by the officers of CETIP, with the corresponding amendment to its
bylaws; (viii) approve the Redemption, with the corresponding amendment to its bylaws;
(ix) approve the Merger of Holding into BM&FBOVESPA; and (x) authorize the
subscription, by its officers, of the new shares to be issued by BM&FBOVESPA; and
(c) extraordinary general shareholders meeting of BM&FBOVESPA to, in this order, (i) approve
the investment, by BM&FBOVESPA, in an amount of at least R$7.920.019.939,00, upon the
subscription of new shares in the Holding,; (ii) approve the Merger Agreement; (iii) ratify
the appointment of APSIS; (iv) approve the Appraisal Report of the Holding; (v) approve
the Transaction; (vi) authorize the increase of the capital stock to be subscribed and paid in
by the managers of the Holding, with the following amendment to its bylaws (once the
Final Amount of BM&FBOVESPAs Shares per Common Share of the Holding, according to
the objective determination by the application of the formula set forth in Schedule 2.2, and,
therefore, the final amount of BM&FBOVESPAs shares to be issued as a result of the
Merger of the Holding); and (vii) approve the amendment to its bylaws, substantially in the
terms of Schedule 5.1(c), to, among other adjustments, (1) include an article setting forth the
existence of a corporate indemnification (supplemental to any D&O insurance policy cover),
according to the terms usually adopted to large size listed companies, applicable to the
management and to the employees that occupy managing positions, to offer complete
protection against direct damages that might be suffered, in the performance of their
professional duties, by the current and future managers of BM&FBOVESPA and of its
controlled companies, including CETIP, with the usual restrictions, (2) increase the
maximum number of members of the board of directors of BM&FBOVESPA, from 11 to 13
members, exceptionally until the general shareholders meeting that deliberates upon the

10

financial statements of the fiscal year ending in December 31, 2018. The two new members
of the Board of Directors shall only be appointed after the obtaining of the regulatory
approvals for the Transaction before the applicable authorities, and shall be appointed by
the board of directors of CETIP among their current independent directors and/or statutory
officers, and approved by the Governance and Appointment Committee and by the board
of directors of BM&FBOVESPA (which can request the substitution of up to one of the
appointed members for another independent director or statutory officer of CETIP), and
submitted for the election by the General Shareholders Meeting of BM&FBOVESPA.
5.1.1. The management of the Companies shall employ their best efforts so that the general
shareholders meetings referred to above are held in the shortest term possible, in a way that that
the general shareholders meetings occur within the maximum term of 90 days counted as of the
date hereof.
6. Submission to the Government Authorities
6.1. BM&FBOVESPA shall submit the Transaction to the Brazilian Securities and Exchange
Commission, the Central Bank of Brazil and to CADE (Governmental Authorities), preferably
until May 2, 2016, which shall be conducted, actively and diligently, by the legal advisors
appointed by BM&FBOVESPA.
6.1.1. Regarding the submission to CADE, the term mentioned in item 6.1 above shall be
considered complied with by the presentation of the draft of the notice to CADE (with the
responses to the items of Schedule I of the Resolution CADE no. 2/2012) for preliminary assessment
by the General Superintendence of CADE.
6.2. For this purpose, CETIP undertakes to provide all the information reasonably necessary to
BM&FBOVESPA for such filling, as requested by BM&FBOVESPA. Among the necessary
information, confidential information and/or sensible commercial information shall be clearly
marked as such by CETIP so that they are exchanged solely by external counsels.
6.3. All costs and expenses related to the approval of the Transaction by the Governmental
Authorities shall be borne by BM&FBOVESPA, with the exception of expenses with the respective
counsels, which shall be borne by the Party that retains them, according to item 6.4 below.
6.4. At its discretion, CETIP can be represented by external counsel on the case records of the
Transaction notice to CADE or on the case records of the Transaction notice to the other
Governmental Authorities, provided that the representatives of CETIP shall always be invited to
participate of any and all interactions of BM&FBOVESPA relating to the approval process of the
Transaction before the Governmental Authorities with the appropriate prior notice to accomplish
such participation. However, by leading the notice, BM&FBOVESPA shall not need CETIPs
approval for the submission of any pronouncements or information to the Governmental
Authorities. BM&FBOVESPA undertakes, nevertheless, to previously share with CETIP the
documents to be presented to the Governmental Authorities for knowledge and confirmation of the

11

exactitude of the information presented. In this last hypothesis, CETIP undertakes to confirm or
correct any information, as well as to present eventual comments that it believes to be pertinent for
the best defense of the companies interests before the Governmental Authorities, in a sufficient
expedite way to allow the fulfillment of deadlines which may be established by the authority.
6.5. Without the prior consent of BM&FBOVESPA, CETIP shall not make any contact with CADE
related to the Transaction. In case such contact may be deemed necessary, BM&FBOVESPA shall
have the opportunity to accompany and participate of such contact.
6.6. In case any Governmental Authorities imposes restrictions to the Transaction contemplated in
this Merger Agreement or demands the change of any of its terms or conditions, BM&FBOVESPA,
in case it believes that such restrictions or changes are not aligned with its best interests, can opt to
not conclude the Transaction, in which event, subject to the provisions set forth in the caput of item
7.6, the payment in item 7.6(a) shall be applicable.
6.6.1. BM&FBOVESPA shall be responsible for the negotiation of potential remedies/commitments
and for the preparation of any proposals of settlements with any Governmental Authority in the
context of the Transactions notification. In case, at any moment during the analysis of the
Transaction by any Governmental Authorities, the negotiation of remedies/commitments is
proposed, BM&FBOVESPA undertakes to promptly report the terms of the proposal presented to
CETIP. At its discretion, BM&FBOVESPA can accept or reject the terms proposed by the
Governmental Authorities. In the event of rejection by BM&FBOVESPA, the payment in item 7.6(a)
shall be applicable, subject to the provisions set forth in the caput of item 7.6.
6.6.2. In no event the remedies/commitments negotiated or imposed by the Governmental
Authorities shall modify the result of the exchange rate calculated according to the terms set forth
in this Merger Agreement, or shall mean the waiver to any right set forth herein, or shall modify
the obligations hereby undertaken by the parties.
7. Other Obligations
7.1. Until the date of completion of the Transaction, except if in any other way provided for in this
Merger Agreement or if necessary to the completion of the Transaction, the Companies shall
maintain the regular course of business and abstain from engaging in any acts that might, in any
manner, affect in a material way their business or transactions and, consequently, change, also in a
material manner, the balance of the exchange ratio hereby determined or, in addition, prevent or
create difficulties for the completion of the Transaction, provided that the Parties agree that from
May, 2016 the Deeds and Securities Unit of CETIP shall render its services at Alameda Xingu, 350,
City of Barueri, State of So Paulo.
7.1.1. Without prejudice to the provisions set forth in item 7.1, each Company hereby undertakes to,
until the date that the Transaction is completed:

12

(a)

not to approve the filling, propose or take any measure for the request of judicial or
extrajudicial reorganization, the declaration of bankruptcy, the dissolution or liquidation
of each Company and/or its controlled companies; and

(b)

keep in force the authorizations issued by the Central Bank of Brazil or by the Brazilian
Securities and Exchange Commission.

7.1.2. Additionally, and without prejudice to the provisions set forth in item 7.1, CETIP undertakes
to:
(a)

until the Date of Completion of the Transaction, keep its Gross Indebtedness lower than the
equivalent of the sum of R$650,000,000.00 and US$300,000,000.00, considering that "Gross
Indebtedness" means, based on the quarterly consolidated financial statements of CETIP,
the sum of the balance of the consolidated debt of CETIP, including debt owed to natural
persons and/orlegal entities , such as loans, borrowings, financing, commercial leasing,
issuance of fixed rate securities, convertible or not, in the local and/or international markets,
co-obligations, sureties or guarantees;

(b)

until the Date of Completion of the Transaction, not to dispose of fixed assets of whose
aggregated value is equal or higher than R$ 50,000,000.00;

(c)

until the Date of Completion of the Transaction, not to dispose of or purchase any equity
interest or execute investment agreements, consortium agreements or joint ventures that
result in an aggregate investment equal or higher than R$ 50,000,000.00, except for eventual
capital increases involving the existing subsidiaries on the date hereof;

(d)

not to surpass during the fiscal year of 2016 more than 10% of the amounts contained in the
budget, as approved by the board of directors of CETIP on March 2, 2016 intended for the
payroll and for the payment of benefits to the employees;

(e)

not to issue new grants within the scope of the stock option plan of CETIP, except as to
comply with obligations already set forth in contracts;

(f)

not to perform capital expenditures, during the fiscal year of 2016, except for the allocation
of employees hours, that surpasses in 20% the amounts contained in the budget for 2016, as
approved by the board of directors of CETIP on March 2, 2016;

(g)

at the Date of Completion of the Transaction, have sufficientfinancial resources in cash to


keep the regular course of its business, as well as to pay the financial obligations that
eventually come to be owed due to the completion of the Transaction.

7.1.3. Additionally, and without prejudice to the provisions set forth in the caput of item 7.1,
BM&FBOVESPA undertakes to keep the company listed in the Novo Mercado segment and to
comply at all times with the obligation to keep a free float of 25% of its capital stock.
7.2. The exercise right of the stock options granted CETIPs Stock Option Plans of 2009, 2010 and
2012 shall be anticipated as of the Date of Completion of the Transaction, and BM&FBOVESPA
hereby agrees that the balance of the unexercised stock options by the respective beneficiary of

13

CETIP before the Date of Completion of the Transaction shall, shall up to the Financial Settlement
Date , be cancelled by BM&FBOVESPA against payment, by BM&FBOVESPA to the respective
beneficiary of CETIP, of the corresponding amount in local currency, and the amounts paid in cash
shall be ascertained to this special purpose, based on the fair value of the options at the Date of
Completion of the Transaction. For the determination of the fair value of the options, it shall be
used the methodology adopted by BM&FBOVESPA in the cancelation of the balance of the options
issued in the scope of its stock option plan, which was object of the announcement to the market
released on February 4, 2015. BM&FBOVESPA shall propose to the respective beneficiaries that an
agreement is executed with the purpose to hold them indemnified in relation to potential
contingencies arising from the payments described in this item.
7.3. BM&FBOVESPA, considering the opinion of its external tax advisors, already adopted in a
previous case, according to which there is no capital gain subject to taxation in merger of shares
transactions, will not retain the alleged income tax over the common shares of the Holding to be
delivered to the non-resident shareholders of CETIP in the context of the Transaction.
Notwithstanding, BM&FBOVESPA declares, for all legal purposes, to be the sole responsible party
for eventual discussions (that BM&FBOVESPA believes to be groundless) over the applicability of
income tax over the alleged capital gain in transactions involving the merger of shares of nonresidents in the Merger of CETIPs Shares, and, in this sense, undertakes to keep the management
of CETIP, as well as its shareholders and respective financial institutions that act as representatives
for tax purposes in Brazil (custodians), completely indemnified from any kind of losses in this
sense related to the tax issue presented herein, exclusively in connection to the Transaction.
7.4. The events described in this Merger Agreement, as well as the other matters submitted to the
Companies shareholders on the general shareholders meetings that deliberate upon the Merger
Agreement, are legal matters reciprocally dependent, so that it is an assumption that any matter
shall only be effective if the others are also effective.
7.5. BM&FBOVESPA, by this Merger Agreement, is co-obligated with the Holding in all obligations
involving the Holding in the Transaction and/or set forth in Merger Agreement, so that, once
corporate approvals for the Transaction are obtained, as provided in item 5.1, it is jointly liable with
the Holding regarding all payments eventually owed by the Holding in the terms of this Merger
Agreement, but especially in relation to the Redemption Value for Every Three Redeemable
Preferred Shares of the Holding.
7.6. Once all corporate approvals for the Transaction set forth in item 5.1 are obtained, in case the
Transaction is not completed:
(a)

due to the lack of fulfillment of any of the Conditions Precedent set forth in items 3.1(a),
3.1(b) and 3.1(c) (except if for reason of non-compliance to the obligations set forth in
the Merger Agreement by CETIP, and as long as that breach has not been cured or
remedied by CETIP within 60 days counted as of the date of notice of the breach sent
by BM&FBOVESPA to CETIP for that purpose); or

14

(b)

within 18 months counted as of the date of the last general shareholders meeting of the
Companies that approve the Transaction without its conclusion (except due to breach
of the obligations set forth in the Merger Agreement by CETIP, and as long as that
breach has not been cured or remedied by CETIP within 60 days counted as of the date
of notice of the breach sent by BM&FBOVESPA to CETIP for that purpose); or

(c)

due to the breach of the obligations set forth in this Merger Agreement by BM&FBOVESPA
(and as long as that breach has not been cured or remedied by BM&FBOVESPA within
60 days counted as of the date of notice of the breach sent by CETIP to
BM&FBOVESPA for that purpose),

CETIP can consider the Transaction resolved and shall be entitled to the payment, by
BM&FBOVESPA, as a pre-fixed damages award, of R$ 250,000,000.00, payable in local currency in a
lump sum, within 30 days counted as of the notification of CETIP to BM&FBOVESPA in this sense,
and CETIP cannot demand any supplemental amount due to the non-completion of the
Transaction, as set forth in the sole paragraph of article 416 of the Brazilian Civil Code. The
payment of the amount referred above under no circumstance shall be cumulative.
7.7. Once the corporate approvals for the Transaction set forth in item 5.1 are obtained, and the
Transaction is not concluded due to the breach of the obligations set forth in this Merger
Agreement by CETIP (and provided that such breach is not cured or remedied by CETIP within 60
days counted as of the date of notice of the breach sent by BM&FBOVESPA to CETIP for that
purpose), BM&FBOVESPA can deem the Transaction as resolved and demand damages from
CETIP to be ascertain by the arbitral procedure set forth in Section 9.
7.8. In addition to the provisions set forth in Sections 7.6 and 7.7, no other indemnity demand shall
be brought from all Parties in relation to the provisions set forth in this Merger Agreement.
7.9. A BM&FBOVESPA, in relation to itself and to the Holding, and CETIP, in relation to itself,
represent and warrant reciprocally the following:
(a)

CETIP and BM&FBOVESPA are public companies, duly incorporated and validly existing
in accordance with the laws of the Federal Republic of Brazil. The Holding is a corporation,
duly incorporated and validly existing in accordance with the laws of the Federal Republic
of Brazil, without any operations or liabilities.

(b)

In their best knowledge, on the date hereof, there is no impediment to the completion of the
Transaction and compliance with the provisions set forth in this Merger Agreement, except
if otherwise regulated in this Merger Agreement.

(c)

On the date hereof:


(i)

The capital stock of BM&FBOVESPA is represented exclusively by 1.815.000.000


common shares, all paid-in, and there is no contract or security of its issuance that

15

gives rights to its subscription, except for the obligations arising out of the restrictive
stock plan disclosed in the Information Form of BM&FBOVESPA.

(d)

(ii)

The capital stock of CETIP is represented exclusively by 262.978.823 common shares,


all paid-in, and there is no contract or security of its issuance that gives rights to its
subscription, except for the obligations arising out of the stock plan disclosed in the
Information Form of CETIP.

(iii)

The capital stock of the Holding is represented exclusively by 1.200 common shares,
all paid-in, and there is no contract or security of its issuance that gives rights to its
subscription by any other person that is not BM&FBOVESPA.

Their respective audited financial statements with the reference date of December 31, 2015
and, in relation to BMFBOVESPA and CETIP, their most recent Information Form
(Formulrio de Referncia), as filled and available at the Brazilian Securities and Exchange
Commissions website, adequately reflects, on the date hereof, in all relevant aspects, the
best understanding of the managers of each Company about its business, as demanded by
the applicable laws.

7.10. The Companies and their respective managers undertake to comply with all terms set forth in
this Merger Agreement, so that their respective officers are authorized to take all and any necessary
measures for the implementation of the Transaction.
8. General Dispositions
8.1. Once the Transaction is approved, the managers of BM&FBOVESPA shall practice all necessary
acts for the implementation of the Merger of the Holding, including the cancellation of the
registration of the Holding before the competent federal, state and municipal authorities, as well as
the maintenance of the accounting books of the Holding for the legal term.
8.2. The applicable documentation shall be at the disposal of the Companies shareholders in the
respective headquarters as of the date of the call notice to the Extraordinary General Shareholders
Meetings of the Companies, and/or, as applicable, on the Investor Relations website of CETIP
(www.cetip.com.br/ri) and on BM&FBOVESPAs (www.bmfbovespa.com.br/ri), as well as on the
Securities and Exchange Commissions and on BM&FBOVESPA Bolsa de Valores, Mercadorias e
Futuross websites.
8.3. Except if otherwise provided in this Merger Agreement, the costs and expenses incurred with
the Transaction shall be borne by the Party that incurs in them (provided that BM&FBOVESPA
may bear the costs and expenses incurred by the Holding), including the expenses related to the
fees of their respective advisors, auditors, appraisers and counsels.
8.4. This Merger Agreement may only be amended by a written agreement executed the by Parties.

16

8.5. The potential declaration by any court of the nullity or ineffectiveness of any covenants
contained in this Merger Agreement shall not affect the validity and effectiveness of the other
provisions, which shall be entirely fulfilled, undertaking the Companies to endeavor their best
efforts to adjust the provisions in order to obtain the same effect of the covenant that was declared
null and void.
8.6. The lack or delay of any of the Companies to exercise any of its rights set forth in this Merger
Agreement shall not be considered a waiver or novation and shall not affect the subsequent
exercise of such right. Any waiver shall only produce effects if specifically granted and in writing.
8.7. This Merger Agreement is irrevocable and irreversible, and the obligations undertaken by the
Companies herein are and also binding against their successors for any effect.
8.8. Any rights and obligations set forth in this Merger Agreement may not be assigned without the
previous and express written approval of the Companies.
8.9. This Merger Agreement, which is executed in the presence of two witnesses, constitutes an
extrajudicial execution title in the form of the applicable civil procedure law , for all legal effects.
The Companies acknowledge that (i) this Merger Agreement constitutes an extrajudicial execution
title for any and all purposes and effects of the Brazilian Civil Procedure Code; and (ii) is subject to
the specific performance in the form of the applicable law.
9. Applicable Law and Dispute Resolution
9.1. This Merger Agreement shall be interpreted and governed by the laws of the Federative
Republic of Brazil.
9.2. It is expressly agreed that all disputes, controversies and/or complaints arising from this
Merger Agreement or in any way related to it, including to its implementation, negotiation,
interpretation, existence, validity, effectiveness , execution, violation or termination among the
Parties and/or their successors at any account (Disputes) shall be submitted to arbitration, to be
administered by the Market Arbitration Chamber of BM&FBOVESPA (Cmara de Arbitragem do
Mercado, CAM), except if CETIP exercises its option to submit the arbitration to the BrazilCanada Chamber of Commerce (Cmara de Comrcio Brasil Canad, CCBC).
9.2.1. CETIP shall exercise its option to submit the arbitration to the administration of CCBC by the
filing of the arbitration request before CCBC to settle any Disputes. If BM&FBOVESPA initiates an
arbitral proceeding before CAM before CETIP has filed the arbitration request before CCBC, and
CETIP wishes to exercise its option to submit the arbitration to CCBC, CETIP shall file the
arbitration request with the CCBC before the end of the term to present its response to the
arbitration request filed BM&FBOVESPA before CAM. In case CETIP does not exercise its right
within the applicable term, the Parties agree that the arbitration initiated by BM&FBOVESPA shall
proceed before CAM. In case CETIP exercises its option within the applicable term,
BM&FBOVESPA shall cancel its request for arbitration before CAM and submit its claims to CCBC

17

within the scope of the arbitral proceeding initiated by CETIP. In this last scenario, the Parties shall
share in equal parts all the costs and expenses incurred by BM&FBOVESPA before CAM.
9.2.2. BM&FBOVESPA agrees that, in case CETIP exercises the option to submit the arbitration to
the administration of CCBC, in substitution of CAM, CCBC shall be for all legal purposes the
arbitration chamber elected and chosen by the Parties to settle any Disputes.
9.2.3. In any case, the arbitration procedure shall be conducted in accordance to the rules defined in
the arbitration rules of CAM or CCBC as applicable (Rules), valid as of the date of the of the
arbitration request, with the exceptions set forth herein, and in accordance with the applicable law,
specially Law no. 9.307 of September 23, 1996 (Arbitration Law).
9.2.4. The arbitration shall be conducted by three arbitrators (Arbitration Tribunal) to be
appointed according to the Rules. In case any of the three arbitrators is not appointed within the
term provided for in the Rules, CAM, or CCBC, as applicable, shall be responsible for appointing
him/her/them, according to the Rules. Any and all controversy relating to the appointment of the
arbitrators by the Parties, as well as the choice of the third arbitrator, shall be settled by CAM, or by
CCBC, as applicable. The Parties, by mutual agreement, waive the application of the provision
contained in the Rules that limits the choice of co-arbitrators or of the president of the arbitration
tribunal to the list of arbitrators of CAM, or of CCBC, as applicable.
9.2.5. The arbitration shall take place in the City of So Paulo, State of So Paulo, Brazil, where the
final arbitral award shall be issued, and shall be conducted in Portuguese. The Arbitration Tribunal
shall judge the merit of the Dispute according to the applicable Brazilian law, being expressly
forbidden the judgment by equity.

9.2.6. Before the constitution of the Arbitration Tribunal, the Parties may claim provisional and
urgent remedies to the Courts. After its constitution, the Arbitration Tribunal may grant
injunctions, temporary and definitive remedies that it deems appropriate, including those aimed at
the specific performance of the obligations set forth in this Merger Agreement, as well as keep,
modify and/or revoke the injunctions previously granted by the Courts. Any order, decision,
determination or award issued by the Arbitration Tribunal shall be final and binding to the Parties
and their successors, which expressly waive the right to any appeals. The arbitral award shall be
executed before any judicial authority with jurisdiction over the Parties and/or their assets.
9.2.7. Injunctions, as well as lawsuits for the enforcement and compliance of awards suits, when
applicable, may be requested , at the interested partys discretion, (i) in the city where the
headquarters or the assets of any of the Parties are located; or (ii) in the City of So Paulo, State of
So Paulo, Brazil. For any other judicial measures allowed by Law 9.307/96, the Parties hereby elect
the courts of the City of So Paulo, State of So Paulo, Brazil. The request for any judicial measures
allowed by Law 9.307/96 shall not be considered as a waiver of the rights set forth in this clause or
of the arbitration as the sole method to resolve the Dispute among the Parties.

18

9.2.8. In case two or more Disputes arise and are resulting or related to this Merger Agreement
and/or other instruments executed between the Parties, their settlement may occur by means of a
sole arbitral proceeding according to the provisions set forth in the Rules. Before the execution of
the Arbitration Term, CAM, or the CCBC, as applicable, shall be responsible for consolidating,
according to the Rules, the arbitral proceeding with any other pending arbitral proceeding that
involves the settlement of Disputes arising out of or related to this Merger Agreement and/or other
instruments executed by the Parties. After the execution of the Arbitration Term, the Arbitration
Tribunal may consolidate simultaneous arbitral proceedings based on Disputes arising out of or
related to this Merger Agreement and/or to other instruments executed by the Parties, provided
that (i) such proceedings are related to the same legal connection; (ii) their arbitral provisions are
compatible; and (iii) the consolidation does not result in damages to one of the Parties. The first
arbitral tribunal constituted shall have the authority for the consolidation. The decision to
consolidate shall be final and binding over all Parties involved in the Disputes and arbitral
proceedings related to the order of consolidation.
9.2.9. Each Party shall bear the costs and expenses that it causes during the arbitration, including
the fees of its attorneys and technical assistants and the Parties shall apportion in equal parts the
costs and expenses advanced to CAM, or to CCBC, as applicable, or whose cause cannot be
attributed to one of the Parties, according to the Rules. The Arbitration Tribunal, in the arbitral
award shall attribute to the losing Party, or to both Parties in the proportion that their claims have
not been recognized, the final responsibility for the proceedings cost, including the legal fees borne
by the defeated party, as arbitrated by the Arbitration Tribunal.
9.3. The Parties undertake not to disclose (and not to allow the disclosure) of the existence and the
content of the arbitration procedure, including any information that come to their knowledge and
any documents presented in the arbitration procedure, that are not, otherwise , of public
knowledge, any evidence and materials produced in the arbitration procedure and any decisions
issued in the arbitration procedure, except if and only to the extent that (i) the obligation to disclose
such information is provided by law, (ii) the disclosure of such information is requested by a
governmental authority or determined by the courts; (iii) such information becomes of public
knowledge by any other means not related to the disclosure by the Parties and their affiliates; or
(iv) the disclosure of such information results from the appeal to the courts in the events provided
for in the Arbitration Law. Any and all disputes related to the confidentiality obligation shall be
settled by the Arbitration Tribunal in a final and binding manner.
9.4. The Holding is expressly bound by this arbitration clause for all legal purposes.
(remaining of this page left intentionally blank)

19

(signature page of the Merger Agreement)

In witness hereof, the management of the Companies execute this Merger Agreement in 4 (four)
counterparts, in the presence of the undersigned witnesses.
So Paulo, April 15, 2016.
Management of
BM&FBOVESPA S.A. BOLSA DE VALORES, MERCADORIAS E FUTUROS
DIRECTORS
_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

20

(signature page of the Merger Agreement)


Management of
BM&FBOVESPA S.A. BOLSA DE VALORES, MERCADORIAS E FUTUROS
OFFICERS
_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

21

(signature page of the Merger Agreement)


Management of
CETIP S.A. MERCADOS ORGANIZADOS
DIRECTORS
_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

22

(signature page of the Merger Agreement)


Management of
CETIP S.A. MERCADOS ORGANIZADOS
OFFICERS
_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

_____________________________________
Name:

23

(signature page of the Merger Agreement)


Management of
COMPANHIA SO JOS HOLDING
OFFICERS
_____________________________________
Name:

_____________________________________
Name:

24

(signature page of the Merger Agreement)


BM&FBOVESPA S.A. BOLSA DE VALORES, MERCADORIAS E FUTUROS
_____________________________________
Name:
Position:

_____________________________________
Name:
Position:

25

(signature page of the Merger Agreement)


CETIP S.A. MERCADOS ORGANIZADOS
_____________________________________
Name:
Position:

_____________________________________
Name:
Position:

26

(signature page of the Merger Agreement)


COMPANHIA SO JOS HOLDING
_____________________________________
Name:
Position:

_____________________________________
Name:
Position:

Witnesses:
1. ___________________________________
Name:
RG:
CPF:

2. ___________________________________
Name:
RG:
CPF:

27

SCHEDULE 2.2
Calculation of the Redemption Value for Every Three Redeemable Preferred Shares of the
Holding and of Final Amount of BM&FBOVESPA Shares for each Common Share of the
Holding

1.

DEFINITION OF VARIABLES
ORIGINAL AMOUNT OF REFERENCE FOR THE CASH PORTION FOR
EACH THREE REDEEMABLE PREFERRED SHARES OF THE HOLDING

R$30,75

D1

ORIGINAL AMOUNT OF REFERENCE FOR THE CASH PORTION


= ADJUSTED FOR DISTRIBUTIONS AND WITHOLDING TAXES ON THE
DATE OF LIQUIDATION

D2

ORIGINAL AMOUNT OF REFERENCE FOR THE CASH PORTION


ADJUSTED FOR DISTRIBUTIONS, WITHOLDING TAXES ON THE
=
DATE OF LIQUIDATION, REPURCHASES AND ISSUANCES FOR EACH
THREE REDEEMABLE PREFERRED SHARES OF THE HOLDING

D3

ADDITIONAL CASH AMOUNT AS A PROTECTION TO THE DROP OF


= THE PRICE OF BVMF3 SHARES FOR EACH THREE REDEEMABLE
PREFERRED SHARES OF THE HOLDING

0,8991

REFERENCE EXCHANGE RATE (BVMF3 SHARES PER COMMON


SHARE OF THE HOLDING)

R$11,40

REFERENCE PRICE OF BVMF3 FOR THE DETERMINATION OF THE


REFERENCE EXCHANGE RATE

Q1

EXCHANGE RATE ADJUSTED FOR DISTRIBUTIONS (BVMF3 SHARE


PER COMMON SHARE OF THE HOLDING)

Q2

EXCHANGE RATE ADJUSTED FOR DISTRIBUTIONS, REPURCHASES


= AND ISSUANCES (BVMF3 SHARES PER COMMON SHARE OF THE
HOLDING)

Q3

REDUCED EXCHANGE RATE (BVMF3 SHARES PER COMMON SHARE


OF THE HOLDING)

Q4

INCREASED EXCHANGE RATE (BVMF3 SHARES PER COMMON


SHARE OF THE HOLDING)

28

REFERENCE AMOUNT OF EACH COMMON SHARE OF THE


HOLDING

R$10,25

R$11,25

= MINIMUM UNIT AMOUNT PER COMMON SHARE OF THE HOLDING

R$17,76

= MAXIMUM UNIT AMOUNT PER COMMON SHARE OF THE HOLDING

CDITt0,T

= CDI RATE ACCUMULATED BETWEEN t0 AND T

t0 = 04/08/2016

DATE OF THE APPROVAL OF THE TRANSACTION BY THE BOARDS


OF DIRECTORS

t1

DATE OF THE APPROVAL OF THE TRANSACTION BY THE GENERAL


SHAREHOLDERS MEETINGS

= DATE OF THE FINANCIAL LIQUIDATION OF THE TRANSACTION

PROVBVMF,11/04,t0

PRESENT VALUE ON t0 OF THE DISTRIBUTIONS PER SHARE


DECLARED AND PAID BY BM&FBOVESPA BETWEEN 11/04/15 AND t0
=
UPDATED BY THE CDI RATE ACCUMULATED BETWEEN THE DATE
OF PAYMENT AND t0

PROVBVMF,t0,T

PRESENT VALUE ON t0 OF THE DISTRIBUTIONS PER SHARE


DECLARED AND PAID BY BM&FBOVESPA BETWEEN t0 AND T
=
DISCOUNTED AT THE CDI RATE ACCUMULATED BETWEEN t0 AND
THE DATE OF PAYMENT

PROVCETIP,11/04,t0

PRESENT VALUE ON t0 OF THE DISTRIBUTIONS PER SHARE


DECLARED AND PAID BY CETIP BETWEEN 11/04/15 AND t0
=
UPDATED BY THE CDI RATE ACCUMULATED BETWEEN THE DATE
OF PAYMENT AND t0

PROVCETIP,t0,T

PRESENT VALUE ON t0 OF THE DISTRIBUTIONS PER SHARE


DECLARED OR PAID BY CETIP BETWEEN t0 AND T DISCOUNTED AT
=
THE CDI RATE ACCUMULATED BETWEEN t0 AND THE DATE OF
PAYMENT

IMPT

= WITHOLDING TAX AT THE LIQUIDATION DATE

PM

AVERAGE PRICE OF CLOSING OF BVMF3 CALCULATED IN THE 30


(THIRTY) STOCK FLOOR TRADINGS BEFORE THE DATE OF
= OBTAINING OF THE LAST APPROVAL OF THE TRANSACTION BY
THE COMPETENT AUTHORITIES, PROVIDED THAT THE PRICES OF
BVMF3 SHARES SHALL BE ADJUSTED FOR A LOWER AMOUNT IN
CASE THE BVMF3 SHARE BEGINS TO BE NEGOTIATED EX-

29

DIVIDENDS WITHIN THE REFERRED MEASURING TERM. THE


ADJUSTMENTS REFERRED ABOVE SHALL BE MADE ONLY IN THE
PRICE OF THE STOCK FLOOR TRADINGS BEFORE THE DATE IN
WHICH BVMF3 BEGINS TO BE NEGOTIATED EX-DIVIDENDS, IN A
WAY THAT THE AVERAGE OF THE PRICES OBSERVED IN THE 30
(THIRTY) STOCK FLOOR TRADINGS BE REPRESENTATIVE OF A
PRICE PER SHARE EX-DIVIDEND.
264.883.610

= REFERENCE NUMBER OF CETIP SHARES

1.782.094.906

= REFERENCE NUMBER OF BVMF3 SHARES

NUMRCETIP

NUMBER OF CETIP SHARES REPURCHASED BETWEEN 09/30/2015


AND T

NUMRBVMF

NUMBER OF BVMF SHARES REPURCHASED BETWEEN 09/30/2015


AND T

NUMECETIP

NUMBER OF CETIP SHARES ISSUED BETWEEN 09/30/2015 AND T,


= EXCLUDING THE CETIP SHARES ISSUED DUE TO THE STOCK
OPTION PROGRAMS EXISTING ON 09/30/2015

NUMEBVMF

= NUMBER OF BVMF SHARES ISSUED BETWEEN 09/30/2015 AND T

RECOMPCETIP,09/30,t0

PRESENT VALUE ON t0 OF THE REPURCHASES OF THE CETIP


SHARES (REPURCHASE PRICE MULTIPLIED BY THE NUMBER OF
= REPURCHASED SHARES) MADE BETWEEN 09/30/2015 AND t0
UPDATED BY THE CDI RATE ACCUMULATED BETWEEN THE DATE
OF REPURCHASE AND t0

RECOMPCETIP,t0,T

PRESENT VALUE ON t0 OF THE REPURCHASES OF CETIP SHARES


(REPURCHASE PRICE MULTIPLIED BY THE NUMBER OF
= REPURCHASED SHARES) MADE BETWEEN t0 AND T DISCOUNTED
AT THE CDI RATE ACCUMULATED BETWEEN t0 AND THE DATE
REPURCHASE

RECOMPBVMF,09/30,t0

PRESENT VALUE ON t0 OF THE REPURCHASES OF BVMF3 SHARES


(REPURCHASE PRICE MULTIPLIED BY THE NUMBER OF
= REPURCHASED SHARES) MADE BETWEEN 09/30/2015 AND t0
UPDATED BY THE CDI RATE ACCUMULATED BETWEEN THE DATE
OF REPURCHASE AND t0

RECOMPBVMF,t0,T

PRESENT VALUE ON t0 OF THE REPURCHASES OF BVMF3 SHARES


= (REPURCHASE PRICE MULTIPLIED BY THE NUMBER OF
REPURCHASED SHARES) MADE BETWEEN t0 AND T DISCOUNTED

30

AT THE CDI RATE ACCUMULATED BETWEEN t0 AND THE DATE OF


REPURCHASE

EMISCETIP,09/30,t0

PRESENT VALUE ON t0 OF THE ISSUANCE OF SHARES CETIP (ISSUE


PRICE MULTIPLIED BY THE NUMBER OF ISSUED SHARES) MADE
BETWEEN 09/30/2015 AND t0 UPDATED BY THE CDI RATE
=
ACCUMULATED BETWEEN THE ISSUANCE DATE AND t0,
EXCLUDING THE CETIP SHARES ISSUED DUE TO THE STOCK
OPTION PROGRAMS EXISTING ON 09/30/2015

EMISCETIP,t0,T

PRESENT VALUE ON t0 OF THE ISSUANCE OF SHARES CETIP (ISSUE


PRICE MULTIPLIED BY THE NUMBER OF ISSUED SHARES) MADE
BETWEEN t0 AND T DISCOUNTED AT THE CDI RATE
=
ACCUMULATED BETWEEN t0 AND THE ISSUANCE DATE,
EXCLUDING THE CETIP SHARES ISSUED DUE TO THE STOCK
OPTION PROGRAMS EXISTING ON 30/09/2015

EMISBVMF,09/30,t0

PRESENT VALUE ON t0 OF THE ISSUANCE OF SHARES BVMF (ISSUE


PRICE MULTIPLIED BY THE NUMBER OF ISSUED SHARES) MADE
=
BETWEEN 09/30/2015 AND t0 UPDATED BY THE CDI RATE
ACCUMULATED BETWEEN THE ISSUANCE DATE AND t0

EMISBVMF,t0,T

PRESENT VALUE ON t0 OF THE ISSUANCE OF SHARES BVMF (ISSUE


PRICE MULTIPLIED BY THE NUMBER OF ISSUED SHARES) MADE
=
BETWEEN t0 AND T DISCOUNTED AT THE CDI RATE
ACCUMULATED BETWEEN t0 AND THE ISSUANCE DATE

DL1

AMOUNT OF THE REDEMPTION FOR EACH THREE REDEEMABLE


PREFERRED OF THE HOLDING

QL1

FINAL AMOUNT OF BM&FBOVESPA SHARES PER COMMON SHARE


OF THE HOLDING

2.

DETERMINATION OF THE ADJUSTMENTS AS A RESULT OF DISTRUBUTIONS

2.1.

DISTRIBUTION PAYMENTS BY CETIP:


D1 = R$30.75 - PROVCETIP,11/04,t0 - PROVCETIP,t0,T - IMPT

2.2.

DISTRIBUTION PAYMENTS BY BM&FBOVESPA:


Q1 = R$10.25 / (R$11.40 PROVBVMF,11/04,t0 - PROVBVMF,t0,T)

31

3.
DETERMINATION OF THE ADJUSTMENTS FOR REPURCHASES AND ISSUANCE
OF SHARES
3.1.

REPURCHASES AND ISSUANCES OF BM&FBOVESPA SHARES:


Q2 = [(1,782,094,906 - NUMRBVMF + NUMEBVMF) x PM + RECOMPBVMF,09/30,t0 +
RECOMPBVMF,t0,T - EMISBVMF,09/30,t0 - EMISBVMF,t0,T] / 1,782,094,906 x Q1 / PM

3.2.

REPURCHASES AND ISSUANCE OF CETIP SHARES:


IF: (I) Q2 x PM > R$11.25 AND (II) Q2 x PM < R$17.76 (BOTH CONDITIONS (I) AND (II)
VERIFIED TOGETHER)
THEN:

D2 = D1 + [(D1 + Q2 x PM) x 264,883,610 - RECOMPCETIP,09/30,t0 - RECOMPCETIP,t0,T + EMISCETIP,09/30,t0 +


EMISCETIP,t0,T] / [264,883,610 - NUMRCETIP + NUMECETIP] - (D1 + Q2 x PM)
IF: Q2 x PM > R$17.76
THEN:
D2 = D1 + [(D1 + R$17.76) x 264,883,610 - RECOMPCETIP,09/30,t0 - RECOMPCETIP,t0,T + EMISCETIP,09/30,t0 +
EMISCETIP,t0,T] / [264,883,610 - NUMRCETIP + NUMECETIP] -(D1 + R$17.76)
IF: Q2 x PM < R$11.25
THEN:
D2 = D1 + [(D1 + R$11.25) x 264,883,610 - RECOMPCETIP,09/30,t0 - RECOMPCETIP,t0,T + EMISCETIP,09/30,t0 +
EMISCETIP,t0,T] / [264,883,610 - NUMRCETIP + NUMECETIP] -(D1 + R$11.25)

4.

DETERMINATION OF THE AMOUNTS ON THE LIQUIDATION DATE

4.1.

HYPOTHESIS IN WHICH THE PROTECTION MECHANISMS ARE NOT USED:


IF: (I) Q2 x PM > R$11.25 AND (II) Q2 x PM < R$17.76 (BOTH CONDITIONS (I) AND (II)
VERIFIED TOGETHER)
THEN:
DL1 = D2 x (1+ CDITt0,T)
QL1 = Q2

4.2.

HYPOTHESIS IN WHICH THE PRICE INCREASE PROTECTION IS USED

32

SE: Q2 x PM > R$17,76


THEN:
DL1 = D2 x (1+ CDITt0,T)
QL1 = Q3 = R$17.76 / PM
4.3.

HYPOTHESIS IN WHICH THE PROTECTION AGAINST THE PRICE DROP IS USED


IF: (I) Q2 x PM < R$11.25 AND (II) [D2 x (1+ CDITt0,T) + (R$11.25 Q2 x PM)] <= 0.85 x [D2
x (1+ CDITt0,T) + R$11.25] (BOTH CONDITIONS (I) AND (II) VERIFIED TOGETHER)
THEN:
D3 = R$11.25 Q2 x PM
DL1 = D2 x (1+ CDITt0,T) + D3
QL1 = Q2
IF: (I) Q2 x PM < R$11.25 AND (II) [D2 x (1+ CDITt0,T) + [(R$11.25 Q2 x PM)] > 0,85 x [D2 x
(1+ CDITt0,T) + R$11.25] (BOTH CONDITIONS (I) AND (II) VERIFIED TOGETHER)
THEN:
D3 = 0.85 x [D2 x (1+ CDITt0,T) + R$11.25] D2 x (1+ CDITt0,T)
DL1 = D2 x (1+ CDITt0,T) + D3
QL1 = Q4 = [R$11.25 D3] / PM

** ** **

33

ATTACHMENT
II.2
Minutes of the
Board of Directors

BM&FBOVESPA S.A. - BOLSA DE VALORES, MERCADORIAS E FUTUROS


CNPJ no. 09.346.601/0001-25
NIRE 35.300.351.452
MINUTES FROM THE EXTRAORDINARY MEETING OF THE BOARD OF
DIRECTORS HELD ON APRIL 15, 2016

1. Date, Time & Venue: April 15, 2016, 11:00 a.m., company branch offices at Rua
Tabapu, 841, 4th floor, Itaim Bibi, So Paulo, So Paulo State.
2. Attendance: Pedro Pullen Parente Chairman and Antonio Carlos Quintella
Director. Directors Denise Pauli Pavarina, Eduardo Mazzilli de Vassimon, Jos de
Menezes Berenguer Neto, Luiz Antonio de Sampaio Campos and Luiz Fernando
Figueiredo participated via conference call and Director Charles Peter Carey
participated by videoconferencing in accordance with Article 26 (4) of the Companys
Bylaws. Justified absence of Directors Claudio Luiz da Silva Haddad, Larcio Jos de
Lucena Cosentino and Luiz Nelson Guedes de Carvalho.
3. Presiding Officers: Pedro Pullen Parente, Chairman; Iael Lukower, Secretary.
4. Decisions based on supporting documents filed at the Companys head offices,
with authorization granted for the minutes to be recorded in summary form:
4.1. After analyzing (i) a valuation report at the book value of the net worth of
Companhia So Jos Holding (formerly Netanya Empreendimentos e Participaes
S.A.), a closely held company domiciled in the city of So Paulo, So Paulo State, at
Praa Antonio Prado, 48, CEP 01010-901, federal taxpayer no. CNPJ/MF
23.791.728/0001-84 (the Holding Company); (ii) a report appraising the economic
value of the stock of CETIP S.A. Mercados Organizados, a public company domiciled
in the city of Rio de Janeiro, Rio de Janeiro State, at Avenida Repblica do Chile, 230,
11 andar, CEP 20031-919, federal taxpayer no. CNPJ/MF 09.358.105/0001-91
(CETIP); (iii) a report appraising the market value of the net worth of the Holding
Company and BM&FBOVESPA; and (iv) a report produced by an investment bank to
support the analysis of the transaction by the Board, Directors decided unanimously to
approve the conclusion of the Merger and Justification Agreement for the Absorption of
CETIPs Shares by the Holding Company, followed by the Absorption of the Holding
Company by BM&FBOVESPA (Merger and Justification Agreement).
4.2. Propose that the General Meeting of Shareholders ratify the appointment of Apsis
Consultoria e Avaliaes Ltda. (Apsis) to perform the valuation report and determine
the book value of the Holding Companys net worth and prepare the respective
valuation report.
4.3. Approve the convening of an Extraordinary General Meeting of Shareholders in
BM&FBOVESPA on May 20, 2016, to deliberate the following order of business, and
authorize the Executive Board to take all necessary measures to do so: (a) approval of
investment by BM&FBOVESPA of R$9,257,820,000.00 via subscription of new shares

(Continuation of Minutes from the Extraordinary Meeting of BM&FBOVESPAs Board of Directors Held on April 15,
2016)

in the Holding Company, all of whose shares are held by BM&FBOVESPA; the
Holding Company will absorb CETIPs shares in the context of the transaction to which
the Merger and Justification Agreement refers; (b) approval of the Merger and
Justification Agreement; (c) ratification of Apsiss appointment to produce the report
confirming the book value of the Holding Companys net worth for the purposes of
merging the Holding Company into BM&FBOVESPA (Valuation Report); (d)
approval of the Valuation Report; (e) approval of the reorganization proposal detailed in
the Merger and Justification Agreement; (f) approval of an increase in
BM&FBOVESPAs capital to reflect absorption of the Holding Company, requiring
amendment of article 5 of the Corporate Bylaws, and authorization for the Board of
Directors to approve the exact financial amount and quantity of shares corresponding to
the capital increase when the transaction consummation date is defined; (g) approval of
other amendments to and consolidation of BM&FBOVESPAs Corporate Bylaws; and
(h) authorization for BM&FBOVESPAs management to perform all other acts required
to conclude the corporate reorganization.

5. Close: With nothing further to discuss, these minutes were recorded and will be read
and, if approved, signed by all the Board members present. So Paulo, April 15, 2016.
Pedro Pullen Parente Chairman, Antonio Carlos Quintella, Charles Peter Carey,
Denise Pauli Pavarina, Eduardo Mazzilli de Vassimon, Jos de Menezes Berenguer
Neto, Luiz Antonio de Sampaio Campos and Luiz Fernando Figueiredo.

This is a true copy of the minutes from this meeting, as recorded in the companys minutes
book.

Pedro Pullen Parente


Chairman

ATTACHMENT
II.3
Valuation Reports

BM&FBOVESPA S.A.
Bolsa de Valores,
Mercadorias e Futuros
Economic Valuation Report of Cetip S.A.
Mercados Organizados
April 11, 2016

Contents
I. Executive summary
II. Information about the appraiser
III. Information on the Company
IV. Market information
V. Methodology
VI. Discount rate
VII. Assumptions
VIII. Economic valuation
Appendix
1. Appendix I Glossary
2. Appendix II Important notes

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

I. Executive Summary (1/3)


Context (source: Client)

BM&FBOVESPA S.A. Bolsa de Valores, Mercadorias e Futuros


(BM&FBOVESPA, or Client) is a company that manages organized
equity and derivatives markets providing registration, clearing, and
settlement services. It acts mainly as a central counterpart, guaranting
financial liquidity for the trades executed in its environments.
Cetip S.A. Mercados Organizados (Cetip or Company) is a
company that provides services of registry, central depository, trading,
clearing and settlement of assets and securities. Through technology
and infrastructure solutions, its proposal is to provide liquidity, security,
and transparency for financial transactions in the Brazilian market.

BM&FBOVESPA and CETIP will be jointly named hereafter as


Companies.

BM&FBOVESPA, according to a material fact released on February 19,


2016, approved the submission of a binding proposal to the respective
shareholders of the Companies for the combination of the operations
of the Companies ("a Binding Proposal" or Operation"), which will
result in the following: (i) the ownership by BM&FBOVESPA, of all the
shares of Cetip; and (ii) the receipt, subject to the adjustments
provided for in that material fact, for each common share issued by
Cetip, of 0.8991 common share of BM&FBOVESPA, in addition to R$
30.75 (thirty Brazilian Reais and seventy five cents).

According to that, BM&FBOVESPA intends to conduct the Operation


through a corporate reorganization, using a company called Companhia
Sao Jose, formerly named as Netanya Empreendimentos e
Participacoes S.A. ("Netanya" or "Holding"), to incorporate the shares of
Cetip, and redeem part of the issued shares, and finally, perform the
merger of the Holding by BM&FBOVESPA.

In this sense, to meet the requirements of Clause 264 of Law No.


6404/76 ("the Brazilian Corporate Law") in line with the Operation,
BM&FBOVESPA hired KPMG Corporate Finance ("KPMG") to prepare
the economic valuation report of Cetip by the criteria of discounted cash
flow.

This Report includes important notes (see Attachment II) relating to the
KPMG Scope of work before the Client.

Sources of information

We used the audited consolidated financial statements of the


Companies, of 2013, 2014 and 2015, on the base date, management
reports, and documents available in the virtual data room ("VDR") by
Cetip to BM&FBOVESPA.

The work also took into account information of financial and economic
projections provided by the Client and its financial advisors.

In addition, public market information were used, in order to analyze the


assumptions used in the valuation.

KPMG analyzed including the information available to the general public


and those provided by the Client and used in this work, understanding
be consistent.

We had access to Cetip projections in a limited way. We used


information about new projects/products supplied by Cetip to
BM&FBOVESPA.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

I. Executive Summary (2/3)


Subsequent Events

Discount rate

We emphasize that this report is based on the position of the


consolidated balance sheet of Cetip as of December 31, 2015. Any
relevant facts that may have occurred after the reporting date which
have not been brought to our attention up to the date of the issuance
of this Report may change the estimated value for Cetip in this Report.

On March 3, 2016, Cetip announced to the market a dividend payment


of R$0.3194231187 per share, which was considered in this work.

On March 21, 2016, Cetip announced to the market a JCP gross


payment of R$0,0842715836 per share, which was considered in this
work.

KPMG was not hired to update this report after its date of issue.

Risk free (US$ nominal) (source: Bloomberg)


US inflation (source: Economist)
Brazilian inflation (source: BACEN)
Relevered Beta
Expected return on the market (source: Damodaran)
Country risk premium (Global 37) (source: Bloomberg)
Size premium (source: Ibbotson Associates, 2015)
CAPM - nominal - Ke (a)

3.0%
1.8%
5.1%
1.0
4.5%
3.1%
1.0%
14.8%

Cost of debt
Tax
Kd after tax - nominal - Kd (b)

12.0%
34.0%
7.9%

WACC
% common equity capital in the capital structure ( c )
% of debt capital in the capital structure ( d )
WACC nominal = (a*c) + (b*d)

97.5%
2.5%
14.7%

Valuation Criterion

We use the criterion of discounted cash flow, which we consider to be


the most appropriate for the valuation, because captures the expected
future performance of the Company. This methodology is described in
more details in Chapter 5 of this report.

The discount rate was estimated according to the methodology of


WACC (Weighted Average Cost of Capital), in nominal terms, of
14.7%, as follows:

Discount rate

Cetip

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

I. Executive Summary (3/3)


Summary Report

Based on the scope of this Report, and subject to the assumptions,


restrictions and limitations described here, we estimate the fair value
of Cetip, as below:
Equity Value
(R$ MM)

11,296

Economic value
per share (R$) 42.67

12,423

46.93

Note: Considered the number of 264,716,860 shares (262,978,823 outstanding +


4,900,800 open, regarding stock option - 3,162,763 treasury) net of treasury
shares, as FS of 2015 reviewed by independent auditors.

We conclude that the estimated economic value of Cetip shares is


between R$ 42.67 and R$ 46.93 estimated by the methodology of
discounted cash flow and the equity value is between R$ 11,296
millions and R$ 12,423 millions.

Fernando A. Mattar
KPMG Corporate Finance Ltda.
Partner

Gabriel Carracedo
KPMG Corporate Finance Ltda.
Director

Fabiano Goulart Delgado


KPMG Corporate Finance Ltda.
Manager

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

Contents
I. Executive summary
II. Information about the appraiser
III. Information on the Company
IV. Market information
V. Methodology
VI. Discount rate
VII. Assumptions
VIII. Economic valuation
Appendix
1. Appendix I Glossary
2. Appendix II Important notes

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

I . Information about the appraiser (1/5)


The KPMG Network

Anti-money laundering;

Restructuring (services of companys restructuration and consulting


to creditors for debt recovery);

Consulting in PPPs (services related to public private partnerships);

Consulting for financing for private companies;

Consulting related to merger and acquisitions;

Financial valuations.

KPMG is a global network of professional services firms providing


Audit, Tax and Advisory services. We operate in 155 countries and
have 174,000 people working in member firms around the world. The
independent member firms of the KPMG network are affiliated with
KPMG International Cooperative ("KPMG International"), a Swiss entity.
Each KPMG firm is a legally distinct and separate entity and describes
itself as such.
In Brazil, approximately 4,000 professionals work in 22 cities located in
13 States and the Federal District. KPMG in Brazil has offices located
in So Paulo (head office), Belm, Belo Horizonte, Braslia, Campinas,
Cuiab, Curitiba, Florianpolis, Fortaleza, Goinia, Joinville, Londrina,
Manaus, Osasco, Porto Alegre, Recife, Ribeiro Preto, Rio de Janeiro,
Salvador, So Carlos, So Jos dos Campos and Uberlndia.

KPMG brand was created in 1987 from the merge of Peat Marwick
International (PMI) and Klynveld Main Goerdeler (KMG).

In Brazil, the area of Deal Advisory, deliver the following professional


services:

Transaction Services (due diligence services during acquisitions);


Forensic Services (services related to investigations and fraud
prevention);

The Corporate Finance segment of KPMG International member firms


sum up to approximately 2,500 professionals, in 167 offices across 82
countries.

Internal process of approval of the report

The economic valuation of Cetip was performed by a team of qualified


consultants, monitored and reviewed by the engagement partner, a
director and the manager coordinating the work. In addition, the team
was also composed of a partner-reviewer.

Identification and qualification of the involved professionals

Fernando Afonso C. S. B. Mattar, Gabriel Carracedo and Fabiano


Goulart Delgado coordinated and participated in the development of
this report. Paulo G. M. Coimba was the partner reviewer of the work.

You can find the curricula vitae of these professionals on pages 9 and
10.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

I . Information about the appraiser (2/5)


Appraiser declarations

KPMG Corporate Finance declares, in April the 11th, 2016, that:


It does not entitle any shares of the Client nor the Company, nor do its
partners, directors, officers, directors, controllers or persons related to
them;

There are no commercial and credit relations that could impact the
Report;

There is no conflict of interest that impairs the necessary


independence required for the performance of this work.

For the services referring to the preparation of this Report,


independently of the success or failure of the Operation, KPMG will
receive, from BM&FBOVESPA, a fixed remuneration of R$ 120,000.00
(One hundred and twenty thousand Reais), net of taxes.

On the date of this Report, in addition to the relationship concerning


the Report mentioned above, KPMG has the following ongoing work in
the context of the operation, which do not impact on the analysis in
the preparation of this report:
a)

In addition to the relationships related to the operation mentioned


above, KPMG Corporate Finance Ltda. and other companies
operating under the KPMG brand in Brazil declare they have
received remuneration of R$ 212,500.00 (Two hundred and twelve
thousand, five hundred Reais) from BM&FBOVESPA for the
provision of professional services related to general advice, in the
twelve months preceding the filing of this Report, and do not
impact its drafting.

Due diligence, financial, fiscal and labor in the total amount of


approximately R$ 510,000.00 (Five hundred and ten thousand
Reais);

b) Valuation report using the criteria of the net book value adjusted to
market prices, worth a total amount of approximately R$
100,000.00 (One hundred thousand Reais); and
c)

Advice on the allocation of pre-purchase price (pre-PPA) in the


amount of R $ 30,000.00 (Thirty thousand Reais).

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

I . Information about the appraiser (3/5)


Name

Fernando A. C. S. B. Mattar

Position

Partner, Corporate Finance Valuation Services, Brazil

Qualifications

Post Graduation in Business Administration Fundao Getlio Vargas FGV/ SP


Undergraduate degree in Mechanical Engineering - Mackenzie - SP

Experience

Since 1995 works in in business consulting, conducting projects in the financial restructuring of
companies, economic-financial, mergers and acquisitions and start-up companies and business units.
Started at KPMG in 2006. Before he served as manager of Arthur Andersen and worked as manager of
business development for the Cisneros Group in Latin America.

Sector of experience

Pharmaceutical, Entertainment, Internet Services, Consumer Products (food, beverage, pulp and paper
etc..), Telecommunications and Retail Companies.

Name

Gabriel Chamadoira Carracedo

Position

Director, Corporate Finance Valuation Services, Brazil

Qualifications

Post Graduation in Finance iBMEC/ SP


Graduate degree in Business Administration Universidade Salvador - Bahia

Experience

Started at KPMG in 2003, Gabriel has a strong experience in financial valuation, trough different
methodologies.

Sector of experience

Banking, Telecommunications and IT (software and hardware), Entertaining, Publishing, Aviation,


Education, Retail. Companies.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

I . Information about the appraiser (4/5)


Name

Fabiano Goulart Delgado

Position

Manager, Corporate Finance, KPMG Curitiba - Brazil

Qualifications

Specialization in Controllership at UFPR-PR


Graduated in Economics at UFMS-MS

Experience

Works in the accounting, auditing and consulting areas for over six years. Fabiano has experience in
financial advisory services, including financial planning, business plan development and project
analysis. Acts in mergers and acquisitions area, with a greater focus on valuation models (valuation)
and mergers and acquisitions.

Sector of experience

Banking, real estate, power, agribusiness, foods and beverages, retail and logistic.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

10

I . Information about the appraiser (5/5)

Presented below are some of KPMGs experiences in companys valuations in the last years:
2016

2015

2015

2015

vora S.A.

Eneva S.A.

Eneva S.A.

Banco Santander S.A.

Economic and Financial Valuation


of vora in its Public Offering
(Deslisting)

Economic and Financial Valuation


of Eneva Participaes S.A. e
BPMB Parnaba S.A.

Economic and Financial Valuation


of Parnaba Gs Natural S.A.

Economic and Financial Valuation


of Banco Santander

ABCD

ABCD

ABCD

ABCD

2014

2013

2013

2013

Banco Santander S.A.

Com panhia De Bebidas Das


Am ericas - Am bev

Banco Santander (Brasil) S.A.

Banco Santander (Brasil) S.A.

Economic and Financial Valuation


of BR Properties

Economic and Financial Valuation


of CND - Cerveceria Nacional
Dominicana

Economic and Financial Valuation


of Webmotors

Economic and Financial Valuation


of Tecban

ABCD

ABCD

ABCD

ABCD

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

11

Contents
I. Executive summary
II. Information about the appraiser
III. Information on the Company
IV. Market information
V. Methodology
VI. Discount rate
VII. Assumptions
VIII. Economic valuation
Appendix
1. Appendix I Glossary
2. Appendix II Important notes

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

12

I I Information on the Company (1/4)

Overview of CETIP (Source: public information)

Cetip (Ticker: CTIP3) was established in 1984 by the National Monetary


Council, in the city of Rio de Janeiro - RJ, and currently manages
markets relating to trading and listing of securities, public and private
fixed income securities, and OTC derivatives. Cetip is the largest
depositary of private fixed income securities in Latin America and the
largest private asset clearinghouse of the Brazilian financial market. Its
performance provides the necessary support to the entire cycle of
transactions with fixed income securities, securities and OTC
derivatives.
The simplified structure of Cetip is shown below:
Framework
Ice Overseas
Limited

Blackrock. Inc.

Others
81.52%

5.28%

12.00%

Shares in
Treasury

The chronology of the main events that occurred in the history of Cetip
are explained below:
1984

Creation of Cetip as a nonprofit entity.

1986

Beginning of activities of Cetip.

1988

2008

Demutualization and creation of Cetip S.A.

2009

Advent becomes shareholder of Cetip, with a share stake in the


capital of 32%.
IPO and beginning of the trading of the shares on the Novo
Mercado of BM&FBOVESPA.

2010

Acquisition of GRV Solutions, which currently represents the Cetip


Financing Unit.

2011

Repositioning of the Cetip brand and implementation of new logo


and product architecture.
IntercontineltalExchange (ICE) becomes a shareholder of the
company, with a 12.4% stake.
Launch in partnership with Clearstream, of the Cetip Collateral.

1.2%

2012
100.00%
GRV Solutions

100%
Cetip Lux S..r.l.

100%
Cetip Info
Tecnologia S.A.

Agreement with Andima (the current Brazilian Association of


Financial Markets and Capital (Associao Brasileira das Entidades
dos Mercados Financeiro e das Capitais, Anbima)) to operate the
National Debentures System (Sistema Nacional de Debntures,
SND)

2013

Launch in partnership with ICE, of the Cetip business platform |


Trader Launch of Cetip | InfoAuto PagamentosIngresso of Cetip's
shares in Ibovespa and IBrX50.
Reform of the bylaws to improve the corporate governance
structure of Cetip.
Launch, in partnership with the FNC, of the real estate valuation
platform
Spurce: Cetip

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

13

I I Information on the Company (2/4)


Income Statement Consolidated Cetip (Source: audited financial statements)
IS Consolidated - R$ '000
Net Revenue
Expenses
General and administrative
Other net operacional revenues
Other net operacional expenses
EBITDA
Depreciation and amortization
EBIT
Financial revenues
Financial expenses
Equity in income of investees
EBT
IR / CSLL accounting period
IR / CSLL deferred
Net profit

2013
908,575
(276,176)
(275,359)
31
(848)
632,399
(75,790)
556,146
33,595
(77,174)
(463)
512,567
(90,447)
(61,092)
361,028

2014
1,015,885
(316,666)
(315,634)
584
(1,616)
699,219
(83,108)
616,825
59,069
(117,760)
714
558,134
(111,193)
(19,822)
427,119

2015
1,125,430
(354,941)
(350,248)
144
(4,837)
770,489
(92,771)
678,683
294,476
(405,904)
965
567,255
(129,730)
60,081
497,606

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

14

I I Information on the Company (3/4)


Balance Sheet Consolidated Cetip (Source: audited financial statements)
BS Consolidated - R$ '000
Asset
Current asset
Cash and Cash Equivalents
Financial investments - non restricted
Accounts receivable
Recoverable taxes and contributions
Prepaid expenses
Other receivables
Non-current asset
Financial investments - non restricted and restricted
Derivatives
Judicial deposits
Prepaid expenses
Other receivables
Fixed
Investments
Property and equipment
( - ) Accumulated depreciation
Intangible assets
( - ) Accumulated amortization

2013
2,735,651
505,117
475
381,685
93,073
16,679
7,011
6,194
85,768
79,746
162
3,744
2,116
2,144,766
5,497
109,683
(68,861)
2,307,087
(208,640)

2014
2,998,539
740,930
551
590,349
106,735
17,431
7,784
18,080
135,944
128,197
137
5,526
2,084
2,121,665
6,211
128,612
(78,681)
2,347,452
(281,929)

2015
3,497,064
1,007,642
2,438
801,956
117,658
63,917
7,084
14,589
373,958
248,553
120,663
181
2,659
1,902
2,115,464
6,873
126,771
(79,086)
2,423,547
(362,641)

BS Consolidated - R$ '000
Liabilities
Current liabilities
Suppliers
Labor obligations and social charges
Taxes payable
Income tax and social contribution
Dividends and interest on own capital payable
Debentures issued
Financial instruments
Loans and finance lease obligations
Deferred revenues
Other liabilities
Non-current liabilities
Suppliers
Deferred income tax and social contribution
Provision for contingencies and legal obligations
Debentures issued
Loans and finance lease obligations
Deferred revenues
Shareholders' equity
Capital
Capital reserves
Carrying value adjustments
Income reserves
Treasury shares
Retained earnings
Additional dividends proposed

2013
2,735,651
337,300
25,969
48,195
12,837
787
45,858
156,053

2014
2,998,539
240,225
23,496
56,682
14,902
2,181
80,130
17,427

3,507
44,044
50
708,788
3,662
176,052
3,067
474,774
9,291
41,942
1,689,563
586,428
533,193
(247)
405,655
(5,031)
169,565

2,608
42,754
45
1,012,361
2,073
195,785
4,536
498,175
271,153
40,639
1,745,953
635,937
533,821
(413)
464,715
111,893

2015
3,497,064
340,198
54,416
68,411
18,183
8,435
110,261
21,431
11,572
7,113
40,223
153
1,461,051
8,046
136,465
5,933
498,849
775,019
36,739
1,695,815
658,416
527,834
(8,313)
539,388
(104,502)
82,992

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

15

I I Information on the Company (4/4)


Financial indicators

Below are shown the historical financial indicators of Cetip (source: audited financial statements)
Volume
7,751

7,611

Gross Revenues per segment (R$ 000)

8,193

6,757

6,393
5,312

2013

2014

Volume records securities unit (R$ bi)

2015

412,579

436,216

384,024
690,132

786,642

950,495

2013

2014

2015

Vehicles financed ('000)

Financing unit

Securities unit

Net profit (R$ 000)

EBITDA (R$ 000)


69.60%

68.83%

68.46%

632,399

699,219

770,489

2013

2014

2015

EBITDA

361,028

427,119

497,606

2013

2014

2015

% Margin EBITDA

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

16

Contents
I. Executive summary
II. Information about the appraiser
III. Information on the Company
IV. Market information
V. Methodology
VI. Discount rate
VII. Assumptions
VIII. Economic valuation
Appendix
1. Appendix I Glossary
2. Appendix II Important notes

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

17

IV. Market information (1/5)


Markets and financial instruments

Overview (source: Cetip website)

The financial system is the set of institutions and financial instruments


that enables the transfer of resources belonging to final offerers to the
final takers of resources, and creates conditions for the securities to be
marketable.

Among the institutions that can be highlighted within the financial


system, there are the custodian agencies.

Custody agencies are organized and centralized markets, to provide an


appropriate environment for conducting business and the pricing of
securities issued by companies, funds and other fund raising entities.

Cetip, which is directed to the custody of fixed income investments


(such as CDB, LCI, LCA, among others), and derivatives;

Cetip is the main service provider of the custody market for private
fixed income.

The fixed income market reached, in January 2016, US$ 2,658 billion
of actual value invested in their segments, an increase of 3.69% when
compared to January 2015.

Next, there is the evolution of the fixed income market between


January / 2015 and January / 2016:

Custody (source: Cetip)

Changes in the market and in the large volume of securities traded


every day permanently changed the landscape of the custody world.
The vast majority of assets custodies are held in book-entry form, both
for government securities assets, and private securities.

Fixed income assets are bonds that pay a certain compensation in


defined periods, which can be determined at the time of the
investment or upon redemption.

The major custodians in the international market are the DTCC (United
States), Euroclear, and Clearstream (Europe).

Amount invested in fixed income (in R$ bi)

2,639
2,564

2,561

2,562
2,519

Brazilian fixed income market (source: Cetip)

2,534

2,532

May-15

Jun-15

2,579

2,582

Jul-15

Aug-15

2,654

2,644

Nov-15

Dec-15

2,625

2,658

In Brazil, two of the main players of the financial system are:

BM&FBOVESPA, whose activities are focused on the equity


market, bonds, futures, and the options market.

Jan-15

Feb-15

Mar-15

Apr-15

Sep-15

Oct-15

Jan-16

Source: Cetip

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

18

IV. Market information (2/5)


Markets and financial instruments
Brazilian fixed income market (contd.)

Brazilian credit market (source: Bacen)

The relationship between the balances of credit and the gross


domestic product (GDP) of the countries is a reference measure of the
economic conditions and of the depth of a countrys market.

Below is the balance of credit operations between January 2015 and


January 2016, as well as their respective percentage in relation to the
Brazilian GDP.

The table below shows the segmentation of the fixed income


investments in January 2016:

19%
35%

54.5%
54.0%
29%

2%
2%

13%

Bank funding (CDB, LF and DPGE)

Agricultural securities (LCA, CRA and CDCA)

Debt securities (NCE, CCB and CCE)

Real estate securities (LCI, CRI and CCI)

Debentures and promissory notes

DI

54.0%

3,220

3,082

3,100 3,110

3,135

3,164 3,157 3,177

3,199

3,013 3,024

Income yields are mainly linked to the following indexes:

53.3% 53.4% 53.4%

53.8%

53.0%

3,061 3,062

Source: Cetip

53.2%
52.8% 52.9%

53.6%

54.0%

SELIC (Special System for Settlement and Custody);


IPCA (National Index of Consumer Price);
Credit balance (in R$ bi)

IGP-M (General Index of Market Prices); and


CDI (Interbank Deposit Certificates).

% GDP

Source: Bacen

The CDI is an index linked to SELIC rate, as well as the amount of


funds transfers between financial institutions.
This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

19

IV. Market information (3/5)


Markets and financial instruments

The segmentation of credit, both for individuals and for legal entities,
according to the Central Bank, is presented below:

Below, please see the most used modes during the period of 2016:

3%
21.25%

26.63%

16%

BNDES
Real estate

Financing

Personal Credit

Consortium

Rural

Others

Vehicles
0.17%
0.95%

Credit card
17.98%

5.65%

81%

Microcredit

5.69%
7.22%

Acquisition of goods

Others
14.47%

Source: Cetip

Source: Bacen

Brazilian credit market (vehicles) (source: Bacen and Cetip)

The values obtained for vehicle financing declined from January 2015
to January 2016, as shown below:
184

182

180

178

175

173

171

169

167

165

163

161

The credit for vehicles operates as follows:

Financing, i.e., a loan for financing vehicles;

Consortium, where one or more individuals participate in a common


activity or resource sharing to achieve a common goal.

160

Leasing, where the lender is the owner of the property, and the
possession and use are of the lessee; and

19

Source: Bacen

18

18

18

18

17

Natural person (R$ bi)

17

17

17

17

17

16

16

Legal entity (R$ bi)

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

20

IV. Market information (4/5)


Markets and financial instruments

The interest rates for vehicle financing rose in the last 12 months due
to the current political and economic conditions in Brazil, as shown
below:

24%
21%

25%
21%

25%

25%

21%

21%

25%
22%

25%
21%

25%
21%

Natural person (% p.a.)

25%
21%

26%
21%

26%
22%

26%
22%

26%
22%

28%
23%

Legal entity (% p.a.)

Source: Cetip

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

21

IV. Market information (5/5)


Macroeconomics
Macroeconomics assumptions (source: Bacen and Economist)
Brazilian inflation

Exchange rate R$ / US$

The inflation rate (IPCA) estimated for the 2016-2025 period is shown
in the chart below. We can observe a fall between the years 2016 and
2019, according to the expectations of the institutions consulted by the
Central Bank (Central Bank of Brazil)

9,5%
7,5%

5,50
5,00
4,50
4,00
3,50
3,00
2,50
2,00

10,7%

11,5%

7,4%

6,4%
5,9%

5,9%
5,5% 5,2% 5,1% 5,1% 5,1% 5,1% 5,1% 5,1%

5,5%
3,5%

The American inflation rate estimated for the period between 2016 and
2025 is shown below. In the chart are observed growth of price indices
in the years 2016 and 2017 in relation to 2015. In the long-term the
trend is stabilizing, according to projections made by The Economist.
8,0%
6,0%
4,0%
2,0%
0,0%

1,5%
1,3%
0,7% 0,7%

4,79 4,94
4,54 4,65
4,40
4,19 4,20 4,26
3,95 4,11
3,33
2,35
2,16

Brazilian GDP

American inflation

The average annual exchange rate for the 2016-2025 period is


presented below. We can observe an increase in market expectations
about the exchange rate. After 2021, the exchange rate was
considered as the difference between the Brazilian and American
inflation.

2,0% 2,4%

1,5% 1,8% 1,8% 1,8% 1,8% 1,8% 1,8%

The Brazilian GDP projection estimated by institutions consulted by the


Central Bank between 2015 and 2018 is a decrease in the biennium
2015-2016, followed by a slow growth with a tendency to stabilize.

2,3%
2,0%
0,1%
1,0%
0,0%
-1,0%
-2,0%
-3,0%
-3,8%
-4,0%

1,5% 1,9% 2,0% 2,0% 2,0% 2,0% 2,0% 2,0%

0,3%

-3,7%

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

22

Contents
I. Executive summary
II. Information about the appraiser
III. Information on the Company
IV. Market information
V. Methodology
VI. Discount rate
VII. Assumptions
VIII. Economic valuation
Appendix
1. Appendix I Glossary
2. Appendix II Important notes

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

23

V. Methodology (1/3)
Valuation criterion

The criterion used for the study of Cetips economic valuation was the
discounted cash flow.

The criterion of the discounted cash flow method is widely used in the
market for business valuation, determining feasibility studies,
purchase, sale, merger and IPO companies because it allows for the
proper measurement of the expected return on investment for the
investor. Below, we present a brief description of this criterion.

To calculate the future cash flow generated by a company's


operations, we initially project its statement of income. To the
projected net profits calculated, expenses with depreciation and
amortization expenses are added (as they are expenses without an
impact on cash generation) and investments and the need for
projected working capital. Projected turnover. Other items with an
impact on the company's cash flow are also considered when
appropriate.

It is worth emphasizing that the net income calculated in the


projections of income is not directly comparable with the accounting
net income to be determined in the future in subsequent years. This
occurs, among other reasons, because the net income realized is
affected by non-operating or nonrecurring facts, such as occasional
and/or non-operating income and expenses etc. These factors are not
projected due to their unpredictability.

Moreover, it should be noted that when using the "cash flow to the
firm" (or "free cash flow") approach in projecting profits, revenue and
interest expenses are not projected. In that approach, cash flows
available to all capital providers (i.e., both shareholders and creditors)
are projected.

The projection of statements of income for the future is intended only


for the purpose of calculating the projected cash flow of the company
being valuated, which includes future cash flows to be available for
shareholders and creditors. What is intended to be determined is the
ability to generate cash flows arising from the company's normal
operations, i.e., its potential to generate wealth for capital providers as
a result of its operating features.

Description of the discounted cash flow method

The discounted cash flow criterion has its grounds in the concept that
the value of a company or business is directly related to the sums and
to the times in which the free cash flows, originating from its
operations, will be available for distribution. Therefore, for the
shareholders the value of the company is measured by the sum of
financial resources to be generated in the future by the business,
discounted at their present value, to reflect the time, the opportunity
cost and the risk associated with this distribution.
This criterion also captures the value of intangible assets, such as
brand, customer portfolio, product portfolio and market share, to the
extent that this value is reflected in the ability to generate results.
For the purposes of this study, it is assumed that 100% of the surplus
cash will be available for distribution at the time it is generated.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

24

V. Methodology (2/3)

Projected annual cash flows are discounted using the Weighted


Average Cost of Capital (WACC), which already incorporates the
impacts of projected indebtedness in income taxes by taking into
account the cost of debt after taxes in its calculation. The discounted
cash flows are then added to obtain the value of the business.

To determine the assessed value of the company, and therefore the


market value of its shares, the debt is deducted from the calculated
value of the business on the reference date.

All non-operational assets and liabilities are then added/deducted on


the reference date of the value study. Any contingencies and/or other
extraordinary, non-operational payments identified are also deducted.

Note that, when the cash flow to equity method is used, flows are
discounted at own capital cost, normally calculated based on CAPM
(Capital Assets Pricing Model) methodology. In this case, the evaluated
companys loans and financing value is not deducted from its value and
financial expenses and income are projected in cash flow.

However, due to the great difficulty of estimating parameters for long


periods, it is market practice to consider a projection horizon of a few
years, according to the characteristics of the business valuated and at
the end of that period, add a residual value.

In the value present study, according to the Company's characteristics,


it was considered a 10-year forecast period from the base date of
December 31, 2015.

The value of perpetuity was calculated as follows:

Perpetuity value at
the end of last year
of the projection

Free cash flow of


normalized last year
=

(Discount rate Growth


rate in perpetuity)

FCn x (1+g)

=
(i-g)

Projection horizon and residual value

From a theoretical point of view, with a view to continuity of business


operations measured, the projection horizon would extend to infinity or
for long periods.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

25

V. Methodology (3/3)

A brief diagram of the discount to present value is present below:

Terminal value
Perpetual cash flow grows constant or
zero rate

Cash flow horizon explicit projection

Adjustment
s

Present value of
terminal value

Market value of
analyzed company

CFN

CF

CFN + 1

CF3
CF2

Present value of
projected cash
flows

CF1

.................

.........

.........

N+1

Projected horizon

.................

Perpetuity

Discount rate
Firm: Cost of debt (WACC)
Equity: Cost of equity (CAPM)

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

26

Contents
I. Executive summary
II. Information about the appraiser
III. Information on the Company
IV. Market information
V. Methodology
VI. Discount rate
VII. Assumptions
VIII. Economic valuation
Appendix
1. Appendix I Glossary
2. Appendix II Important notes

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

27

VI. Discount rate (1/4)


Discount rate

Ke
Cost of Equity
=

Establishing the discount rate is a fundamental stage of the economic


valuation. This single factor reflects aspects of a subjective nature,
varying from one investor to another, such as cost of opportunity, and
the individual perception of investment risk.

Rf / (1+Ia) * (1+ lb)


+

The Weighted Average Cost of Capital (WACC) used was an


appropriate parameter to calculate the discount rate to be applied to
the Companys cash flows. The WACC methodology considers a
variety of financing components used by companies to finance their
cash needs, including debt and equity cost.

x (E[Rm] Rf)
+
Rb
+
Rs

WACC = (E/(E + D))*Ke + (D/(E + D))*Kd


Where:
E = Total Equity;
D = Total Debt;
Ke = Cost of Equity; e
Kd = Cost of Debt.

The cost of equity may be calculated with the Capital Assets Pricing
Model (CAPM). The equity cost is calculated according to the following
formula:

Rf = Average Risk-Free Return;


= Beta - Market Risk Coefficient ;
E[Rm] = Average Long Term Return Obtained in the Stock Market;
E[Rm] - Rf = Market premium;
Rb = Country Risk;
Rs = Size premium;
Ia = USA Long Term Inflation;
Ib = Brazil Long Term Inflation;

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

28

VI. Discount rate (2/4)

The components used to calculate the discount rate of the Company


are detailed as follows:

Risk free rate (Rf)

In order to quantify the average risk free return (Rf), we considered the
average return of the American 30-year Treasury Bond (T-Bond) for 24
months before March 24, 2016, which was 3.0%. (source:
Bloomberg).

Inflao americana (Ia)

Beta Calculation

For the long term stock market risk premium (E[Rm] Rf), we used
the average return above the Treasury Bond rate provided by investing
in the American stock market from 1928 to 2015, which was 4.5%
(source: Aswath Damodaran website).

Country Risk (Rb)

To estimate the risk associated with Brazil (Rb), we used the average
difference between the yield of the Global-Bond 37 in relation to the TBond performance, from the 24 months before the base date of March
24, 2016, which was 3.1% (source: Bloomberg).

The following procedure is used for obtaining the betas:


Identification and selection of comparable companies;

Market Risk Premium (E[Rm] - Rf)

For the projected American inflation, the long term inflation rate was
considered, as of March, 2016. The rate used was 1.8%. (source:
Economist).

Determining their correlations with relevant stock markets; and


Calculation of average betas, which will be used in determining the
risk of companies.

It is important to note that the betas observed in capital markets for


comparable companies include the different degrees of leverage of
these companies. Thus, it is necessary to extract the leverage factor to
calculate the specific risk factor by the market on the operational risks
inherent in the business.

For this purpose the following formula is used:

Where:

Size Premium

For the Companys size premium it was considered the rate of 1.0%, a
rate applied to the same-sized companies. (source: Ibbotson
Associates, 2015).

Brazilian Inflation (Ib)

The Brazilian long term projected inflation rate was considered, as of


March 24, 2016 according to Relatrio Focus (source: Banco Central do
Brasil). The rate used was 5.1%.

d = /[1 + (1 T)*(D/E)]

d = Unlevered Beta share risk of comparable companies,


regardless of their leverage;
= Levered Beta share risk of comparable companies, adjusted
by leverage;
T = Tax rates for income tax and social contribution; and
D/E = Debt / Equity of each comparable.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

29

VI. Discount rate (3/4)

The following formula is used to releverege beta:

Cost of debt (Kd)

r = d*[1 + (1 T)*(D/E)]

The cost of debt indicates the cost of the loans made to project
financing. In general terms, it is determined by the following variables:
The current level of interest rates;

Where:

The delinquency risk of companies; and

r = Levered Beta - to be used as a basis for calculating the cost of


financing;

Tax benefits associated with financing (debt).

d = Unlevered Beta share risk of comparable companies;

= Levered Beta calculated in the two-year period, average


weekly;

The rates of income tax and social contribution have direct influence
on the cost of debt, since these payments are tax deductible.

Thus, the cost of debt is calculated by the following formula:

T = Income tax and social contribution, as the effective rate of


company analyzed; e
D/E = Debt / Equity of the analyzed company.

The calculation of Cetips beta is shown below:


Comparables

Ticker

Cetip S.A. - Mercados Organizados

Levered Beta

Tax rate

Unlevered Beta

0.9

1.3%

26.1%

0.9

ASX Ltd.

ASX AU Equity

1.3

0.0%

29.5%

1.3

CME Group Inc.

CME US Equity

0.7

3.0%

36.4%

0.7

LS4C GB Equity

1.0

5.9%

30.5%

1.0

2.6%

30.6%

Average

1.0

Where:
Kd = Cost of debt;

Debt to
Equity

CTIP3 BZ Equity

London Stock Exchange Group

Kd = RD * (1 T)

RD = Debt rate;
T = Tax rate of income tax and social contribution.

1.0

Source: Bloomberg for the base date March 24, 2016.

Relevered Beta
Beta
D/E
Tax
Relevered Beta

1.0
2.6%
34.0%
1.0

Source: Bloomberg for the base date March 24, 2016.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

30

VI. Discount rate (4/4)


Cost of debt (Kd)

For the purposes of cost of debt, it was considered a nominal cost of


debt before tax of 12.0%, based on the long-term interest rate (Selic),
plus a 1.0% of spread. After tax effect the cost of debt is 7.9%.

Capital Structure

The capital structure adopted was based on the capital structure of


comparable companies (market participants).

Discount Rate Calculation

The following table shows the calculation of the WACC:

Discount rate

Cetip

Risk free (US$ nominal) (source: Bloomberg)


US inflation (source: Economist)
Brazilian inflation (source: BACEN)
Relevered Beta
Expected return on the market (source: Damodaran)
Country risk premium (Global 37) (source: Bloomberg)
Size premium (source: Ibbotson Associates, 2015)
CAPM - nominal - Ke (a)

3.0%
1.8%
5.1%
1.0
4.5%
3.1%
1.0%
14.8%

Cost of debt
Tax
Kd after tax - nominal - Kd (b)

12.0%
34.0%
7.9%

WACC
% common equity capital in the capital structure ( c )
% of debt capital in the capital structure ( d )
WACC nominal = (a*c) + (b*d)

97.5%
2.5%
14.7%

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

31

Contents
I. Executive summary
II. Information about the appraiser
III. Information on the Company
IV. Market information
V. Methodology
VI. Discount rate
VII. Assumptions
VIII. Economic valuation
Appendix
1. Appendix I Glossary
2. Appendix II Important notes

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

32

VII . Assumptions (1/6)


General Assumptions
General assumptions

The general assumptions adopted in the study of the Companys


economic value were based on information provided and analyses
prepared in accordance with market data, obtained from recognized
sources.

Currency and data base for the forecast

The forecasts were prepared using the Brazilian Real as the currency
and were prepared in nominal terms (considering the effects of
inflation), for the base date December 31, 2015.

Forecast horizon

From a theoretical point of view, given the continuity of the Companys


operations, the forecast horizon extends over very long periods.
However, given the difficulty in estimating the parameters for long
periods, a specific forecast horizon has been considered for a certain
number of years, in accordance with the characteristics of the
Company, and a terminal value added at the end of this period.
The forecast horizon adopted was from January 2016 to December
2025 and the estimated terminal value was made based on cash flows
into perpetuity normalized for the operations in 2025.

Thus, in order to simplify the calculations, the average flow between


the beginning and end of each period forecast was selected to
discount the cash flows.

Discount rate:

The discount rate was forecast in accordance with the WACC method
(Weighted Average Cost of Capital), in nominal terms, at 14.7% p.a.

Growth rate into perpetuity:

To calculate perpetuity, long term inflation in Brazil, and Brazilian long


term GDP were added as g growth of 7.1%.

Value into perpetuity:

The terminal value was calculated based on a perpetual future cash


flow, based on the normalized value of the estimated cash flow for the
last year of the forecasts.

Adjustments:

Non operational assets and liabilities were not considered in the


Companys free cash flow forecasts. Its balances, when appropriate,
were treated separately.

Discounted cash flows over time

A companys cash inflows and outflows occur over time during its
business cycles. Consequently, the calculation of the present value of
the cash flows generated over a specific time should discount the
individual expenses and income, considering the different dates they
occur. Thus, the cash generated at the start of the year should be
discounted for less time that the cash generated at the end of the
year.
This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

33

VII . Assumptions (2/6)


Specific assumptions

Revenue

Revenue consisted of two large divisions:

i.

UTVM Securities Unit, the original Cetip, which includes services


related to the Register, Deposit, Liquidation of Financial Assets and
Securities, and Organized over the counter market.

ii.

UF Financing Unit, previously GRV, responsible for the


administration of the national system for vehicle liens and
registration of vehicle financing contracts.

iii.

Fixed income: bank funding instruments, real estate market


instruments;
Derivatives; and
Others
3,000

Register revenue composition (R$ MM)


2,500

New projects

(i) UTVM Securities Unit

The revenue from registration services was segregated as follows:

2,000

The UTVM revenue was forecast according to the expectations of


BM&FBOVESPA and its advisors. UTVM income is segregated as
follows:
3,000

1,500
1,000

UTVM revenue composition (R$ MM)


500

2,500

2,000

2016

2017

2018

2019

2020

Fixed income

1,500

2021

2022

Derivatives

2023

2024

2025

Others

1,000
500

2016

2017
Register

2018

2019

Custody

2020

2021

Transactions

2022

2023

Utilization

2024

2025

Others

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

34

VII . Assumptions (3/6)


Specific assumptions

Custody revenue was segregated as follows:

(ii) UF Vehicle Financing Unit

Debentures;

Bank funding instruments;


Derivatives and structured operations; and

The UTVM revenue considers the expectations of market analysts and


those of BM&FBOVESPA and is segregated as follows :
Financial revenues composition (R$ MM)

3,000

Maintenance of consignors

2,500
2,000

Custody revenue composition (R$ MM)


3,000

1,500

2,500

1,000

2,000

500

1,500

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

1,000

SNG
500

2016

2017

2018

2019

2020

2021

2022

2023

2024

Debentures, fund shares & others

Bank funding instruments

Derivatives and structure operations

Consignors maintenance

Sircof

Market data and developing solutions

Real estate segment

Others

SNG: System for Custody of Information on inclusions and exclusions


of liens provided by to the Traffic entities by Users. It enables financial
institutions to gain custody of the asset given in guarantee for the
vehicle financing operation, through the efficient electronic register of
liens.

Sircof: The Contracts System is a complete Solutions platform,


consisting of revenues, custody and transmission of information and
vehicle financing contracts to the state traffic institutions.

2025

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

35

VII . Assumptions (4/6)


Specific assumptions

Market data and developing solutions: Access to platforms:

3000

Cetip | InfoAuto: loan platform through which financial institutions


can gain access to vehicle data using a CPF, in real time.

2500
2000

Cetip | Vehicle Reports: analytical information on the operation


performed by the client using the National Lien System SNG.

1500

Cetip Performance: System to identify the financing potential for


each resale, determine goals for the sales team and accompany
their performance throughout Brazil.

New projects revenues composition (R$ MM)

1000
500

Real estate segment: services that refer to assessing real estate.

(iii) New projects

2016

Projects - CCP and Icelink

Refers to revenue from new projects, according to Cetip


managements expectations, and informed to BM&FBOVESPA
Administration. The inclusion of income from these new products is
considered as from 2020, with a more conservative growth rate than
that forecast by Cetip management, aligned with the expectations of
the markets in which the Company intends to operate (Fixed income,
vehicles and real estate).

2017

2018

2019

2020

2021

2022

Projects - Vehicles

2023

2024

2025

Projects - Real estate

Indirect tax

Indirect taxes refer to ISS, PIS and COFINS. For 2016 the historic rate
of 17.4% was used. As from 2017, a reduction of 3 percentage points
to ISS was considered only for UTVM revenues, as a result of moving
the various services to the location in Barueri-SP, which resulted in
the rate of 14.4%. The ISS rate for the UF revenue remained
unaltered.

Taxes

Direct taxes refer to corporate income tax (IRPJ) and Social


Contribution on Net Profit (CSLL). The rates used were those
permitted by tax legislation in force:

Income tax: 15% on profit before tax, plus additional of 10% on


taxable profit in excess of R$ 240,000 per annum; and

Social Contribution: rate of 9% on profit before tax.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

36

VII . Assumptions (5/6)


Specific assumptions
Operational expenses

Interest on own capital

Expenses such as personnel, hire of equipment and systems, third


party fees, maintenance and general administrative expenses, were
forecast and corrected using the IPCA, plus 2% for real growth.

Cleaning, maintenance of machinery and equipment, reception, safety,


security, press relations and marketing, recruitment and selection,
other operational income and expenses were corrected by the IPCA.

Fees and taxes, FENASEG costs and credential registration fees and
other services were estimated based on a fixed percentage of net
revenue with reference to the percentage registered in 2015.

The expenses for new projects were forecast as from 2020 based on
an average percentage of revenue from new projects of 24% p.a. in
accordance with the business plan for existing products.
Operational expenses brak-down (R$ MM)

3,000

Stock related
statements)

1,000

Operational expenses
Third party service
Others

2020

2021

2022

2023

matching

(source:

financial

Cetip introduced a new stock related compensation program as from


2016, whereby employees have the option to acquire the companys
shares and with this adhesion the Company makes an equal
contribution (matching) in shares or in cash. This expense was
estimated based on Cetips expectations of costs of R$2,500,000 per
annum, corrected by the IPCA.

The forecast indicators were calculated for working capital for


operational assets and liabilities (drivers), based on net operational
revenue and operational expenses for the year 2015.

The following table presents the applications and sources for the
working capital and respective drivers:

500

2019

Based on historic published financial information, the historical balance


sheet accounts of Cetip were analyzed and subsequently, the balances
for these accounts were classified between operational and non
operational assets and liabilities.

1,500

2018

plan

2,000

2017

compensation

Working capital

2,500

2016

In accordance with the policy approved by Cetip at the end of 2015,


payment of interest on own capital was considered (TJLP on
shareholders equity), limited to 50% of profit for the period or 50% of
the revenue reserve, less 15% for tax on the income earned by the
shareholder.

2024

2025

Personnel expenses
General and administrative expenses
Project expenses

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

37

VII . Assumptions (6/6)


Specific assumptions
Depreciation and amortization
Working capital

Driver

Days

Applications
Cash and cash equivalents
Accounts receivables
Taxes and contributions
Prepaid expenses
Other credits

Days
Days
Days
Days
Days

of
of
of
of
of

Revenues
Revenues
Revenues
Expenses
Revenues

0.8
37.6
20.4
7.6
4.7

Sources
Suppliers
Labor liabilities and charges
Taxes payable
Income tax and social contribution
Revenues to be recognized
Other obligations

Days
Days
Days
Days
Days
Days

of
of
of
of
of
of

Expenses
Expenses
Revenues
Revenues
Revenues
Expenses

67.1
73.4
5.8
2.7
24.6
0.2

The depreciation charges were calculated based on the deprecation of


fixed assets held at the base date.

Presented below is a table with the forecast depreciation charges:

D&A - R$ MM
D&A

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

94

101

107

113

119

126

132

139

146

154

Capex

Refer to the investments necessary to ensure the continuity and


maintenance of Cetips productive capacity.

The assumption adopted was reinvestment of the depreciation of


assets held at the base date for the study and new investments, with
the amounts presented below:

Capex - R$ MM

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Capex

150

134

130

125

119

126

132

139

146

154

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

38

Contents
I. Executive summary
II. Information about the appraiser
III. Information on the Company
IV. Market information
V. Methodology
VI. Discount rate
VII. Assumptions
VIII. Economic valuation
Appendix
1. Appendix I Glossary
2. Appendix II Important notes

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

39

VII . Economic valuation (1/3)


Discounted cash flow - Cetip
Income Statement

The projections of the Cetips results for the January 2016 to December 2025 period are presented, based on the assumptions described earlier:

Incom e Statem ent - R$ MM


Net revenue

1,266

Operational expenses
EBITDA
% EBITDA Margin
Depreciation and amortization
EBIT
% EBIT Margin
(-) Income tax and social contribution
Net Profit

2016

2017
1,436

2018
1,585

2019
1,748

2020
2,295

2021
2,512

2022
2,748

2023
3,006

2024
3,291

2025
3,604

(368)

(399)

(430)

(462)

(595)

(636)

(678)

(724)

(773)

(825)

898
71.0%

1,037
72.2%

1,155
72.9%

1,286
73.6%

1,700
74.1%

1,877
74.7%

2,069
75.3%

2,283
75.9%

2,518
76.5%

2,780
77.1%

(94)

(101)

(107)

(113)

(119)

(126)

(132)

(139)

(146)

(154)

804
63.5%

936
65.2%

1,048
66.1%

1,173
67.1%

1,581
68.9%

1,751
69.7%

1,937
70.5%

2,143
71.3%

2,372
72.1%

2,625
72.8%

(273)

(318)

(356)

(399)

(537)

(595)

(659)

(729)

(806)

(893)

531

618

692

774

1,043

1,156

1,279

1,415

1,565

1,733

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

40

VII . Economic valuation (2/3)


Discounted cash flow - Cetip
Cash Flow

Based on the assumptions used, the nominal discount rate of 14.7% (see Appendix I - Discount Rate Analysis) and information provided by
Management, were projected operational free cash flows and discounted to present value, considering the base date December 31, 2015.

Discounted cash flow - R$ MM

2016

2017

EBIT

804

936

(273)

(318)

(356)

(399)

(537)

(595)

(659)

(729)

(806)

(893)

(956)

94

101

107

113

119

126

132

139

146

154

165

(-) Income tax and social contribution


(+) D&A
(+/-) Investment in w orking capital
(-) Capex
(+) Tax effect of the payment of interest on equity (*)
Free cash flow

2018
1,048

2019
1,173

(3)

(1)

(2)

(150)

(134)

(130)

(125)

25

25

25

25

2020
1,581

2021
1,751

2022
1,937

2023
2,143

2024
2,372

2025
2,625

(4)

(5)

(6)

(7)

(5)

(119)

(126)

(132)

(139)

(146)

(154)

(165)

24

24

24

23

23

23

25
1,876

499

606

693

786

1,070

1,176

1,298

1,433

1,583

1,749

14.7%

14.7%

14.7%

14.7%

14.7%

14.7%

14.7%

14.7%

14.7%

Discount period

0.93

0.81

0.71

0.62

0.54

0.47

0.41

0.36

0.31

0.27

Discounted cash flow

466

493

492

487

578

554

533

513

494

476

Sum of the discounted cash flow s


Perpetuity grow th ( "g")
Present value of perpetuity
Entreprise value

5,087
7.1%
6,778
11,865

Non-operating assets and liabilities (**)


Equity value

2,813

(3)

14.7%

Discount rate

Perp.

(6)
11,860

Sensibility
Equity value
price per share
Base-date: 12/31/2015
n of shares

-4,75%
11,296
42.67

Mid point
11,860
44.80

+4,75%
12,423
46.93
264.7

Source: Financial Statements - December 2015

(*) Considering only the net effect of the tax benefit.

Perpetuity = [( free cash flow 2025 x (1 + g)) / (WACC g)]


g = 7,1%
This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

41

VII . Economic valuation (3/3)


Discounted cash flow - Cetip
(**) Non operating assets and liabilities to equity value
Assets [a]

Summary Report
1,531

Financial applications - free


Financial applications - free and related
Derivative financial instruments
Judicial deposits
Prepaid expenses
Exercise of stock options (*)
Buildings
Investments
Deferred income tax and social contribution
Other credits

802
249
121
0
3
119
28
16
192
2

Liabilities [b]

(1,537)

Dividends and interest on equity payable

(110)

Dividends and interest on equity payable - announced in 2016

(107)

Issued debentures

(520)

Loans and finance lease obligations

(782)

Derivative financial instruments

Based on the scope of this Report, and subject to the assumptions,


restrictions and limitations described here, we estimate the fair
value of Cetip, as below:

Equity Value
(R$ MM)

Economic value
42.67
per share (R$)

11,296

12,423

46.93

Note: Considered the number of 264,716,860 shares (262,978,823 outstanding +


4,900,800 open, regarding stock option - 3,162,763 treasury) net of treasury
shares, as FS of 2015 reviewed by independent auditors.

(12)

Provision for contingencies and social obligations

(6)

Total non-operating assets and liabilities [a] + [b]

(6)

(*) For the recognition of the conversion of stock options issued and not exercised by
December 31, 2015, was considered the exercise of 4,900,800 granted and valid actions
on the valuation date based on the updated exercise price as reported by Cetips
management.

We conclude that the estimated economic value of Cetip shares is


between R$ 42.67 and R$ 46.93 estimated by the methodology of
discounted cash flow and the equity value is between R$ 11,296
millions and R$ 12,423 millions.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

42

Contents
I. Executive summary
II. Information about the appraiser
III. Information on the Company
IV. Market information
V. Methodology
VI. Discount rate
VII. Assumptions
VIII. Economic and financial valuation
Appendix
1. Appendix I Glossary
2. Appendix II Important Notes

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

43

Appendix I Glossary (1/2)


BACEN

Central Bank of Brazil (Banco Central do Brasil)

BS

Balance Sheet

CAGR

Compounded Annualy Growth Rate

CAPM

Capital Asset Pricing Model

COFINS

Contribution for Social Security Financing (Federal Tax Over Revenues)

Company

Cetip S.A. Mercados Organizados

Client

BM&FBOVESPA S.A. Bolsa de Valores, Mercadorias e Futuros

CVM

Securities and Exchange Commission

EBIT

Earnings Before Interest and Tax

EBITDA

Earnings Before Interest, Tax, Depreciation and Amortization

Free Float de shares

Number of shares free to be traded on the market

FS

Financial Statement

GAAP

Generally Accepted Accounting Principles

GDP

Gross Domestic Product

IBGE

Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatstica)

IPCA

Brazilian Consumer Price Index (ndice de Preos ao Consumidor Amplo)

IS

Income Statement

ITS

Quarterly Financial Statement

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

44

Appendix I Glossary (2/2)


Law 6.404/76

Law 6,404 of December 15, 1976 , which provides for the Corporation in Brazil

MPEEM

Multi Period Excess Earnings

OS

Ordinary shares

On stand alone basis

Term adopted to assume that the company operates independently

PIS

Brazilian Social Integration Program (Programa de Integrao Social)

PS

Preffered shares

Report

This Valuation Report , dated April 11, 2016

SELIC

Brazilian Interest Rate (Sistema Especial de Liquidao e Custdia)

Ticker

Action Code traded on BM&FBOVESPA

WACC

Weighted Average Cost of Capital

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

45

Appendix I Important Notes (1/3)

This Report is a free translation into English (requested by the Client)


of the report issued in Brazilian Portuguese. If there are any
discrepancies or differences between the versions, the version in
Portuguese will prevail.

The report was prepared by KPMG Corporate Finance Ltda. (KPMG),


requested by BM&FBOVESPA, in accordance with the rulings
applicable from Law 6,404/76 (Corporate Law), in order to issue the
Economic Valuation Report of Cetip S.A. Mercados Organizados,
based on the method of discounted cash flow, at the base date
December 31, 2015.

This report does not constitute a judgment, opinion, proposal, request,


suggestion or recommendation to management or the Clients
shareholders, or to any third party, as to the convenience and
opportunity, or as to the decision to approve or participate in the
Operation. This Report, including its analyses and conclusions (i) does
not constitute a recommendation to any member of the Management
Board, or any of the Clients shareholders, or any of its subsidiaries as
to how to act or vote for any issue related to the Operation; and (ii)
cannot be used to justify the right to vote of any individual on this
matter, including the Clients shareholders.
The shareholders should perform their own analyses in relation to the
convenience and opportunity to accept the Operation, and should
consult their own financial, tax and legal advisors, to form their own,
independent opinions on the Operation. This Report should be read
and interpreted in light of the restrictions and qualifications previously
stated. The reader should take into consideration in his analysis the
restrictions and characteristics of the sources of information used.
Neither KPMG, nor any other of its partners, employers or workers
declared or guaranteed, expressly or tacitly, the accuracy and
completeness of this Report, and furthermore, do not provide advice of
any nature, such as legal or accounting. The content of this report is

not and should not be considered to be a promise or guarantee in


relation to the past or future, or as a recommendation for the price of
the Operation.

KPMG highlights that the valuation of the Companies was performed


on a stand alone basis, and does not consider any synergies or
correlated elements.

Assuming that the price of the shares within the ambit of the
Operation will observe the rulings in Corporate Law, KPMG did not
and does not make any recommendation, explicit or implicit, and does
not express any opinion with respect to defining the final price of the
Shares within the ambit of the Operation or with respect to the terms
and conditions of any operation involving the Company, or any of its
subsidiaries.

As established in Corporate Law, the information included in the


Report was based on the audited financial statements of the
Companies and the quarterly financial information, management
information related to Cetip presented by Client Management and
information available to the public in general obtained from public
sources.

The information presented to KPMG includes public sources that


KPMG considers reliable, however, KPMG did not undertake an
independent investigation of this information, and does not assume
responsibility for the accuracy, precision and sufficiency of this
information. The base date used for the Assessment Report is
December 31, 2015.

The Client, through appointed professionals, provided information on


data, forecasts, assumptions and estimates related to Cetip, and its
operations markets, used in this Report.

During the course of our work, we performed analysis procedures that


we considered appropriated within the context of the work. However,

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

46

Appendix I Important Notes (2/3)


KPMG did not assess the completeness, sufficiency and accuracy of
the information provided. Any errors, alterations or modifications to
this information could significantly affect KMPGs valuation.

We also highlight that the work does not constitute an audit in


accordance with generally accepted auditing standards, or any other
form, and therefore, should not be interpreted as such.

The scope of the work proposed does not represent any obligation by
KPMG to detect frauds in the Cetip operations, processes, registers or
documents.

The scope of this report does not include determining the economic
values of any of the Companies contingencies. Therefore, with
respect to such items, we have based our work on information and
analyses made available by the Client and its legal advisors, as such,
KPMG is not responsible for the results of these services.

Also, the scope of this report does not include the assessment of nonoperating fixed assets and fixed assets individually of Cetip.

In order to prepare this report, KPMG presupposes the reliability,


expressly given by the Client, with respect to the accuracy, contents,
completeness, sufficiency and integrity of all of the data that was
provided or discussed, such that we do not assume, nor did we
undertake a physical inspection of any assets or properties, and did not
prepare or obtain independent assessments of the Companies assets
or liabilities, or the solvency of such, and considered the information
used in this report to be consistent, and the Client is responsible,
together with its agents, partners and employees, for all of the
information provided or discussed with KPMG.

The information that refers to data, forecasts, assumptions and


estimates, related to Cetip and its operations markets, used and
included in the Report, is based on certain groups of reports and
presentation lay-out, which could differ considerably in relation to the
group of accounts presented by the Client for purposes of preparing
the financial statements or quarterly financial information, made
available to the public. This procedure was adopted to enable the
forecasts presented to be consistent with the group of accounts
reported in the management financial information presented. Any
differences in the groups of accounts do not have an impact on the
results.

Except if expressly stated otherwise, in writing in notes or specific


references, all of the previous information, market information,
estimates, forecasts and assumptions, included, considered, used or
presented in this Report refer to that presented by the Client to KPMG.

Neither KPMG nor its representatives declare, guarantee or express


their opinion, explicitly or implicitly, as to the accuracy, completeness
or viability of any forecasts or assumptions on which they are based.

This report was prepared according to the economic conditions of the


market, amongst others, available on the date it was prepared, such
that the conclusions presented are subject to variations as a result of a
range of factors.

The sum of the individual values presented in the Report may differ
from the sum presented, as a result of rounding of the amounts
involved.

The range in the Company's value is limited to a range of 10% to be in


accordance to the requirements of Annex III, item II of CVM
Instruction 361.

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

47

Appendix I Important Notes (3/3)

The market is aware that every assessment prepared using the


discounted cash flow method represents a significant degree of
subjectivity, given that they are based on future expectations, which
may or may not occur. It should also be noted that all or any of the
assumptions for financial valuation models based on discounted cash
flows can alter the value obtained for the company, brand or asset
being assessed. These possibilities do not constitute errors in the
valuation and are recognized by the market as part of the nature of the
valuation process using the discounted cash flow method.
There are no guarantees that the assumptions, estimates, forecasts,
partial or total results or conclusions used or presented in the Report
will in fact occur or be registered, in full or in part. The Companys
future results may differ from those in the forecasts, and these
differences may be significant, and may result from various factors,
including, but not limited to, changes in market conditions. KPMG does
not assume any responsibility for these differences.
The services proposed may be informed and supported by legal norms
and regulations, within this context, we highlight that our legislation is
complex and often the same ruling can be interpreted in more than
one way. KPMG seeks to keep up to date in relation to the different
interpretative currents, to ensure it is able to perform an extensive
assessment of the alternatives and the risks involved. Thus, inevitably
there will be interpretations of the law that differ from ours. Within
this context, neither KPMG nor any other firm, can provide Client
management with total assurance that it will not be questioned by
third parties, including tax investigation agencies.

alterations, required as a result of these acts, will have adverse equity


effects for the Client or will reduce the benefits to the Client sought
from the Operation.

The information herein, related to the accounting and financial position


of the Companies, and the market, is that available at December 31,
2015, depending on the case. Any change in these positions could
affect the results of this report. KPMG does not assume any
obligation to up date, review or correct the report, as a result of
differences in information subsequent to April 11, 2016, or as a result
of any subsequent event.

This Report should be read and interpreted considering the restrictions


and qualifications stated above. The reader should take into
consideration in his analysis the restrictions and characteristics of the
sources of information used.

This Report can not be distributed, copied, published or used in any


other form, and can not be filed, included or referred to in part or
totally in any document without prior consent from KPMG, liberating
its use by third parties interested in the Operation, within the strict
terms of Corporate Law.

Presentation of this report concludes the services stated in our


proposal.

To undertake this work, KPMG assumed that all of the government


and regulatory approvals or any other approvals, as well as any
exemptions, amendments or renegotiation of contracts necessary for
the business considered were or will be obtained, and that no

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

48

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG
International), a Swiss entity. All rights reserved. Printed in Brazil.

APPRAISAL REPORT AP-0333/16-01


COMPANHIA SO JOS HOLDING AND CETIP
S.A. MERCADOS ORGANIZADOS

REPORT:

AP-0333/16-01

REFERENCE DATE:

December 31st, 2015

APPLICANT:

BM&FBOVESPA S.A. BOLSA DE VALORES, MERCADORIAS E FUTUROS, hereinafter called BVMF.


Public Company, with head office located at Praa Antnio Prado, No 48, 7th floor, Centro, in the City and State of
So Paulo, registered with the Brazilian Taxpayers Registry (CNPJ) under No. 09.346.601/0001-25.

OBJECT:

COMPANHIA SO JOS HOLDING, present name of NETANYA EMPREENDIMENTOS E PARTICIPAES S.A., hereinafter
called NETANYA.
Private held company with head office located at Rua Fernando de Albuquerque, No 31, Conj. 72, Consolao, in the
City and State of So Paulo, registered with the Brazilian Taxpayers Registry (CNPJ) under No. 23.791.728/0001-84.
CETIP S.A. MERCADOS ORGANIZADOS, hereinafter called CETIP.
Public Company, with head office located at Av. Repblica do Chile, No 230, 10th and 11th floors, Centro, in the City
and State of Rio de Janeiro, registered with the Brazilian Taxpayers Registry (CNPJ) under No. 09.358.105/0001-91.

PURPOSE:

Calculation of the net equity of NETANYA, at book value, for the purposes of the merger of NETANYA with and into
BVMF, pursuant to sections 226 and 227 of Law No. 6,404/76 ('Brazilian Corporation Law').

Report AP-0333/16-01

INDEX
1.

EXECUTIVE SUMMARY -------------------------------------------------------------------------------------------------------------------------------------------------------------------- 3

2.

PRINCIPLES AND QUALIFICATIONS------------------------------------------------------------------------------------------------------------------------------------------------------ 5

3.

LIABILITY LIMITATIONS ------------------------------------------------------------------------------------------------------------------------------------------------------------------ 7

4.

APPRAISAL METHODOLOGY ------------------------------------------------------------------------------------------------------------------------------------------------------------- 8

5.

APPRAISAL OF NET EQUITY OF NETANYA --------------------------------------------------------------------------------------------------------------------------------------------- 9

6.

CONCLUSION ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- 10

7.

LIST OF EXHIBITS ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ 11

Report AP-0333/16-01

1. EXECUTIVE SUMMARY
BM&FBOVESPA S.A. Bolsa De Valores, Mercadorias e Futuros ('BVMF') is a

APSIS CONSULTORIA E AVALIAES LTDA., hereinafter called APSIS, with its

company that manages the organized Securities and Derivatives markets,

head office located at Rua da Assembleia, 35, 12nd floor, in the City and

providing registration, clearing and settlement services. It acts as central

State of Rio de Janeiro, registered with the Brazilian Taxpayers Registry

counterparty, guaranteeing financial liquidity for the trades executed in its

(CNPJ) under No. 08.681.365/0001-30 was retained to determine net equity

environments.

of NETANYA, at book value, for the purposes of the merger of NETANYA with

COMPANHIA

SO

JOS

HOLDING,

present

name

of

NETANYA

EMPREENDIMENTOS E PARTICIPAES S.A. ('NETANYA') is a wholly-owned

and into BVMF, pursuant to sections 226 and 227 of Law No. 6,404/76
('Brazilian Corporation Law').

subsidiary of BVMF. NETANYAs main activity is the rental of its own real

In order to prepare this report, we have used data and information provided

state property and the holding of equity interests in other companies.

by third parties, i.e., documents and verbal interviews with the client.

CETIP S.A. MERCADOS ORGANIZADOS ('CETIP') is a publicly-held company


that offers services related to registration, central securities depository

Estimates used in this process are based on the following documents and
information, among others:

(CSD), trading and settlement of assets and securities. Through technological

Audited Balance Sheet of NETANYA, as of December 31st, 2015;

and infrastructure solutions, it provides liquidity, security and transparency

Subsequent events to be taken place in NETANYA before the merging

for financial operations in the Brazilian market.


BVMF, according to Events of Relevance to the Market disclosure on February
19th, 2016, approved the presentation of Biding Precedent, toward the
respective shareholders of the Companies, for the combination of the

date; and

CETIPs economic appraisal report, used to support the operation of


incorporation of CETIPs shares in NETANYA, developed by a third
party.

operations of BVMF and CETIP ('Proposta Vinculante' or 'Operao'), that will


result: (i) on the entitlement from BVMF, of the total CETIP issued shares,
and (ii) on the receipt, for each CETIP issued common share, subject to the
adjustments provided for in the referred Events of Relevance to the Market,
of 0.8991 BVMF common share and more 30.75 BRL (thirty Brazilian reais and
seventy five cents), in Brazilian currency (to be re-adjusted).

Report AP-0333/16-01

APSIS has recently prepared appraisal reports for publicly-held


companies, for several purposes:

AMBEV S.A.
BCO BTG PACTUAL S.A.
BEMATECH S.A.
BR PROPERTIES S.A.
CENTRAIS ELET BRAS S.A. - ELETROBRAS
CIA SIDERRGICA NACIONAL
ESTCIO PARTICIPAES S.A.
GOL LINHAS AREAS INTELIGENTES S.A.
JBS S.A.
JEREISSATI TELECOM S.A.
NET SERVIOS DE COMUNICAO S.A.
OI S.A.
QUALICORP S.A.
RESTOQUE COMRCIO E CONFECES DE ROUPAS S.A.
TOTVS S.A.

The team responsible for preparing such report comprises the following
professionals:
AMILCAR DE CASTRO
Director
Bachelor in Law
ANA CRISTINA FRANA DE SOUZA
Vice-President
Civil Engineer (CREA/RJ 1991103043)
ANTONIO LUIZ FEIJ NICOLAU
Director
Lawyer (OAB/RJ 167.543)
EDUARDO DE CASTRO ROSSI
Director
Electrical Engineer (CREA/SP 5062320397)
GIANCARLO FALKENSTEIN
Senior Consultant
Accountant (CRC/SP 317492/O-1)
LUIZ PAULO CESAR SILVEIRA
Vice-President
Mechanical Engineer and Accountant (CREA/RJ 1989100165 and CRC/RJ-118263/P-0)
MARCIA APARECIDA DE LUCCA CALMON
Director
Accountant (CRC/SP-143169/O-4)
MRCIA MOREIRA FRAZO DA SILVA
Director
Accountant (CRC/RJ-106548/O-3)
MARINA RAGUCCI
Executive Manager
Economist
RENATA POZZATO CARNEIRO MONTEIRO
President
Postgraduate in Law (OAB/RJ 109.393)
SERGIO FREITAS DE SOUZA
Vice-President
Economist (CORECON/RJ 23521-0)

Report AP-0333/16-01

2. PRINCIPLES AND QUALIFICATIONS


The following information is important and must be read carefully.
The Report complies with the fundamental principles described below:

The consultants have no interest, direct or indirect, in the companies

affecting the companies in question, other than those listed in

involved neither in their operation; as well as there is not any other

this report.

relevant circumstance that may characterize conflict of interest.

APSIS does not hold BVMF nor CETIPs securities, nor do its partners,

by the adopted methodologies, which may affect the analyses,

directors, officers, managers, controllers or people related to them.

opinions and conclusions comprised herein

APSIS declares that there is no commercial or credit relation that


may affect the report.

There is no conflict of interest that jeopardizes the necessary


Independence for the performances of APSIS professionals duties in
this work.

APSIS professional fees are not in any way whatsoever subject to


the conclusions of this Report.

This report presents all the limiting conditions, if applicable, imposed

This report was prepared by APSIS and no one other than the
consultants themselves prepared the analyses and respective
conclusions.
APSIS assumes full liability on the appraised matter, including implicit
appraisals, for the exercise of its honorable duties, primarily
established in the appropriate laws, codes or regulations.
This Report complies with the specifications and criteria established

To the best of the consultants knowledge and credit, the

by the USPAP (Uniform Standards of Professional Appraisal Practice)

analyses, opinions, and conclusions expressed in this report are

and the International Valuation Standards Council (IVSC), in addition

based on data, diligence, research and surveys that are true and

to the requirements imposed by various agencies and regulations,

correct.

such as the Brazilian Accounting Practice Committee (CPC), the

For purposes of this report, it was assumed that the information

Ministry of Treasury, Brazilian Central Bank, Banco do Brasil, CVM

received from third parties is correct; the sources of such

(Brazilian

information are stated in this Report.

Commission), Income Tax Regulations (RIR), Brazilian Committee of

For projection purpose, it was assumed the nonexistence of liens

Business Appraisers (CBAN) etc.

or encumbrances of any nature, judicial or extrajudicial,

Securities

Commission),

SUSEP

(Brazilian

Insurance

The controlling shareholders and managers of the companies involved


did not direct, restrict, hinder or engage in any acts which have or

Report AP-0333/16-01

may have compromised access to, use, or knowledge of information,


assets, documents, or work methods applicable to the quality of the
respective conclusions contained herein.

For the services provided through this report, APSIS will receive the
amount of 28,000.00 BRL (twenty-eight thousand reais).

APSIS did not provide any kind of service in the last 12 months for the
companies that were involved in this operation.

Report AP-0333/16-01

3. LIABILITY LIMITATIONS
In order to prepare this Report, APSIS used historic data and
information, audited by third-parties or unaudited, provided in
writing by the management of NETANYA, CETIP and BVMF, or
obtained from the mentioned sources. As such, APSIS assumed that
the data and information obtained for this Report are true and APSIS
does not have any liability with respect to their veracity.

The scope of this Report did not include auditing financial


statements or revising the work performed by auditors. Therefore,
APSIS is not issuing an opinion on the financial statements of
NETANYA.

We are not liable for eventual losses to BVMF, its subsidiaries,


shareholders, officers, creditors or other parties as a result of the
use of data and information provided by the companies and
contained herein.

Our work was developed solely for use by BVMF, its shareholders and
any other entities or persons involved in the transaction.

Report AP-0333/16-01

4. APPRAISAL METHODOLOGY
Analysis of the previously mentioned supporting document, aiming at

NETANYA will incorporate the shares of CETIP and will issue in favor
of CETIP shareholders:

verifying whether bookkeeping was accurately conducted and in compliance


with the legal, regulatory, normative and statutory disposals which govern

1 common share of NETANYA for each share of CETIP;

the matter, according to the 'Generally Accepted Accounting Principles and

3 redeemable preferred shares of NETANYA for each share of


CETIP.

Conventions in Brazil'.
We examined the accounting books of NETANYA as well as all other

NETANYA of 11,295,468,416.20 BRL; and

documents required to prepare this report, which was prepared based on

NETANYAs balance sheet as of December 31st, 2015 (Exhibit 02).

Considering the emissions above, there will be a new contribution on


Buy back of all preferred shares of NETANYA for the estimated
amount of 9,257,820,000.00.

The experts concluded that the assets and liabilities of NETANYA have been
duly accounted.

It is important to highlight, that the buy back, described in the


subsequent events, is subject to variation due to the agreement between

It is not part of the scope of APSIS to validate the assumptions that


supported the contribution values reported in the subsequence events, which
are reasoned on reports issued by a third party (KPMG Corporate Finance
Ltda.).

BVMF and CETIP to update this contribution by CDI while it awaits the
approval of the business combination by the regulatory agencies and
government authorities. For this Report it was considered the base value
of the report developed by third parties, updated, for the purposes of
cash contribution held by BVMF, by the accumulated CDI of 9.29%

SUBSEQUENT EVENTS CONSIDERED IN EVALUATING


In this evaluation some events that must occur before the incorporation were
considered pro forma, according to the description below:

NETANYA had 1,200 common shares at a value of 1.00 BRL;

BVMF will make a contribution in cash on NETANYA in the amount of


9,257,820,000.00

BRL,

through

the

subscription

of

at

regarding the CDI projected by FOCUS April/2016 to December/2016,


resulting in a cash contribution in the amount of 9,257,820,000.00 BRL.

least

794,650,830 new common shares.;

Report AP-0333/16-01

5. APPRAISAL OF NETANYAS NET EQUITY


NETANYAs accounting books were examined and all the others necessary documents in order to prepare this report.
The experts concluded that the book value of NETANYAs net equity, if occurring the increase of its capital events, the incorporation of CETIPs shares and the
redemption of its redeemable preferred shares, for the purpose the merger of NETANYA with and into BVMF, will be equivalent to, at least, 11,295,468,000.00
BRL (eleven billion, two hundred ninety-five million, four hundred and sixty-eight thousand reais), as shown in the table below:
NETANYA

STATEMENTS

Balance in
December 31st,
2015

BALANCE SHEET (BRL '000)

CURRENT ASSETS
Cash and Cash Equivalents
NON CURRENT ASSETS
LONG TERM RECEIVABLES
INVESTMENTS
CETIP S.A.
PROPERTY, PLANT AND EQUIPAMENT
INTANGIBLES

100%

Capital
Contribution in
cash*

Balance after
Capital
Contribution in
December 31st,
2015

Transference
and Issuance of
Shares *

Balance after
Transference and
Issuance of Shares in
December 31st, 2015

0,13
0,13
-

9.257.820
9.257.820
-

9.257.820
9.257.820
-

11.295.468
1.695.815
1.695.815
-

9.257.820
9.257.820
11.295.468
1.695.815
1.695.815
-

9.599.653

9.599.653

Goodwill
9.599.653
TOTAL ASSETS
0
9.257.820
9.257.820
11.295.468
CURRENT LIABILITIES
NON CURRENT LIABILITIES
LONG TERM DEBTS
SHAREHOLDERS EQUITY
0,13
9.257.820
9.257.820
11.295.468
Capital Stock
1
9.257.820
9.257.821
1.695.815
Capital Reserve
9.599.653
Net Income of Previous Fiscal Years
(1)
(1)
TOTAL LIABILITIES
0
9.257.820
9.257.820
11.295.468
* Values are subject to variation, because of suspensive conditions subject to the approval of regulatory and government authorities

9.599.653
20.553.289
20.553.289
10.953.636
9.599.653
(1)
20.553.289

Redemption of
Shares*

Balance after
Redemption of
Shares in
December 31st,
2015

(9.257.820)
(9.257.820)
(9.257.820)
(9.257.820)
(9.257.820)
(9.257.820)

Report AP-0333/16-01

11.295.468
1.695.815
1.695.815
9.599.653
9.599.653
11.295.468
11.295.468
1.695.816
9.599.653
(1)
11.295.468

6. CONCLUSION
In light of the analyses of the previously mentioned documents and based on studies conducted by APSIS, the experts concluded that the book value of
NETANYAs net equity, as of December 31st, 2015, for purpose of the merger of NETANYA with and into BVMF, is equivalent to, at least, 11,295,468 BRL
thousand (eleven billion, two hundred and ninety five million, four hundred and sixty eight thousand reais), after subsequent events informed by the company.
The report AP-0333/16-01 was elaborated in the form of Digital Report (eletronic document in Portable Document Format - PDF), with the certification of the
responsible technicians and printed by APSIS, composed by eleven (11) pages typed on one side and three (3) exhibits. APSIS Consultoria e Avaliaes Ltda., a
company specialized in the appraisal of assets, CRC/RJ-005112/O-9, legally represented by its representatives, makes itself available for any clarifications which
may be deemed necessary.

So Paulo, April 15th, 2016.

LUIZ PAULO CESAR SILVEIRA


Vice President

MARCIA APARECIDA DE LUCCA CALMON


Director
Report AP-0333/16-01

10

7. LIST OF EXHIBITS
1. BALANCE SHEET OF NETANYA WITH ALL THE EVENTS
2. BALANCE SHEET OF NETANYA ON DECEMBER, 2015
3. GLOSSARY AND APSIS PROFILE

RIO DE JANEIRO - RJ
Rua da Assembleia, n 35, 12 andar
Centro, CEP 20011-001
Tel.: + 55 (21) 2212-6850 Fax: + 55 (21) 2212-6851

SO PAULO - SP
Av. Anglica, n 2.503, Conj. 101
Consolao, CEP 01227-200
Tel.: + 55 (11) 3662-5453 Fax: + 55 (11) 3662-5722

Report AP-0333/16-01

11

EXHIBIT 1

APPRAISAL REPORT AP-0333/16-01

EXHIBIT 1 - BP - NETANYA

STATEMENTS

NETANYA

BALANCE SHEET (BRL '000)

CURRENT ASSETS
Cash and Cash Equivalents
NON CURRENT ASSETS
LONG TERM RECEIVABLES
INVESTMENTS
CETIP S.A.
PROPERTY, PLANT AND EQUIPAMENT
INTANGIBLES

Capital
Contribution in
cash*

Balance after
Capital
Contribution in
December 31st,
2015

Transference
and Issuance of
Shares *

Balance after
Transference and
Issuance of Shares in
December 31st, 2015

0,13
0,13
-

9.257.820
9.257.820
-

9.257.820
9.257.820
-

11.295.468
1.695.815
1.695.815
-

9.257.820
9.257.820
11.295.468
1.695.815
1.695.815
-

9.599.653

9.599.653

Balance in
December 31st,
2015

100%

Goodwill
TOTAL ASSETS
0
9.257.820
CURRENT LIABILITIES
NON CURRENT LIABILITIES
LONG TERM DEBTS
SHAREHOLDERS EQUITY
0,13
9.257.820
Capital Stock
1
9.257.820
Capital Reserve
Net Income of Previous Fiscal Years
(1)
TOTAL LIABILITIES
0
9.257.820
* Values are subject to variation, because of suspensive conditions subject to the approval of regulatory

APSIS CONSULTORIA E AVALIAES LTDA.

9.599.653
9.257.820
11.295.468
9.257.820
11.295.468
9.257.821
1.695.815
9.599.653
(1)
9.257.820
11.295.468
and government authorities

9.599.653
20.553.289
20.553.289
10.953.636
9.599.653
(1)
20.553.289

Redemption of
Shares*
(9.257.820)
(9.257.820)
(9.257.820)
(9.257.820)
(9.257.820)
(9.257.820)

Balance after
Redemption of
Shares in
December 31st,
2015
11.295.468
1.695.815
1.695.815
9.599.653
9.599.653
11.295.468
11.295.468
1.695.816
9.599.653
(1)
11.295.468

1/1

EXHIBIT 2

GC ASSESSORIA CONTABIL LTDA - ME

1.200,00

Dbito
1.068,60

1.068,60

Crdito
131,40D

131,40D

Saldo Atual

Folha: 1

Saldo Anterior
1.200,00

11,40D

131,40D

Dirio:0

0,00D

1.068,60

NETANYA EMPREENDIMENTOS E PARTICIPACOES S.A.(02116)


CNPJ : 23.791.728/0001-84
Balancete Analtico de 04/12/2015 at 31/12/2015

0,00D
1.200,00
1.068,60

Descrio
[11]ATIVO CIRCULANTE
0,00D

1.068,60

[1]ATIVO

[111]DISPONIBILIDADE
1.080,00
11,40D

1.080,00

0,00D

1.200,00

1.200,00

0,00

1.200,00C

1.200,00C

1.200,00C

120,00D

120,00D

0,00

1.200,00C

0,00

0,00
1.200,00

1.200,00C

120,00

0,00C

1.200,00

0,00D

0,00C
0,00

1.200,00

0,00D

0,00C
0,00

0,00

0,00

0,00C

0,00

0,00C

0,00C

1.068,60

1.068,60

0,00

0,00

223,39D

223,39D

1.068,60D

1.068,60D

0,00D

0,00

0,00D

0,00

0,00

0,00

0,00D
223,39

0,00

0,00D

505,21D

223,39D

0,00

505,21D

0,00

223,39

0,00

223,39

0,00

0,00D

0,00D

0,00D

0,00C

0,00C

0,00C

120,00

0,00D

[111101]CAIXA MATRIZ

[1111]CAIXA

[111203]BANCO DO BRASIL S/A

[1112]DEPSITOS BANCRIOS VISTA

[23]PATRIMNIO LQUIDO

[2]PASSIVO

[231]CAPITAL SOCIAL

[231101]CAPITAL SUBSCRITO DE DOMICILIADOS E RESIDENTES

[2311]CAPITAL REALIZADO - DE RESIDENTES NO PAS

[234]OUTRAS CONTAS DO PATRIMNIO LQUIDO

[234104](-) PREJUZOS ACUMULADOS

[2341]OUTRAS CONTAS DO PATRIMNIO LQUIDO

[51]DESPESAS OPERACIONAIS

[5]DESPESAS

[513]DESPESAS OPERACIONAIS

[513124]HONORRIOS CONTBEIS

[5131]DESPESAS OPERACIONAIS DAS ATIVIDADES EM GERAL

505,21

21,00D

484,21D

505,21

0,00

0,00D

0,00

0,00D

21,00

484,21

[5151]DESPESAS TRIBUTRIAS

[515]DESPESAS TRIBUTRIAS

0,00D

340,00D

0,00D

340,00D

[515108]IMPOSTOS E TAXAS

0,00

[515109]IMPOSTOS E TAXAS FEDERAIS

0,00

11,40D

340,00

13,90D

340,00

0,00

314,70D

0,00D

11,40

0,00

0,00D
0,00D

0,00

[5161]OUTRAS DESPESAS OPERACIONAIS EM GERAL

[516]OUTRAS DESPESAS OPERACIONAIS

[516103]CONTRIBUIO PATRONAL

13,90

0,00D

314,70

0,00

0,00D

0,00

0,00

0,00D

0,00

0,00

[516117]DESPESAS DE CARTRIO

0,00D

0,00

0,00

0,00

0,00

0,00
0,00

0,00
0,00

0,00

[516124]MATERIAL DE ESCRITRIO

[53]RESULTADO DO EXRECCIO
[531]RESULTADO DO EXRECCIO

[531101]RESULTADO DO EXERCCIO

[5311]RESULTADO DO EXRECCIO

Anlise do Balancete ==============================================================================


Ativo ---------------->
131,40D Passivo ------------->
1.200,00C
Despesa ------------->
1.068,60D Receita ------------->
0,00C
Custo-------------------->
0,00D
=====================>
1.200,00D =====================>
1.200,00C
Prejuzo ===============>
1.068,60
=============================================================================================

EXHIBIT 3

Glossary

ABL

Gross Leasable Area

ABNT (Associao Brasileira de


Normas Tcnicas)
Brazilian Technical Standards
Association.

Allocated Codes

economic benefits are expected for the


entity.

price trend of a particular share to be


correlated with changes in a given index.

Asset Approach

Book Value

Business Combination

valuation of companies where all


assets (including those not accounted
for) have their values adjusted to the
market. Also known as market net
equity.

serial number (grades or weights) to


differentiate the quality features of
properties.

Base Date

Allotment

Basic Infrastructure

subdivision of a tract of land into


lots for buildings with the opening of
new thoroughfares, or the extension,
modification or expansion of existing
ones.

Amortization

specific date (day, month and year) of


application of the assessment value.

urban rainwater drainage equipment,


street lighting, sewage system, drinking
water, public and home electricity
supply and access routes.

BDI (Budget Difference Income)

systematic allocation of the depreciable


value of an asset over its useful life.

a percentage that indicates the benefits


and overhead costs applied to the
direct cost of construction.

Apparent Age

Best Use of the Property

estimated age of a property according to


its characteristics and conservation status
at the time of inspection.

Asset

a resource controlled by the entity as a


result of past events from which future

the most economically appropriate


use of a certain property according to
its characteristics and surroundings,
respecting legal limitations.

Beta

a systematic risk measure of a share;

CAPM (Capital Asset Pricing


Model)

model in which the capital cost for any


share or lot of shares equals the risk
the value at which an asset or liability is
free rate plus risk premium provided by
recognized on the balance sheet.
the systematic risk of the share or lot of
shares under investigation. Generally
used to calculate the Cost of Equity or
Building Standard
the quality of the improvements according the Cost of Shareholder Capital.
to the specifications of design, materials,
workmanship and performance effectively Capitalization Rate
used in construction.
any divisor used to convert economic
benefits into value in a single period.
union of separate entities or businesses
producing financial statements of a
single reporting entity. Transaction or
other event by which an acquirer obtains
control of one or more businesses,
regardless of the legal form of operation.

Business Risk

uncertainty of realization of expected


future returns of the business resulting
from factors other than financial leverage.

CAPEX (Capital Expenditure)


fixed asset investments.

Capitalization

conversion of a simple period of


economic benefits into value.

Capital Structure

composition of a companys invested


capital, between own capital (equity)
and third-party capital (debt).

Cash Flow

cash generated by an asset, group


of assets or business during a given
period of time. Usually the term is
supplemented by a qualification
referring to the context (operating, nonoperating, etc...).

Cash Flow on Invested Capital

cash flow generated by the company


to be reverted to lenders (interest
and amortizations) and shareholders
(dividends) after consideration of cost
and operating expenses and capital
investments.

Cash-Generating Unit

smallest identifiable group of assets


generating cash inflows that are largely
independent on inputs generated by other
assets or groups of assets.

Casualty

an event that causes financial loss.

Company

commercial or industrial entity, service


provider or investment entity holding
economic activities.

Conservation Status

physical status of an asset as a result of


its maintenance.

Current Value

value replacement with a new value


depreciated as a result of the physical
state the property is in.

CVM

D
Damage

spending on inputs, including labor, in the


production of goods.

Discount for Lack of Control

Discount for Lack of Liquidity

Date of Issue

value or percentage of the pro-rata value


of a lot of controlling shares over the
pro-rata value of non-controlling shares,
which reflect the control power.

closing date of the valuation report,


when conclusions are conveyed to the
client.

Cost

discounted cash flow.

Accounting Pronouncements Committee.

Direct Production Cost

Data Treatment

Control Premium

CPC (Comit de Pronunciamentos


Contbeis)

Efficient Use

variable that assumes only two values.

value or percentage deducted from the


pro-rata value of 100% of the value of a
company that reflects the absence of part
or all of the control.

power to direct the strategic policy


and administrative management of a
company.

Expected rate of return required by


the market as an attraction to certain
investment funds.

Dichotomous Variable

damage caused to others by the


occurrence of flaws, defects, accidents
and crimes, among others.

application of operations to express, in


relative terms, the attribute differences
between the market data and data of
the property being assessed.

Cost of Capital

Economic Benefits

systematic allocation of the depreciable


value of an asset during its useful life.

Securities and Exchange Commission.

Control

the total direct and indirect costs


necessary for production, maintenance or
acquisition of an asset at a particular time
and situation.

Depreciation

DCF (Discounted Cash Flow


D&A

depreciation and amortization.

Dependent Variable

variable to be explained by the


independent ones.

Depreciable Value

cost of the asset, or other amount


that substitutes such cost (financial
statements), less its residual value.

value or percentage deducted from the


pro-rata value of 100% of the value of a
company that reflects the lack of liquidity.

Discount Rate

any divisor used to convert a flow of


future economic benefits into present
value.

Drivers

value drivers or key variables.

EBIT (Earnings before Interest and


Taxes)
earnings before interest and taxes.

EBITDA (Earnings before


Interest, Taxes, Depreciation and
Amortization)

earnings before interest, taxes, preciation


and amortization.

benefits such as revenue, net profit, net


cash flow, etc.

that which is recommendable and


technically possible for the location on
a reference date, among the various
uses permitted by the applicable law,
observing surrounding marketing
trends.

Electrical Damage Value

estimated cost of the repair or


replacement of parts, when the
property suffers electrical damage.
Values are tabulated in percentages
of the Replacement Value and have
been calculated through the study of
equipment manuals and the expertise
in corrective maintenance of Apsis
technicians.

Enterprise

set of properties capable of producing


revenue through marketing or
economic exploitation. It can be: real
estate (e.g. subdivision, commercial /
residential buildings), real-estate based
(e.g., hotel, shopping mall, theme
parks), industrial or rural.

Enterprise Value

economic value of the company.

Equity Value

economic value of the equity.

Equivalent Construction Area

constructed area on which the unit


cost equivalence of corresponding
construction is applied, according to
ABNT postulates.

Equivalent Depth

numerical result of the division of a lot


area by its main projected front.

Expertise

technical activity performed by a


professional with specific expertise to
investigate and clarify facts, check the
status of property, investigate the causes
that motivated a particular event, appraise
assets, their costs, results or rights.

Facilities

set of materials, systems, networks,


equipment and operational support
services for a single machine, production
line or plant, according to the degree of
aggregation.

Fair Market Value

value at which an asset could have its


ownership exchanged between a potential
seller and a potential buyer, when both
parties have reasonable knowledge
of relevant facts and neither is under
pressure to do so.

Fair Value Less Cost to Sell

value that can be obtained from the sale


of an asset or cash-generating unit less
sale expenses, in a transaction between
knowledgeable, willing and uninterested
parties.

FCFF (Free Cash Flow to Firm)

Free cash flow to firm, or unlevered free


cash flow.

Financial Lease

that which substantially transfers all

the risks and benefits related to the


ownership of the asset, which may
or may not eventually be transferred.
Leases that are not financial leases are
classified as operating leases.

Fixed Asset

tangible asset available for use in


the production or supply of goods
or services, in third-party leasing,
investments, or for management
purposes, expected to be used for
more than one accounting period.

Flaw

anomaly that affects the performance of


products and services, or makes them
inadequate to the purposes intended,
causing inconvenience or material loss
to the consumer.

Forced Liquidation

condition on the possibility of a


compulsory sale or in a shorter period
than the average absorption by the
market.

Free Float

percentage of outstanding shares on


the companys total capital.

Frontage

horizontal projection of the line dividing


the property and the access road;
measurement of the front of a building.

G
Goodwill

see Premium for Expected Future


Profitability.

Homogenization

treatment of observed prices


by application of mathematical
transformations that express, in relative
terms, the differences between market
data attributes and those of the property
assessed.

Homogenized Area

useful or private area, or built with


mathematical treatments for valuation
purposes, according to criteria based on
the real estate market.

IAS (International Accounting


Standards)

principles-based standards,
interpretations and the framework
adopted by the International Accounting
Standards Board (IASB). See International
Accounting Standards.

IASB (International Accounting


Standards Board)

International Accounting Standards


Board. Standard setting body responsible
for the development of International
Financial Reporting Standards (IFRSs).

Ideal Fraction

percentage owned by each of the buyers


(tenants) of the land and of the buildings
common items.

IFRS (International Financial


Reporting Standards)

International Financial Reporting


Standards, a set of international
accounting pronouncements published
and reviewed by the IASB.

Impairment

see Impairment losses

Impairment Losses (impairment)


book value of the asset that exceeds,
in the case of stocks, its selling price
less the cost to complete it and
expense of selling it; or, in the case
of other assets, their fair value less
expenditure for sale.

Income Approach

valuation method for converting the


present value of expected economic
benefits.

Independent Variables

variables that provide a logical content


to the formation of the value of the
property subject to the assessment.

Indirect Production Cost

administrative and financial costs,


benefits and other liens and charges
necessary for the production of goods.

Influence Point

atypical point that, when removed from


the sample, significantly changes the
estimated parameters or the linear
structure of the model.

Insurance

risk transfer guaranteed by contract


whereby one party undertakes, subject
to payment of premium, to indemnify
another for the occurrence of casualties
covered under the policy.

Insurance Value

value at which an insurance company


assumes the risks. Except in special
cases, it is not applied to land and
foundations.

Intangible Asset

identifiable non-monetary asset without


physical substance. This asset is
identifiable when: a) it is separable, i.e.,
capable of being separated or divided
from the entity and sold, transferred,
licensed, leased or exchanged, either
alone or together with the related
contract, asset or liability; b) it arises
from contractual or other legal rights,
regardless of whether those rights are
transferable or separable from the entity
or from other rights and obligations..

Internal Rate of Return

discount rate where the present value of


future cash flow is equivalent to the cost
of investment.

International Accounting
Standards (IAS)

standards and interpretations adopted


by the IASB. They include: International
Financial Reporting Standards (IFRS)
International Accounting Standards (IAS)
and interpretations developed by the
Interpretation Committee on International
Financial Reporting Standards (IFRIC) or
by the former Standing Interpretations
Committee (SIC).

Invested Capital

the sum of own capital and third-party


capital invested in a company. Thirdparty capital is usually related to debt
with interest (short and long-term) and
must be specified within the context of
the valuation.

Investment Property

property (land, building or building


part, or both) held by the owner
or lessee under the lease, both to
receive payment of rent and for capital
appreciation or both, other than for use
in the production or supply of goods or
services, as well as for administrative
purposes.

Investment Value

value for a particular investor based


on individual interests in the property
in question. In the case of business
valuation, this value can be analyzed by
different situations, such as the synergy
with other companies of an investor,
risk perceptions, future performance
and tax planning.

Key Money

amount paid by the prospective tenant


for signature or transfer of the lease
contract, as compensation for the point
of sale.

Key Variables

variables that, a priori, and traditionally


have been important for the formation
of property value.

Levered Beta

beta value reflecting the debt in capital


structure.

Liability

present obligation that arises from past


events, whereby it is hoped that the
settlement thereof will result in the inflow
of funds from the entity embodying
economic benefits.

asset and its reproduction cost less


depreciation or replacement cost,
which may be higher or lower than 1
(one).

Market Research

set of activities for identification,


investigation, collection, selection,
processing, analysis and interpretation
of results on market data.

Maximum Insurance Value

value of a property offered for sale on


the market outside the normal process,
i.e. one that would be established if the
property were offered for sale separately,
taking into account the costs involved
and the discount required for a sale in a
reduced period.

maximum value of the property for


which it is recommendable to insure
it. This criterion establishes that the
property whose depreciation is greater
than 50% should have its Maximum
Insurance Value equivalent to twice
as much as the Current Value; and
the property whose depreciation is
with less than 50% should have its
Maximum Insurance Value equivalent
to the Replacement Value.

Liquidity

Multiple

Liquidation Value

ability to rapidly convert certain assets


into cash or into the payment of a certain
debt.

Market Approach

valuation method in which multiple


comparisons derived from the sales price
of similar assets are adopted.

Market Data

set of information collected on the market


related to a particular property.

Marketing Factor

the ratio between the market value of an

market value of a company, share or


invested capital, divided by a valuation
measurement of the company (EBITDA,
income, customer volume, etc...).

Net Debt

cash and cash equivalents, net position


in derivatives, short-term and long-term
financial debts, dividends receivable
and payable, receivables and payables
related to debentures, short-term and
long-term deficits with pension funds,
provisions, and other credits and
obligations to related parties, including
subscription bonus.

Non-Operating Assets

those not directly related to the


companys operations (may or may
not generate revenue) and that can be
disposed of without detriment to its
business.

Null hypothesis in a regression


model

hypothesis in which one or a set of


independent variables involved in the
regression model are not important to
explain the variation of the phenomenon
in relation to a pre-established
significance level.

Operating Assets

assets that are basic to the companys


operations.

Operating Lease

that which does not substantially transfer


all the risks and benefits incidental to the
ownership of the asset. Leases that are
not operating leases are classified as
financial leases.

Parent Company

an entity that has one or more


subsidiaries.

Perpetual Value

value at the end of the projective period to


be added on the cash flow.

Point of Sale

intangible asset that adds value to


commercial property, due to its location
and expected commercial exploitation.

Population

total market data of the segment to be


analyzed.

Premium for Expected Future


Profitability (goodwill)

future economic benefits arising from


assets not capable of being individually
identified or separately recognized.

Present Value

the estimated present value of


discounted net cash flows in the normal
course of business.

Price

the amount by which a transaction


is performed involving a property, a
product or the right thereto.

Private Area

useful area plus building blocks (such


as walls, pillars, etc.) and elevator
hallway (in specific cases).

Property

something of value, subject to use, or


that may be the object of a right, which
integrates an equity.

Qualitative Variables

variables that cannot be measured


or counted, only ordered or ranked,
according to attributes inherent to

the property (e.g., building standard,


conservation status and quality of the
soil).

Reference Real Estate

Quantitative Variables

Regression Model

variables that can be measured or


counted (e.g., private area, number of
bedrooms and parking spaces).

Range for Real Estate Valuations

range in the vicinity of the point estimator


adopted in the valuation within which
to arbitrate the value of the property,
provided it is justified by the existence of
features that are not contemplated in the
model.

Re (Cost of Equity)

return required by shareholders for the


capital invested.

Real Estate - property, consisting of


land and any improvements incorporated
thereto. Can be classified as urban or
rural, depending on its location, use or to
its highest and best use.
Recoverable Value

the highest fair value of an asset (or cashgenerating unit) minus the cost of sales
compared with its value in use.

Rd (Cost of Debt)

a measure of the amount paid for the


capital earned from third parties, in the
form of loans, financing, market funding,
among others.

market data with features comparable


to the property assessed.

the model used to represent a specific


phenomenon, based on a sample,
considering the various influencing
characteristics.

Remaining Life

a propertys remaining life.

Replacement Cost

a propertys reproduction cost less


depreciation, with the same function
and features comparable to the
property assessed.

Replacement Value for New

value based on what the property


would cost (usually in relation to
current market prices) to be replaced
with or substituted by a new, equal or
similar property.

Reproduction Cost

expense required for the exact


duplication of a property, regardless of
any depreciation.

Reproduction Cost Less


Depreciation

a propertys reproduction cost less


depreciation, considering the state it is
in.

Residual Value

value of new or used asset projected


for a date limited to that in which it
becomes scrap, considering its being
in operation during the period.

Residual Value of an Asset

estimated value that the entity would


obtain at present with the sale of the
asset, after deducting the estimated costs
thereof, if the asset were already at the
expected age and condition at the end of
its useful life.

S
Sample

set of market data representative of a


population.

Scrap Value

market value of a propertys reusable


materials in disabling conditions, without
their being used for production purposes.

Shareholders Equity at Market


Prices
see Assets Approach.

Statistical Inference

part of statistical science that allows


drawing conclusions about the population
from a sample.

Subsidiary

entity, including that with no legal


character, such as an association,
controlled by another entity (known as the
parent company).

Supporting Documentation

documentation raised and provided by


the client on which the report premises
are based.

Survey

evidence of local events through insightful

observations in a property and of the


factors and conditions that constitute or
influence it.

the number of production or similar units


expected to be obtained from the asset by
the entity.

physically existing asset, such as


land, building, machinery, equipment,
furniture and tools.

act or process of determining the value of


an asset.

Tangible Asset

Technical Report

detailed report or technical clarification


issued by a legally qualified and trained
professional on a specific subject.

Total Construction Area

resulting from the sum of the real


private area and the common area
allocated to an independent unit,
defined according to ABNT.

Urbanizable Land

land eligible to receive urban


infrastructure works aiming at
its efficient use, by means of the
subdivision, split or implementation of
a business.

Useful Area

real private area subtracted from the


area occupied by walls and other
building blocks that prevent or hinder
its use.

Useful Economic Life

the period in which an asset is


expected to be available for use, or

Valuation

Valuation Methodology

one or more approaches used in


developing evaluative calculations for the
indication of the value of an asset.

Value at Risk

representative value of the share of


the property one wishes to insure and
that may correspond to the maximum
insurable value.

Value in Use

value of a property in operating


conditions in its present state, such as
the useful part of an industry, including,
where relevant, the costs of design,
packaging, taxes, freight and installation.

Value Plan

the graphic representation or listing of


generic square meter values of land or of
the real estate on the same date.

WACC (Weighted Average Cost of


Capital)

model in which capital cost is determined


by the weighted average of the market

value of capital structure components


(own and others).

FOR OVER 37 YEARS


Value is what moves the world and determining precisely how much it is worth is our business. Apsis is a consulting
firm driven by the constant motivation of understanding the value of things. How much are your company, your
property, or your business intangible assets worth.

MAIN SERVICES
Business Appraisal

Corporate Transactions

Compliance with legal standards:


The Brazilian Corporate Law (Lei das Sociedades Annimas)
The Accounting Ruling Council(Comit dePronunciamento Contbil)
The Judicial Reorganization Law
Corporate Restructuring
Public Share Offering (OPA)
BACEN Circular Letter;
Carta Circular BACEN

Mergers & Acquisitions (M&As);

Economic and financial feasibility analysis;


Appraisal of intangible assets, biological Assets, Properties
for Investment, among others;
Appraisal for Purchase and Sale purposes;
Premium Allocation Law # 12,973;
Intangible Asset appraisals;
Technical Assistance and Forensic Inspection;
Pre-PPA in business merging operations;
PPA - Purchase Price Allocation.

Fixed Asset Mansgement


Inventory with tagging (RFID/Bar Code);
Physical vs. Book Reconciliation;
Bookkeeping and maintenance integration;
Bookkeeping registry collection (Component Management);

Full or partial sales;

OUR CLIENTS

Fundraising from Private Equity funds;

Algar

Concal

Mattos Filho Advogados

Strategic growth advisory through the M&A - Buy-Side


scope;

Aliansce Shopping Centers

CSN

Michelin

ALL - Amrica Latina Logstica

CVC

Oi

Joint Ventures;

Ambev

Duff & Phelps

Ptria Investimentos

Strategic alliances;

Andrade Gutierrez

Embratel

Petrobras

Financial restructuring;

AmstedMaxion

Eneva

Pinheiro Neto Advogados

Finance and real estate: purchase, sale, sale & lease back
and build to suit.

Angra Partners

Energia Sustentvel do Brasil

Procter & Gamble

Arcelor Mittal Brasil

Estcio Participaes

Profarma

Artesia

Femsa

Prumo Logstica Global

Banco Modal

FGV

Restoque

BHG - Brazil Hospitality Group

FGV Projetos

Rexam

Bio Ritmo

FIS Global

Rio Bravo Investimentos

Real Estate Management System - Cubus;

BMA - Barbosa Mssnich Arago

Gvea Investimentos

Samsung

Financial lifespan, residual value, and replacement value;

BNY Mellon

Gerdau

Supergasbras

Real estate portfolio profitability analysis;

Bolsa De Mulher

Getnet

The Carlyle Group

Lease vs. buy and stay vs. go analysis;

BRMALLS

Gol Linhas Areas

Totvs

Forensic Inspection;

BR Properties

Ideiasnet

Ultrapar

Braskem

Inbrands

Unimed Rio

Brasil Pharma

Infoglobo

Veirano Advogados

JBS

Via Varejo

Real Estate Consultancy


Study of project economic and financial feasibility;
Highest & best use study for potential properties;

Execution of projects dedicated to values blueprint review


for cities/municipalities;

Fixed Asset Appraisal for various purposes;

Appraisals for various purposes: Insurance, Bank Guarantees/Dation in Payment, Purchase and Sale Value;

Brasil Brokers
BTG Pactual

Laureate

Vinci Partners

Accounting Requirements (IFRS/CPC/CFC);

Contract renegotiation and revenue portfolio management;

Carrefour

Lavazza

Votorantim

Asset allocation equity control during project execution;

Construction Inspection and Measurements;

CEG

Light

Yamana Gold

Cielo

Magnesita

Warburg Pincus

Claro

Marfrig

Equity Outsourcing;
Specialized Projects / Services for the Telecommunications, Energy and Broadcasting Segments.

Sustainability
Basic Environmental Plan (PBA);
Environmental expert inspection and Due Diligences;
Environmental appraisals to meet Ecuador Principles;

Site Hunter.

Corporate Governance
Consultancy in corporate governance for the alignment
with the best practices;
Implementation of governance bodies through board of
directors and consulting board, including recruitment and
selection of independent members;

Mine Shutdown Plan;

Corporate governance preparation to structure long-term


debt (BNDES) and/or Mergers & Acquisitions (M&A);

Industrial Plant Decommissioning Plans;

Consultancy for Board Secretariat structuring;

Environmental Projects and Plans for specific purposes;

Strategic restructuring of active boards.

ISC (Corporate Sustainability Index).

RIO DE JANEIRO

SO PAULO

Rua da Assembleia, 35 - 12 floor


Centro Rio de Janeiro
RJ 20011-001
Phone: +55 21 2212-6850
E-mail: apsis.rj@apsis.com.br

Av. Anglica, 2503, Conj. 101


Consolao So Paulo
SP 01227-200
Phone: +55 11 3662-5453
+55 11 3662-5722
E-mail: apsis.sp@apsis.com.br

apsis.com.br

BM&FBOVESPA S.A.
Bolsa de Valores,
Mercadorias e Futuros
Valuation Report of BM&FBOVESPA S.A.
Bolsa de Valores, Mercadorias e Futuros e da
CETIP S.A. Mercados Organizados
April 11, 2016

Contents

I. Executive summary
II. Information about the appraiser

III. Information on the Companies


IV. Market information
V. Methodology
VI. Adjusted assets and liabilities
VII. Conclusion
Appendix
1. Appendix I Glossary

2. Appendix II Important notes


3. Appendix III Intangible projections

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

I. Executive Summary (1/3)


Context (source: Client)

BM&FBOVESPA S.A. Bolsa de Valores, Mercadorias e Futuros


(BM&FBOVESPA, or Client) is a company that manages organized
equity and derivatives markets providing registration, clearing, and
settlement services. It acts mainly as a central counterpart, guaranting
financial liquidity for the trades executed in its environments.
Cetip S.A. Mercados Organizados (Cetip or Company) is a
company that provides services of registry, central depository, trading,
clearing and settlement of assets and securities. Through technology
and infrastructure solutions, its proposal is to provide liquidity, security,
and transparency for financial transactions in the Brazilian market.
BM&FBOVESPA and CETIP will be jointly named hereafter as
Companies.

In this sense, to meet the requirements of Clause 264 of Law No. 6404/76
("the Brazilian Corporate Law") in line with the Operation, BM&FBOVESPA
hired KPMG Corporate Finance ("KPMG") to prepare the valuation based on
the Adjusted Net Asset criterion ("PLA") of BM&FBOVESPA and of
Netanya, also considering Cetip.

This Report includes important notes (see Attachment II) relating to the
KPMG Scope of work before the Client.
As requested by BM&FBOVESPA, our report was prepared solely to meet
the requirements of Clause 264 of the Brazilian Corporate Law, in
connection with the operation. We emphasize that the current
understanding of the PLA methodology seen in recent public market
transactions and approved by regulators differs from the current
understanding of accounting pronouncements issued by the Accounting
Pronouncements Committee (Comit de Pronunciamentos Contbeis,
CPC). Thus, the accounting of the Company's equity following the CPC 15 Business Combination parameters will be different from the PLA
presented in this report. This issue was discussed with the Client and its
legal counsels and it was agreed to follow the recent interpretation given
to other market transactions.

BM&FBOVESPA, according to a material fact released on February 19,


2016, approved the submission of a binding proposal to the respective
shareholders of the Companies for the combination of the operations
of the Companies ("a Binding Proposal" or Operation"), which will
result in the following: (i) the ownership by BM&FBOVESPA, of all the
shares of Cetip; and (ii) the receipt, subject to the adjustments
Sources of information
provided for in that material fact, for each common share issued by
Cetip, of 0.8991 common share of BM&FBOVESPA, in addition to R$ We used the audited consolidated financial statements of the Companies,
30.75 (thirty Brazilian Reais and seventy five cents).
as of December 31, 2015, management reports, and documents available
in the virtual data room ("VDR") provided by Cetip to BM&FBOVESPA.
According to that, BM&FBOVESPA intends to conduct the Operation
through a corporate reorganization, using a company called Companhia The work also took into account information of financial and economic
Sao Jose, formerly named as Netanya Empreendimentos e
projections provided by the Client and its financial advisors.
Participacoes S.A. ("Netanya" or "Holding"), to incorporate the shares of
In addition, public market information were used, in order to analyze the
Cetip, and redeem part of the issued shares, and finally, perform the
assumptions used in the evaluation.
merger of the Holding by BM&FBOVESPA.
This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

I. Executive Summary (2/3)

We had access to Cetip projections in a limited way. We used


information about new projects / products supplied by Cetip to
BM&FBOVESPA.

Valuation Criterion

Subsequent Events

We emphasize that this report is based on the position of the


consolidated balance sheet of the Companies as of December 31,
2015. Any relevant facts that may have occurred after the reporting
date which have not been brought to our attention up to the date of
the issuance of this Report may change the estimated value for Cetip
in this Report.
On March 3, 2016, Cetip announced to the market a dividend payment
of R$0.3194231187 per share, which was considered in this work.

We used the net book value adjusted to market prices criterion, as


required in Clause 264 of the Brazilian Corporate Law, described in
more detail in Chapter 5 of this report.

Report Summary

Based on the scope of this Report, and subject to the assumptions,


restrictions and limitations described herein, we estimate the value of
the PLA of BM&FBOVESPA as below:
BM&FBOVESPA
Balance sheet (R$ MM)

Consolidated
(12.31.2015)

Adjustments

Pro forma
balance sheet

Total assets

26,309

(1,799)

24,510

On March 21, 2016, Cetip announced to the market a JCP gross


payment of R$0,0842715836 per share, which was considered in this
work.

Total liabilities
Equity

7,957
18,342

1,575
(3,374)

9,532
14,968

Total liabilities and equity

26,309

(1,799)

24,510

We considered a contribution of capital in cash of BM&FBOVESPA to


Netanya in the amount of R$9,258 million.

Number of actions (*)


Net pro forma equity/share
(*) Source: BS of 12/31/15

We considered the incorporation of Cetip shares by Netanya through


the issuance of 01 common share and 03 preferred shares of Netanya
for each share issued by Cetip, in a total amount of R$11,295 million,
adjusted by the projected CDI for 8 months, according to a Focus
report.

R$

1,749
8.56

We considered the redemption of all preferred shares of Netanya for


R$9,258 million.
KPMG was not hired to update this report after its date of issue.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

I. Executive Summary (3/3)


Report Summary (cont.)

Based on the scope of this Report, and subject to the assumptions, restrictions and limitations described herein, we estimate the value of the PLA
of the Holding as below:
As a subsequent event, we considered a capital contribution in cash of BM&FBOVESPA in Netanya in the amount of R$9,258 million, adjusted by
the projected CDI for 8 months according a Focus report.
We considered the incorporation of Cetip shares by Netanya through the issuance of 01 common share and 03 preferred shares of Netanya for each
share issued by Cetip, in a total amount of R$11,295 million.
We considered the redemption of the preferred shares of Netanya, in the estimated amount of R$9,258 million.

Netanya Empreendimentos e Participaes S.A.


Balance Sheet
(R$ MM)

Opening
balance
12/31/2015

Current Assets

0,131

Total Liabilities

Inssuance of
Capital
Balance
Shares and
contribution after capital
Incorporation
in cash
injections
of Shares
9.257.824

1.007.642

10.265.466

Redemption
of Shares
(9.257.824)

Market
adjustments
Cetip

1.007.642

Proforma
Balance
Sheet
Netanya

119.385

1.127.027

1.801.249

1.801.249

1.801.249

1.980.675

3.781.924

0,131

9.257.824

9.257.824

11.295.468

20.553.292

(9.257.824)

11.295.468

(6.555.787)

4.739.682

Total Liabilities and Equity


n of shares
Pro forma Equity/ share
(*) Source: BM&FBOVESPA

0,131

9.257.824

9.257.824

13.096.717

22.354.541

(9.257.824)

13.096.717

(4.575.112)

8.521.606
265
R$
17,90

Gabriel Carracedo
KPMG Corporate Finance Ltda.
Director

Balance after
Redemption
of Shares

Equity

Fernando A. Mattar
KPMG Corporate Finance Ltda.
Partner

9.257.824

Balance after
Issue and
Incorporation
of Shares

Fabiano Goulart Delgado


KPMG Corporate Finance Ltda.
Manager

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

Contents

I. Executive summary
II. Information about the appraiser

III. Information on the Companies


IV. Market information
V. Methodology
VI. Adjusted assets and liabilities
VII. Conclusion
Appendix
1. Appendix I Glossary

2. Appendix II Important notes


3. Appendix III Intangible projections

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

I . Information about the appraiser (1/5)


The KPMG Network

Anti-money laundering;

Restructuring (services of companys restructuration and consulting


to creditors for debt recovery);

Consulting in PPPs (services related to public private partnerships);

Consulting for financing for private companies;

Consulting related to merger and acquisitions;

Financial valuations.

KPMG is a global network of professional services firms providing


Audit, Tax and Advisory services. We operate in 155 countries and
have 174,000 people working in member firms around the world. The
independent member firms of the KPMG network are affiliated with
KPMG International Cooperative ("KPMG International"), a Swiss entity.
Each KPMG firm is a legally distinct and separate entity and describes
itself as such.
In Brazil, approximately 4,000 professionals work in 22 cities located in
13 States and the Federal District. KPMG in Brazil has offices located
in So Paulo (head office), Belm, Belo Horizonte, Braslia, Campinas,
Cuiab, Curitiba, Florianpolis, Fortaleza, Goinia, Joinville, Londrina,
Manaus, Osasco, Porto Alegre, Recife, Ribeiro Preto, Rio de Janeiro,
Salvador, So Carlos, So Jos dos Campos and Uberlndia.
KPMG brand was created in 1987 from the merge of Peat Marwick
International (PMI) and Klynveld Main Goerdeler (KMG).

Internal process of approval of the report

In Brazil, the area of Deal Advisory, deliver the following professional


services:

Transaction Services (due diligence services during acquisitions);


Forensic Services (services related to investigations and fraud
prevention);

The Corporate Finance segment of KPMG International member firms


sum up to approximately 2,500 professionals, in 167 offices across 82
countries.

The economic and financial valuation of the Companies were


performed by a team of qualified consultants, monitored and reviewed
by the engagement partner, a director and the manager coordinating
the work. In addition, the team was also composed of a partnerreviewer.

Identification and qualification of the involved professionals

Fernando Afonso C. S. B. Mattar, Gabriel Carracedo and Fabiano


Goulart Delgado coordinated and participated in the development of
this report. Paulo G. M. Coimba was the partner reviewer of the work.
You can find the curricula vitae of these professionals on pages 9 and
10.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

I . Information about the appraiser (2/5)


Appraiser declarations

KPMG Corporate Finance declares, in April 11, 2016, that:


It does not entitle any securities of the Client nor the Company, nor do
its partners, directors, officers, directors, controllers or persons related
to them;

There are no commercial and credit relations that could impact the
Report;

There is no conflict of interest that impairs the necessary


independence required for the performance of this work.

For the services referring to the preparation of this Report,


independently of the success or failure of the Operation, KPMG will
receive, from BM&FBOVESPA, a fixed remuneration of R$ 120,000.00
(One hundred and twenty thousand Reais), net of taxes.

On the date of this Report, in addition to the relationship concerning


the Report mentioned above, KPMG has the following ongoing work in
the context of the operation, which do not impact on the analysis in
the preparation of this report:
a)

In addition to the relationships related to the operation mentioned


above, KPMG Corporate Finance Ltda. and other companies
operating under the KPMG brand in Brazil declare they have
received remuneration of R$ 212,500.00 (Two hundred and twelve
thousand, five hundred Reais) from BM&FBOVESPA for the
provision of professional services related to general advice, in the
twelve months preceding the filing of this Report, and do not
impact its drafting.

Due diligence, financial, fiscal and labor in the total amount of


approximately R$ 510,000.00 (Five hundred and ten thousand
Reais);

b) Valuation report using the criterion of adjusted net asset, worth a


total amount of approximately R$ 100,000.00 (One hundred
thousand Reais); and
c)

Advice on the allocation of pre-purchase price (pre-PPA) in the


amount of R $ 30,000.00 (Thirty thousand Reais).

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

I . Information about the appraiser (3/5)


Name

Fernando A. C. S. B. Mattar

Position

Partner, Corporate Finance, Brazil

Qualifications

Post Graduation in Business Administration Fundao Getlio Vargas FGV/ SP


Undergraduate degree in Mechanical Engineering - Mackenzie - SP

Experience

Since 1995 works in in business consulting, conducting projects in the financial restructuring of
companies, economic-financial, mergers and acquisitions and start-up companies and business units.
Started at KPMG in 2006. Before he served as manager of Arthur Andersen and worked as manager of
business development for the Cisneros Group in Latin America.

Sector of experience Pharmaceutical, Entertainment, Internet Services, Consumer Products (food, beverage, pulp and paper
etc..), Telecommunications and Retail Companies.

Name

Gabriel Chamadoira Carracedo

Position

Director, Corporate Finance, Brazil

Qualifications

Post Graduation in Finance iBMEC/ SP


Graduate degree in Business Administration Universidade Salvador - Bahia

Experience

Started at KPMG in 2003, Gabriel has a strong experience in financial valuation, trough different
methodologies.

Sector of experience

Banking, Telecommunications and IT (software and hardware), Entertaining, Publishing, Aviation,


Education, Retail. Companies.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

I . Information about the appraiser (4/5)


Name

Fabiano Goulart Delgado

Position

Manager, Corporate Finance, KPMG Curitiba - Brazil

Qualifications

Specialization in Controllership at UFPR-PR


Graduated in Economics at UFMS-MS

Experience

Works in the accounting, auditing and consulting areas for over six years. Fabiano has
experience in financial advisory services, including financial planning, business plan
development and project analysis. Acts in mergers and acquisitions area, with a greater focus on
valuation models (valuation) and mergers and acquisitions.

Sector of experience Banking, real estate, power, agribusiness, foods and beverages, retail and logistic.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

10

I . Information about the appraiser (5/5)

Presented below are some of KPMGs experiences in companys valuations in the last years:

2016

2015

2015

2015

vora S.A.

Eneva S.A.

Eneva S.A.

Banco Santander S.A.

Economic and Financial Valuation


of vora in its Public Offering
(Deslisting)

Economic and Financial Valuation


of Eneva Participaes S.A. e
BPMB Parnaba S.A.

Economic and Financial Valuation


of Parnaba Gs Natural S.A.

Economic and Financial Valuation


of Banco Santander

ABCD

ABCD

ABCD

ABCD

2014

2013

2013

2013

Banco Santander S.A.

Com panhia De Bebidas Das


Am ericas - Am bev

Banco Santander (Brasil) S.A.

Banco Santander (Brasil) S.A.

Economic and Financial Valuation


of BR Properties

Economic and Financial Valuation


of CND - Cerveceria Nacional
Dominicana

Economic and Financial Valuation


of Webmotors

Economic and Financial Valuation


of Tecban

ABCD

ABCD

ABCD

ABCD

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

11

Contents

I. Executive summary
II. Information about the appraiser

III. Information on the Companies


IV. Market information
V. Methodology
VI. Adjusted assets and liabilities
VII. Conclusion
Appendix
1. Appendix I Glossary

2. Appendix II Important notes


3. Appendix III Intangible projections

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

12

I I Information on the Companies (1/10)


BM&FBOVESPA

Overview of BM&FBOVESPA (source: Client)

BM&FBOVESPA is the main Brazilian institution of intermediation for


operations in the capital market by developing, implementing and
providing systems for stock trading, stock and financial derivatives,
fixed income securities, government securities, currencies, and
agricultural commodities. It was established in 2008 with the
integration of BM&F (futures market exchange and derivatives) and
Bovespa (stock exchange), and is headquartered in Sao Paulo - SP.

The chronology of the main events that occurred in the history of


BM&FBOVESPA are explained below:
1890

Establishment of the Free Exchange Foundation, closed in 1891.

1895

Establishment of the Public Funds of Sao Paulo Stock Exchange.


Negotiations on government bonds and shares were registered in
huge stone blackboards.

1967

Emergence of brokerage firms and trading operators. The stock


exchange is called Sao Paulo Stock Exchange (Bolsa de Valores de
So Paulo, Bovespa).

The simplified structure of BM&FBOVESPA is shown below:


1986

Framework

1997
Vontobel

Capital
World
Investors

Blackrock

7.67%

Oppenheimerfunds

5.09%

7.37%

Others
Asset
Management
7.16%

Treasury
2002

71.14%

1.57%

2007

2008
100%
BM&F
(UK)
Ltd.

BM&F
(USA)
INC.

100%
100%
99.99%
99.99%
Bolsa de
BM&FBOVESPA
Banco
Instituto
Valores
Superviso de
BM&FBOVESPA BM&FBOVESPA
do Rio de
Mercados
Janeiro

2010
2014

Beginning sessions of the Mercantile & Futures Exchange (Bolsa


Mercantil & de Futuros, BM&F) and its Derivatives Clearinghouse.
Signing of agreement between BM&F and the Brazilian Futures
Exchange (Bolsa Brasileira de Futuros, BBF), with the objective of
consolidating the entity as the main trading center in Mercosur
derivatives.
Beginning of the activities of the BM&F Foreign Exchange
Clearinghouse and the Brazilian Commodities Exchange; and
acquisition of equity the securities of the Rio de Janeiro Stock
Exchange (Bolsa de Valores do Rio de Janeiro, BVRJ).
Demutualization of Bovespa, which is now called Bovespa Holding
and of the BM&F, which is called BM&F S.A. Bovespa Holding S.A.
and BM&F S.A. obtain the listed company registration and launch a
public offering of shares on the Novo Mercado on October 26, 2007
and November 30, respectively.
Integration of Bovespa Holding SA and BM&F S.A., and creation of
BM&FBOVESPA SA Securities, Commodities and Futures
Exchange.
Beginning of the trading of the BM&FBOVESPA S.A. In the Novo
Mercado under the code BVMF3.
Beginning of the global preference strategic partnership with the
CME Group.
Implementation of the derivative phase of the new integrated
clearinghouse ("Clearing BM&FBOVESPA").
Source: BM&FBOVESPA

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

13

I I Information on the Companies (2/10)


BM&FBOVESPA
Income statement Consolidated (source: audited income statement)
IS Consolidated - R$ '000
Net Revenue

2013
2,126,638

2014
2,030,433

2015
2,216,634

Expenses
General and administrative
EBITDA
Depreciation and amortization
EBIT
Financial revenues
Financial expenses
Impairment
Equity in income of investees
Discontinuity of the Equity method
Gain on disposal of investment in associate
EBT
IR / CSLL accounting period
IR / CSLL deferred
Net income from continuing operations
Net income from discontinued operations
Net profit

(671,280)
(671,280)
1,455,358
(119,534)
1,335,824
298,868
(118,173)
171,365
1,687,884
(60,097)
(546,491)
1,081,296
(349)
1,080,947

(684,937)
(684,937)
1,345,496
(119,133)
1,226,363
361,761
(153,604)
212,160
1,646,680
(104,159)
(556,800)
985,721
(7,807)
977,914

(739,799)
(739,799)
1,476,835
(110,857)
1,365,978
745,707
(236,911)
(1,662,681)
136,245
1,734,889
723,995
2,807,222
(45,558)
(558,206)
2,203,458
2,203,458

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

14

I I Information on the Companies (3/10)


BM&FBOVESPA
Balance sheet Consolidated (source: audited balance sheet)
BS Consolidated - R$ '000
Asset
Current asset
Cash and cash equivalents
Financial investments
Accounts receivable
Other receivables
Taxes recoverable and prepaid
Prepaid expenses
Non-current asset
Financial investments
Deferred income tax and social contribution
Judicial deposits
Other receivables
Prepaid expenses
Fixed
Investments
Property and equipment
( - ) Accumulated depreciation
Intangible assets
( - ) Accumulated amortization

2013
25,896,659
4,319,483
1,196,589
2,853,393
54,227
79,272
120,396
15,606
1,135,424
820,778
203,037
108,665
2,200
744
20,441,752
3,346,277
908,282
(485,132)
16,955,594
(283,269)

2014
25,263,482
2,785,239
500,535
1,962,229
57,571
72,319
166,154
26,431
1,522,541
1,392,763
120,285
2,200
7,293
20,955,702
3,761,300
949,367
(528,181)
17,130,039
(356,823)

2015
26,308,895
8,673,786
440,845
7,798,529
75,129
157,974
175,011
26,298
1,961,426
1,815,620
140,567
2,200
3,039
15,673,683
30,635
924,124
(471,030)
15,624,991
(435,037)

BS Consolidated - R$ '000
Liabilities
Current liabilities
Collateral for transactions
Earnings and rights on securities in custody
Suppliers
Salaries and social charges
Provision for taxes and contributions payable
Income tax and social contribution
Interest payable on debt issued abroad
Dividends and interest on capital
Other liabilities
Non-current liabilities
Debt issued abroad
Deferred income tax and social contribution
Provision for contingencies and legal obligations
Obligation with post-retirement health care benefit
Other liabilities
Shareholders' equity
Capital
Capital reserve
Revaluation reserves
Revenue reserves
Treasury shares
Other comprehensive income
Proposed additional dividend
Non-controlling interest

2013
25,896,659
2,710,846
2,072,989
49,925
45,474
74,911
25,979
1,433
42,129
1,428
396,578
3,886,921
1,426,193
2,295,774
88,592
25,940
50,422
19,284,229
2,540,239
16,056,681
21,360
794,773
(955,026)
680,499
145,703
14,663

2014
25,263,482
1,891,833
1,321,935
46,289
66,241
72,273
25,413
2,129
47,368
1,687
308,498
4,383,246
1,619,123
2,584,525
102,989
28,371
48,238
18,979,509
2,540,239
15,220,354
20,774
990,770
(983,274)
1,004,705
185,941
8,894

2015
26,308,895
2,096,785
1,338,010
49,224
42,708
117,041
34,551
4,944
70,181
2,902
437,224
5,859,897
2,384,084
3,272,276
119,054
26,122
58,361
18,342,099
2,540,239
14,300,310
20,188
1,950,980
(365,235)
(104,383)
10,114

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

15

I I Information on the Companies (4/10)


Financial indicators - BM&FBOVESPA

The historical financial indicators of BM&FBOVESPA can be found below. (source: audited financial statements)
Net revenues in R$ thousand

EBITDA in R$ thousand
68.43%

2,126,638

2,030,433

2013

2014

66.27%

66.63%

1,455,358

1,345,496

1,476,835

2013

2014

2015

2,216,634

2015

EBITDA

% Margin EBITDA

Net profit in R$ thousand

2,203,458
1,080,947

977,914

2013
2014
2015
This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

16

I I Information on the Companies (5/10)


Cetip

Overview of CETIP (Source: public information)

Cetip (Ticker: CTIP3) was established in 1984 by the National Monetary


Council, in the city of Rio de Janeiro - RJ, and currently manages
markets relating to trading and listing of securities, public and private
fixed income securities, and OTC derivatives. Cetip is the largest
depositary of private fixed income securities in Latin America and the
largest private asset clearinghouse of the Brazilian financial market. Its
performance provides the necessary support to the entire cycle of
transactions with fixed income securities, securities and OTC
derivatives.
The simplified structure of Cetip is shown below:
Framework

Ice Overseas
Limited

Blackrock. Inc.

Others

81.52%

5.28%

12.00%

Shares in
Treasury

The chronology of the main events that occurred in the history of Cetip
are explained below:
1984

Creation of Cetip as a nonprofit entity.

1986

Beginning of activities of Cetip.

1988

2008

Demutualization and creation of Cetip S.A.

2009

Advent becomes shareholder of Cetip, with a share stake in the


capital of 32%.
IPO and beginning of the trading of the shares on the Novo
Mercado of BM&FBOVESPA.

2010

Acquisition of GRV Solutions, which currently represents the Cetip


Financing Unit.

2011

Repositioning of the Cetip brand and implementation of new logo


and product architecture.
IntercontineltalExchange (ICE) becomes a shareholder of the
company, with a 12.4% stake.
Launch in partnership with Clearstream, of the Cetip Collateral.

1.20%

2012
100.00%
GRV Solutions

100%
Cetip Lux S..r.l.

Agreement with Andima (the current Brazilian Association of


Financial Markets and Capital (Associao Brasileira das Entidades
dos Mercados Financeiro e das Capitais, Anbima)) to operate the
National Debentures System (Sistema Nacional de Debntures,
SND)

Launch in partnership with ICE, of the Cetip business platform |


Trader Launch of Cetip | InfoAuto PagamentosIngresso of Cetip's
shares in Ibovespa and IBrX50.

100%
Cetip Info
Tecnologia S.A.

2013

Reform of the bylaws to improve the corporate governance


structure of Cetip.
Launch, in partnership with the FNC, of the real estate valuation
platform
Source: Cetip website

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

17

I I Information on the Companies (6/10)


Cetip
Income statement Consolidated (source: audited income statement)
IS Consolidated - R$ '000
Net Revenue
Expenses
General and administrative
Other net operacional revenues
Other net operacional expenses
EBITDA
Depreciation and amortization
EBIT
Financial revenues
Financial expenses
Equity in income of investees
EBT
IR / CSLL accounting period
IR / CSLL deferred
Net profit

2013
908,575
(276,176)
(275,359)
31
(848)
632,399
(75,790)
556,146
33,595
(77,174)
(463)
512,567
(90,447)
(61,092)
361,028

2014
1,015,885
(316,666)
(315,634)
584
(1,616)
699,219
(83,108)
616,825
59,069
(117,760)
714
558,134
(111,193)
(19,822)
427,119

2015
1,125,430
(354,941)
(350,248)
144
(4,837)
770,489
(92,771)
678,683
294,476
(405,904)
965
567,255
(129,730)
60,081
497,606

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

18

I I Information on the Companies (7/10)


Cetip
Balance sheet Consolidated (Source: audited balance sheet)
BS Consolidated - R$ '000
Asset
Current asset
Cash and Cash Equivalents
Financial investments - non restricted
Accounts receivable
Recoverable taxes and contributions
Prepaid expenses
Other receivables
Non-current asset
Financial investments - non restricted and restricted
Derivatives
Judicial deposits
Prepaid expenses
Other receivables
Fixed
Investments
Property and equipment
( - ) Accumulated depreciation
Intangible assets
( - ) Accumulated amortization

2013
2,735,651
505,117
475
381,685
93,073
16,679
7,011
6,194
85,768
79,746
162
3,744
2,116
2,144,766
5,497
109,683
(68,861)
2,307,087
(208,640)

2014
2,998,539
740,930
551
590,349
106,735
17,431
7,784
18,080
135,944
128,197
137
5,526
2,084
2,121,665
6,211
128,612
(78,681)
2,347,452
(281,929)

2015
3,497,064
1,007,642
2,438
801,956
117,658
63,917
7,084
14,589
373,958
248,553
120,663
181
2,659
1,902
2,115,464
6,873
126,771
(79,086)
2,423,547
(362,641)

BS Consolidated - R$ '000
Liabilities
Current liabilities
Suppliers
Labor obligations and social charges
Taxes payable
Income tax and social contribution
Dividends and interest on own capital payable
Debentures issued
Financial instruments
Loans and finance lease obligations
Deferred revenues
Other liabilities
Non-current liabilities
Suppliers
Deferred income tax and social contribution
Provision for contingencies and legal obligations
Debentures issued
Loans and finance lease obligations
Deferred revenues
Shareholders' equity
Capital
Capital reserves
Carrying value adjustments
Income reserves
Treasury shares
Retained earnings
Additional dividends proposed

2013
2,735,651
337,300
25,969
48,195
12,837
787
45,858
156,053

2014
2,998,539
240,225
23,496
56,682
14,902
2,181
80,130
17,427

3,507
44,044
50
708,788
3,662
176,052
3,067
474,774
9,291
41,942
1,689,563
586,428
533,193
(247)
405,655
(5,031)
169,565

2,608
42,754
45
1,012,361
2,073
195,785
4,536
498,175
271,153
40,639
1,745,953
635,937
533,821
(413)
464,715
111,893

2015
3,497,064
340,198
54,416
68,411
18,183
8,435
110,261
21,431
11,572
7,113
40,223
153
1,461,051
8,046
136,465
5,933
498,849
775,019
36,739
1,695,815
658,416
527,834
(8,313)
539,388
(104,502)
82,992

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

19

I I Information on the Companies (8/10)


Financial indicators - Cetip

The historical financial indicators of Cetip can be found below. (Source: audited financial statements)
Volume

Net revenues per segment in R$ thousand


8,193

7,751

7,611
6,757

6,393
5,312

2013

2014

Volume records securities unit (R$ bi)

2015

690,132

786,642

950,495

2013

2014

2015

Financing unit

Vehicles financed ('000)

Securities unit

Net profit in R$ thousand

EBITDA in R$ thousand
69.60%

68.83%

68.46%

632,399

699,219

770,489

2013

2014
EBITDA

412,579

436,216

384,024

361,028

427,119

497,606

2013

2014

2015

2015

% Margin EBITDA

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

20

I I. Information on the Companies (9/10)


Netanya Empreendimentos e Participaes S.A. (Holding)
Overview of the Holding (Source: audited financial statements)

Netanya is a holding company created to incorporate the shares of Cetip


and then to be merged with BM&FBOVESPA if the Operation is realized.
Following, the income statement of the Holding on December 31, 2015.

Income Statement - Holding (Source: audited financial statements)


IS Consolidated - R$ '000
Net Revenue
Expenses
General and administrative
EBITDA
Depreciation and amortization
EBIT
Financial revenues
Financial expenses
Equity in income of investees
EBT
IR / CSLL accounting period
IR / CSLL deferred
Net profit

2015
(1,181)
(1,181)
(1,181)
(1,181)
(1,181)
(1,181)

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

21

I I. Information on the Companies (10/10)


Netanya Empreendimentos e Participaes S.A. (Holding)
Balance sheet Holding (Source: audited balance sheet)
BS Consolidated - R$ '000
Asset
Current asset
Cash and Cash Equivalents
Financial investments - non restricted
Accounts receivable
Recoverable taxes and contributions
Prepaid expenses
Other receivables
Non-current asset
Financial investments - non restricted and restricted
Derivatives
Judicial deposits
Prepaid expenses
Other receivables
Fixed
Investments
Property and equipment
( - ) Accumulated depreciation
Intangible assets
( - ) Accumulated amortization

2015
0.131
0.131
0.131
-

BS Consolidated - R$ '000
Liabilities
Current liabilities
Suppliers
Labor obligations and social charges
Taxes payable
Income tax and social contribution
Dividends and interest on own capital payable
Debentures issued
Financial instruments
Loans and finance lease obligations
Deferred revenues
Other liabilities
Non-current liabilities
Suppliers
Deferred income tax and social contribution
Provision for contingencies and legal obligations
Debentures issued
Loans and finance lease obligations
Deferred revenues
Shareholders' equity

2015
0.131
0.131

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

22

Contents

I. Executive summary
II. Information about the appraiser

III. Information on the Companies


IV. Market information
V. Methodology
VI. Adjusted assets and liabilities
VII. Conclusion
Appendix
1. Appendix I Glossary

2. Appendix II Important notes


3. Appendix III Intangible projections

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

23

IV. Market information (1/6)


Markets and financial instruments
Overview (source: Cetip website)

The financial system is the set of institutions and financial instruments


that enables the transfer of resources belonging to final offerers to the
final takers of resources, and creates conditions for the securities to be
marketable.

Among the institutions that can be highlighted within the financial


system, there are the custodian agencies.
Custody agencies are organized and centralized markets, to provide an
appropriate environment for conducting business and the pricing of
securities issued by companies, funds and other fund raising entities.
In Brazil, two of the main players of the financial system are:

BM&FBOVESPA, whose activities are focused on the equity


market, bonds, futures, and the options market.
Cetip, which is directed to the custody of fixed income investments
(such as CDB, LCI, LCA, among others), and derivatives;

Stock Exchange
Listed companies (source: WFE)

The stock exchanges that have the largest number of listed


companies, whether they are domestic or foreign, are the Indian stock
exchange BSE India Limited and the Spanish BME Spanish Exchanges,
which together include over 9,500 publicly traded listed companies.

The chart with the stock exchanges that have more listed companies
is presented next:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Stock exchange
BSE India Limited
BME Spanish Exchanges
TMX Group
Japan Exchange Group
Nasdaq - US
London SE Group
NYSE
Australian Securities Exchange
Korea Exchange
Hong Kong Exchanges and Clearing
National Stock Exchange of India
Shenzhen Stock Exchange
Shanghai Stock Exchange
Euronext
Warsaw Stock Exchange
Bursa Malaysia
Taiwan Stock Exchange Corp.
NASDAQ OMX Nordic Exchange
Singapore Exchange
Taipei Exchange
Stock Exchange of Thailand
Deutsche Boerse
Indonesia Stock Exchange
Tel-Aviv Stock Exchange
Borsa Istanbul
Johannesburg Stock Exchange
Hanoi Stock Exchange
BM&FBOVESPA

Listed companies
5,884
3,647
3,537
3,505
2,848
2,658
2,393
2,080
1,969
1,874
1,800
1,751
1,084
1,059
905
901
897
822
771
718
640
611
524
459
393
384
380
358

Source: WFE

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

24

IV. Market information (2/6)


Markets and financial instruments
Traded volume (source: WFE)

Capitalization volume (source: WFE)

According to the World Federation of Exchanges (WFE) in terms of


volume, in February 2016, the two largest stock exchanges are
American: the New York Stock Exchange (NYSE) and the BATS Global
Markets, which together own almost 40% of the trading volume
share.
The table below represents the February 2016 volume values with the
variation compared to the previous year, as well as the global market
share:

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

Stock exchange
NYSE
BATS Global Markets - US
Nasdaq - US
Shenzhen Stock Exchange
Shanghai Stock Exchange
Japan Exchange Group
BATS Chi-x Europe
London SE Group
Euronext
Korea Exchange
Deutsche Boerse
Hong Kong Exchanges and Clearing
TMX Group
SIX Swiss Exchange
BME Spanish Exchanges
NASDAQ OMX Nordic Exchange
Australian Securities Exchange
National Stock Exchange of India
Taiwan Stock Exchange Corp.
Saudi Stock Exchange (Tadawul)
Borsa Istanbul
Johannesburg Stock Exchange
BM&FBOVESPA
Stock Exchange of Thailand
Singapore Exchange

Source: WFE

Year-to-date (jan / feb 2016)


3,179,269
2,695,327
2,239,288
1,704,741
1,134,239
976,658
542,739
419,896
343,002
255,713
244,488
205,301
185,806
165,371
141,991
134,966
122,384
101,779
72,920
63,118
58,804
57,420
53,108
44,370
33,461

% change / 2015 (in USD)


13.1%
14.7%
3.7%
26.3%
-41.4%
16.2%
0.5%
-5.6%
-2.0%
2.3%
-7.0%
-18.3%
-18.7%
-20.1%
-18.0%
5.2%
-3.2%
-18.9%
-15.5%
-33.1%
-24.7%
2.4%
-44.5%
-33.1%
-2.1%

% Market share
21.10%
17.69%
14.54%
9.82%
6.43%
7.20%
3.68%
2.93%
2.41%
1.56%
1.66%
1.14%
1.31%
1.18%
0.87%
0.98%
0.93%
0.68%
0.39%
0.44%
0.42%
0.41%
0.39%
0.29%
0.23%

The stock exchanges exhibited an average plunge of 13.5% in the first


quarter of 2016 when compared to the same period last year.
The stock exchanges with the largest market cap are American: NYSE
and Nasdaq, as shown in the next chart:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

Stock exchange
NYSE
Nasdaq - US
Japan Exchange Group
London SE Group
Shanghai Stock Exchange
Euronext
Hong Kong Exchanges and Clearing
Shenzhen Stock Exchange
TMX Group
Deutsche Boerse
SIX Swiss Exchange
BSE India Limited
National Stock Exchange of India
NASDAQ OMX Nordic Exchange
Korea Exchange
Australian Securities Exchange
Johannesburg Stock Exchange
Taiwan Stock Exchange Corp.
BME Spanish Exchanges
Singapore Exchange
BM&FBOVESPA
Moscow Exchange
Bolsa Mexicana de Valores
Indonesia Stock Exchange
Bursa Malaysia

February-16
17,042,898
6,633,019
4,368,325
3,464,634
3,461,936
3,189,716
2,763,808
2,611,234
1,617,708
1,540,006
1,370,484
1,250,896
1,227,535
1,197,538
1,156,329
1,074,347
875,752
745,766
650,517
619,741
466,041
400,342
383,875
378,940
378,911

% change / 2015 (in USD)


-12.6%
-9.0%
-8.0%
-18.6%
-14.7%
-10.1%
-18.3%
7.7%
-20.0%
-17.2%
-13.3%
-26.1%
-25.7%
-7.6%
-9.3%
-20.3%
-11.8%
-15.9%
-35.6%
-17.6%
-41.1%
-14.2%
-20.5%
-9.8%
-19.0%

Source: WFE

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

25

IV. Market information (3/6)


Markets and financial instruments
Custody (source: Cetip)

Amount invested in fixed income (in R$ bi)

Changes in the market and in the large volume of securities traded


every day permanently changed the landscape of the custody world.
The vast majority of assets custodies are held in book-entry form, both
for government securities assets, and private securities.

Fixed income assets are bonds that pay a certain compensation in


defined periods, which can be determined at the time of the
investment or upon redemption.

2,639

The major custodians in the international market are the DTCC (United
States), Euroclear, and Clearstream (Europe).

2,564

2,561

2,562
2,519

2,534

2,532

May-15

Jun-15

2,579

2,582

Jul-15

Aug-15

2,654

2,644

Nov-15

Dec-15

2,625

2,658

Brazilian fixed income market (source: Cetip)

Cetip is the main service provider of the custody market for private
fixed income.
The fixed income market reached, in January 2016, US$ 2,658 billion
of actual value invested in their segments, an increase of 3.69% when
compared to January 2015.

Jan-15

Feb-15

Mar-15

Apr-15

Sep-15

Oct-15

Jan-16

Source: Cetip

The table below shows the segmentation of the fixed income


investments in January 2016:

Next, there is the evolution of the fixed income market between


January / 2015 and January / 2016:

19%
35%

29%

2%
2%

13%

Bank funding (CDB, LF and DPGE)

Agricultural securities (LCA, CRA and CDCA)

Debt securities (NCE, CCB and CCE)

Real estate securities (LCI, CRI and CCI)

Debentures and promissory notes

DI

Source: Cetip

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

26

IV. Market information (4/6)


Markets and financial instruments
Brazilian credit market (source: Bacen)

Brazilian credit market (cont.)

The relationship between the balances of credit and the gross


domestic product (GDP) of the countries is a reference measure of the
economic conditions and of the the depth of a countrys market.

The segmentation of credit, both for individuals and for legal entities,
according to the Central Bank, is presented below:

Below is the balance of credit operations between January 2015 and


January 2016, as well as their respective percentage in relation to the
Brazilian GDP.

21.25%

26.63%

53.2%
52.8% 52.9%

53.3% 53.4% 53.4%

53.6%

53.8%

54.0%

Rural

54.0%

Vehicles
0.17%

53.0%

0.95%

Credit card
17.98%

5.65%

3,061 3,062

3,082

3,100 3,110

3,135

3,164 3,157 3,177

3,013 3,024

7.22%

3,199

Others
14.47%

Source: Bacen

Brazilian credit market (vehicles) (source: Bacen and Cetip)

Credit balance (in R$ bi)


Source: Bacen

Acquisition of goods
Microcredit

5.69%

3,220

Real estate

Personal Credit

54.5%
54.0%

BNDES

% GDP

The credit for vehicles operates as follows:

Financing, i.e., a loan for financing vehicles;


Leasing, where the lender is the owner of the property, and the
possession and use are of the lessee; and
Consortium, where one or more individuals participate in a common
activity or resource sharing to achieve a common goal.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

27

IV. Market information (5/6)


Markets and financial instruments

Below, please see the most used modes during the period of 2016:

The interest rates for vehicle financing rose in the last 12 months due
to the current political and economic conditions in Brazil, as shown
below:
28%

3%
16%

24%
21%

Financing

25%
21%

25%
21%

25%
21%

25%
22%

25%

25%

21%

21%

25%
21%

26%

26%

21%

22%

26%
22%

26%
22%

23%

Consortium
Others

81%

Source: Cetip

The values obtained for vehicle financing declined from January 2015
to January 2016, as shown below:
184

182

180

178

175

173

171

169

167

165

163

161

160

Natural person

Legal entity

Source: Bacen

19

18

Source: Bacen

18

18

18

17

Natural person (R$ bi)

17

17

17

17

17

16

16

Legal entity (R$ bi)

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

28

IV. Market information (6/6)


Macroeconomics
Macroeconomic assumptions (Source: Bacen and Economist)

Brazilian inflation

Exchange rate R$ / US$

The inflation rate (IPCA) estimated for the 2016-2025 period is shown
in the chart below. We can observe a fall between the years 2016 and
2019, according to the expectations of the institutions consulted by the
Central Bank (Central Bank of Brazil)

9,5%
7,5%

5,50
5,00
4,50
4,00
3,50
3,00
2,50
2,00

10,7%

11,5%

7,4%

6,4%

5,9%
5,5% 5,2% 5,1% 5,1% 5,1% 5,1% 5,1% 5,1%

5,9%

5,5%
3,5%

The American inflation rate estimated for the period between 2016 and
2025 is shown below. In the chart are observed growth of price indices
in the years 2016 and 2017 in relation to 2015. In the long-term the
trend is stabilizing, according to projections made by The Economist.
8,0%
6,0%
4,0%
2,0%
0,0%

1,5%
1,3%
0,7% 0,7%

4,79 4,94
4,54 4,65
4,40
4,19 4,20 4,26
3,95 4,11
3,33

2,35
2,16

Brazilian GDP

American inflation

The average annual exchange rate for the 2016-2025 period is


presented below. We can observe an increase in market expectations
about the exchange rate. After 2021, the exchanged rate was
considered as the difference between Brazilian and American inflation.

2,0% 2,4%

1,5% 1,8% 1,8% 1,8% 1,8% 1,8% 1,8%

The Brazilian GDP projection estimated by institutions consulted by the


Central Bank between 2015 and 2018 is a decrease in the biennium
2015-2016, followed by a slow growth with a tendency to stabilize.

2,3%
2,0%
0,1%
1,0%
0,0%
-1,0%
-2,0%
-3,0%
-3,8%
-4,0%

1,5% 1,9% 2,0% 2,0% 2,0% 2,0% 2,0% 2,0%


0,3%

-3,7%

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

29

Contents

I. Executive summary
II. Information about the appraiser

III. Information on the Companies


IV. Market information
V. Methodology
VI. Adjusted assets and liabilities
VII. Conclusion
Appendix
1. Appendix I Glossary

2. Appendix II Important notes


3. Appendix III Intangible projections

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

30

V. Methodology (1/5)

Adjusted net asset

The valuation based on the net asset is the measurement of the net
assets or net worth, at book value, plus gain or loss arising from
certain assumptions to obtain the market values of assets and
liabilities.

Market price (or fair value), according to the Brazilian corporate law:

for raw materials and goods stored in warehouses, it is the cost for
which they can be replaced by purchase in the market;

for assets or rights for sale, it is the net price realization by sale in
the market, less taxes and other expenses necessary for the sale,
and the profit margin;

for investments, it is the net amount by which they can be sold to


third parties.

For financial instruments, the value that can be obtained in an active


market, due to a non-compulsory transaction carried out between
unrelated parties; and in the absence of an active market for a given
financial instrument:

(i) the amount that can be obtained in an active market with


the trading of other financial instruments with similar terms,
risk, and nature;

(ii) the net present value of future cash flows for financial
instruments of similar terms, risk, and nature; or

(iii) the amount obtained through mathematical and statistical


models for pricing financial instruments.

(iv) we emphasize that the current understanding of the PLA


methodology seen in recent public market transactions and
approved by regulators differs from the current understanding of
the accounting pronouncements issued by the Accounting
Pronouncements Committee (Comit de Pronunciamentos
Contbeis, CPC). Thus, the accounting of the Company's equity
following the CPC - 15 Business Combination parameters will be
different from the PLA presented in this report. This issue was
discussed with the Client and its legal counsels and it was agreed
to follow the recent interpretation given to other market
transactions.

Approach used in the evaluation of intangible assets

Evaluation of the platform was done through the profitability approach


(Income Approach) by the Multi Period Excess Earnings Method
(MPEEM), due to the possibility of assigning the generated cash flow
directly to the identified asset.
The evaluation of the brand was done through the Income Approach
approach, with the avoided royalty (Relief from Royalty) method. This
method assumes that intangible assets have a fair value based on the
royalty income that can be attributed to them. This income involving
royalties represents the economies of the asset owner - the owner
does not need to pay royalties to a third party for the license to use the
intangible asset. The estimation of the royalties income consists of
two steps:

the determination of the revenues attributable to the asset; and


the determination of the appropriate royalty fee.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

31

V. Methodology (2/5)
Discount rate
Discount rate

Ke
Cost of Equity
=

Establishing the discount rate is a fundamental stage of the economic


valuation. This single factor reflects aspects of a subjective nature,
varying from one investor to another, such as cost of opportunity, and
the individual perception of investment risk.

Rf / (1+Ia) * (1+ lb)


+

The Weighted Average Cost of Capital (WACC) used was an


appropriate parameter to calculate the discount rate to be applied to
the Companys cash flows. The WACC methodology considers a
variety of financing components used by companies to finance their
cash needs, including debt and equity cost.

x (E[Rm] Rf)
+

Rb
+
Rs

WACC = (E/(E + D))*Ke + (D/(E + D))*Kd


Where:
E = Total Equity;
D = Total Debt;
Ke = Cost of Equity; e

Kd = Cost of Debt.

Rf = Average Risk-Free Return;


= Beta - Market Risk Coefficient ;
E[Rm] = Average Long Term Return Obtained in the Stock Market;
E[Rm] - Rf = Market premium;
Rb = Country Risk;

The cost of equity may be calculated with the Capital Assets Pricing
Model (CAPM). The equity cost is calculated according to the following
formula:

Rs = Size premium;
Ia = USA Long Term Inflation;
Ib = Brazil Long Term Inflation;

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

32

V. Methodology (3/5)
Discount rate

The components used to calculate the discount rate of the Company


are detailed as follows:

American inflation (Ia)

Risk free rate (Rf)

In order to quantify the average risk free return (Rf), we considered the
average return of the American 30-year Treasury Bond (T-Bond) for 24
months before March 24, 2016, which was 3.0%. (source:
Bloomberg).

Beta Calculation

For the long term stock market risk premium (E[Rm] Rf), we used
the average return above the Treasury Bond rate provided by investing
in the American stock market from 1928 to 2015, which was 4.5%
(source: Aswath Damodaran website).

Determining their correlations with relevant stock markets; and


Calculation of average betas, which will be used in determining the
risk of companies.

Country Risk (Rb)

To estimate the risk associated with Brazil (Rb), we used the average
difference between the yield of the Global-Bond 37 in relation to the TBond performance, from the 24 months before the base date of March
24, 2016, which was 3.1% (source: Bloomberg).

The following procedure is used for obtaining the betas:


Identification and selection of comparable companies;

Market Risk Premium (E[Rm] - Rf)

For the projected American inflation, the long term inflation rate was
considered, as of March, 2016. The rate used was 1.8%. (source:
Economist).

It is important to note that the betas observed in capital markets for


comparable companies include the different degrees of leverage of
these companies. Thus, it is necessary to extract the leverage factor to
calculate the specific risk factor by the market on the operational risks
inherent in the business.

For this purpose the following formula is used:

Where:

Size Premium

For the Companys size premium it was considered the rate of 1.0%, a
rate applied to the same-sized companies. (source: Ibbotson
Associates, 2015).

Brazilian Inflation (Ib)

The Brazilian long term projected inflation rate was considered, as of


March 24, 2016 according to Relatrio Focus (source: Banco Central do
Brasil). The rate used was 5.1%.

d = /[1 + (1 T)*(D/E)]

d = Unlevered Beta share risk of comparable companies,


regardless of their leverage;
= Levered Beta share risk of comparable companies, adjusted
by leverage;
T = Tax rates for income tax and social contribution; and
D/E = Debt / Equity of each comparable.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

33

V. Methodology (4/5)
Discount rate

The following formula is used to releverege beta:

Comparables

r = d*[1 + (1 T)*(D/E)]

Where:

0.9

ASX Ltd.

ASX AU Equity

1.3

0.0%

29.5%

1.3

CME Group Inc.

CME US Equity

0.7

3.0%

36.4%

0.7

LS4C GB Equity

1.0

5.9%

30.5%

2.6%

30.6%

Relevered Beta
Beta
D/E
Tax
Relevered Beta

Source: Bloomberg for the base date March 24, 2016.

Relevered Beta
Beta
D/E
Tax
Relevered Beta

1.2
5.3%
34.0%
1.2

Source: Bloomberg for the base date March 24, 2016.

Debt to
Equity
0.0%
23.0%
0.0%
0.0%
3.0%
5.9%
5.3%

Tax rate
36.0%
30.8%
30.9%
29.5%
36.4%
30.5%
32.4%

1.0
2.6%
34.0%
1.0

The cost of debt indicates the cost of the loans made to project
financing. In general terms, it is determined by the following variables:
The current level of interest rates;

Unlevered Beta
1.5
1.0
1.6
1.3
0.7
1.0
1.2

1.0
1.0

Source: Bloomberg for the base date March 24, 2016.

The calculation of BM&FBOVESPAs beta is shown below:


1.5
1.1
1.6
1.3
0.7
1.0
1.2

1.0

Source: Bloomberg for the base date March 24, 2016.

D/E = Debt / Equity of the analyzed company.


Levered Beta

Unlevered Beta

26.1%

Cost of debt (Kd)

Ticker

Tax rate

1.3%

T = Income tax and social contribution, as the effective rate of


company analyzed; e

BVMF3 BZ Equity
NDAQ US Equity
ENX FP Equity
ASX AU Equity
CME US Equity
LS4C GB Equity

Debt to
Equity

0.9

Average

= Levered Beta calculated in the two-year period, average


weekly;

Comparables

Levered Beta

CTIP3 BZ Equity

London Stock Exchange Group

d = Unlevered Beta share risk of comparable companies;

BM&FBovespa S.A.
NASDAQ Inc.
EURONEXT NV
ASX Ltd.
CME Group Inc.
London Stock Exchange Group
Average

Ticker

Cetip S.A. - Mercados Organizados

r = Levered Beta - to be used as a basis for calculating the cost of


financing;

The calculation of Cetips beta is shown below:

The delinquency risk of companies; and


Tax benefits associated with financing (debt).

The rates of income tax and social contribution have direct influence
on the cost of debt, since these payments are tax deductible.
Thus, the cost of debt is calculated by the following formula:
Where:

Kd = RD * (1 T)

Kd = Cost of debt;
RD = Debt rate;

T = Tax rate of income tax and social contribution.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

34

V. Methodology (5/5)
Discount rate

Cost of debt (Kd)

For the purposes of cost of debt, it was considered a nominal cost of


debt before tax of 12.0%, based on the long-term interest rate (Selic),
plus a 1.0% of spread. After tax effect the cost of debt is 7.9%.

Capital Structure

The capital structure adopted was based on the capital structure of


comparable companies (market participants).

Discount Rate Calculation

The following table shows the calculation of the WACC of


BM&FBOVESPA:

Discount rate

BM&FBovespa

Risk free (US$ nominal) (source: Bloomberg)


US inflation (source: Economist)
Brazilian inflation (source: BACEN)
Relevered Beta
Expected return on the market (source: Damodaran)
Country risk premium (Global 37) (source: Bloomberg)
Size premium (source: Ibbotson Associates, 2015)
CAPM - nominal - Ke (a)

3.0%
1.8%
5.1%
1.2
4.5%
3.1%
1.0%
15.9%

Cost of debt
Tax
Kd after tax - nominal - Kd (b)

12.0%
34.0%
7.9%

WACC
% common equity capital in the capital structure ( c )
% of debt capital in the capital structure ( d )
WACC nominal = (a*c) + (b*d)

94.9%
5.1%
15.5%

The following table shows the calculation of the WACC of Cetip:


Discount rate

Cetip

Risk free (US$ nominal) (source: Bloomberg)


US inflation (source: Economist)
Brazilian inflation (source: BACEN)
Relevered Beta
Expected return on the market (source: Damodaran)
Country risk premium (Global 37) (source: Bloomberg)
Size premium (source: Ibbotson Associates, 2015)
CAPM - nominal - Ke (a)

3.0%
1.8%
5.1%
1.0
4.5%
3.1%
1.0%
14.8%

Cost of debt
Tax
Kd after tax - nominal - Kd (b)

12.0%
34.0%
7.9%

WACC
% common equity capital in the capital structure ( c )
% of debt capital in the capital structure ( d )
WACC nominal = (a*c) + (b*d)

97.5%
2.5%
14.7%

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

35

Contents

I. Executive summary
II. Information about the appraiser

III. Information on the Companies


IV. Market information
V. Methodology
VI. Adjusted assets and liabilities
VII. Conclusion
Appendix
1. Appendix I Glossary

2. Appendix II Important notes


3. Appendix III Intangible projections

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

36

VI. Adjusted assets and liabilities (1/8)


BM&FBOVESPA
Current assets and non-current assets

Based on the financial statements and documentation provided by


BM&FBOVESPA, the following is a brief description of the lines of
assets and liabilities of short and long term and eventual balances
adjusted to market value on the date of the report:
Cash and cash equivalents, financial investments, and marketable
securities: correspond to available funds held in financial institutions
domestically or abroad. They also refer to investments in financial
investment funds with portfolios composed primarily by government
securities, repurchase agreements and financial assets available for
sale as CME Group shares.
We considered the sale of shares of the CME Group as a subsequent
event, as announced on April 7, 2016, based on the amount realized
and the respective tax impacts. We understand that no adjustment is
applicable for the other items in this account because according to the
explanatory notes, investments are accounted for at fair value.

the balance sheet arising from previous acquisitions and their related
tax effects.

Accounts receivable: due to the short-term average maturity of


receivables, we understand that no adjustment is applicable.
Other receivables: mainly composed of dividends receivable from the
CME Group (94.0% of total), and we understand that no adjustment is
applicable.
Taxes recoverable and advances: recoverable taxes within the actual
period. We understand that no adjustment is applicable because it is a
short turnover.

Deferred income tax and social contribution: the corresponding effect


of goodwill write-off of R$932.5 million was considered due to a
temporary difference in the tax base for the accounting basis. Also we
considered the write-off of deferred charges arising from the marking
to market of shares of the CME Group in the amount of R$69.2 million.
Judicial deposits: correspond to legal, tax, civil, and labor obligations.
We understand that no adjustment is applicable.
Property for investments: consists of properties available for sale. It is
a commercial development in Rio de Janeiro, in which an update of the
estimate of the fair value of R$173.4 million was carried out.

Fixed assets: It consists of real estate, furniture and fixtures,


appliances and computer equipment, facilities, and other fixed assets
in progress. An estimated fair value of the building of the headquarters
of the BM&FBOVESPA was considered in the real estate account, with
an approximate gain of R$75.0 million. For equipment group, we
estimated life cycles and average age, and before the book value, we
reached an amount of gain of approximately R$103.7 million.
Intangible assets (software and projects): we carried out a fair value
estimate of the existing intangible assets in the company, segregated
between brand and platform (software and products), based on the
following assumptions:
Methodology

Advanced expenses: these are expenses to be recognized during the


period. We understand that no adjustment is applicable.
Goodwill: The write-off of the goodwill was considered as recorded in

Useful life (years)

Tradem ark

Platform

Relief from
Royalty

Multi Period Excess


Earnings

30

15

CAC's considered

N.a.

Working capital, fixed


assets, trademark,
w orkforce

Discount rate
Fair value (R$ MM)

15.5%
1,184

15.5%
10,715

Note 1: The calculations


related to intangibles are
presented in the appendix
to this report.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the versions, the version in
Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

37

VI. Adjusted assets and liabilities (2/8)


BM&FBOVESPA
Current and non-current liabilities

Collaterals received in operations: include the four clearinghouses


administered by BM&FBOVESPA. They are as follows: BM&BOVESPA
Clearinghouse (formerly Derivatives Clearinghouse), Exchange, Assets
and Securities, and Fixed and Private Income (CBLC). We understand
that no adjustment is applicable.
Earnings and rights on securities in custody: they represent dividends
and interest on equity received from listed companies to be
transferred to the custodian agents and subsequently to their clients,
which are the owners of the shares of these public companies. We
understand that no adjustment is applicable.

Dividends and interest on equity payable: we understand that no


adjustment is applicable.

Suppliers: Due to the short turnover of this account, we understand


that no adjustment is applicable.
Payroll and related charges: we understand that no adjustment is
applicable.
Provision for taxes and contributions payable : refers to taxes and
contributions withheld at source to collect, PIS and COFINS, and ISS
payable within the period. We consider the establishment of the tax
payable of R $ 963 million from the sale of shares of the CME Group,
already including the amount reclassified from deferred liabilities.
Income tax and social security contribution: includes taxes payable
within the actual period. We understand that no adjustment is
applicable because it is a short turnover.
Issuance of debt and interest payments (abroad): corresponds to the
issuance of senior unsecured notes in July 2010. The fair value of
R$2.3 million was considered, according to the explanatory note of the
income statement of December 31, 2015.

Other liabilities: refer to amounts payable to the CME, amounts


payable to related parties, custody agents, amounts to be transferred
from direct treasury, advance received for the sale of property,
preferred shares to settle, demand at sight deposits, and mainly
obligations with committed operations. We understand that no
adjustment is applicable because there is the expectation of realization
within the actual period.
Deferred income tax and social contribution, and deferred tax liability:
we considered the write-off of R$2.8 million related to the amortization
of the goodwill arising from temporary differences between the tax
basis of the goodwill, and its carrying value in equity, contained in the
explanatory notes of the financial statement of BM&FBOVESPA on
December 31, 2015.
We also considered the creation of a deferred tax of R$3.8 billion net
of all adjustments made to BM&FBOVESPA.
Also taken into account in the calculation of the tax due on the sale of
the shares of the CME Group, and the deferred tax assets arising from
exchange rate changes was written off, and the change in the
accounting criteria in the approximate amount of R$989 million, with
the final balance of (negative) liabilities was reclassified to deferred
assets.
Accrual for tax, civil and labor risks: we understand that no adjustment
is applicable.
Benefits of post-employment health care: corresponds to the
maintenance of a plan for post-employment medical care for a
particular group of employees and former employees. We understand
that no adjustment is applicable.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the versions, the version in
Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

38

VI. Adjusted assets and liabilities (3/8)


BM&FBOVESPA
Balance sheet after adjustments

Next, we show the consolidated balance sheet of BM&FBOVESPA on


December 31, 2015 after the relevant adjustments.

BM&FBOVESPA
Balance sheet (R$ MM)

Consolidated
(12.31.2015)

Total assets
Current assets
Cash and cash equivalents
Financial applications and marketable securities
Accounts receivables
Other credits
Receivable taxes and anticipations
Prepaid expenses
Non current assets
Long term assets
Financial applications and marketable securities
Deferred Taxes
Judicial deposits
Other credits
Prepaid expenses
Investments
Investments in associated companies
Investments in subsidiaries
Investment properties
Fixed assets
Property in use
Equipments and plants
Others
(Accumulated depreciation)
Intangible
Goodwill
Softwares and projects

Adjustments

Pro forma
balance sheet

BM&FBOVESPA
Balance sheet (R$ MM)

Consolidated
(12.31.2015)

Adjustments

26,309

(1,799)

24,510

8,674

(314)

8,359

441
7,799
75
158
175
26

4,491
(4,805)
-

4,931
2,993
75
158
175
26

Guarantees receibed in operations

Provision for taxes and contributions payable

35

17,635

(1,484)

16,151

1,961
1,816
141
2
3

1,485
1,485
-

3,446
1,816
1,485
141
2
3

Income tax and social contribution


Interest on capital payable

5
70

963
-

31
0
31

143
143

173
0
173

453
387
394
143
(471)

179
75
104
-

632
462
498
143
(471)

15,190
14,402
788

(3,291)
(14,402)
11,111

11,899
11,899

Total liabilities
Current liabilities

Earnings and rights on securities in custody


Suppliers
Labor and social security obbligations

Dividends and interest on equity payment


Other obligations
Non current liabilities
Debt issued abroad
Provisions for income tax and social contribution
Provision for tax, civil and labor risks
Post employment healt-care benefits
Other obligations
Deferred tax liabilities (market adjustments)

Pro forma
balance sheet

7,957

1,575

9,532

2,097

963

3,059

1,338

1,338

49

49

43
117

43
117
35
968
70

437

437

5,860

612

6,472

2,384
3,272
119
26
58
-

(4)
(3,272)
3,888

2,380
119
26
58
3,888

Equity

18,342

(3,374)

14,968

Stock capital
Capital reserve
Revaluation reserves
Profit reserves
Treasury stock
Equity valuation adjustments
Additional dividend proposed
Accumulated profits

2,540
14,300
20
1,951
(365)
(104)
-

2,540
14,300
20
1,951
(365)
(104)
-

Minority interest
Total liabilities and equity

10
26,309

(1,799)

10
24,510

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

39

VI. Adjusted assets and liabilities (4/8)


Cetip
Current and non-current assets

Based on the financial statements and documentation provided in


VDR, the following is a brief description of the short and long term
lines of assets and liabilities and eventual balances adjusted to market
value on the date of the report:
Cash, cash equivalents, and financial investments - free and linked:
they match the cash, bank deposits, and bank certificates of deposit,
investments in investment funds, bank certificates of deposit, financial
bills, repurchase agreements, treasury bills, treasury bills of the
national treasury, and notes of the national treasury - B and F series.
According to the explanatory notes, investments are accounted for at
fair value, except for investments held to maturity. Thus, we consider
the adjustment of -R$2.0 million of investments held to maturity
according to the explanatory notes. For the other items, we
understand that the adjustment to fair value is not applicable.

To recognize the conversion of stock options issued but not exercised


up to December 31, 2015, we considered the exercise of 4,900,800
shares granted and valid on the valuation date based on the updated
exercise price as reported by the management of Cetip.
Accounts receivable: due to the short term average maturity of
receivables, we understand that no adjustment is applicable.
Taxes and contributions to offset: we understand that no adjustment
to fair value is applicable.
Derivative financial instruments: refer to investment in foreign
subsidiary. The fair value was considered, according to the explanatory
notes.
Prepaid expenses, escrow deposits and other receivables: we
understand that no adjustment is applicable.

Goodwill: The write-off of the goodwill was considered as recorded in


the balance sheet arising from previous acquisitions and their related
tax effects.
Investments: is segregated in:
i.

investments in subsidiaries: 100% stake in Cetip Lux S..r.l. and


100% stake in Cetip SA Info Technologia S.A.

ii.

investments in related companies: 20% stake in RTM - Rede de


Telecomunicao para o Mercado Ltda. We considered the fair
value of this investment based on the price / market profit
multiple similar to that of Cetip.

iii.

other investments.

Fixed assets are segregated in land, buildings, improvements and


facilities, machinery and equipment, computer equipment, systems
and programs, vehicles, and other assets in progress. An estimated
fair value of the building of the headquarters of the Cetip was
considered in the real estate account, with an approximate gain of
R$20.3 million. For equipment group, we estimated life cycles and
average age, and before the book value, we reached an amount of gain
of approximately R$12.7 million.

Intangible assets: we carried out a fair value estimate of the existing


intangible assets in the company, segregated between brand and
platform (software and products), based on the following assumptions:
Methodology
Useful life (years)
Considered CAC's
Discounte rate
Fair value (R$ MM)

Tradem ark

Plataform

Relief from
Royalty

Multi Period Excess


Earnings

30

15

N.a.

Working capital, fixed


assets, trademark,
w orkforce

14.7%

14.7%

712

5,975

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

40

VI. Adjusted assets and liabilities (5/8)


Cetip

The calculations related to intangibles are presented in the appendix to


this report.

Current and non-current liabilities

Suppliers: due to the short turnover of this account, we understand


that no adjustment is applicable.

Labor obligations and charges, taxes payable, income tax and social
contribution: correspond to provisions for holidays and charges, INSS
payable, FGTS payable, PIS and COFINS payable, ISS payable,
withholding income tax at source (IRRF) and others. We understand
that no adjustment is applicable because of their realization within the
period.
Dividends and interest on equity payable: refer mainly to the accrual
for profit sharing.
On March 3, 2016, Cetip announced to the market a dividend payment
of R$0.3194231187 per share, which was considered as an
adjustment. On March 21, 2016, Cetip announced to the market a JCP
gross payment of R$0,0842715836 per share, which was also
considered as an adjustment.
Debentures issued, derivatives financial instruments and loans, and
financial lease obligations: Refer to debentures - 2nd series,
intercompany loans, loan abroad by subsidiary Cetip Lux, bank loans
and other loans and financial lease obligations (financing obtained from
Financiadora de Estudos e Projetos FINEP). According to the
explanatory notes, they are accounted for at fair value, except for the
bank loan contracted by Cetip Lux. Thus, we consider an adjustment of
-R$1.5 million. For the other items, we understand that the adjustment
to fair value is not applicable

Unearned revenues: refers to encumbrances revenues from vehicles,


deferred and must be earned according to the period of encumbrance
maintenance. We performed a fair value adjustment considering
average term of 36 months for 30% of encumbrances revenues and
the rest was recognized at sight.

Deferred income tax and social contribution and deferred tax liability:
refer to the following assets and liabilities of deferred taxes (presented
net): accrual for contingencies and legal liabilities, unearned revenues,
foreign exchange losses, adjustment to market value of financial
instruments, other temporary differences, asset revaluation, review of
life cycles, research and technological innovation, cost of transactions,
business combinations, goodwill, gain on swap transactions,
adjustment to market value of financial instruments and other
temporary differences.
We considered a write-off of R$277.5 million related to deferred tax
liabilities of goodwill arising from the temporary difference that was
found between the tax basis of premium and its carrying value in
shareholders' equity, and R$50.7 million relating to the deferred tax
liability of the business combination.
For the other items within this group, we understand that no
adjustment is applicable.
Deferred tax liabilities (market adjustments): We considered the
establishment of a deferred tax net of all adjustments made to Cetip.
Accruals for contingencies and legal obligations: they are segregated
into labor, attorneys' fees, legal obligations and civil obligations. We
understand that no adjustment is applicable.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

41

VI. Adjusted assets and liabilities (6/8)


Cetip
Balance sheet after adjustments

Next, we present the consolidated balance sheet of Cetip on


December 31, 2015, after the relevant adjustments.

Cetip S.A. - Mercados organizados


Balance Sheet (R$ 'MM)

Consolidated
Pro forma
Adjustments
(31.12.2015)
Balance Sheet

Cetip S.A. - Mercados organizados


Balance Sheet (R$ 'MM)

Consolidated
Pro forma
Adjustments
(31.12.2015)
Balance Sheet

Total Assets

3,497

5,025

8,522

Total Liabilities

1,801

1,981

3,782

Current Assets

1,008

119

1,127

Current Liabilities

340

98

439

2
802
118
64
7
15

119
-

2
921
118
64
7
15

2,489

4,905

7,395

Suppliers
Labor liabilities and charges
Taxes payable
Income tax and social contribution
Dividends and interest on equity payable
Issued debentures
Loans and finance lease obligations
Derivative financial instruments
Revenues to be recognized
Other liabilities

54
68
18
8
110
21
7
12
40
0

107
(8)
-

54
68
18
8
217
21
7
12
32
0

Non current Liabilities


Suppliers
Deferred income tax and social contribution
Provision for contingencies and social obligations
Issued debentures
Loans and financial lease obligations
Bank loans 1
Bank loans 2
Others
Deferred tax liabilities (market adjustments)
Revenues to be recognized

1,461
8
136
6
499
769
394
376
6
37

1,882
(136)
(2)
(2)
2,028
(8)

3,343
8
6
499
768
394
374
6
2,028
29

Equity

1,696

3,044

4,740

Cash and cash equivalents


Financial applications - free
Accounts receivables
Taxes and contributions
Prepaid expenses
Other credits
Non current
Long-term
Financial applications - free and related
Derivative financial instruments
Judicial deposits
Prepaid expenses
Deferred taxes
Other credits
Investments
Investments in subsidiaries
Investments in associates
Other investments
Fixed assets

374
249
121
0
3
2
7
6
1
48

Intangible
Goodwill
Contractual relationships
Acquired software and systems
Internally developed software and systems
Software and systems in development
Others
Trademark
Platform

2,061
1,221
669
39
85
47
0
-

190
(2)
192
-

564
247
121
0
3
192
2

10
10
-

17
16
1

33
4,672
(1,221)
(669)
(39)
(85)
(0)
712
5,975

81
6,733
47
712
5,975

Social capital
Capital reserves
Equity valuation adjustments
Profit reserves
Treasury stock
Retained earnings / accumulated loss
Proposed additional dividends
Total Liabilities and Equity

658
528
(8)
539
(105)
83
3,497

5,025

658
528
(8)
539
(105)
83
8,522

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

42

VI. Adjusted assets and liabilities (7/8)


Holding
Balance sheet after adjustments

Next, we present the consolidated balance sheet of the Holding on December 31, 2015, after the relevant adjustments.

As a subsequent event, we considered a capital contribution in cash of BM&FBOVESPA in Netanya in the amount of R$9,258 million, adjusted by
the projected CDI for 8 months according a Focus report.
We also consider the merger of all shares of Cetip by Netanya, for the total amount of R$11,295 million, through the issuance of common and
preferred shares.
We considered the redemption of the preferred shares of Netanya, in the estimated amount of R$9,258 million.
Netanya Empreendimentos e Participaes S.A.
Opening
balance
12/31/2015

Balance Sheet
(R$ MM)

Inssuance of
Capital
Balance
Shares and
contribution after capital
Incorporation
in cash
injections
of Shares

Balance after
Issue and
Incorporation
of Shares

Redemption
of Shares

Balance after
Redemption
of Shares

Market
adjustments
Cetip
(4,575,112)

Proforma
Balance
Sheet
Netanya

Total Assets

0.131

9,257,824

9,257,824

13,096,717

22,354,541

(9,257,824)

13,096,717

Current Assets

0.131

9,257,824

9,257,824

1,007,642

10,265,466

(9,257,824)

1,007,642

119,385

8,521,606
1,127,027

Cash and cash equivalents


Financial applications - free
Accounts receivables
Taxes and contributions
Prepaid expenses
Other credits

0.131
-

9,257,824
-

9,257,824
-

2,438
801,956
117,658
63,917
7,084
14,589

9,260,262
801,956
117,658
63,917
7,084
14,589

(9,257,824)
-

2,438
801,956
117,658
63,917
7,084
14,589

119,385
-

2,438
921,341
117,658
63,917
7,084
14,589

Non current Assets

12,089,075

12,089,075

12,089,075

(4,694,497)

7,394,578

Long-term
Financial applications - free
Derivative financial instruments
Judicial deposits
Prepaid expenses
Crdito trbutrio (Goodwil)
Other credits

373,958
248,553
120,663
181
2,659
1,902

373,958
248,553
120,663
181
2,659
1,902

373,958
248,553
120,663
181
2,659
1,902

189,817
(2,045)
191,862
-

563,775
246,508
120,663
181
2,659
191,862
1,902

Investiments
Investments in subsidiaries
Investments in associates
Other investments

6,873
6,143
730

6,873
6,143
730

6,873
6,143
730

Fixed Assets

47,685

47,685

47,685

Intangible
Goodwill
Contractual relationships
Acquired software and systems
Internally developed software and systems
Software and systems in development
Others
Trademark
Platform

11,660,559
10,820,698
668,801
38,680
85,254
46,974
152
-

11,660,559
10,820,698
668,801
38,680
85,254
46,974
152
-

11,660,559
10,820,698
668,801
38,680
85,254
46,974
152
-

9,787
9,787
33,079
(4,927,181)
(10,820,698)
(668,801)
(38,680)
(85,254)
(152)
711,746
5,974,658

16,660
15,930
730
80,764
6,733,379
46,974
711,746
5,974,658

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

43

VI. Adjusted assets and liabilities (8/8)


Holding
Balance sheet after adjustments
Netanya Empreendimentos e Participaes S.A.
Opening
balance
12/31/2015

Balance Sheet
(R$ MM)

Inssuance of
Capital
Balance
Shares and
contribution after capital
Incorporation
in cash
injections
of Shares

Balance after
Issue and
Incorporation
of Shares

Redemption
of Shares

Balance after
Redemption
of Shares

Market
adjustments
Cetip

Proforma
Balance
Sheet
Netanya

Total Liabilities

1,801,249

1,801,249

1,801,249

1,980,675

3,781,924

Current liabilities

340,198

340,198

340,198

98,422

438,620

Suupliers
Labor liabilities and charges
Taxes payable
Income tax and social contribution
Dividends and interest on equity payable
Issued debentures
Loans and finance lease obligations
Derivative financial instruments
Revenues to be recognized
Other liabilities

54,416
68,411
18,183
8,435
110,261
21,431
7,113
11,572
40,223
153

54,416
68,411
18,183
8,435
110,261
21,431
7,113
11,572
40,223
153

54,416
68,411
18,183
8,435
110,261
21,431
7,113
11,572
40,223
153

106,865
(8,443)
-

54,416
68,411
18,183
8,435
217,126
21,431
7,113
11,572
31,780
153

Non current
Suppliers
Income tax and social contributions
Provision for contingencies and social obligations
Issued debentures
Loans and financial lease obligations
Bank loans 1
Bank loans 2
Others
Deferred tax liabilities (market adjustments)
Revenues to be recognized

1,461,051
8,046
136,465
5,933
498,849
769,153
393,585
375,568
5,866
36,739

1,461,051
8,046
136,465
5,933
498,849
769,153
393,585
375,568
5,866
36,739

1,461,051
8,046
136,465
5,933
498,849
769,153
393,585
375,568
5,866
36,739

1,882,253
(136,465)
(1,508)
(1,508)
2,027,938
(7,712)

3,343,304
8,046
5,933
498,849
767,645
393,585
374,060
5,866
2,027,938
29,027

Equity
Social capital
Capital reserves
Equity valuation adjustments
Profit reserves
Treasury stock
Retained earnings / accumulated loss
Proposed additional dividends
Total Liabilities and Equity

0.131

9,257,824

9,257,824

11,295,468

20,553,292

(9,257,824)

11,295,468

(6,555,787)

4,739,682

1.200
(1.069)
-

9,257,824
-

9,257,825
(1)
-

658,416
10,119,174
539,388
(104,502)
82,992

9,916,241
10,119,174
539,388
(104,502)
(1)
82,992

(9,257,824)
-

658,417
10,119,174
539,388
(104,502)
(1)
82,992

(6,555,787)
-

658,417
10,119,174
(6,555,787)
539,388
(104,502)
(1)
82,992

0.131

9,257,824

9,257,824

13,096,717

22,354,541

(9,257,824)

13,096,717

(4,575,112)

8,521,605

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

44

Contents

I. Executive summary
II. Information about the appraiser

III. Information on the Companies


IV. Market information
V. Methodology
VI. Adjusted assets and liabilities
VII. Conclusion
Appendix
1. Appendix I Glossary

2. Appendix II Important notes


3. Appendix III Intangible projections

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

45

VII. Conclusion (1/1)

Report Summary

Based on the scope of this Report, and subject to the assumptions,


restrictions and limitations described herein, we estimate the value of
the PLA of BM&FBOVESPA as below:

BM&FBOVESPA
Balance sheet (R$ MM)

Consolidated
(12.31.2015)

Adjustments

Pro forma
balance sheet

Total assets

26,309

(1,799)

24,510

Total liabilities
Equity

7,957
18,342

1,575
(3,374)

9,532
14,968

Total liabilities and equity

26,309

(1,799)

24,510

Number of actions (*)


Net pro forma equity/share
(*) Source: BS of 12/31/15

1,749
8.56

R$

Based on the scope of this Report, and subject to the assumptions,


restrictions and limitations described herein, we estimate the value of
the PLA of the Holding as below:

Netanya Empreendimentos e Participaes S.A.


Balance Sheet
(R$ MM)

Opening
balance
12/31/2015

Current Assets

0.131

Total Liabilities

Inssuance of
Capital
Balance
Shares and
contribution after capital
Incorporation
in cash
injections
of Shares
9,257,824
-

9,257,824
-

Balance after
Issue and
Incorporation
of Shares

1,007,642

10,265,466

1,801,249

1,801,249

Redemption
of Shares
(9,257,824)
-

Balance after
Redemption
of Shares

Market
adjustments
Cetip

Proforma
Balance
Sheet
Netanya

1,007,642

119,385

1,127,027

1,801,249

1,980,675

3,781,924
4,739,682

Equity

0.131

9,257,824

9,257,824

11,295,468

20,553,292

(9,257,824)

11,295,468

(6,555,787)

Total Liabilities and Equity


n of shares
Pro forma Equity/ share
(*) Source: BM&FBOVESPA

0.131

9,257,824

9,257,824

13,096,717

22,354,541

(9,257,824)

13,096,717

(4,575,112)

8,521,606
265
17.90

R$

Notes

We emphasize that this report is based substantially on discussions


with Clients Management in the financial statements of the Company
and on assumptions provided by Clients management and its financial
advisors.

During our work, we performed analysis procedures that we deem


appropriate in the context of the report. However, KPMG is not
responsible for the information provided, and shall not be liable in any
event, or will not support any loss or damage arising or resulting from
withholding data and information by the Client. We also stress that this
work should not be interpreted as an auditing work in accordance with
generally accepted auditing procedures, and must not be interpreted
as such.
We cannot, as the Client is unable to do, guarantee that future results
will be effectively achieved in conformity with the projected results,
given that often the events forecast may not take place because of
various external factors related to the economic and operational
situation, thus causing relevant variations.

Up to the date of the issuance of this report, KPMG is not aware of


any event that could substantially alter the result of this report, except
for the Operation, which if completed, may cause a change in the
conclusion of this report.
KPMG was not hired to update this report after its date of issue.
As requested by BM&FBOVESPA, our report was prepared solely to
meet the requirements of Clause 264 of the Brazilian Corporate Law,
in line with the operation. We emphasize that our report cannot serve
other objectives such as the price allocation procedure, for business
combination purposes in accordance with the CPC 15 or the IFRS 3.
We highlight that the full understanding of the conclusion of this report
will only occur through its full reading. Thus, one should not draw
conclusions from a partial reading.

This Report is a free translation into English (requested by the Client) of the report issued in Brazilian Portuguese. If there are any discrepancies or differences between the
versions, the version in Portuguese will prevail.
2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

46

Contents

I. Executive summary
II. Information about the appraiser

III. Information on the Companies


IV. Market information
V. Methodology
VI. Adjusted assets and liabilities
VII. Conclusion
Appendix
1. Appendix I Glossary

2. Appendix II Important notes


3. Appendix III Intangible projections

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

47

Appendix I Glossary (1/2)


BACEN

Banco Central do Brasil (Central Bank of Brazil)

BS

Balance sheet

CAGR

Compounded Annual Growth Rate

CAPM

Capital Asset Pricing Model

COFINS

Contribution for Social Security Financing (Federal Tax Over Revenues)

Companies

BM&FBOVESPA S.A. Bolsa de Valores, Mercadorias e Futuros and CETIP S.A. Mercados Organizados

Client

BM&FBOVESPA S.A. Bolsa de Valores, Mercadorias e Futuros

CVM

Securities and Exchange Commission

EBIT

Earnings Before Interest and Tax

EBITDA

Earnings Before Interest, Tax, Depreciation and Amortization

Free Float shares

Number of shares free to be traded on the market.

FS

Financial statements

GDP

Gross Domestic Product

GAAP

Generally Accepted Accounting Principles

IBGE

Instituto Brasileiro de Geografia e Estatstica

IPCA

Brazilian Consumer Price Index (ndice de Preos ao Consumidor Amplo)

IS

Income statement

ITS

Quarterly Financial Statement

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

48

Appendix I Glossary (2/2)


Law 6.404/76

Law 6,404 of December 15, 1976 , which provides for the Corporation in Brazil

MPEEM

Multi Period Excess Earnings

OS

Ordinary shares

PIS

Brazilian Social Integration Program

PS

Preferred share

Relief from Royalty

Method of avoided royalties

Report

This Valuation Report , dated April 11, 2016

SELIC

Brazilian Interest Rate (Sistema Especial de Liquidao e Custdia)

Ticker

Action Code traded on BM&FBOVESPA

WACC

Custo Mdio Ponderado de Capital (Weighted Average Cost of Capital)

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

49

Appendix I Important notes (1/3)

This Report is a free translation into English (requested by the Client)


of the report issued in Brazilian Portuguese. If there are any
discrepancies or differences between the versions, the version in
Portuguese will prevail.
The report was prepared by KPMG Corporate Finance Ltda. (KPMG),
requested by BM&FBOVESPA, in accordance with the rulings
applicable from Law 6,404/76 (Corporate Law), in order to issue the
valuation of the Companies, based on the net asset criterion, at the
base date December 31, 2015.
This report does not constitute a judgment, opinion, proposal, request,
suggestion or recommendation to management or the Clients
shareholders, or to any third party, as to the convenience and
opportunity, or as to the decision to approve or participate in the
Operation. This Report, including its analyses and conclusions (i) does
not constitute a recommendation to any member of the Management
Board, or any of the Clients shareholders, or any of its subsidiaries as
to how to act or vote for any issue related to the Operation; and (ii)
cannot be used to justify the right to vote of any individual on this
matter, including the Clients shareholders.
The shareholders should perform their own analyses in relation to the
convenience and opportunity to accept the Operation, and should
consult their own financial, tax and legal advisors, to form their own,
independent opinions on the Operation. This Report should be read
and interpreted in light of the restrictions and qualifications previously
stated. The reader should take into consideration in his analysis the
restrictions and characteristics of the sources of information used.
Neither KPMG, nor any other of its partners, employers or workers
declared or guaranteed, expressly or tacitly, the accuracy and
completeness of this Report, and furthermore, do not provide advice of
any nature, such as legal or accounting. The content of this report is
not and should not be considered to be a promise or guarantee in r

elation to the past or future, or as a recommendation for the price of


the Operation.

KPMG highlights that the valuation of the Companies was performed


on a stand alone basis, and does not consider any synergies or
correlated elements.
Assuming that the price of the shares within the ambit of the
Operation will observe the rulings in Corporate Law, KPMG did not
and does not make any recommendation, explicit or implicit, and does
not express any opinion with respect to defining the final price of the
Shares within the ambit of the Operation or with respect to the terms
and conditions of any operation involving the Company, or any of its
subsidiaries.
As established in Corporate Law, the information included in the
Report was based on the audited financial statements of the
Companies and the quarterly financial information, management
information related to Cetip presented by Client Management and
information available to the public in general obtained from public
sources.
The information presented to KPMG includes public sources that
KPMG considers reliable, however, KPMG did not undertake an
independent investigation of this information, and does not assume
responsibility for the accuracy, precision and sufficiency of this
information. The base date used for the Assessment Report is
December 31, 2015.
The Client, through appointed professionals, provided information on
data, forecasts, assumptions and estimates related to the Companies,
and its operations markets, used in this Report.
During the course of our work, we performed analysis procedures that
we considered appropriated within the context of the work. However,
KPMG did not assess the completeness, sufficiency and accuracy of

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

50

Appendix I Important Notes (2/3)


the information provided. Any errors, alterations or modifications to
this information could significantly affect KMPGs valuation.

We also highlight that the work does not constitute an audit in


accordance with generally accepted auditing standards, or any other
form, and therefore, should not be interpreted as such.

The scope of the work proposed does not represent any obligation by
KPMG to detect frauds in the companies operations, processes,
registers or documents.
The scope of this report does not include determining the economic
values of any of the companies contingencies. Therefore, with
respect to such items, we have based our work on information and
analyses made available by the Client and its legal advisors, as such,
KPMG is not responsible for the results of these services.
In order to prepare this report, KPMG presupposes the reliability,
expressly given by the Client, with respect to the accuracy, contents,
completeness, sufficiency and integrity of all of the data that was
provided or discussed, such that we do not assume, nor did we
undertake a physical inspection of any assets or properties, and did not
prepare or obtain independent assessments of the Companies assets
or liabilities, or the solvency of such, and considered the information
used in this report to be consistent, and the Client is responsible,
together with its agents, partners and employees, for all of the
information provided or discussed with KPMG.
The information that refers to data, forecasts, assumptions and
estimates, related to the Companies and its operations markets, used
and included in the Report, is based on certain groups of reports and
presentation lay-out, which could differ considerably in relation to the
group of accounts presented by the Client for purposes of preparing
the financial statements or quarterly financial information, made
available to the public. This procedure was adopted to enable the

forecasts presented to beconsistent with the group of accounts


reported in the management financial information presented. Any
differences in the groups of accounts do not have an impact on the
results.

Except if expressly stated otherwise, in writing in notes or specific


references, all of the previous information, market information,
estimates, forecasts and assumptions, included, considered, used or
presented in this Report refer to that presented by the Client to KPMG.
Neither KPMG nor its representatives declare, guarantee or express
their opinion, explicitly or implicitly, as to the accuracy, completeness
or viability of any forecasts or assumptions on which they are based.
This report was prepared according to the economic conditions of the
market, amongst others, available on the date it was prepared, such
that the conclusions presented are subject to variations as a result of a
range of factors.
The sum of the individual values presented in the Report may differ
from the sum presented, as a result of rounding of the amounts
involved.
The market is aware that every assessment prepared using the
discounted cash flow method represents a significant degree of
subjectivity, given that they are based on future expectations, which
may or may not occur. It should also be noted that all or any of the
assumptions for financial valuation models based on discounted cash
flows can alter the value obtained for the company, brand or asset
being assessed. These possibilities do not constitute errors in the
valuation and are recognized by the market as part of the nature of the
valuation process using the discounted cash flow method.
There are no guarantees that the assumptions, estimates, forecasts,
partial or total results or conclusions used or presented in the Report

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

51

Appendix I Important notes (3/3)


will in fact occur or be registered, in full or in part. The Companys
future results may differ from those in the forecasts, and these
differences may be significant, and may result from various factors,
including, but not limited to, changes in market conditions. KPMG does
not assume any responsibility for these differences.

The services proposed may be informed and supported by legal norms


and regulations, within this context, we highlight that our legislation is
complex and often the same ruling can be interpreted in more than
one way. KPMG seeks to keep up to date in relation to the different
interpretative currents, to ensure it is able to perform an extensive
assessment of the alternatives and the risks involved. Thus, inevitably
there will be interpretations of the law that differ from ours. Within
this context, neither KPMG nor any other firm, can provide Client
management with total assurance that it will not be questioned by
third parties, including tax investigation agencies.

To undertake this work, KPMG assumed that all of the government


and regulatory approvals or any other approvals, as well as any
exemptions, amendments or renegotiation of contracts necessary for
the business considered were or will be obtained, and that no
alterations, required as a result of these acts, will have adverse equity
effects for the Client or will reduce the benefits to the Client sought
from the Operation.
The information herein, related to the accounting and financial position
of the Companies, and the market, is that available at December 31,
2015, depending on the case. Any change in these positions could
affect the results of this report. KPMG does not assume any
obligation to up date, review or correct the report, as a result of
differences in information subsequent to April 11, 2016, or as a result
of any subsequent event.

This Report should be read and interpreted considering the restrictions


and qualifications stated above. The reader should take into
consideration in his analysis the restrictions and characteristics of the
sources of information used.
This Report can not be distributed, copied, published or used in any
other form, and can not be filed, included or referred to in part or
totally in any document without prior consent from KPMG, liberating
its use by third parties interested in the Operation, within the strict
terms of Corporate Law.
As requested by BM&FBOVESPA, our report was prepared exclusively
to comply with the requirements of art. 264 of Corporate Law, in
accordance with the Operation. We highlight that the existing
understanding of the PLA method adopted in recent public
transactions on the Market and approved by the regulatory bodies
differs from the existing understanding given in the accounting
pronouncements from the Accounting Pronouncements Committee CPC. Consequently, the accounting entries for the Companys
shareholders equity in accordance with the parameters stated in
CPC - 15 Business Combinations will be different from the PLA
presented in this report. This issue was discussed with the Client and
its legal advisors and it was understood to follow the recent
interpretation given to other market transactions.
Presentation of this report concludes the services stated in our
proposal.

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

52

Appendix I I Projections intangibles (1/4)


BM&FBOVESPA
Trademark
(R$ MM)

Proj.
2016

Proj.
2017

Proj.
2018

Proj.
2019

Proj.
2020

Proj.
2021

Net revenues

2,367

2,528

2,798

3,213

3,662

4,162

Financial result
% of net revenues

457
19.3%

429
17.0%

411
14.7%

405
12.6%

411
11.2%

425
10.2%

Net revenues

2,824

2,957

3,210

3,619

4,073

4,587

Royalty rate (RoyaltyStat)

5%

(=) Trademark profit (before taxes - IR/CS)


(-) Income tax and social contribution
Effective tax rate

-34%

(=) Trademark profit (after taxes - IR/CS)


Discount rate
Discount period
Discount factor

5%

5%

5%

5%

5%

141

148

160

181

204

229

(48)
-34%

(50)
-34%

(55)
-34%

(62)
-34%

(69)
-34%

(78)
-34%

93

98

106

119

134

151

15.47%
0.5
0.931

(=) Discounted free cash flows

5%

87

15.47%
1.5
0.806
79

15.47%
2.5
0.698
74

15.47%
3.5
0.604
72

15.47%
4.5
0.523
70

Terminal
Value

162

15.47%
5.5
0.453
69

Value
Rate (BM&F Bovespa)
g (BM&F Bovespa)
Remaining additional life
Sum of discounted cash flows
Value of the 24 remaining years
Present value of the trademark

15.47%
7.10%
24
450
733
1,184

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

53

Appendix I I Projections intangibles (2/4)


BM&FBOVESPA
Platform
(R$ MM)

Proj.
2016

(+) Incremental gross revenues

Proj.
2017

Proj.
2018

Proj.
2019

Proj.
2020

Proj.
2021

2,649

2,830

3,132

3,597

4,099

4,658

(-) Taxes (PIS/COFINS/ISS)


% of gross revenues

(282)
-10.7%

(301)
-10.7%

(334)
-10.7%

(383)
-10.7%

(437)
-10.7%

(496)
-10.7%

(+) Incremental net revenues

2,367

2,528

2,798

3,213

3,662

4,162

(790)
-33.4%

(840)
-33.2%

(858)
-30.7%

(900)
-28.0%

(955)
-26.1%

(1,012)
-24.3%

1,576

1,688

1,940

2,313

2,707

3,150

(-) Incremental costs/expenses


% costs expenses/net revenues
(=) Incremental EBITDA
Depreciation
% of net revenues

(120)
-5%

(207)
-8%

(218)
-8%

(228)
-7%

(237)
-6%

(228)
-5%

Incremental EBIT

1,456

1,481

1,721

2,086

2,471

2,922

(+) financial result


% of net revenues

457
19.3%

429
17.0%

411
14.7%

405
12.6%

411
11.2%

425
10.2%

Incremental EBT

1,913

1,910

2,133

2,491

2,882

3,347

Trademark
% of net revenues

(118)
-5.0%

(126)
-5.0%

(140)
-5.0%

(161)
-5.0%

(183)
-5.0%

(208)
-5.0%

Incremental EBT

1,794

1,784

1,993

2,330

2,699

(-) Incremental taxes


Tax rate IR CS

(610)
-34%

(=) Operational cash flow

1,184

CAC
Working capital
Fixed assets
Workforce

(163)
(155)
(4)
(4)

(=) Free cash flow


Discount rate
Discount period
Discount factor
(=) Discounted cash flow

(606)
-34%
1,177
(170)
(159)
(7)
(4)

(678)
-34%
1,315
(164)
(157)
(3)
(4)

(792)
-34%
1,538
(151)
(149)
3
(5)

(918)
-34%
1,781
(136)
(140)
8
(5)

3,139
(1,067)
-34%
2,072
(121)
(129)
13
(5)

1,021

1,007

1,151

1,387

1,645

1,951

15.47%
0.5
0.931

15.47%
1.5
0.806

15.47%
2.5
0.698

15.47%
3.5
0.604

15.47%
4.5
0.523

15.47%
5.5
0.453

950

812

803

838

861

Terminal
Value

2,090

884

Value
Rate (BM&F Bovespa)
g (BM&F Bovespa)

15.47%
7.10%

Remaining additional life

Sum of discounted cash flows


Value of the 9 remaining years
Present value of the platform

5,149
5,567
10,715

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

54

Appendix I I Projections intangibles (3/4)


Cetip
Trademark
(in R$ MM)

Proj.
2016

Net Revenues

Proj.
2017

Proj.
2018

Proj.
2019

Proj.
2020

Proj.
2021

Proj.
2022

Proj.
2023

Proj.
2024

Proj.
2025

Terminal
Value

1,266

1,436

1,585

1,748

2,295

2,512

2,748

3,006

3,291

3,604

5.0%

5.0%

5.0%

5.0%

5.0%

5.0%

5.0%

5.0%

5.0%

5.0%

Royalty rate (Rule of Thumb)

20.2%

20.2%

20.2%

20.2%

20.2%

20.2%

20.2%

20.2%

20.2%

20.2%

Average

12.6%

12.6%

12.6%

12.6%

12.6%

12.6%

12.6%

12.6%

12.6%

12.6%

63.3

71.8

79.3

87.4

114.7

125.6

137.4

150.3

164.5

180.2

(39.0)
-34.0%

(42.7)
-34.0%

(46.7)
-34.0%

(51.1)
-34.0%

(55.9)
-34.0%

(61.3)
-34.0%

Royalty rate (RoyaltyStat)

(=) Trademark revenus (before Income tax and social contribution)


(-) Income tax and social contribution
tax rate

(21.5)
-34.0%

(=) Ttrademark revenues (after Income tax and social contribution)


Discount rate
Discount period
(=) Discounted cash flow

Discount rate

(26.9)
-34.0%

(29.7)
-34.0%

41.8

47.4

52.3

57.7

75.7

82.9

90.7

99.2

108.6

118.9

14.7%
0.5

14.7%
1.5

14.7%
2.5

14.7%
3.5

14.7%
4.5

14.7%
5.5

14.7%
6.5

14.7%
7.5

14.7%
8.5

14.7%
9.5

39

37

36

41

39

37

36

34

32

39

Present value of discounted free cash flow (DCF)

(24.4)
-34.0%

127

370
14.7%

Growth rate in terminal value


Long-term IPCA
real growth in terminal value

7.1%
5.1%
2.0%

Remaining additional life

20

of discounted cash flow (DCF)


Amount of remaining 20 years
Present value of trademark

370
342
712

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

55

Appendix I I Projections intangibles (4/4)


Cetip
Platform
(in R$ MM)

Proj.
2016

(=) Total Gross Revenues


Securities Revenues
% of Cetip trader and Clearstream Platafor
Revenue
% of real state revenues
Platform revenues from trird party real state
(=)Gross Revenues - Plataform
Deductions
(=)Net Revenues - Plataform
(-) Operational costs and expenses
(=) EBITDA
(-) Depreciation
% of net revenues
(=) EBIT
(-) Income tax and social contribution
effective tax rate
(=) Net profit
(-) Contributory Asset Charge (CAC)
(=) Free cash flow
Discount rate
Discount period
(=) Discounted free cash flow
Present value of discounted free cash flow (DCF)

4,357

Discount rate

14.7%

Growth rate in terminal value


Long-term IPCA
real growth in terminal value

Proj.
2017

Proj.
2018

Proj.
2019

Proj.
2020

Proj.
2021

Proj.
2022

Proj.
2023

Proj.
2024

Proj.
2025

Terminal
Value

1,266

1,436

1,585

1,748

2,295

2,512

2,748

3,006

3,291

3,604

1,070
-0.34%
(4)
-0.20%
(3)

1,191
-0.34%
(4)
-0.20%
(3)

1,318
-0.34%
(4)
-0.20%
(3)

1,457
-0.34%
(5)
-0.20%
(3)

1,611
-0.34%
(5)
-0.20%
(5)

1,782
-0.34%
(6)
-0.20%
(5)

1,971
-0.34%
(7)
-0.20%
(5)

2,181
-0.34%
(7)
-0.20%
(6)

2,414
-0.34%
(8)
-0.20%
(7)

2,672
-0.34%
(9)
-0.20%
(7)

1,527

1,688

1,864

2,056

2,265

2,494

2,742

3,015

3,316

3,649

(266)
0

(244)
0

(269)
0

(297)
0

(327)
0

(360)
0

(396)
0

(435)
0

(479)
0

(527)
0

1,261

1,445

1,595

1,759

1,938

2,134

2,346

2,580

2,838

3,122

(429)

(474)

(512)

(552)

(518)

(562)

(608)

(658)

(712)

832

971

1,083

1,206

1,420

1,572

1,738

1,922

2,125

2,351

(93)
-7.4%

(101)
-7.0%

(108)
-6.8%

(114)
-6.5%

(101)
-5.2%

(107)
-5.0%

(113)
-4.8%

(119)
-4.6%

(126)
-4.4%

(134)
-4.3%

1,092

1,319

1,465

1,625

1,802

1,999

2,218

(771)

738

870

975

(251)
-34%

(296)
-34%

(332)
-34%

(371)
-34%

(449)
-34%

(498)
-34%

487

574

644

721

871

967

(10)

(13)

(15)

(16)

(14)

(13)

477

561

629

705

857

954

1,059

1,176

1,306

1,450

14.7%
0.5

14.7%
1.5

14.7%
2.5

14.7%
3.5

14.7%
4.5

14.7%
5.5

14.7%
6.5

14.7%
7.5

14.7%
8.5

14.7%
9.5

446

457

446

437

463

449

435

421

408

395

(552)
-34%
1,072
(13)

(613)
-34%

(680)
-34%

1,189

1,319

(13)

(14)

(754)
-34%
1,464
(14)
1,553

7.1%
5.1%
2.0%

Remaining additional life

of discounted cash flow (DCF)


Amount of remaining 5 years
Present value of platform

4,357
1,618
5,975

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in Brazil.

56

2016 KPMG Corporate Finance Ltda., a Brazilian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG
International), a Swiss entity. All rights reserved. Printed in Brazil.

Valuation Report for BM&FBovespa

April 9th, 2016

Table of Contents
Section 1

Executive Summary

Section 2

UBS Information and Declarations

10

Section 3

Cetip

16

3.A Company and Sector Overview


3.B Valuation
Section 4

BM&FBovespa

36

4.A Company and Sector Overview


4.B Valuation
Appendix A

Selected Comparable Companies for Cetip and BM&FBovespa

50

Appendix B

Selected Analyst Estimates for Cetip

56

Appendix C

Selected Analyst Estimates for BM&FBovespa

58

Appendix D

Additional Materials

60

Appendix E

Glossary

63

Appendix F

Disclaimer

65

Section 1

Executive Summary

Introduction

In the context of the corporate reorganization involving BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros ("BM&FBovespa") and Cetip S/A
Mercados Organizados ("Cetip") that may result in among other things, the acquisition of Cetip shares by BM&FBovespa and an issuance of shares of
BM&FBovespa to Cetip shareholders, which the terms and conditions were disclosed to the market on April 8, 2016 (the "Transaction"), UBS Brasil Servios de
Assessoria Financeira Ltda. ("UBS") was hired by BM&FBovespa to prepare a valuation report (the "Valuation Report")

This Valuation Report was prepared in accordance with the applicable regulation and following market practices of evaluating companies and shall be used
exclusively for the benefit of the BM&FBovespa's Board of Directors in the sole purpose of enabling them to evaluate the Transaction

In this Valuation Report, Cetip and BM&FBovespa share prices were assessed according to the following criteria:

Cetip

Shareholders' equity book value per share as of December 31 st, 2015


Volume weighted average price ("VWAP")

in the 12-month period ending on November 2nd, 2015 (the day prior to the First Material Fact regarding the transaction) and beginning on
November 3rd, 2014

in the 1-month period ending November 2nd, 2015 (the day prior to the First Material Fact regarding the transaction) and beginning on October
3rd, 2015

from November 3rd, 2015 (the day of the First Material Fact regarding the transaction) and April 5 th, 2016
Discounted Cash Flow method ("DCF")
Selected trading multiples methodology

BM&FBovespa
Shareholders' equity book value per share as of December 31 st, 2015
Volume weighted average price ("VWAP")

in the 12-month period ending on November 2nd, 2015 (the day prior to the First Material Fact regarding the transaction) and beginning on
November 3rd, 2014

in the 1-month period ending November 2nd, 2015 (the day prior to the First Material Fact regarding the transaction) and beginning on October
3rd, 2015

from November 3rd, 2015 (the day after the First Material Fact regarding the transaction) and April 5 th, 2016
Selected trading multiples methodology

Except as otherwise stated, all financial information used was prepared according to the International Financial Reporting Standards ("IFRS")

UBSs analysis does not include all of the pertinent information to determine the appropriateness of the transaction to BM&FBovespa and Cetip

Note:
1 This Valuation Report does not consider the potential value of synergies, the value of instruments or other elements of the transaction structure, nor any benefits or disadvantages of the
transaction

Transaction Background

On November 3rd, 2015, BM&FBovespa informed the market that it had engaged in preliminary discussions with Cetip to present their respective Boards of
Directors with a proposal for the combination of both companies ("First Material Fact")

on November 13th, 2015, BM&FBovespa informed the market that a non-binding proposal was approved by its Board of Directors consisting on a valuation
of R$39.00 per Cetip share (which represented a 15.5% premium compared to Cetip's closing price on October 30th, 2015) via a minimum 50% cash and
maximum 50% stock transaction

On December 4th, 2015, BM&FBovespa informed the market that it had received correspondence sent by the Board of Directors of Cetip expressing that the nonbinding proposal for the combination of the two companies sent by BM&FBovespa did not represent the fair value of Cetip

On February 19th, 2016, BM&FBovespa informed the market that its Board of Directors approved the presentation, to the Board of Directors of Cetip, of a
binding proposal for the combination of the operations of the companies

the binding proposal described the terms of a corporate reorganization and adjustment of the previous proposal to R$41.00 per Cetip share, which was to
consist in a payment of 75% cash (R$30.75) and 25% stock (R$10.25) with an exchange ratio of 0.8991 ordinary BM&FBovespa's shares for each Cetip
share. Based on this exchange ratio, the current shareholders of Cetip would own 11.8% of BM&FBovespas capital stock after the transaction

the amount to be paid in cash would be subject to adjustment to the Certificado de Depsito BancrioInterbank Deposit Certificate ("CDI") from the date
of the general shareholder's meeting of Cetip that would approve the transaction until the date of effective payment of the amount to Cetip's shareholders

On March 2nd, 2016, BM&FBovespa received a communication from Cetip's Board of Directors deciding:

not to accept, in the specific terms presented, the proposal for the acquisition of Cetip's shares submitted by BM&FBovespa on February 19th, 2016

to authorize its financial and legal advisors to initiate discussions about the proposed transaction; and

to authorize the signing, by Cetips Management, of a confidentiality agreement related to the aforementioned discussions

Source:
Notes:
1
2

BM&FBovespa's Material Facts


Last day of trading prior to the release of the material fact related to the discussions about a potential combination, adjusted for dividends declared on November 4, 2015
The amount of R$ 11.40 per BM&FBovespa share was used, which is the closing price as of October 30, 2015, date that preceded the disclosure of the First Material Fact regarding the transaction

Transaction Background (cont'd)

On April 8th, 2016, BM&FBovespa and Cetip published a joint material fact announcing a new offer with a floor for Cetip of R$42.00/share and a cap of
R$48.51/share. According to the material fact terms, BM&FBovespa and Cetip shareholders will vote to approve a corporate reorganization in which
BM&FBovespa will own all the shares issued by Cetip and Cetip shareholders will receive (i) shares of BM&FBovespa in an exchange ratio of 0.8991x for each
Cetip share (Reference Exchange Ratio) and (ii) R$30.75 in cash (the Original Reference Value of the Cash Portion), to be paid in a lump sum no later than
forty (40) days after all regulatory approvals required by the legislation have been obtained (Financial Settlement Date)

the Original Reference Value of the Cash Portion will be subject to adjustment by the variation in the CDI ("Adjusted Cash Portion") (a) between April 8th,
2016 and the Financial Settlement Date, inclusive, if the call for its General Shareholders Meeting to discuss the Transaction is disclosed by CETIP via CVMs
system by April 15, 2016, so such meeting is held until May 16, 2016 (on first call); or (b) between the date of the General Shareholders Meeting of CETIP
that approves the Transaction and the Financial Settlement Date, if the call for the General Shareholders Metting of Cetip to deliberate on the Transaction is
disclosed via CVM's system after April 15, 2016

the Adjusted Cash Portion and Reference Exchange Ratio will be adjusted to reflect any dividends, interest on capital and other corporate actions declared
and paid by BM&FBovespa between November 4, 20151 , and the date of computing the shareholder base (ex-date) up to the Financial Settlement Date,
inclusive (BM&FBovespas Corporate Actions). The Reference Exchange Ratio will be ajusted so that the product of (i) a new exchange ratio (Corporate
Actions Adjusted Exchange Ratio) and (ii) the result of subtracting (a) BM&FBOVESPAs Corporate Actions from (b) R$11.40 is always kept constant at
R$10.25

the value of the stock component to be received by Cetips shareholders is subject to a minimum of R$11.25 and maximum of R$17.76

Corporate Actions Adjusted Exchange Ratio on April 8th, 2016, was at 0.9358x and the value of the Adjusted Cash Portion was R$29.90

for the purposes of adjustments in the stock component, BM&FBovespa share price ("Average Closing Price") will be calculated using the closing price of
the 30 trading days prior to the Financial Settlement Date

final transaction structure regarding cash and stock components will be based on 2 scenarios:

(i) if the product of the Adjusted Exchange Ratio and the Average Closing Price ("Adjusted Price") is higher than the R$17.76, the R$30.75 of cash
component will be fixed and the Adjusted Exchange Ratio will be proportionally reduced (Reduced Exchange Ratio) until the product of the Reduced
Exchange Ratio and the Average Closing Price is R$17.76

(ii) if the Adjusted Price is lower than R$11.25, the R$30.75 of cash component will be raised by an additional amount ("Additional Amount") until it
equals 85% of the total amount to be paid to Cetip's shareholders

the Additional Amount will be equal to the amount required to equal R$11.25 by adding the Additional Amount to the Adjusted Price

if, after fixing the cash component at 85% of total amount to be paid to Cetip's shareholders, the R$11.25 threshold is not achieved, the Adjusted
Exchange Ratio will be raised to a new exchange ratio (Augmented Exchange Ratio) until the sum of (a) product of the Augmented Exchange
Ratio and the Transaction Price and (b) Additional Amount equals to R$11.25

Source:
Note:
1

BM&FBovespa's Material Facts


BM&FBOVESPA declared interest on capital (IoC) of R$ 0.1765 per share on November 13, 2015, and R$0.2525 per share on December 10, 2015. CETIP declared corporate actions of R$0.3326 per share on November 4, 2015, R$0.0994 per
share on December 18, 2015, R$0.3194 per share on March 2, 2016, and R$0.0843 per share on March 15, 2016

Cetip: Description of Valuation Methodologies Stated Herein


UBS has performed a multi-approach valuation of Cetip's shares based on different criteria: discounted cash flow, volume
weighted average price, book value and selected trading multiples analysis
Description

Relevance

VWAP

Average of the daily prices for Cetip weighted by the daily volumes
from November 3rd, 2014 to November 2nd, 2015 (1 year VWAP to First
Material Fact)
from October 3rd, 2015 to November 2nd, 2015 (1 month VWAP to First
Material Fact)
from November 3rd, 2015 to April 5th, 2016
Daily share price of Cetip calculated as average of the prices of each trade,
weighted by the volume of traded shares

This methodology takes into account current market value of the


company
represents market participants' view of overall value
given high liquidity of Cetips shares, the volume-weighted
historical price of the shares is a reasonable view of the
company's value by the market

Book Value

Shareholders equity according to Cetip's balance sheet under IFRS as of


December 31st, 2015 divided by the total number of shares excluding treasury
shares

This methodology only takes into account historical accounting value


of the company
does not account for business and operating profile, excluding
growth prospects, profitability and future return profile to
shareholders

Selected
Trading
Multiples

Median of price to earnings (P/E) and enterprise value to EBITDA (EV/EBITDA)


multiples of selected comparable companies based on consensus analyst
estimates for 2016E and 2017E
Comparable companies chosen based on a number of factors including
business mix, relative size and market position

Reflects the company's value based on the valuation of comparable


companies, without taking into consideration all of the companyspecific characteristics
Represents two of the most common valuation multiples for
exchanges used by equity investors and research analysts

Analysis based on long term financial projections of the company


Calculated based on discounted unlevered cash flows to firm and as a standalone basis
No potential synergies arising from the transaction were considered

Reflects the best estimates of BM&FBovespa as to the expected


future financial performance of Cetip
Captures company's expected performance in the short, medium
and long term
Identifies key value creation factors and allows evaluation of the
sensitivity to each of these factors
Projections may be affected by subjective considerations

Discounted
Cash Flow
(DCF)

Relevance

= Very high
Note:
1

= High

= Moderate

= Low

= Very Low

UBS based its analysis and valuation of Cetip exclusively with information publicly available to the market or directly provided by BM&FBovespa

Valuation Output for Cetip per Methodologies Herein


Valuation Output for Cetip Share Price (R$ per share)

Valuation Approach

Nov 3, 2014
to
Nov 2, 2015

VWAP

R$33.26

Oct 3, 2015
to
Nov 2, 2015

The valuation of Cetip shares herein is based on the


following methodologies:
Volume Weighted Average Price
from November 3, 2014 to November 2, 2015
(1 year VWAP to First Material Fact)
from October 3, 2015 to November 2, 2015 (1
month VWAP to First Material Fact)
from November 3, 2015 to April 5, 2016
Book value
book value per share as of December 31, 2015
Selected Trading Multiples
indicative range of 2016E and 2017E EV /
EBITDA and P / E trading multiples based on
selected comparable companies1
Discounted Cash Flow
free cash flow to the firm and utilizing a
perpetuity growth rate for terminal value post
2025
A variety of relevant methodologies may be
appropriate. For purposes of this Valuation Report,
DCF was adopted as the most relevant methodology
given that it reflects BM&F's best estimates of
expected future financial performance of Cetip
the valuations herein DO NOT reflect the
potential impact of transaction synergies,
nor other transaction benefits or
disadvantages included in the transaction
structure

R$34.29

Nov 3, 2015
to
Apr 5, 2016

R$38.24

R$6.53

Book Value

R$35.82

EV / EBITDA

R$39.39

Selected
Trading
Multiples

R$37.26

P/E

R$40.97

R$41.33

DCF

0.00
Note:
1

10.00

20.00

30.00

40.00

R$45.45

50.00

60.00

Includes ASX Limited, Bolsa y Mercados Espanoles, Bolsa Mexicana de Valores, Bursa Malaysia, Deutsche Boerse, Intercontinental Exchange, Singapore Exchange and TMX Group

BM&FBovespa: Description of Valuation Methodologies Stated Herein


UBS has performed a multi-approach valuation of BM&FBovespa's shares based on different criteria: volume weighted
average price, book value and selected trading multiples analysis
Description

Relevance

VWAP

Average of the daily prices for BM&FBovespa weighted by the daily volumes
from November 3rd, 2014 to November 2nd, 2015 (1 year VWAP to First Material
Fact)
from October 3rd, 2015 to November 2nd, 2015 (1 month VWAP to First Material
Fact)
from November 3rd, 2015 to April 5th, 2016
Daily share price of BM&FBovespa calculated as average of the prices of each trade,
weighted by the volume of traded shares

This methodology takes into account the market value of the company
represents market participants view of overall value
given high liquidity of BM&FBovespa's shares, the volume-weighted
historical price of the shares is a reasonable view of the company's value
by the market
Stock consideration for the transaction will be paid with liquid shares
BM&FBovespa is the 6th most liquid stock in Brazilian market with a highly
dispersed shareholder base
VWAP captures market's best view of fair value and it's less a biased
methodology because company is a true corporation
Based on the Reference Exchange Ratio, the largest shareholder of Cetip will
own 1.4% of the combined company that represents 1.1 days of trading1,2

Book Value

Shareholders equity according to BM&FBovespa's balance sheet under IFRS as of


December 31st, 2015 divided by the total number of shares excluding treasury shares

This methodology only takes into account historical accounting value of the
company
does not account for the business and operating profile, excluding
growth prospects, profitability and future return profile to shareholders

Selected
Trading
Multiples

Median of price to earnings (P/E) and enterprise value to EBITDA (EV/EBITDA) multiples
of selected comparable companies based on consensus analyst estimates for 2016E and
2017E
Comparable companies chosen based on a number of factors including business mix,
relative size and market position

Reflects the company's value based on the valuation of comparable


companies, without taking into consideration all of the company-specific
characteristics
Represents two of the most common valuation multiples for exchanges used
by equity investors and research analysts

Considerations on BM&FBovespa Valuation Approach4

A variety of relevant methodologies may be appropriate. For purposes of this Valuation Report, Volume Weighted Average Price was adopted as the most relevant methodology
given the transaction structure and that the company is highly traded and well covered by the market and research

The adoption of same assessment criteria for both companies is only legally required in the case of transactions between related parties, which is justified because of the concern on
the reciprocal treatment of non-controlling shareholders of the companies involved

From the technical point of view (a) BM&FBovespa was evaluated by the VWAP methodology and not by DCF due to the significant portion to be paid in cash to Cetip's
shareholders, in addition to the fact that such shares will be delivered at market value and could be sold at any time; and (b) the exclusively valuation of Cetip using the discount cash
flow method is justified because, with the conclusion of the Transaction, BM&FBovespa's shareholders will become holders of the totality of Cetip's shares, from what arises the
need to also know the future cash flows to be generated by a business that will be fully integrated to Bovespa

Relevance

= Very high
Note:
1
2
3
4

= High

= Moderate

= Low

= Very Low

Considering average daily volume traded in number of shares (from April 5, 2015 to April 5, 2016)
ICE stake as of as of March 18th, 2016 (last update of Cetip's website)
The percentage to be received in cash will not be inferior to 62.7%
This Valuation Report does not contain all of the information required to make a determination on the appropriateness, valuation nor structure of the Transaction and does not purport to convey a
recommendation with respect to pursuing or not the Transaction

Valuation Output for BM&FBovespa per Methodologies Herein


Valuation Output for BM&FBovespa Share Price (R$ per share)

Valuation Approach

Nov 3, 2014
to
Nov 2, 2015

VWAP

R$10.73

The valuation of BM&FBovepa shares is based on the


following methodologies:

Oct 3, 2015
to
Nov 2, 2015

R$11.67

Nov 3, 2015
to
Apr 5, 2016

R$12.52

Volume Weighted Average Price

from November 3, 2014 to November 2, 2015


(1 year VWAP to First Material Fact)

from October 3, 2015 to November 2, 2015 (1


month VWAP to First Material Fact)

from November 3, 2015 to April 5, 2016

Book value

R$10.30

Book Value

Selected Trading Multiples

R$9.18

EV / EBITDA

R$10.09

R$15.43

5.00

Note:
1

8.00

11.00

14.00

R$16.97

17.00

indicative range of 2016E and 2017E EV /


EBITDA and P / E trading multiples based on
selected comparable companies1

A variety of relevant methodologies may be


appropriate. For purposes of this Valuation Report,
Volume Weighted Average Price was adopted as the
most relevant methodology given the transaction
structure and that the company is highly traded and
well covered by the market and research

Selected
Trading
Multiples
P/E

book value per share as of December 31, 2015

20.00

Includes ASX Limited, Bolsa y Mercados Espanoles, Bolsa Mexicana de Valores, Bursa Malaysia, CBOE Holdings, CME Group, Deutsche Boerse, Intercontinental Exchange, Nasdaq, Singapore Exchange and
TMX Group

Section 2

UBS Information and Declarations

Information Regarding UBS


UBS is a global Investment Banking platform with offices in more than 50 countries, over 50 years of experience in Brazil and
150 years worldwide
Relevant Experience
UBS has significant experience advising large companies in Brazil and globally. Among the recent transactions performed in the financial industry in Brazil,
we highlight:
Recent UBS Brazil Experience with Transactions Involving Companies in the Financial Sector

Pending
~US$3 billion
Global Coordinator and Financial Advisor IPO

April 2013
US$5.1 bn
Joint Lead Manager
IPO

February 2010
US$600 million
Sole Financial Advisor Commercial and Direct
Investment into CME

October 2009
US$447 million
Joint Global Coordinator and Bookrunner
Initial Public Offering

Among the recent transactions performed in the financial industry worldwide, we highlight:
Recent UBS Experience with Exchanges / FinTech Transactions
March 2016
27 billion

July 2015
599 million

April 2015
$361 million

May 2014
US$1.5 billion

Financial Advisor to London Stock Exchange on its


merger with Deutsche Brse

Joint Global Coordinator


Initial Public Offering

Joint Bookrunner
Initial Public Offering

Joint Active Bookrunner

September 2013
Undisclosed

September 2013
US$750 million

June 2013
A$553 million

February 2013
$500 million

Minority Investment in ACE Portal

Joint Bookrunner
30-year Fixed Rate Senior Note Offering

Sole lead manager and underwriter on Equity


Offering

Joint Bookrunner
Initial Public Offering

Initial Public Offering

Internal approval process


UBS's internal valuation committee reviewed the analysis performed by the project team. The committee is formed by professionals with experience in
M&A and financial advisory. This committee has met with the project team and discussed the main assumptions and aspects related to the valuation
methodologies presented in the Valuation Report and approved its release

11

Information Regarding UBS


Experience in transactions involving Brazilian listed companies in the last 4 years
Company

Date

December 2015

Source:

Transaction Value

Transaction Description

Financial advisor to SALIC (Saudi Agricultural and


Livestock Investment Company) in a private capital
increase in Minerva SA

Financial Adviser to British American Tobacco to acquire


the remaining stake in Souza Cruz following delisting
process from the Brazilian Stock Exchange

Financial adviser and fairness opinion provider to


Santander Group on its voluntary offer to acquire the
minority interests in Santander Brasil

Financial Advisor to Camargo Corra SA to acquire the


remaining stake in CCDI following delisting process from
the Brazilian Stock Exchange

Advised Casino in the change of control of Grupo Po de


Acar

Advisor to Alphaville Urbanismo S.A. on the sale of


Alphaville Participaes S.A. to Gafisa

Advisor to the Independent Committee of CCR on the


acquisition of three airports located in Costa Rica,
Curaao and Ecuador

US$187 million

February 2015

US$3.5 billion

April 2014

US$6.5 billion

October 2012

US$120 million

August 2012

Undisclosed

June 2012

US$880 million

January 2012

US$215 million

UBS CCS
12

UBS Team Responsible for the Valuation Report


Andr Laloni

Jose Luis Martinez

Managing DirectorHead of CCS Brazil and Southern Cone

Managing DirectorHead of LatAm M&A

Andr Laloni joined UBS Investment Bank as Managing Director and Head of Brazil & Southern Cone for CCS
based in So Paulo. Andr was most recently Head of Corporate Finance for Barclays in Brazil, where he's
worked since 2009. Prior to joining Barclays, he held coverage roles at Goldman Sachs and Unibanco in Brazil,
and similar roles at UBS in New York
His relevant advisory transactions include: Oi on five consecutive M&A divestiture assignments in the last 18
months totaling ~$1.7bn, Vale on its sale of selected assets in Chile, Group 1 Automotive in its $200mm
acquisition of UAB Motors, Oi on its $17.2bn corporate restructuring, Intercement in the acquisition of the
remaining 67% it did not own in Cimpor ($5.4bn) and many others
Andr holds an MBA from University of Virginia, a degree in Mechanical Engineering from the UnicampUniversidade de Campinas. He is fluent in Portuguese and English

Jose Luis Martinez is Head of UBSs Latin America M&A practice. Mr. Martinez joined UBS in 2016 after 20 years
at J.P. Morgan and predecessor Bear Stearns, where he held a number of senior roles , including Managing
Director and Head of Latin America Investment Banking at Bear Stearns from 2005 2008, and several regional
and industry leadership positions at JP Morgan between 2008 and 2016, including Head of Latin America Power
& Utilities
Mr. Martinez has executed over 100 transactions, including more than US$150 billion in mergers and
acquisitions as well as billions in fixed income and equity financings
Mr. Martinez is fluent in Spanish and Portuguese. He obtained a Bachelor of Science in Business Administration
degree with distinction from the University of North Carolina at Chapel Hill, and an MBA with distinction from
the Kellogg Graduate School of Management - Northwestern University

Vik Hebatpuria

Daniel Bassan

Managing DirectorHead of Financial Technology & Services, Americas

Managing DirectorBrazil

Vik Hebatpuria is Head of Financial Technology & Services, Americas. Prior to joining UBS in 2013, Mr.
Hebatpuria was a senior banker in the Financial Institutions Group at Credit Suisse, focusing on financial
technology and insurance brokerage. Before joining Credit Suisse, Mr. Hebatpuria spent 5 years as a Vice
President at Marsh & McLennan developing risk management solutions related to mergers and acquisitions
He has worked on transactions such as: the $9.1bn sale of SunGard to Fidelity National Information Services, the
599mm IPO of Flow Traders, the $1.1bn refinancing for AlixPartners, the $361mm IPO of Virtu Financial, the
$1.3bn IPO of Markit, the $1.1bn refinancing for ION Trading, the $13.5bn acquisition of BGI by BlackRock,
several financings for Virtu Financial, the $300mm dividend recap for BATS Global Markets and many others
Mr. Hebatpuria received his MBA from the Stern School of Business at New York University, an MS in
Environmental Engineering from the University of Cincinnati and a B.S. in Civil Engineering from VJTI, University
of Bombay

Daniel Bassan joined UBS in March 2016 as Managing Director after 5 years as Managing Director at Credit
Suisse. He was resposible for the coverage of Real Estate, TMT, Metals and Mining, Financial Sponsors and
Education. Previously he worked at BTG Pactual for 11 years
Daniel has participated in many different transactions in M&A, equity and debt issuances and restructurings. His
most relevant transactions include financial advisory for Vivendi in the sale of its subsidiary GVT to Telefonica,
sale of IBMEC group to DeVry Education Group, Sale of Tijuca shopping Mall, Multiplan IPO, Even IPO and many
others
He graduated in Civil Engineering from Pontifcia Universidade Catlica Rio de Janeiro and is fluent in Portuguese
and English

Eugene Kim

Gaurav Mehta

Executive DirectorAmericas M&A

DirectorFinancial Technology & Services

Eugene Kim joined UBS in 2006, and has over 10 years of investment banking experience. Eugene has advised
on transactions across a variety of industries, including the Financial Institutions, Real Estate, Telecom, and
Technology sectors
Mr. Kim has worked on transactions such as: the 21.2bn sale of Visa Europe to Visa Inc, Equifax's $1.9bn
acquisition of Veda Group, Sprint's US$21.6bn sale of control to Softbank, Leucadia National Corp.s $3.8bn
stock-for-stock merger with Jefferies Group
Eugene graduated from the Wharton School at the University of Pennsylvania with concentrations in Accounting
and Finance

Gaurav Mehta is a Director in UBS's Financial Institutions Group specializing in Financial Technology & Services
Prior to joining UBS, Mr. Mehta was a Vice President in the Financial Institutions Group at Credit Suisse focusing
on financial technology and specialty finance. Previously, Mr. Mehta spent five years as an Associate at Bank of
America and as a consultant with a focus on the financial services sector companies
Mr. Mehta has worked on transactions such as: the 21.2bn sale of Visa Europe to Visa Inc., the $16.2bn
acquisition of Alico by Metlife, Equifax's $1.9bn acquisition of Veda Group, the $1.3bn IPO of Markit, the
$1.1bn refinancing for AlixPartners, the $923mm IPO of Air Lease, the $670mm LBO of Duff & Phelps by Carlyle
and many others
Mr. Mehta received his MBA from the Stern School of Business at New York University and a Bachelor in
Technology in Electrical Engineering from Indian Institute of Technology Delhi

13

UBS Team Responsible for the Valuation Report


Anderson Brito

Bradford Lo Gatto

DirectorBrazil

Associate DirectorFinancial Technology & Services

Anderson Brito is a Director of UBS Investment Bank in Brazil. Prior to joining UBS in January 2011, he worked in
the Americas M&A Group at Standard Bank in 2010. Prior to this position he worked at the business consulting
firm Bain & Company from 2008 to 2010 as Associate Consultant
Mr. Brito has executed over 30 transactions, including more than R$75 billion in merger and acquisitions and
capital markets
Anderson holds a Bachelor of Science in Aeronautical Infrastructure Engineering from Instituto Tecnolgico de
Aeronutica (ITA). He is fluent in Portuguese and English

Bradford Lo Gatto is an Associate Director in UBSs Financial Institutions group specializing in Financial
Technology & Services
Prior to joining UBS, Mr. Lo Gatto spent 7 years on the buy-side as a portfolio manager and research analyst. He
has worked on transactions including: the 21.2bn sale of Visa Europe to Visa Inc., and the $361mm IPO of
Virtu Financial
Mr. Lo Gatto received his MBA with distinction from the Johnson Graduate School of Management at Cornell
University and a Bachelor of Arts in Economics from Cornell University. He has also earned the right to use the
CFA designation

Bruno Davila

Mikhail Neto

AnalystBrazil

AnalystBrazil

Bruno Davila joined UBS Investment Bank in 2013. He works in the So Paulo office as an analyst in investment
banking

Mikhail Neto joined UBS Investment Bank in 2015. He works in the So Paulo office as an analyst in investment
banking. Prior to joining UBS, Mikhail worked at Hyundai Glovis in the Seoul office

His relevant transaction experience includes: Financial Advisor to SALIC on its US$187 million investment in
Minerva, Financial Advisor to Grupo Colombo on the merger with GGAC

His relevant transaction experience includes: Financial Advisor to SALIC on its US$187 million investment in
Minerva

Bruno holds Bachelor of Business Administration from Fundao Getulio Vargas FGVEAESP

Mikhail graduated in Industrial Engineering from Universidade Federal de So Carlos (UFSCar)

UBS Brasil Servios de Assessoria Financeira Ltda.

Andr Laloni

Jose Luis Martinez Vik Hebatpuria

Daniel Bassan

Eugene Kim

Anderson Brito

Bruno Davila

14

UBS Declarations
In accordance with the provision set forth in Annex III of Rule No. 361 of the Brazilian Securities and Exchange Commission ("CVM" and
"CVM Rule 361", respectively), UBS declares that:

as of March 28, 2016 UBS, its parent company and related parties, held under its discretionary management 5,271,408 shares issued by
BM&FBovespa SA - Bolsa de Valores Mercadorias e Futuros and 1,575,302 shares issued by CETIP SA - Mercados Organizados

it does not have any commercial or credit information of any kind that can impact the Valuation Report

does not have any conflict of interest that can reduce the independency required for the performance of its functions

in the last 12-month period until the present date, UBS has received no remuneration from either BM&FBovespa or from Cetip (not
considering the compensation to be received due to the issuance of this Valuation Report)

15

Section 3

Cetip

Section 3.A

Cetip
Company and Sector Overview

CetipCompany Overview
Cetip is Latin Americas largest depositary of private fixed income securities and Brazils largest private asset clearinghouse
Presentation of Cetip Activities

1984
Cetip is established as a not-forprofit organization
1988
Agreement with Anbima to operate
SND (National System of
Debentures)
2008
Demutualization process: creation
of Cetip S.A.
2009
Advent becomes a shareholder with
a 32% stake
IPO and listing at Novo Mercado of
BMF Bovespa
2010
Acquisition of the Financing Unit
(GRV Solutions) financed by the
companys first issuance of
debentures

Established in 1984 as a not-for-profit by the participants of the


Brazilian private fixed income market, with the support of the
Central Bank

Became a public company in 2009; its shares are traded on


BM&FBovespa under ticker symbol CTIP3; part of the Ibovespa and
IBrX-50 Index
Today, Cetip operates in two distinct businesses:

the Securities Unit is Brazils leader in the registration,


custody, and settlement of private fixed income securities

the Financing Unit offers an electronic system for the entry of


financial restrictions related to vehicle financing transactions
with local DMVs (Sircof), covering all of such registrations in
Brazil and the custody of such information (SNG)

2015 Gross Revenues Breakdown


Others
7%

Registration
9%

Transaction Fee
11%

Custody
28%

Auto Financing
Unit
31%

Intercontinetal Exchange, Inc. ("ICE") purchased 12% stake from


Advent International for US$512mm on July 24th, 2011

Monthly Fee
14%

2011
Cetip s brand repositioning
ICE becomes a shareholder with
12.4% stake (from Advent)

Ownership Structure1

2012
Cetips shares are included in the
IBOVESPA and IBrX-50 indexes

Others
88%

2013

Board and
Management

ICE
12%

< 1%

Amendment of the companys


bylaws, seeking to improve Cetips
corporate governance
Launching, in partnership with FNC,
of the real estate appraisal platform
2015
Cetip Trader becomes Bacens
dealer platform (Brazilian Central
Bank)
Source:
Company materials, CVM
Note:
1
As of March 18th, 2016

18

CetipFinancial Highlights
Gross Revenues (R$mm) and Gross Revenues Breakdown
1,376

1,222
1,076
917

21%

20%

36%

36%

2012A
Auto financing unit

2013A
Custody Monthly fee

28%

35%

31%

2014A
Registration

69.6%

68.8%

1,125

1,016

909

14%

23%

EBITDA1 (R$mm) and EBITDA Margin

69.5%

7%
11%
9%

7%
10%
10%
15%

8%
10%
11%
15%

8%
10%
11%
15%

Net Revenues (R$mm)

791

2015A
Transaction Others

2012A

2013A

2014A

2015A

Net Debt (R$mm) and Net Debt/EBITDA

Net Income (R$mm)

0.8x

68.4%

0.6x
0.4x

550

632

699

0.3x

770

275

2012A

2013A

Source:
Note:
1

2014A

2015A

2012A

361

2013A

427

498

498

416
261

2014A

2015A

2012A

2013A

199

2014A

2015A

Company filings
Excludes equity in the results of associate

19

CetipHistorical Financial Analysis


Balance SheetLiabilities and Equity

Balance SheetAssets

Fiscal year ended in December 31st

Fiscal year ended in December 31st

2012A

2013A

2014A

2015A

Current

375

337

240

340

Suppliers

18

26

23

54

802

Labor obligations and social charges

37

48

57

68

107

118

Taxes payable

11

13

15

18

17

17

64

18

15

25

46

80

110

215

2,192

2,231

2,258

2,489

66

156

17

21

Long-term receivables

77

86

136

374

Derivatives

12

Financial investments - available and restricted

73

80

128

249

Deferred revenues

44

43

40

Derivatives

121

Judicial deposits

789

709

1,012

1,461

Prepaid expenses

Other receivables

Deferred income tax and social contribution

143

176

196

136

Investments

Investment in associate

Provision for contingencies and legal


obligations

629

475

498

499

Other investments

Loans and finance lease obligations

13

271

775

41

41

50

48

Deferred revenues

42

41

37

Intangible assets

2,069

2,098

2,066

2,061

Shareholders equity

1,428

1,690

1,746

1,6962

Total assets

2,591

2,736

2,999

3,497

Total liabilities and shareholders' equity

2,591

2,736

2,999

3,497

2012A

2013A

2014A

2015A

399

505

741

1,008

295

382

590

Accounts receivable

81

93

Recoverable taxes and contributions

17

Other receivables
Prepaid expenses

R$mm
Current
Cash and cash equivalents
Financial investments - available and restricted

Non-current

Property and equipment

Source:
Notes:
1
2

R$mm

Income tax and social contribution


Dividends and interest on own capital payable
Purchase pricedeferred payments
Debentures issued
Loans and finance lease obligations

Other liabilities
Non- current
Suppliers

Debentures issued

Company fillings, CVM


Intangible assets are composed mostly by goodwill and contractual relations
Includes R$83 million of additional dividends proposed

20

CetipHistorical Financial Analysis


Profit & Loss
Fiscal year ended in December 31st
2012A

2013A

2014A

2015A

'12'15 CAGR

791

909

1,016

1,125

12.5%

14.9%

11.8%

10.7%

(308)

(352)

(400)

(448)

(38.9%)

(38.7%)

(39.4%)

(39.8%)

(118)

(139)

(164)

(184)

Share-based remuneration with no cash disbursement

(26)

(20)

(16)

(20)

Depreciation and amortization

(67)

(76)

(83)

(93)

Outsourced services

(63)

(75)

(87)

(100)

General and administrative expenses

(32)

(36)

(41)

(40)

Equipment and systems rental

(1)

(2)

(3)

(3)

Board members' compensation

(2)

(2)

(2)

(2)

Taxes and fees

(1)

(1)

(2)

(1)

Other operating expenses

(1)

(1)

(2)

(5)

Other operating income

Equity in the results of associate

483

557

616

677

R$mm
Net revenue from services
Revenue growth
(Operating expenses)/other operating income
Margin
Personnel expenses

(=) EBIT
(+) Depreciation and Amortization
(=) EBITDA1
Margin
Financial result
Financial income
Financial expenses
Income before taxation

13.3%

67

76

83

93

550

632

699

770

69.5%

69.6%

68.8%

68.4%

(96)

(44)

(59)

(111)

5.0%

39

34

59

294

96.1%

(135)

(77)

(118)

(406)

44.3%

11.9%

387

513

558

567

13.6%

(112)

(152)

(131)

(70)

(14.5%)

Current

(51)

(90)

(111)

(130)

Deferred

(61)

(61)

(20)

60

Income tax and social contribution

Net income for the period


Net income margin

Source:
Note:
1

275

361

427

498

34.8%

39.7%

42.0%

44.3%

21.9%

Company fillings, CVM


Excludes equity in the results of associate

21

CetipSector Overview
Brazilian Fixed Income, Derivatives and Credit Overview

Brazil fixed income


instruments and OTC
derivatives grew at a
CAGR 2010-'15 of 9.4% and
36.9%, respectively

Fixed Income Volume Outstanding (R$ bn)


4,133
3,769
3,454

3,182
2,828
7%

21%

8%
1%

5%

23%

Credit volume grew at a


CAGR 2010-'15 of 14.7%,
but at a lower pace than in
the previous years

12%
29%

11%

8%
7%

18%
19%

30%

14%

23%
15%

17%
16%
16%

4,435
2,054
15%
9%

8%

8%

OTC Derivatives Volume Outstanding (R$ bn)

15%

11%

16%

2010
2011
Investment Fund
DI

848

17%

584
427

33%

33%

2012
2013
Debentures
Letra Financeira

34%

2014
CDB

1,117

1,034

13%

12%
29%

32%

11%

36%

2015

22%
70%

69%

2010

2011
Swap

Other

Credit Growth (YoY Growth)

29%

74%

70%

58%

2012

2013

2014

5%

6%

25%

8%

22%

21%

Forward Contracts

46%

53.7%

Other Derivatives

45.4%

49.1%

52.6%

40.5%

54.3%

3,218

2,715

18.8%
16.4%

54.7%

3,018

35.1%

15.1%

2015

Credit Expansion (R$ bn and % of GDP)

30.7%

20.6%

22%

13%

8%

2,368
2,034

14.7%

1,731

11.3%

1,234

1,421

6.7%

2008

Source:

2009

2010

2011

2012

2013

2014

2015

2008

2009

2010

2011

2012

2013

2014

2015

Brazilian Central Bank, Cetip


22

CetipSector Overview
Brazilian Automotive and Real Estate Financing Overview

In the automotive sector,


acquisition loans have
been decreasing since
2008 in number of
vehicles, but increased in
volume of loans at a CAGR
2008-15 of 9.8%

Vehicle Acquisition LoansTotal Outstanding


('000)
7,950

6,949
3,920

4,461

198

7,685

6,810

6,758

3,241

213
10.1%

203

3,233
2,973

9.3%

9.1%

92

105
10.3%

89.7%

10.5%

89.6%

89.9%

90.7%

90.7%

90.9%

2008

3,269

2009

3,937

2010

3,870

2011

New Vehicles

3,590

2012

3,517

2013

3,160

2014

2,339

2015

7.8%

8.4%

7.0%

2008

89.7%

2009

500

4.6%

2010 2011
Personal Loans

3.5%

24

24

48
8

58

23

19

6
74

341

36
3 2

75

255
189

60

76

131

2009

2011

2012

2013

2014

2015

Mortgages

31
82

2010

21
12

Auto

1 4

Credit Card

20
22

84

2008

2015

432

2.6%

84

2012 2013 2014


Corporate Loans

Population Debt by Credit Type (%)

50

5.8%

2.0%

89.5%

Used Vehicles

Mortgages for IndividualsTotal Outstanding


(R$ bn and % of GDP)

Source:

177

9.3%

154
5,312

3,359

216
10.4%

10.3%

6,393

3,815

3,541

3,489

In Brazil, mortgages grew


at a CAGR 2008-15 of
35.4%

7,857

Vehicle Acquisition LoansTotal Outstanding


(R$ bn)

14
11

Others

Brazilian Central Bank, Sistema Nacional de Gravames, Fenabrave


23

Section 3.B

Cetip
Valuation

Valuation by Volume Weighted Average Price (1/2)


VWAP for the last 12 months prior to the First Material Fact is R$33.26 and R$38.24 from the First Material Fact to April 5th,
2016
Historical VWAP Price of Cetip Prior to the First Material Fact

Historical VWAP Price of Cetip Since the First Material Fact

(from November 3rd, 2015 to April 5th, 2016)

(from November 3rd, 2014 to November 2nd, 2015)

12.0

50.00
November 13th, 2015
NBO Date

40.41

10.0

40.00

March 2nd, 2016


Declined BO

40.00

6.0
20.00

Price VWAP (R$)

33.26

8.0
Volume (mm)

Price VWAP (R$)

8.0
30.00

December 3rd, 2015


Declined NBO

February 19th, 2016


BO Date
6.0

20.00

4.0

10.00

2.0

0.00
Nov-14

0.0
Jan-15
Volume

Source:

Mar-15

Jun-15

Aug-15

Price VWAP (R$)

Bloomberg as of April 5, 2016

Oct-15
VWAP

10.0

38.24

33.99

30.00

12.0

Volume (mm)

Material Fact Released


on November 3rd, 2015

50.00

4.0

10.00

0.00
Nov-15

2.0

0.0
Dec-15
Volume

Feb-16
Price VWAP (R$)

Apr-16
VWAP
NBO: Non-Binding Offer
BO: Binding Offer
25

Valuation by Volume Weighted Average Price (2/2)


VWAP for the periods of 1, 30, 60, 90, 180 trading days and 1 year before the First Material Fact and for the period since the
date of the First Material Fact until April 5th, 2016

Summary of VWAP for Selected Periods

Price VWAP (R$)


Trading Days Prior to the First Material Fact Release

Weighted by Trading Volume

33.99

30

33.73

60

33.31

90

33.91

180

33.44

12 months (from November 3rd, 2014 to November 2nd, 2015)

33.26

Since the First Material Fact (from November 3rd, 2015 to April 5th, 2016)

38.24

Source:

Bloomberg as of April 5, 2016


26

Valuation by Shareholders' Equity Book Value


Equity book value per share is R$6.53 for Cetip, as of December 31st, 2015

Equity Book Value per Share

R$ million, unless otherwise indicated

As of December 31st, 2015

Total Assets

3,497

Total Liabilities

1,801

Shareholders' Equity

1,696

Outstanding Shares (mm)


Common Shares
Treasury Shares

Equity Book Value per Share (R$)

Source:
Company filings
Note:
1
Shareholders' Equity / Outstanding Shares

260
263
3

6.531

27

CetipSelected Trading Multiples Methodology

UBS has used the trading multiples valuation approach in order to estimate the economic value of Cetip

Selected Trading Multiples is a relative valuation method which estimates the value of a company using ratios of market valuation to financial metrics of
similar publicly traded companies; traditional trading multiples include P/E and EV/EBITDA

Trading multiples of Cetips comparable companies were calculated based on the EBITDA and net income forecasts from market analysts for the years
2016 and 2017, and applied over the EBITDA and net income forecasts for Cetip over the same years, given that forecasts from market analysts are
generally limited to two years

Selected comparable companies are international exchanges sharing several aspects in common with Cetip, including the following1:

business model

revenue mix

product and service offerings

size and scale of operations

monopolistic position within its home country in certain market segments the comparable company operates in

emerging market exposure

Selected Trading Comparables

Note:
1
Not every aspect applicable for each selected comparable company. See Appendix A for more details on selection of comparable companies

28

CetipSelected Trading Multiples


EV/EBITDA

Price / EPS

Headquarters

April 5, 2016
Price (R$)

Market Value
(R$bn)

Enterprise Value
(R$bn)

CY'16E
(x)

CY'17E
(x)

CY'16E
(x)

CY'17E
(x)

United States

869.83

104.7

129.5

12.5

11.4

16.8

15.1

Germany

302.75

56.2

64.6

11.0

10.1

15.9

14.1

Australia

114.43

22.2

19.3

12.0

11.6

18.8

18.1

Singapore

21.02

21.8

20.4

15.5

14.4

22.7

21.1

Spain

113.25

9.5

8.6

8.7

8.8

13.0

13.3

Canada

128.38

7.0

9.6

10.2

9.6

12.6

11.4

Malaysia

8.19

4.4

4.3

14.8

13.9

22.4

21.0

Mexico

5.73

3.6

3.3

10.9

9.9

18.5

16.5

Mean

11.9

11.2

17.6

16.3

Median

11.5

10.7

17.6

15.8

Min

8.7

8.8

12.6

11.4

Max

15.5

14.4

22.7

21.1

Source: FactSet as of April 5, 2016


Note:
1
R$ / US$ exchange rate of 3.67 as of April 5, 2016, fully diluted shares using treasury stock method

29

Cetip Valuation Based on Selected Trading Multiples


EV / EBITDA Analysis

(R$ mm)
EV/EBITDA Multiple (sample median)
EBITDA (consensus)
Implied Enterprise Value

(-) Net Debt


(-) Minorities
Implied Equity Value
Total Shares Outstanding (mm)2
Share Price (R$)

CY'16E

CY'17E

11.5x

10.7x

871

981

10,034

10,519

443

443

9,592

10,076

261

261

36.68

38.54

Min. Range

Max. Range

Mid-Point ("MP")

MP-4.75%

MP+4.75%

10,277

9,789

10,765

9,834

9,367

10,301

37.61

35.82

39.39

Min. Range

Max. Range

Mid-Point ("MP")

MP-4.75%

MP+4.75%

10,228

9,742

10,714

39.11

37.26

40.97

Price to Earnings Analysis


(R$ mm)
P/E Multiple (sample median)
Net Income (consensus)
Implied Equity Value
Total Shares Outstanding

(mm)2

Share Price (R$)

Source: FactSet, Research reports


Note:
1
FactSet (as of April 5, 2016)
2
Fully diluted shares using treasury stock method

CY'16E

CY'17E

17.6x

15.8x

577

651

10,173

10,282

261

261

38.91

39.32

30

Cetips Revenues Assumptions


Securities Segment

Gross Revenues
(by segment)

Financing Segment

Taxes and Revenue


Deductions

Registration

fixed income security registration product long-term volume growth rate of approximately 10% - 14%, pricing fixed at 2015 levels

derivatives security registration product long-term volume growth rate of approximately 10% - 14%, pricing fixed at 2015 levels
Custody

debentures, bank funding instruments, OTC contracts, structured notes and other securities custody product with a long-term
volume growth of ~10% and maintenance of the registration fee (bps), pricing fixed at 2015 levels

end users: monthly fee per user adjusted by Broad National Consumer Price Index ("IPCA") and number of users with a longterm growth rate of approximately 8% - 9%
Transactions: cost per transaction adjusted by 50% of IPCA and number of transactions with a long-term growth rate of ~10%
Monthly utilization: average cost adjusted by IPCA and average number of users with a long-term growth rate of ~2%
Others1: long-term growth rate of ~10%
New projects: launch of an integrated trading platform focused on government and corporate bonds and bank securities targeting
an increase of market share from current 13% (Cetip Trader) to 20% to be fully operational in 2020

SNG (Communication of liens to DMV): Average ticket adjusted by IPCA and number of financed vehicles with a long-term growth
rate of approximately 2% to 3%
Sircof (Registration of vehicle financing contracts): % of financed vehicles registered kept constant, pricing fixed at 2015 levels and
average ticket adjusted by IPCA
Market data and solution development: long-term growth rate of ~9%
New projects:

electronic appraisal: report for used cars targeting a market share of 75% (total numbers of used cars financed in 2018) to
be fully operational in 2020

electronic formalization: electronic information flow for vehicle financing targeting a market share of 40% (total numbers of
used cars financed in 2018) to be fully operational in 2020
Real estate appraisal:

services of real estate appraisal with average fee of R$125.00 (base 2016) per unit adjusted by IPCA

price already net of costs associated with this service

total number of financed units of 450 thousand (base 2016) with 2% CAGR ('16'25) and Cetip market share of 62.5% in
2016, 70% in 20172019 and 80% from 2020 onwards
17.4% of the gross revenue (realized in the 2015)
Assumes 3 p.p reduction in the Securities segment deductions from 2017 onwards

Source: BM&FBovespa Management


Note:
1
Other revenue are derived primarily from services rendered to Interbank Payments Chamber for processing interbank financial transfers. The Company has been engaged by CIP to process electronic
cash transfers as well as to handle the financial settlement of credit documents and collection slips

31

CetipExpenses and Other Assumptions


Adjusted by IPCA + 2%

Expenses with personnel, share option plan (SOP), auditors, consultants and legal fees, board compensation, general and
administrative expenses, support and maintenance of systems, equipment expenses and rent

Adjusted by IPCA
Expenses

Maintenance and cleaning of facilities, maintenance of machinery and equipment, reception, security and surveillance, media
relations, marketing, recruitment, other operating expenses and other operating income

Estimated as % of Revenues

Taxes and fees, regulatory costs, registration costs and other services

All based on the % of 9M15. Adjustments in regulatory costs and registration costs in order to reflect the change in the accounting
of the contract system in So Paulo as of 2Q'15

Working Capital

Considers no change in net working capital

Taxes

34% of adjusted results before taxes1

Maintained at approximately 6% of net revenues, based on the average capex as % of net revenues in the prior 4 years

One-off capex increase in 2016 due to new projects expected to start in 2020

Capex

Source: BM&FBovespa Management


Note:
1
Before adjustment for interest on own capital payment, an alternative to making dividend payments to shareholders

32

CetipFinancial Summary
Historical

Projected

CAGR (%)

(R$mm)

2012

2013

2014

2015

2016E

2017E

2018E

2019E

2020E

2021E

2022E

2023E

2024E

2025E

'12 - '15 '16E - '25E

Net Revenues

791

909

1,016

1,125

1,267

1,437

1,584

1,743

2,197

2,410

2,638

2,888

3,162

3,539

12.5%

12.1%

EBITDA1

550

632

699

770

881

1,021

1,136

1,262

1,607

1,779

1,965

2,171

2,397

2,704

11.4%

13.3%

11.4%

13.8%

12.8%

17.6%

20.7%

17.6%

69.5% 69.6% 68.8% 68.4% 69.6% 71.0% 71.7% 72.4% 73.1% 73.8% 74.5% 75.2% 75.8% 76.4%

% Margin

Less: Depreciation &


Amortization

(67)

(76)

(83)

(93)

(104)

(118)

(97)

(107)

(134)

(147)

(161)

(177)

(193)

(216)

483

557

616

678

777

902

1,039

1,156

1,472

1,631

1,804

1,994

2,204

2,488

(96)

(44)

(59)

(111)

(76)

(34)

18

61

111

175

248

330

424

530

387

513

558

567

701

868

1,057

1,217

1,583

1,806

2,052

2,324

2,627

3,018

Less: Taxes

(112)

(152)

(131)

(70)

(202)

(253)

(310)

(355)

(469)

(531)

(599)

(674)

(756)

(866)

Net Income

275

361

427

498

499

615

747

862

1,114

1,275

1,453

1,651

1,871

2,152

EBIT

Financial Revenues and


Expenses
EBT

Source: BM&FBovespa Management


Note:
1
Historical data excludes equity in the results of associate

33

CetipDiscounted Cash Flow

Methodology

Currency

Discounted
cash flow

Discount Rate

Perpetuity Growth
Rate

Unlevered discounted cash flow method

Projection of the unlevered cash flows to firm

Cash flows are discounted using the weighted average cost of capital (WACC) to calculate their present value using
mid-year convention

Valuation prepared on a stand-alone basis, not including operating, financial, or strategic benefits or losses, if any, that
Cetip may have upon conclusion of the potential Transaction

Projections in nominal R$

Converted to US$ using Central Bank of Brazil projections through 2020; R$ further depreciated through 2025 by ratio
of each countries' stated inflation target based on Economist Intelligence Unit projections

Base date: December 31, 2015

Projection period: annual projections from 2016 to 2025

Discounted cash flow in nominal US$

Calculated based on: (i) risk-free return rate per US 10 year Treasury bonds rate adjusted to Brazil US$ government bond
rate, (ii) market risk premium, (iii) leveraged beta of the sector, and estimated cost of debt for assumed US$ issuance

Represents 3.0% estimated long-term nominal growth for Cetip

Source: BM&FBovespa Management


34

CetipDiscounted Cash Flow


(R$mm, unless noted)
Cetip EBITDA
Less: Depreciation & Amortization
Cetip EBIT
Less: Interest On Own Capital 1
Taxable EBIT 2
Tax Rate
Taxes
Cetip EBIT
Less: Taxes
Plus: Depreciation & Amortization
Less: Total Capex
Plus: (Increase) / Decrease in Working Capital
Unlevered Free Cash Flows
R$/US$ Average Rate 3
US$ Free Cash Flows

Free Cash Flow to Firm


Present Value of the Cash Flows
Present Value of the Terminal Value 4
Enterprise Value
Exchange Rate R$/US$
Enteprise Value 5
Less: Debt 6
Plus: Cash 6,7
Equity Value
Diluted Shares Outstanding 8
Equity Value per Share 9

US$mm
US$mm
US$mm
4/5/2016
R$mm
R$mm
R$mm
R$mm
mm
R$ / share

1,331
1,871
3,202
3.67
11,740
(1,302)
860
11,298
260
43.39

Minimum Range 10
Maximum Range 10

R$ / share
R$ / share

41.33
45.45

2016E
881
(104)
777

2017E
1,021
(118)
902

2018E
1,136
(97)
1,039

Calendar Year Ended December 31,


2019E
2020E
2021E
2022E
1,262
1,607
1,779
1,965
(107)
(134)
(147)
(161)
1,156
1,472
1,631
1,804

2023E
2,171
(177)
1,994

2024E
2,397
(193)
2,204

2025E
2,704
(216)
2,488

(127)
650
34.0%
221
777
(221)
104
(129)
0
531
3.74
142

(146)
756
34.0%
257
902
(257)
118
(88)
0
676
4.25
159

(169)
870
34.0%
296
1,039
(296)
97
(97)
0
743
4.50
165

(197)
959
34.0%
326
1,156
(326)
107
(107)
0
830
4.70
177

(373)
1,621
34.0%
551
1,994
(551)
177
(177)
0
1,443
5.27
274

(435)
1,768
34.0%
601
2,204
(601)
193
(193)
0
1,602
5.40
297

(506)
1,983
34.0%
674
2,488
(674)
216
(216)
0
1,814
5.53
328

(229)
1,243
34.0%
423
1,472
(423)
134
(134)
0
1,050
4.90
214

(271)
1,360
34.0%
463
1,631
(463)
147
(147)
0
1,169
5.02
233

(319)
1,485
34.0%
505
1,804
(505)
161
(161)
0
1,299
5.14
253

Source: BM&FBovespa Management


Notes:
1 Represents payment to shareholders characterized as interest on own capital
2 Interest on own capital reduces taxable income basis
3 Sourced from Central Bank of Brazil projections through 2020; R$ depreciated throughout balance of projection period by
differential in long-term inflation targets of 4.5% for Brazil and 2.0% for the US, according to Economist Intelligence Unit
projections for 2025
4 Terminal value considering a perpetuity growth rate of 3.0%
5 Converted at R$/US$ exchange rate of 3.67 as of April 5, 2016
6 Represents balance sheet data as of 12/31/15
7 Represents cash and cash equivalents plus financial investments (available and restricted, current and non-current) less dividends
and interest on own capital payable and additional dividends proposed
8 Diluted shares based on treasury stock method of vested shares at R$40.65 per share as of April 5, 2016
9 Discounted to 12/31/15 at a discount rate of 10.2%
10 Minimum and maximum represents a +/-4.75% range from R$43.39

35

Section 4

BM&FBovespa

Section 4.A

BM&FBovespa
Company and Sector Overview

BM&FBovespaCompany Overview
BM&FBovespa is the leading exchange in Latin America by market capitalization
Presentation of BM&FBovespa Activities

1890
Foundation of Bolsa Livre
(Bovespa's predecessor)

2015 Gross Revenues Breakdown

1967

BM&FBovespa, headquartered in So Paulo, was created in 2008


with the merger between the Brazilian Mercantile & Futures
Exchange (BM&F) and the So Paulo Stock Exchange (Bovespa)

Bovespa mutualization

1986
Start of BM&F activities

Aug 2007

BM&F demutualization

Oct 2007
Bovespa Holding IPO
(BOVH3)
Nov 2007
BM&F IPO (BMEF3)

Equities - trading
6.0%

Custody
5.3%

Equities clearing
30.8%

currently is the leading exchange in Latin America by market


capitalization

Only regulated exchange in Brazil trading equities (cash and


derivatives), commodities, fixed income and FX, BM&FBovespa has a
fully integrated business model that includes clearing, settlement and
other post-trade operations

As of December 31, 2015 the exchange had R$ 26.3 billion in total


assets

Bovespa Hld
demutualization
Sep 2007

both entities had demutualized and IPO-ed in 2007 and merged


institution is currently traded under ticker symbol BVMF3 on the
Novo Mercado, the highest level of corporate governance in
Brazil

Ancillary services
14.3%

Derivatives
43.7%

Ownership Structure1
Capital World
Investors
8%

Oppenheimer
Funds
7%

Vontobel Asset
Management
7%

Blackrock
5%

Treasury
2%

Others
71%

May 2008
Merger between BM&F and
Bovespa Holding and
creation of BM&FBovespa
(BVMF3)

Source:
Company materials, CVM
Note:
1
As of March 21st, 2016

38

BM&FBovespaFinancial Highlights
Gross Revenues (R$mm) and Gross Revenues Breakdown
2,459

2,289

2,370

13%
4%

13%
5%

38%

39%

39%

44%

35%

35%

36%

31%

11%

8%

7%

6%

2012A
Equities - trading

2013A
Equities - clearing

2,250

65.5%

68.4%

66.3%

14%
5%

13%
5%

2014A
Derivatives
Custody

EBITDA (R$mm) and EBITDA Margin

Net Revenues (R$mm)

2015A
Ancillary services

2,065

2,127

2,030

2012A

2013A

2014A

2,217

2015A

Net Cash (R$mm)

Net Income (R$mm)


High increase due to
growth on financial
income, FX and one-off
profit from the sale of
CME

66.6%

5,845
BM&FBovespa sold R$1.2 billion
worth of CME in September 2015
and reclassified R$4.8 billion to
available for sale financial securities.
Also includes R$1.3 billion of
collateral for transactions

2,609
2,203

1,353

2012A

1,455

2013A

Source:

1,345

2014A

1,477

2015A

1,074

1,081

978

2012A

2013A

2014A

2,019
885

2015A

2012A

2013A

2014A

2015A

Company filings
39

BM&FBovespaHistorical Financial Analysis


Balance Sheet Assets

Balance Sheet Liabilities and Equity


Fiscal year ended in December

R$mm
Current assets
Cash and cash equivalents
Financial investments and marketable securities

31st

Fiscal year ended in December 31st

2012A

2013A

2014A

2015A

3,536

4,319

2,785

8,674

44

1,197

501

441
1

2013A

2014A

2015A

Current liabilities

1,661

2,711

1,892

2,097

Collateral for transactions

1,134

2,073

1,322

1,338

Earnings and rights on securities in custody

44

50

46

49

Suppliers

61

45

66

43

Salaries and social charges

74

75

72

117

Provision for taxes and contributions payable

28

26

25

35

37

42

47

70

278

397

308

437

Noncurrent liabilities

3,073

3,887

4,383

5,860

Debt issued abroad

1,242

1,426

1,619

2,384

Deferred income tax and social contribution

1,740

2,296

2,585

3,272

Provisions for tax, civil and labor contingencies

63

89

103

119

Obligation with post-retirement health care


benefit

28

26

28

26

Other liabilities

50

48

58

19,414

19,299

18,988

18,352

16

15

10

24,147

25,897

25,263

26,309

3,233

2,853

1,962

57

54

58

75

79

72

158

180

120

166

175

18

16

26

26

20,611

21,577

22,478

17,635

Long-term receivables

809

1,135

1,523

1,961

Interest payable on debt issued abroad

Financial investments and marketable securities

574

821

1,393

1,816

Dividends and interest on equity payable

Judicial deposits

132

203

Other receivables

98

109

120

141

Prepaid expenses

Investments

Investments in associates

2,929

3,346

3,761

31

Investment in subsidiaries

2,894

3,313

3,729

35

34

32

31

361

423

421

453

Intangible assets

16,512

16,672

16,773

15,190

Goodwill

16,064

16,064

16,064

14,402

448

608

709

788

24,147

25,897

25,263

26,309

Accounts receivable
Other receivables
Taxes recoverable and prepaid
Prepaid expenses
Noncurrent assets

Investment properties
Property and equipment

Software and projects


Total assets

7,799

2012A

R$mm

Income tax and social contribution

Other liabilities

Equity
Non-controlling interests
Total liabilities and equity

Source:
Company materials, CVM
Note:
1
BM&FBovespa sold R$1.2 billion worth of CME in September 2015 and reclassified R$4.8 billion to available for sale financial securities. Includes R$1.3 billion of collateral for transactions

40

BM&FBovespaHistorical Financial Analysis


Profit & Loss
Fiscal year ended in December 31st
R$mm
Revenue
Revenue growth
Expenses
Margin

2012A
2,065

(763)
36.9%

2013A
2,127
3.0%
(791)
37.2%

2014A
2,030
(4.6%)
(804)
39.6%

2015A
2,217
9.2%
(861)
38.4%

(354)
(103)
(94)
(51)
(11)
(18)
(19)
(42)
(7)
(65)

149

1,302
51
1,353
65.5%
209
297
(88)
1,660
(586)
(67)
(518)
1,074

1,074
52.0%

(352)
(110)
(120)
(46)
(12)
(17)
(15)
(56)
(8)
(56)

171

1,336
120
1,456
68.4%
181
299
(118)
1,688
(607)
(60)
(546)
1,081
(0)
1,081
50.8%

(354)
(124)
(119)
(40)
(12)
(13)
(11)
(56)
(9)
(66)

212

1,226
119
1,345
66.3%
208
362
(154)
1,647
(661)
(104)
(557)
986
(8)
978
48.2%

(443)
(122)
(111)
(41)
(14)
(6)
(12)
(8)
(9)
(84)
(1,663)
136
1,735
724
1,366
111
1,477
66.6%
509
746
(237)
2,807
(604)
(46)
(558)
2,203

2,203
99.4%

'12'15 CAGR
2.4%
3.7%

Administrative and general


Personnel and related charges
Data processing
Depreciation and amortization
Third-party services
Maintenance in general
Communications
Promotion and publicity
Taxes
Board and committee members compensation
Sundry
Impairment of assets
Equity pickup
Equity method discontinuation
Gain on disposal of investment in associates
(=) EBIT
(+) Depreciation and Amortization
(=) EBITDA
Margin
Financial result
Financial income
Financial expenses
Income before income tax and social contribution
Income tax and social contribution
Current
Deferred
Net income from continuing operations
Net income (loss) from discontinued operations
Net income for the year
Margin
Source:

1.6%
3.0%
34.5%

19.1%
1.0%

27.1%
27.1%

Company materials, CVM


41

BM&FBovespaSector Overview
BM&FBovespa is the only
equities; derivatives
(equity, fixed income and
commodities) trading
venue in Brazil

Average Daily Trading Value "ADTV" (R$ million)


7,251

7,418

7,293

6,492

6,793

Foreign investors
participation in the
average equities daily
trading value accounted
for 54% in 2015

1.5%

1.4%

1.4%

9.1%

8.3%

6.8%

21.2%

18.1%

15.1%

2012A

2013A

Cash

Options

2014A

2015A

Average Market Capitalization and Turnover


Velocity (R$ trillion, %)
72.9%
70.0%

72.4%

34.8%

40.3%

43.8%

2011A

2012A

2013A

Foreign

Forward

2011A

Institutional

466

2012A

2.4

2013A

2.4

2014A

1.5%
4.5%
13.4%

28.8%

26.9%

50.7%

53.7%

2014A

2015A

Financial
Institutions

Others

72.9%
10

2.4

Retail

1.4%
5.5%
13.7%

# of Listed Companies

64.2%

2.4

32.9%

31.9%

33.3%

2011A

Average market
capitalization in 2015 was
R$2.2 trillion and Bovespa
had 440 listed companies
as of December 31st, 2015

Breakdown of ADTV by Investor Type

455

454

452

13

12

12

440
12

182

178

187

192

192

274

262

255

250

236

2012A

2013A

2014A

2.2

2015A

2011A

Traditional

Special Segment

2015A
BDR
42

Section 4.B

BM&FBovespa
Valuation

Valuation by Volume Weighted Average Price (1/2)


VWAP for the last 12 months prior to the First Material Fact is R$10.73 and R$12.52 from the First Material Fact to April 5th, 2016

Material Fact Released


on November 3rd, 2015

Historical VWAP Price of BM&FBovespa Since the First Material


Fact (from November 3rd, 2015 to April 5th, 2016)
March 2nd, 2016
Declined BO

50.0

16.00

16.00

November 13th, 2015


NBO Date
February 19th, 2016
BO Date

40.0
11.43

30.0

8.00
20.0

4.00

10.0

0.00
Nov-14

0.0
Jan-15
Volume

Source:

Mar-15

Jun-15

Aug-15

Price VWAP (R$)

Bloomberg as of April 5, 2016

Oct-15
VWAP

Price VWAP (R$)

10.73

12.00

Volume (mm)

Price VWAP (R$)

12.00

50.0
15.58

40.0
12.52
30.0

8.00

December 3rd, 2015


Declined NBO
20.0

4.00

0.00
Nov-15

Volume (mm)

Historical VWAP Price of BM&FBovespa Prior to the First Material


Fact (from November 3rd, 2014 to November 2nd, 2015)

10.0

0.0
Dec-15
Volume

Feb-16
Price VWAP (R$)

Apr-16
VWAP
NBO: Non-Binding Offer
BO: Binding Offer
44

Valuation by Volume Weighted Average Price (2/2)


VWAP for the periods of 1, 30, 60, 90, 180 trading days and 1 year before the First Material Fact and for the period since the
date of the First Material Fact until April 5th, 2016

Summary of VWAP for Selected Periods

Price VWAP (R$)


Trading Days Prior to the Material Fact Release

Weighted by Trading Volume

11.43

30

11.41

60

10.99

90

11.03

180

11.15

12 months (from November 3rd, 2014 to November 2nd, 2015)

10.73

Since the First Material Fact (from November 3rd, 2015 to April 5th, 2016)

12.52

Source:

Bloomberg as of April 5, 2016


45

Valuation by Shareholders' Equity Book Value


Equity book value per share is R$10.30 for BM&FBovespa, as of December 31st, 2015

Equity Book Value per Share

R$million, unless otherwise indicated


Total Assets

As of December 31st, 2015


26,309

Total Liabilities

7,957

Shareholders' Equity
Outstanding Shares (mm)
Common Shares
Treasury Shares
Equity Book Value per Share (R$)

Source:
Company filings
Note:
1
Shareholders' Equity / Outstanding Shares

18,352
1,782
1,815
33
10.301

46

BM&FBovespaSelected Trading Multiples Methodology

UBS has used the trading multiples valuation approach in order to estimate the economic value of BM&FBovespa

Selected Trading Multiples is a relative valuation method which estimates the value of a company using ratios of market valuation to financial metrics of
similar publicly traded companies; traditional trading multiples include P/E and EV/EBITDA

Trading multiples of BM&FBovespas comparable companies were calculated based on the EBITDA and net income forecasts from market analysts for the
years 2016 and 2017, and applied over the EBITDA and net income forecasts for BM&FBovespa over the same years, given that forecasts from market
analysts are generally limited to two years

Selected comparable companies are international exchanges sharing several aspects in common with BM&FBovespa, including the following1:

business model

revenue mix

product and service offerings

size and scale of operations

monopolistic position within its home country in certain market segments the comparable company operates in

emerging market exposure

Selected Trading Comparables

Note:
1
Not every aspect applicable for each selected comparable company. See Appendix A for more details on selection of comparable companies

47

BM&FBovespaSelected Trading Multiples


EV/EBITDA

Price / EPS

Headquarters

April 5, 2016
Price (R$)

Market Value
(R$bn)

Enterprise Value
(R$bn)

CY'16E
(x)

CY'17E
(x)

CY'16E
(x)

CY'17E
(x)

United States

869.83

104.7

129.5

12.5

11.4

16.8

15.1

United States

346.63

118.1

120.1

12.9

11.9

22.0

20.5

Germany

302.75

56.2

64.6

11.0

10.1

15.9

14.1

United States

238.28

40.6

48.2

11.4

10.6

17.3

15.7

21.02

21.8

20.4

15.5

14.4

22.7

21.1

United States

240.04

19.7

19.4

13.8

12.8

25.7

23.8

Australia

114.43

22.2

19.3

12.0

11.6

18.8

18.1

Canada

128.38

7.0

9.6

10.2

9.6

12.6

11.4

Spain

113.25

9.5

8.6

8.7

8.8

13.0

13.3

Malaysia

8.19

4.4

4.3

14.8

13.9

22.4

21.0

Mexico

5.73

3.6

3.3

10.9

9.9

18.5

16.5

Mean

12.2

11.4

18.7

17.3

Median

12.0

11.4

18.5

16.5

Singapore

Min

8.7

8.8

12.6

11.4

Max

15.5

14.4

25.7

23.8

Source: FactSet as of April 5, 2016


Note:
1
R$ / US$ exchange rate of 3.67 as of April 5, 2016, fully diluted shares using treasury stock method

48

BM&FBovespa Valuation Based on Comparable Trading Multiples


EV / EBITDA Analysis

(R$ mm)

CY'16E

CY'17E

EV/EBITDA Multiple (sample median)

12.0x

11.4x

EBITDA (consensus)

1,582

1,758

19,004

19,973

2,179

2,179

Implied Enterprise Value

(-) Net Debt


(-) Minorities
Implied Equity Value
Total Shares Outstanding (mm)2
Share Price (R$)

10

10

16,815

17,784

1,796

1,796

9.36

9.90

Min. Range

Max. Range

Mid-Point ("MP")

MP-4.75%

MP+4.75%

19,488

18,563

20,414

17,299

16,478

18,121

9.63

9.18

10.09

Min. Range

Max. Range

Mid-Point ("MP")

MP-4.75%

MP+4.75%

29,085

27,703

30,466

16.20

15.43

16.97

Price to Earnings Analysis


(R$ mm)

CY'16E

CY'17E

P/E Multiple (sample median)

18.5x

16.5x

Net Income (consensus)

1,565

1,773

28,900

29,270

1,796

1,796

16.09

16.30

Implied Equity Value


Total Shares Outstanding

(mm)2

Share Price (R$)

Source:
Note:
1
2

FactSet, Research reports


FactSet as of April 5, 2016
Fully diluted shares using treasury stock method

49

Appendix A

Selected Comparable Companies for Cetip


and BM&FBovespa

Selected Comparable Companies for BM&FBovespa and Cetip


Mature Market Exchanges
Peer

Key Financials

Comments

R$bn

Headquartered in New York, Nasdaq is a provider of trading, clearing, exchange technology,


regulatory, securities listing, information and public company services across six continents
with over 3,800 employees

With c.10,000 corporate clients, Nasdaq has around 3,700 listed companies with market cap
of ~US$9.6 trillion

Revenue mix for operating segments: Market Services (61.2%), Technology Solutions (16.0%),
Information Services (15.0%) and Listing services (7.8%)

On March 9, 2016, entered into a definitive agreement to International Securities Exchanges


for US$1.1bn

On February 12, 2016, announced to acquire Marketwired, a newswire operator and press
release distributor for US$200mm

Headquartered in Toronto, TMX Group operates cash & derivative markets for multiple asset
classes including equities, fixed income and energy with over 1,100 employees

Revenue mix for operating segments: Efficient Markets & Market Solutions (29.5%), Market
Insights (29.4%), Capital Formation (25.1%), Derivatives (14.6%) and Others (1.5%)

Has a combined market share (including TSX, Alpha, and TMX Select) of the total volume
traded in Canadian based interlisted issues of 34%

In February 2016, introduced two integrated products: TMX Insights and TMX Analytics

In June & November 2015, announced launch of AgriClear (online platform & payment service
for US and Canadian cattle buyers & sellers) and NAVex (a fund transfer platform) respectively

Headquartered in Madrid, BME is an operator of Spain's stock market and financial systems
with over 700 employees

Has additional significant presence in LatAm

Revenue mix for operating segments: Equity (46.8%), Settlement & Registration (24.3%),
Information (11.4%), Clearing (5.4%), IT & Consulting (5.4%), Derivatives (3.6%), Fixed
Income (2.9%)

On February 29, 2016, announced acquisition of remaining stake (50%) it didn't already own
in Infobolsa SA from Deutsche Brse AG's for US$9.2mm in cash

Share Price (R$)


Fully-Diluted Shares (mm)
Equity Value

238.28
170.6

40.6

Excess Cash

1.1

Debt

8.7

Enterprise Value

48.2

2016 EV/EBITDA

11.4x

2016 P/E

17.3x

R$bn
Share Price (R$)
Fully-Diluted Shares (mm)

128.38
54.4

Equity Value

7.0

Excess Cash

0.4

Debt

3.1

Enterprise Value

9.6

2016 EV/EBITDA

10.2x

2016 P/E

12.6x

R$bn
Share Price (R$)
Fully-Diluted Shares (mm)

83.9

Equity Value

9.5

Excess Cash

0.9

Debt

0.0

Enterprise Value

8.6

2016 EV/EBITDA

8.7x

2016 P/E
Source:
Note:
1

113.25

13.0x

Company InformationMarket data as of April 5, 2016; R$ / US$ exchange rate of 3.67 as of April 5, 2016
Excess Cash as per the latest financial statement excluding financial investments, restricted cash, regulatory capital requirements and customer balances, as appropriate and to the extent available

51

Selected Comparable Companies for BM&FBovespa and Cetip


Mature Market Exchanges (cont'd)
Peer

Key Financials

Comments

R$bn

Share Price (R$)


Fully-Diluted Shares (mm)
Equity Value

21.02
1,074.9
21.8

Excess Cash

1.4

Debt

0.0

Enterprise Value

20.4

2016 EV/EBITDA

16.0x

2016 P/E

22.7x

Fully-Diluted Shares (mm)

Source:
Note:
1

R$bn
Share Price (R$)

114.43
193.8

Equity Value

22.2

Excess Cash

2.9

Debt

0.0

Enterprise Value

19.3

2016 EV/EBITDA

12.0x

2016 P/E

18.8x

Headquartered in Singapore, SGX is a multi asset exchange that provides listing, trading,
clearing, settlement, depository and data services with over 700 employees
About 40% of listed companies and 90% of listed bonds originate from outside of Singapore
Revenue mix for operating segments: Derivatives (40.3%), Securities (25.4%), Depository
services (13.7%),Market data & Connectivity (10.3%) Issuer services (10.2%), and Others
(0.1%)
In February 2016, was in talks to buy Baltic Exchange, which could bolster its derivatives
business and strengthen Singapore as a maritime hub
Planning to introduce a derivative product that would allow investors to trade futures on Indian
sector-specific indexes

Headquartered in Australia, ASX offers a full suite of services, including listings, trading,
clearing and settlement, across a comprehensive range of asset classes with over 500
employees
Revenue mix of operating segments: Derivatives & OTC markets (34.5%), Listings & issuer
services (26.2%), Trading services (23.8%), Equity post trade services (13.1%), Other revenue
(2.4%)
On March 1, 2016, announced collaboration with Nasdaq to replace ASXs existing clearing
technology platforms with Nasdaqs Genium INET Clearing Platform
On January 22, 2016, bought minority stake in Digital Asset, a blockchain start up for
US$10.5mm

Company InformationMarket data as of April 5, 2016; R$ / US$ exchange rate of 3.67 as of April 5, 2016
Excess Cash as per the latest financial statement excluding financial investments, restricted cash, regulatory capital requirements and customer balances, as appropriate and to the extent available

52

Selected Comparable Companies for BM&FBovespa and Cetip


Derivative-Hybrid Exchanges
Peer

Key Financials

Comments

R$bn

Share Price (R$)

240.04

Fully-Diluted Shares (mm)

82.3

Equity Value

19.7

Excess Cash

0.4

Debt
Enterprise Value

0.0
19.4

2016 EV/EBITDA

13.8x

2016 P/E

25.7x

R$bn

Share Price (R$)

869.83

Fully-Diluted Shares (mm)

120.4

Equity Value

104.7

Excess Cash

2.3

Debt

27.0

Enterprise Value

129.5

2016 EV/EBITDA

12.5x

2016 P/E

16.8x

R$bn
Share Price (R$)
Fully-Diluted Shares (mm)

Source:
Note:
1

302.75

187.2

Equity Value

56.2

Excess Cash

3.0

Debt

11.4

Enterprise Value

64.6

2016 EV/EBITDA

11.1x

2016 P/E

15.9x

Headquartered in Chicago, IL with over 500 employees


Operates markets that offer trading options on various market indexes, futures contracts and
multiply-listed options like equity and ETP options in US
Operates through single operating segment consisting of 3 stand-alone exchanges: Chicago
Board Options Exchange, CBOE Futures Exchange and C2
Market share: ~27.1% (for options in US)
Caters to both retail and institutional customers
On August 26, 2015, completed the acquisition of the market data services and trading
analytics platforms of Livevol for US$10.3mm in cash

Headquartered in Atlanta, GA with over 5,500 employees


Operates regulated exchanges, clearing houses and listings venues for a broad array of
derivatives and securities contracts across major asset classes

also provides data services for commodity and financial markets


Has presence in US, UK, Europe, Canada and Singapore

US segment contributed 59% to the net revenues in 2015


On December 14, 2015, completed US$5.2bn acquisition of Interactive Data Corp, a provider
of financial market data, analytics and related trading solutions

Headquartered in Eschborn, Germany with over 5,000 employees


Operates markets trading of securities and derivatives

also provides clearing, settlement and custody services, market data, and development
and operation of electronic trading systems
Has presence in Europe, Americas and APAC
Revenue mix for operating segments: Xetra (8%), Eurex (43%), Clearstream (32%) and
Market Data Services (17%)
On March 16, 2016, Deutsche Brse and London Stock Exchange agreed on the terms of a
~US$30bn all-share merger of equals

Company InformationMarket data as of April 5, 2016; R$ / US$ exchange rate of 3.67 as of April 5, 2016
Excess Cash as per the latest financial statement excluding financial investments, restricted cash, regulatory capital requirements and customer balances, as appropriate and to the extent available

53

Selected Comparable Companies for BM&FBovespa and Cetip


Derivative-Hybrid Exchanges (cont'd)
Peer

Key Financials

Comments

R$bn

Share Price (R$)


Fully-Diluted Shares (mm)

340.7

Equity Value

118.1

Excess Cash

6.2

Debt

Source:
Note:
1

346.63

8.2

Enterprise Value

120.1

2016 EV/EBITDA

12.9x

2016 P/E

22.0x

Headquartered in Chicago, IL, CME Group is a derivative marketplace with over 2,500
employees
Provides global benchmark products across major asset classes, based on interest rates, equity
indexes, foreign exchange, energy, agricultural commodities and metals through its exchanges
(CME, CBOT, NYMEX and COMEX ) to customers worldwide
Access in 150 countries through alliances with 12 partner exchanges
Revenue mix by products: Clearing & transaction (84%), Market data & information (12%),
Access & communication(2%) and Others (2%)
Customers consists of professional traders, financial institutions, individual and institutional
investors, corporations, manufacturers, producers and governments

Company InformationMarket data as of April 5, 2016; R$ / US$ exchange rate of 3.67 as of April 5, 2016
Excess Cash as per the latest financial statement excluding financial investments, restricted cash, regulatory capital requirements and customer balances, as appropriate and to the extent available

54

Selected Comparable Companies for BM&FBovespa and Cetip


Emerging Market Exchanges
Peer

Key Financials

Comments

R$bn

Headquartered in Mexico City

Engages in the operation of equity and debt securities and derivatives market

Share Price (R$)


Fully-Diluted Shares (mm)

5.73
625.0

Equity Value

3.6

Excess Cash

0.5

Debt

0.2

Enterprise Value

3.3

2016 EV/EBITDA

10.9x

2016 P/E

18.5x

R$bn
Share Price (R$)
Fully-Diluted Shares (mm)
Equity Value

Source:
Note:
1

8.19
538.0
4.4

Excess Cash

0.1

Debt

0.0

Enterprise Value

4.3

2016 EV/EBITDA

14.8x

2016 P/E

22.4x

businesses include trading and operations, listing, custody, clearing, settlement,


counterparty services, settlement services and data sales

Revenue mix for operating segment: Cash Equities (16%), Derivatives (6%), OTC (19%), Issuers
(22%), Custody (20%), Information Services (13%) and Others (4%)

On December 12, 2014, appointed Jos Oriol Bosch Par as CEO, effective January 1, 2015

Headquartered in Kuala Lumpur, Malaysia with ~600 employees

Operates a fully integrated exchange, offering the complete range of exchange-related


services, including trading, clearing, settlement and depository services

Operates through four segments: Securities market, Derivatives market, Islamic capital market
and Exchange holding

securities market segment contributes ~84% of total profits


On March 24, 2016, issued various amendments to the Main Market and ACE Market Listing
Requirements to raise the standards of disclosure and Corporate Governance practices

Company InformationMarket data as of April 5, 2016; R$ / US$ exchange rate of 3.67 as of April 5, 2016
Excess Cash as per the latest financial statement excluding financial investments, restricted cash, regulatory capital requirements and customer balances, as appropriate and to the extent available

55

Appendix B

Selected Analyst Estimates for Cetip

Selected Analyst Estimates for Cetip


EBITDA (R$ million)
Broker1

Date

Net Income (R$ million)

2016E

2017E

2016E

2017E

BTG PACTUAL EQUITIES RESEARCH

March 22, 2016

867

981

531

613

HSBC GLOBAL RESEARCH

March 21, 2016

885

973

625

708

JP MORGAN

March 10, 2016

897

1,036

564

657

BANCO VOTORANTIM

March 9, 2016

853

954

593

660

UBS

March 7, 2016

856

943

547

600

BRASIL PLURAL SECURITES LLC

March 4, 2016

834

na

582

na

SANTANDER

March 2, 2016

1,037

1,100

543

615

BRADESCO CORRETORA

February 10, 2016

878

1,021

628

715

ITAU SECURITIES

November 9, 2015

826

927

na

654

September 18, 2015

855

968

na

624

FactSet Consensus Median2

871

981

577

651

Broker Min

826

927

531

600

Broker Max

1,037

1,100

628

715

COINVALORES

Source:
Note:
1
2

FactSet as of April 5, 2016


Includes available individual broker estimates
Includes restricted broker estimates

57

Appendix C

Selected Analyst Estimates for


BM&FBovespa

Selected Analyst Estimates for BM&FBovespa


EBITDA (R$ million)
Broker1

Net Income (R$ million)

Date

2016E

2017E

2016E

2017E

BTG PACTUAL EQUITIES RESEARCH

March 22, 2016

1,714

1,912

1,708

1,880

HSBC GLOBAL RESEARCH

March 21, 2016

1,366

1,505

1,467

1,602

JP MORGAN

March 15, 2016

1,556

1,742

1,870

2,042

UBS

March 15, 2016

1,596

1,921

1,496

1,549

February 15, 2016

1,564

1,719

1,640

1,754

January 12, 2016

1,650

1,775

1,351

1,807

SANTANDER

November 30, 2015

1,535

1,692

1,593

1,802

BANCO VOTORANTIM

November 27, 2015

1,582

1,652

1,593

1,802

ITAU SECURITIES

November 26, 2015

1,525

1,675

1,308

1,527

COINVALORES

November 12, 2015

1,529

1,567

1,377

1,498

October 15, 2015

1,609

1,953

1,537

2,146

FactSet Consensus Median2

1,582

1,758

1,565

1,773

Broker Min

1,366

1,505

1,272

1,467

Broker Max

1,714

1,953

1,870

2,146

BRADESCO CORRETORA
DEUTSCHE BANK RESEARCH

BRASIL PLURAL SECURITIES

Source:
Note:
1
2

FactSet as of April 5, 2016


Includes available individual broker estimates
Includes restricted broker estimates

59

Appendix D

Additional Materials

CetipWACC
Weighted Average Cost of CapitalCAPM Method

Weighted Average Cost of Capital Calculation


Risk Free Rate

Market risk
premium

(+)

(=)

Levered beta

US Treasury 10 Years

2.2%

Brazilian Gov. Bond Spread

2.7%

Risk Free Rate

4.9%

Cost of Equity
Cost of equity

Market Risk Premium

6.9%

Cetip Implied Levered Beta

0.80x

(=)

Sector Market Premium

5.5%

(+)

Risk Free Rate

4.9%

Cost of Equity

10.4%

(x)

Debt / equity
ratio

Risk free rate

Weighted
Average Cost of
Capital (WACC)

(=)

Cost of Debt
6

(x)
(=)
Pre-tax cost of
debt

Pre-Tax Cost of Debt


Brazilian Tax Rate

Cost of Debt

6.3%
34.0%
4.1%

WACC

1 tax rate

Post-tax cost of
debt

Net Debt / Enterprise Value

4.0%

(x)

Cost of Debt

4.1%

(+)

Equity Value / Enterprise Value

96.0%

(x)

Cost of Equity

10.4%

(=)

WACC

Notes:
1
10-Year US Treasury Bond 2-Year Average Rate as of April 5, 2016. Source: Bloomberg
2
GEBU10Y Brazilian Bond and 10-Year US Treasury Bond 2-Year Average Spread as of April 5, 2016. Source: Bloomberg
3
Per Duff & Phelps 2016 Valuation Handbook
4
Implied levered beta based on the median of unlevered (unlevered by their respective capital structure) 2-Year Weekly Beta in USD vs S&P of comparable companies (ASX Limited, Bolsa y Mercados
Espanoles, Bolsa Mexicana de Valores, Bursa Malaysia, Deutsche Boerse, Intercontinental Exchange, Singapore Exchange and TMX Group) and re-levered by Cetip's capital structure. Cetip 2-Year Weekly
Beta in USD vs S&P of 0.85x and 5-Year Weekly Beta in USD vs S&P of 0.79x. Source: Bloomberg
5
Cost of equity calculated according to the following formula: Ke=Rf+*(market risk premium)
6
UBS CCS estimates for a 10-year cost of debt in USD of 6.25%
7
Kd=(Pre-Tax Cost of Debt)*(1-Brazilian Tax Rate)

10.2%

61

Liquidity Analysis
BM&FBovespa is the 6th
most traded stock in the
Bovespa by volume1

Top 10 Most Traded Stocks in Bovespa by Volume1 (R$million)


507
461

Considering
BM&FBovespa average
daily traded volume1, the
position of the largest
stockholder represents 23
days of trading

334

306
238

195

177

171

157

152

Top Stockholders of BM&FBovespa and Divestment Analysis


Rank
1
2
3
4
5
6
7
8
9
10
Total

Holder Name
# of Shares (mm)
CAPITAL GROUP COMPANIES INC
286
MASSACHUSETTS MUTUAL LIFE INS
135
VONTOBEL HOLDING AG
130
BLACKROCK
92
CME GROUP
91
INVESCO LTD
76
VANGUARD GROUP
67
DIMENSIONAL FUND ADVISORS LP
49
FRANKLIN RESOURCES
44
BM&F BOVESPA
28
998

% of Total Shares
Outstanding
16.0%
7.6%
7.3%
5.2%
5.1%
4.3%
3.8%
2.7%
2.5%
1.6%
56.0%

Volume
(R$million)
4,460
2,104
2,030
1,443
1,418
1,191
1,046
761
684
445
15,582

Average Daily Volume Traded1


(R$million)
195
195
195
195
195
195
195
195
195
195

Source:
Bloomberg as of April 5, 2016
Notes:
1
Considering average daily volume traded in number of shares (from April 5, 2015 to April 5, 2016) multiplied by the price of each stock as of April 5, 2016
2
ITUB4
3
ITSA4

Days of Trading
23
11
10
7
7
6
5
4
4
2

62

Appendix E

Glossary

Glossary
ADTV

Average Daily Trading Value

Beta

Ratio measuring the non-diversifiable risk of a share. It is a ratio between the return on the share and the return of the market. Accordingly, the risk premium will
always be multiplied by this coefficient, demanding a higher risk premium the more the share price varies from that of the market portfolio

CAPM

Capital Asset Pricing Model

CDI

Interbank Deposit Certificate

CVM

Brazilian Securities and Exchange Commission

DCF

Discounted Cash Flow method

EBIT

Earnings Before Interest and Taxes

EBITDA

Earnings Before Interest, Taxes, Depreciation and Amortization

EV

Enterprise Value

MP

Mid-point

OTC

Over-the-counter

VWAP

Volume Weighted Average Price

WACC

Weighted Average Cost of Capital Calculation

64

Appendix F

Disclaimer

Disclaimer
1. UBS was engaged by BM&FBovespa to prepare the Valuation Report to be presented to BM&FBovespas Board of Directors, in the context of the discussions related to the Transaction involving the BM&FBovespa and Cetip, as described in
the Material Fact. This Valuation Report is prepared in accordance with the applicable regulation and following market practices of evaluating companies and considers (i) the valuation analysis of Cetip in accordance with the methods of (a)
discounted cash flow analysis; (b) volume weighted average price; (c) book value; and (d) comparable trading multiples; and (ii) the valuation analysis of BM&FBovespa in accordance with the methods of (a) volume weighted average price; (b)
book value; and (c) comparable trading multiples. This Valuation Report is dated of April 9th, 2016, with December 31st, 2015, as its base date (with the clarifications mentioned on item 15 below) and was prepared by UBS based on the
information, assumptions and financial data provided by BM&FBovespa or those publicly available to the market.
2. This Valuation Report was prepared by UBS exclusively for the use and benefit of the BM&FBovespa's Board of Directors for the sole purpose of enabling them to evaluate the Transaction. However, the Valuation Report does not contain all
of the information required to make a determination on the appropriateness, valuation nor structure of the Transaction and does not purport to convey a recommendation with respect to pursuing or not the Transaction. This Valuation Report
and the information herein shall not be used by third parties for any purpose, and shall only be released or reproduced as necessary, provided that any person that may have access to the Valuation Report (a) will not be entitled to use or refer
to this Valuation Report, or its conclusions, to any third party without prior written permission by UBS; and (b) agrees not to disclose the content of the Valuation Report to any third party. Furthermore, in case this Valuation Report is not
reproduced in full, it is agreed that all references to UBS or to the Valuation Report in any such document and the description and inclusion of any such Valuation Report and the contents therein shall be subject to UBS prior written consent
with respect to form and substance. No information related to (i) the name of UBS, or (ii) the terms of such Valuation Report or any communication from UBS in connection with such Valuation Report will be quoted or referred to orally or in
writing, without UBS prior written consent.
3. UBS did not and will not make any explicit or implicit recommendation to the boards of directors nor shareholders of either BM&FBovespa nor Cetip, including with regards to the Transaction, neither with respect to the consideration of the
potential synergies, nor any benefits or disadvantages that could result from the completion of the Transaction, as such consideration, if any, shall be made by BM&FBovespa or by Cetip and its respective management at the time when the
Transaction is submitted for approval by the shareholders. UBS did not and will not make any recommendation as to the structure of the Transaction, the specific value amount to be submitted to the shareholders, the contractual terms of the
Transaction or as to any other aspects related to the Transaction, nor did UBS participate in the negotiation of the Transaction. Any recipient of this Valuation Report other than BM&FBovespa's Board of Directors (i) may not rely on the
Valuation Report in determining any course of action in relation to the Transaction nor any other transaction involving BM&FBovespa and/or Cetip and will not make any claim that it has relied upon it, and (ii) must seek its own independent
financial advisor.
4. UBS assumes that all the information and financial projections (including, for the purposes of this Valuation Report, the information and financial projections related to Cetip) provided by BM&FBovespa (including its subsidiaries, direct or
indirect controlled companies, companies under common control and affiliates (the Subsidiaries and Affiliates)), or its consultants and advisors, or made available to or discussed with UBS for the preparation of the Valuation Report, are
exact, true, complete, consistent and precise, including those discussed with designated representatives and those publicly available. UBS was informed by BM&FBovespa that all information provided, made available to or discussed with UBS is
correct and that all financial projections provided, made available to or discussed with UBS were prepared in a reasonable manner and reflect the best estimates and evaluations at the time they were made and until the date hereof. UBS was
informed by BM&FBovespa that it is not aware of any information that could materially impact any information related to the Transaction, neither BM&FBovespa's and Cetip's businesses, financial conditions, assets and obligations, business
perspectives, commercial transactions or the number of issued and outstanding shares and options of BM&FBovespa, Cetip or their Subsidiaries and Affiliates, nor of any other material fact that could alter the information and financial
projections provided, made available to or discussed with UBS, or that could make such information or projections incorrect or imprecise in any material aspect or that could have a material adverse effect on the results of this Valuation Report.
Estimates and projections considered for the elaboration of this Valuation Report are intrinsically subject to uncertainties and various events or factors that are beyond the control of BM&FBovespa, Cetip and UBS, especially those which
occurrence depend on future or uncertain events. It is not possible to assure that any estimates and projections that may have been used for the preparation of this Valuation Report will be effectively achieved. Therefore, UBS does not assume
any responsibility or obligation for indemnification in the event that future results differ from the estimates and projections that may have been used for the elaboration of this Valuation Report and does not expressly or impliedly make any
representation or warranty regarding those estimates or projections.
5. UBS (a) does not assume any responsibility for the accuracy, exactness, veracity, integrity, consistency, sufficiency or precision of the information and financial projections provided, made available to or discussed with UBS; (b) will not make
any appraisal of the assets of BM&FBovespa or Cetip for the purpose of contribution or formation of capital, pursuant to article 8 of Brazilian Corporation Law; and (c) did not and will not make any appraisal for the purposes of the articles
227, 228, 252, 256 and 264 of the Brazilian Corporation Law or for the effects of CVM Instruction 361 and its annexes or for the submission to the Comit de Fuses e Aquisies - CAF . Additionally, UBS did not assume the responsibility to
conduct, and has not conducted (i) any valuation of the assets and liabilities (contingent or not) of BM&FBovespa, Cetip and their respective Subsidiaries and Affiliates; (ii) any review or audit of the financial statements of BM&FBovespa, Cetip
and their respective Subsidiaries and Affiliates or the documentation that support such financial statements; (iii) any technical audit of the operations of BM&FBovespa and Cetip; (iv) any independent review on the information and
assumptions provided by BM&FBovespa or on the information publicly available to the market that may have been used in the Valuation Report; (v) any inspections of sites or installations of BM&FBovespa, Cetip and their respective
Subsidiaries and Affiliates; (vi) accounting audits, financial audits, due diligence or other investigations of any kind on BM&FBovespa and Cetip and their respective Subsidiaries and Affiliates or (vii) any valuation of the solvency of
BM&FBovespa, Cetip and their respective Subsidiaries and Affiliates, in accordance with any legislation regarding bankruptcy, insolvency or similar issues. UBS did not provide any audit, accounting, tax or legal consulting services and the
preparation of this Valuation Report by UBS does not include any service or opinion relating to such services.

6. UBS does not give any representation with respect to the adequacy of this Valuation Report to the Transaction. This Valuation Report does not consider any aspects of foreign regulations that could be applicable to the Transaction.
BM&FBovespa may consult its own legal advisers in foreign jurisdictions as it considers necessary.
7. BM&FBovespa acknowledges and agrees that UBS has been hired to act solely as an appraiser for the purposes of presenting a valuation report to the BM&FBovespa's Board of Directors, and not as an advisor to any other person.
BM&FBovespas engagement of UBS is not intended to confer rights upon any person (including shareholders, employees or creditors of BM&FBovespa or Cetip) not a party hereto against UBS or its affiliates, or their respective directors,
officers, employees or agents, successors, or assigns.
66

Disclaimer
8. The credit, financial and stock markets are experiencing unusual volatility and UBS does not express any opinion or view as to any potential effects of such volatility on the Transaction. The analysis provided in the Valuation Report does not
indicate the performance of current and future financial results of BM&FBovespa or Cetip. This Valuation Report does not constitute an offer or solicitation to sell or purchase any securities and is not a commitment by any part of UBS to
provide or arrange any financing for any transaction or to purchase any security in connection therewith. This Valuation Report may not reflect information known to other professionals in other business areas of UBS. Other valuations of
companies and sectors prepared by UBS may treat market assumptions in a different way than those framed in this Valuation Report. In this sense, the research departments and other departments of UBS and its Affiliates may use other
analysis, reports and publications, estimates, projections and different methodologies than those used herein, with such analysis, reports and publications containing different conclusions from those set out in this Valuation Report. There is no
guarantee that the future results of BM&FBovespa or Cetip will correspond to the financial projections used as basis for our analysis and such uncertainty may affect the Valuation Report.
9. This Valuation Report does not assess any consequence arising from the Transaction or any agreement, contract, or understanding entered into in connection with the Transaction. UBS does not express any opinion with respect to the
specific value of any shares of BM&FBovespa or Cetip that may be received or issued in connection with the Transaction or the value by which any such shares shall or may be traded at any time in the securities market. This Valuation Report is
not intended to assess the merits of the Transaction when compared to other commercial alternatives which may be available to BM&FBovespa, and it does not analyze BM&FBovespas commercial decision regarding whether to perform the
Transaction. The Valuation Report exclusively refers to the Transaction and does not apply to any other current or future matter or transaction related to BM&FBovespa or its Subsidiaries and Affiliates.
10. UBS performed a variety of financial and comparative analysis which are summarized herein. The following summary is not a complete description of all analysis performed and factors considered by UBS in connection with rendering this
Valuation Report. UBS understands that the valuation process was conducted based on the relevant applicable procedures taking into consideration the Transaction. UBS believes that its analysis and the summary contained herein must be
considered as a whole and that selecting portions of its analysis and factors, or focusing on information presented in tabular format, without considering all analysis and factors or the narrative description of the analysis, could create a
misleading or incomplete view of the processes underlying UBS analysis.

11. UBS has provided, directly or through its affiliates, certain financial and investment banking services to BM&FBovespa or to Cetip, and to the companies belonging to the economic group of BM&FBovespa and Cetip, for which UBS has
received compensation in the past. UBS continues to provide such services and UBS may, at any time, provide any such services again. Moreover UBS, directly or through its affiliates, is and may become a creditor of BM&FBovespa, Cetip or its
Subsidiaries and Affiliates, in certain financial operations, as well as increase or decrease the volume of its financial transactions with such companies. UBS believes that such relationships do not reduce UBS' independence for the provision of
the valuation services hereunder.
12. UBS does not take responsibility for any direct or indirect losses, or loss of profits, that may result from the use of this Valuation Report.
13. UBS does not provide legal, regulatory, accounting or tax advice. Accordingly, any statements contained in the Valuation Report as to tax matters were neither written nor intended by us to be used and cannot be used by any taxpayer for
any purposes, including for avoiding tax penalties that may be imposed on such taxpayer. If any person uses or refers to any such tax statement in promoting, marketing or recommending a partnership or other entity, investment plan or
arrangement to any taxpayer, then the statement expressed herein is being delivered to support the promotion or marketing of the Transaction or matter addressed and the recipient should seek advice based on its particular circumstances
from an independent tax advisor.
14. The financial calculations provided in the Valuation Report may not always result in a precise sum, due to rounding.
15. The base date of the financial information for BM&FBovespa and Cetip used in this Valuation Report is December 31st, 2015. It should be understood that developments in the financial condition or prospects of BM&FBovespa and Cetip
after December 31, 2015 may affect this Valuation Report, and, unless BM&FBovespa so expressly requires, UBS assumes no obligation to update, rectify, revoke or otherwise revise, in whole or in part, this Valuation Report or any information
contained herein or to investigate, review or take into account any changes in events, circumstances, market or industry conditions, projections or other matters or developments that could have affected such financial information since
December 31st, 2015. UBS has relied upon the assurances of the management of BM&FBovespa that no material developments with respect to BM&FBovespa, Cetip and their financial information have occurred since December 31st, 2015.
So Paulo, April 9th, 2016
UBS Brasil Servios de Assessoria Financeira Ltda.

67

ATTACHMENT
II.4
Financial
Statements

MANAGEMENTS DISCUSSION AND ANALISYS 2015


BM&FBOVESPA S.A. Bolsa de Valores, Mercadorias e Futuros
The Brazilian Securities, Commodities and Futures Exchange

FINANCIAL
STATEMENTS 2015

MANAGEMENTS DISCUSSION AND ANALISYS 2015


Dear Shareholders,
We are pleased to submit for your consideration the Management Report of BM&FBOVESPA S.A. Bolsa de Valores,
Mercadorias e Futuros (BM&FBOVESPA, Exchange or Company) relating to our activities in 2015.

HIGHLIGHTS OF THE YEAR


Throughout 2015, the markets operated by BM&FBOVESPA were significantly affected by the deterioration in the
Brazilian economy and by changes in the global situation. Increased volatility in the market and a sharp devaluation of
the Brazilian Real against the US Dollar had a positive effect on revenues from the BM&F segment. In the Bovespa
segment, however, we saw a major fall in the market value of listed companies and, in consequence, in volumes
traded.
Other revenues not related to volumes in the equities and derivatives markets also increased during the year, mainly
reflecting changes in the Companys commercial policies, growth in the securities lending market and the Treasury
Direct (Tesouro Direto) platform, as well as currency devaluation, which had a positive effect on market data revenues.
Thus, in spite of the challenges posed by the macroeconomic scenario, total revenues rose 9.5% over 2014, reflecting
the diversification of revenues and the soundness of the Companys business model.
Although the revenue diversification lessened the impact on our results of the negative feeling of investors towards
Brazilian assets, it should be noted that there has been a slowdown in activity in our derivatives and equities markets,
in particular since late 2015.
There was a reduced number of share issuance in the capital market, in particular IPOs. Besides there was an increase
in the number of companies going private. Although this is part of the life cycle of listed companies, it reduces
opportunities for investors who seek diversity in their portfolios.
In this context, BM&FBOVESPA believes that an important element of the process of maintaining a vigorous and
internationally competitive capital market is constant improvement in the corporate governance of listed companies.
Accordingly, the Company has been working with other bodies and market specialists to introduce a voluntary program
aimed at state-owned companies that want to upgrade their corporate governance practices and to receive
recognition for it. BM&FBOVESPA also started, at the end of 2015, a discussion process to enhance the rules of the
special listing segments (Novo Mercado, Levels 1 and 2).
We should also underline other advances in the Companys strategic objectives, such as its new integrated
clearinghouse project (the BM&FBOVESPA Clearinghouse). The technological development of the equities phase was
completed in 2015. Additionally, new products were launched and the Company continued its efforts to improve the
liquidity of listed products, for example, by expanding market maker programs and promoting the securities lending
platform.
BM&FBOVESPA also took steps to improve its own corporate governance, in particular by strengthening the Board of
Directors advisory committees and arranging a series of meetings of shareholders with the CEO and the Chairman of
the Board of Directors, at the time of the General Meeting that elected a renewed Board.
We should also mention two important developments during the year: the sale of 20% of our investment the CME
Group shares, to reduce the Companys balance sheet risk exposure, and our R$43.6 million investment in the
purchase of 8.3% of the Bolsa de Comercio de Santiago.
Another important event took place in November 2015, when BM&FBOVESPA presented a proposal to combine its
operations with CETIP S.A Mercados Organizados, in a strategic move to expand and diversify business. Those
discussions are ongoing at the Board of Directors level (see material facts of November 3 and 13 and December 4,
2015).
Finally, the poor performance of the Bovespa segment, especially during the last quarter of the year, and the revision
of growth forecasts, led to the impairment of Bovespa Holding totaling R$1.7 billion, which had no cash impact, but
negatively impacted Companys results.
To sum up, BM&FBOVESPA continues well positioned to take advantage of market growth opportunities, but we must
recognize the challenges implicit in the worsening of the macroeconomic scenario. Management remains focused on
investing in new products and technologies, which we believe have been fundamental for improving the quality of the
services we offer and diversifying revenues over recent years.
2

MANAGEMENTS DISCUSSION AND ANALISYS 2015


OPERATING PERFORMANCE
Financial and Commodity Derivatives (BM&F Segment)
The average daily volume on the BM&F segment reached R$2.9 million contracts in 2015, an increase of 10.7% over
the previous year, especially due to Interest rate in USD contracts and Mini contracts, which rose by 31.7% and 67.5%,
respectively.
The performance of the Interest rate in USD contracts mainly reflects the higher level of volatility. In the case of Mini
contracts, which include stock indices contracts (70.1% of the total) and FX rates contracts (29.9% of the total), growth
in volume was due to not just increased volatility but also to the activities of new clients.
The volume of Interest rate in BRL contracts, which are the ones most traded in this segment, grew by 2.9% over 2014,
below the segment average, so that their share of total volume fell from 54.9% in 2014 to 51% in 2015.
Average Daily Volume (thousands of contracts)
Interest Rates in BRL
FX Rates
Stock Indices
Interest Rates in USD
Commodities
Minicontracts
OTC
TOTAL

2011

2012

2013

2014

2015

1,797.2
495.5
123.3
145.2
13.2
114.4
11.7
2,700.6

1,925.7
493.9
143.1
149.8
11.2
165.7
9.2
2,898.7

1,856.7
494.1
113.6
155.9
9.2
208.2
10.1
2,847.8

1,417.4
493.9
118.6
219.6
10.2
310.6
12.4
2,582.8

1,458.4
463.9
100.9
289.2
7.6
520.3
19.6
2,860.0

CAGR
Var.
(2011-15) 2015/2014
-5.1%
2.9%
-1.6%
-6.1%
-4.9%
-15.0%
18.8%
31.7%
-12.9%
-25.3%
46.0%
67.5%
13.7%
57.3%
1.4%
10.7%

Average revenue per contract (RPC) was higher in every group of contracts, and considering all groups together the
rise was 12.3% over 2014. The key factors contributing to this performance were:

An increase in RPC for contracts denominated in US Dollars, due to the 28.9% devaluation of the Real1, reflected
particularly in the RPC of FX Rates contracts (+37.6%) and of Interest Rate in USD contracts (+42.2%); and
A change in the commercial policy for investors using DMA (Direct Market Access) tools, which came into effect in
January 2015.
Average RPC (R$)
2011
Interest Rates in BRL
FX Rates
Stock Indices
Interest Rates in USD
Commodities
Minicontracts
OTC
OVERALL AVERAGE

0.918
1.894
1.614
0.941
2.029
0.129
1.635
1.106

2012
1.004
2.205
1.524
1.015
2.239
0.116
1.769
1.191

2013
1.046
2.535
1.761
1.231
2.534
0.119
1.409
1.282

2014
1.120
2.669
1.774
1.294
2.390
0.117
2.092
1.350

2015
1.150
3.671
2.128
1.840
2.530
0.218
3.925
1.516

Var.
2015/2014
2.7%
37.6%
19.9%
42.2%
5.9%
86.2%
87.6%
12.3%

With regard to the participation of different groups of investors in the financial derivatives and commodities markets,
foreigners boosted the average volume of contracts traded in 2015 by 32.7%, with their share in the total going up
from 34.5% to 39.9% during the year. This was due primarily to increased activity on High-Frequency Traders (HFTs).
The share of institutional investors rose from 28.6% in 2014 to 29.3% in 2015, as a result of a 17.7% increase in the
average volume of contracts traded. On the other hand, the volume traded by financial institutions fell 15.0%, and
their share in the total was down from 29.6% to 21.9% in the year. This was due to the fact that some of these
institutions have been reducing their exposure to risk in recent years.

Based on the variation in the PTAX average closing at the end of each month between December 2013 and November 2014 (the base rate for
2014) and between December 2014 and November 2015 (the base rate for 2015).

MANAGEMENTS DISCUSSION AND ANALISYS 2015


Distribution of Average Daily Volume Traded by Investor Category (%)
38.1%

32.5%

34.5%

29.6%

Financial Institutions

21.9%

Institutional Investors
29.3%

Foreign Investors

28.6%

32.5%

34.0%

35.9%

23.0%

25.4%

25.4%

4.5%

4.5%

4.8%

6.1%

7.7%

2011

2012

2013

2014

2015

Retail
34.5%

39.9%

Companies

Central Bank

Equities and Equity Derivatives (Bovespa Segment)


The average daily trading value in cash equities and equities derivatives (options and forwards) in the Bovespa segment
was R$6.8 billion in 2015, 6.9% below the previous year, due mainly to the lower cash market volumes which make up
96.5% of the total traded in this segment.
Average Daily Trading Value (R$ million)
Markets
Cash
Forward
Options
Total

2011

2012

2013

2014

2015

6,096.3
118.0
276.3
6,491.6

6,861.3
103.4
280.1
7,250.7

7,094.5
91.5
230.3
7,417.7

6,975.8
82.4
233.1
7,292.5

6,552.1
66.5
170.3
6,792.8

CAGR
Var.
2011-2015 2015/2014
1.8%
-6.1%
-13.3%
-19.2%
-11.4%
-27.0%
1.1%
-6.9%

The 6.1% fall in the average daily trading value of the cash market was primarily due to a 7.5% reduction in average
market capitalization2, which was down from R$2.39 trillion in 2014 to R$2.21 trillion in 2015, while turnover velocity3
remained practically unchanged (72.4% in 2014 against 72.9% in 2015).
Average Market Capitalization (R$ trillion) and Turnover Velocity (%)

Average market capitalization fell in practically every sector, as a result of the domestic and international scenarios
and the drop in global commodities prices. The largest fall in market capitalization was in the Oil, Gas and Biofuels
sector, which was 36.1% lower than in the previous year, while for the ten largest Brazilian listed companies4 the
decrease was 11.2% in the same period.

Market capitalization is the multiplication of the number of shares issued by listed companies, by their respective market prices.
Turnover velocity is the result of dividing the annualized value traded on the cash market during the period, by the average market capitalization
for the same period.
4 Consisting of Ambev, Ita Unibanco, Bradesco, Petrobras, Cielo, Vale, Santander Brasil, Telefnica Brasil, BB Seguridade and BRF.
3

MANAGEMENTS DISCUSSION AND ANALISYS 2015


Average Market Capitalization by Sector (R$ billion)
Industry Classification

2014

Financial
Consumption
Basic Materials
Utilities
Oil, Gas and Biofuels
Telecommunications
Construction and Transportation
Others*
Total

777.6
645.9
264.2
207.4
215.8
111.4
98.6
69.9
2,390.7

Total Part.
(%) 2014
32.5%
27.0%
11.0%
8.7%
9.0%
4.7%
4.1%
2.9%

2015
771.7
667.6
209.3
194.6
137.8
91.0
73.3
70.0
2,215.4

Total Part.
Var.
(%) 2015 2015/2014
34.8%
-0.8%
30.1%
3.4%
9.4%
-20.8%
8.8%
-6.2%
6.2%
-36.1%
4.1%
-18.3%
3.3%
-25.6%
3.2%
0.2%
-7.3%

Trading margins in this segment remained stable, at 5.287 basis points in 2014 compared to 5.275 basis points in 2015.
Among investor groups on the Bovespa segment, foreign investors continued to account for the largest share, with
52.8% of the overall value traded, followed by local institutional investors with 27.2%. In comparison with the previous
year, lower trading volumes were seen in every investors group, especially local institutional investors, whose volumes
were down by 12.5%. The increase in domestic interest rates (by 425 basis points between December 2014 and
December 2015) was an important factor in the behavior of investors in the equities market.
Distribution of Average Daily Traded Value by Investor Category (R$ billion)

Other business lines


Securities Lending
The average financial value of open positions in the securities lending facility reached R$38.8 billion in 2015, 18.3%
higher than in 2014. Securities lending is used by investors who take loans as part of their strategy in the equities
market, and by investors seeking additional income as lenders.
Securities lending transactions (BTC)

Treasury Direct (Tesouro Direto)


Tesouro Direto continues its strong upward trend. Average registered stock rose to R$18.4 billion in 2015, 46.8% more
than in the previous year, while the average number of investors increased by 56.2%, from 118.7 thousand in 2014 to
185.4 thousand (the actual number of investors in December 2015 was 248.7 thousand). Designed in partnership with
the Brazilian Treasury, Tesouro Direto continues to be promoted by BM&FBOVESPA through incentive programs in the
distribution channel and operating enhancements.

MANAGEMENTS DISCUSSION AND ANALISYS 2015


Treasury Direct platform

ECONOMIC AND FINANCIAL PERFORMANCE


Revenues
BM&FBOVESPA ended 2015 with total revenues (before deducting PIS/COFINS and ISS) of R$2,458.8 million, an
increase of 9.5% over 2014. Increased revenues explain this performance from the BM&F segment and from other
business lines not tied to volume.
Revenues from trading, clearing and settlement - BM&F segment: amounted to R$1,074.5 million (43.7% of the
total), up by 24.0% over 2014, as a result of an increase of 10.7% in the average daily volume coupled with a 12.3%
increase in average RPC.
Revenues from trading, clearing and settlement - Bovespa segment: totaled R$903 million in 2015 (36.7% of the
total), 7.6% lower than in 2014, reflecting a 6.9% drop in the average daily traded value and the decrease in the
representativeness of the equities derivatives share over the total of the segment.
Other revenues: amounted to R$481.3 million (19.6% of the total), up 19.6% over 2014. The main changes in these
revenue lines that are not tied to trading volumes were:
Securities Lending: amounted to R$103.2 million (4.2% of total), 27.1% higher than in 2014, resulting from an
increase of 18.3% in the average value of open interest positions, coupled with a change in the commercial
policies for some groups of clients in January 2015.
Depositary: totaled R$130.8 million in 2015 (5.3% of the total), an increase of 11.7% compared to 2014, due
mainly to the growth of 20.3% in revenues from Tesouro Direto, which reached R$34.7 million in 2015, and to
changes in the commercial policies adopted by the depositary as from April 2015.
Market data sales (Vendors): revenues from the sale of data signals amounted to R$98.4 million (4.0% of total
revenues), 40.6% up on the previous year. This result reflects the introduction in July 2015 of a new commercial
policy and the devaluation of the Real against the US Dollar, since 62% of these revenues were denominated in
US currency.
Expenses
Expenses amounted to R$850.7 million in 2015, 5.8% higher than in the previous year, and significantly below inflation
of 10.7%5 for the period. The main highlights were:
Personnel and payroll related charges: amounted to R$443.0 million, an increase of 25.0% over the previous year,
mainly due to the impact of approximately 9% adjustment under the annual collective bargaining agreement, which
came into force in August 2015, and to the adoption of a stock grant in 2015 as a long-term incentive. The costs of
the stock grant amounted to R$99.0 million in 2015, and include: (i) recurring expenses of R$40.3 million referring
to the principal amount granted to the beneficiaries, and R$26.4 million in provisions for payroll charges to be paid
upon the delivery of the shares to the beneficiaries; and (ii) non-recurring expenses of R$32.2 million related to the
cancellation of the stock option plan, as detailed in the Notice to the Market of February 4, 2015. Excluding the

Source: IBGE 2015: aggregate IPCA for 12 months - http://www.ibge.gov.br/

MANAGEMENTS DISCUSSION AND ANALISYS 2015


effect of the long-term incentive program of 2014 and 2015, personnel and payroll related charges would have
grown 5.7% during the year, reflecting the efforts of the Company to reduce the headcount.
Data processing: totaled R$122.0 million, a slight fall of 1.8% over 2014.
Third party services: amounted to R$41.1 million in 2015, up 3.2% on the previous year, reflecting an increase in
expenditure on advisory services and legal fees for the development of projects and products.
Communications: totaled R$5.7 million, a decrease of 57.0% in relation to 2014 due to changes and savings in the
process of posting custody statements and trading notices to investors.
Taxes: amounted to R$8.2 million, 85.2% less than in the previous year, due to a change in accounting of taxes on
dividends received from the CME Group, which now affect the calculation base for the Companys income and
social contribution taxes.
Others: other expenses amounted to R$84.5 million, an increase of 28.6% over 2014, due to: i) a rise in electricity
charges; ii) a R$3.6 million increase in provisions; and iii) a non-recurring investment write-off of R$6.4 million in
3Q15.
Impairment of assets
The goodwill created on the acquisition of Bovespa Holding in 2008 is based on both expectation of future profitability
and economic and financial appraisal report of the investment. As mentioned in the economic and financial valuation
report on the investment issued by an external and independent specialist, an impairment was recognized for this
intangible asset in the amount of R$1.7 billion, without cash effects, reflecting the deterioration of the macroeconomic
scenario, which impacted the Bovespa Segment, through the lower market value of the listed companies and
consequently the lower average daily trading value, notably in 4Q15. As result, and also associated to the worse
expectation for the interest rates and country risk for the short and long-term, was accounted a reduction in the
Bovespa Segment expected future profitability.
Equity in Results of Investees
The equity-method investment in the CME Group amounted to R$136.2 million in 2015. The comparison with 2014 is
affected by two changes: (i) starting January 2015, this line is now calculated based on after-tax results of the CME
Group (up to 2014 the calculation was based on pre-tax results); and (ii) due to the discontinuity of the equity method
(see the next item), equity income results were only booked up to September 14, 2015 (the settlement date of
payment of the shares sale).
Extraordinary impacts related to the CME Group
The 2015 financial statements were impacted by the divestment, on September 9, of 20% of the shares held by
BM&FBOVESPA in the CME Group (to 4% from 5% of the US exchange capital stock), which combined with other
quantitative and qualitative aspects led to the discontinuity of the equity method of accounting for the investment in
the CME Group.
Result of divestment of the CME Group shares
Proceeds of the sale amounted to R$1,201.3 million, and had a positive effect on the Companys cash balance. The
gross profit on this transaction (Gain on disposal of investment in associates) was R$724.0 million and was included in
the Companys tax base, which totaled R$249.8 million, generating a net profit of R$474.2 million.
Discontinuity of equity method of accounting
The Company no longer recognizes the investment in the CME Group by the equity method of accounting, and now
treats it as a financial asset available for sale (see Note 7). The impacts on the financial statements are:
Balance sheet: i) the investment ceases to be treated as a non-current asset (investments interest in associate)
and is now treated as a financial asset available for sale in current assets (financial investments); ii) it is now
measured at fair value (marked to market), with variations in the measurement affecting shareholders equity; and
iii) the account deferred income tax and social contribution in non-current liabilities now includes a provision for
tax on potential gains on this investment.
Income statement: i) recognition of the result of discontinuing the equity method and of deferred tax, amounting
to R$1,734.9 million and R$604.4 million, respectively, both with no cash impact; and ii) as from 4Q15 the equity
7

MANAGEMENTS DISCUSSION AND ANALISYS 2015


pickup line no longer includes the CME Group, and dividends received are booked as financial revenues and
included in the Companys tax base.
It is worth noting that the reduction of the shareholding and the discontinuity of the equity method does not imply
changes in the fundamental aspects of the strategic partnership between BM&FBOVESPA and the CME Group.
Financial Result
The financial result was R$508.8 million in 2015, a rise of 144.4% over the previous year. Financial revenues grew by
106.1% to R$745.7 million, mainly reflecting i) an increase in interest rates and average cash holdings during the year;
and ii) dividends received from the CME Group amounting to R$173.4 million which, after the discontinuity of equity
accounting, were booked as financial revenues. On the other hand, financial expenses increased 54.2% to R$236.9
million, due to the appreciation of the US Dollar against the Brazilian Real during the year, which affected the amount
of interest paid on debt issued overseas. The currency variation also impacted other asset and liability lines in the
balance sheet, as well as the Companys financial revenues and expenses, but this did not significantly affect the
financial result.

Financial Income

745.7

361.8

Change
2015/2014
106.1%

Interest on cash

471.6

320.7

47.1%

Dividends CME and BCS

174.8

0.0

Exchange gains and others

99.4

41.1

Financial Expenses

(236.9)

(153.6)

54.2%

Interest and exchange variations on foreign debt

(138.1)

(96.9)

42.4%

Exchange losses and others

(98.8)

(56.7)

74.4%

(R$ millions)

2015

2014

0.0%
141.8%

Income Tax and Social Contribution


Income tax and social contribution amounted to R$603.8 million in 2015, down by 8.7% over 2014. This is explained
mainly by the extraordinary effects of the partial divestment of the CME Group, by tax credits arising from the
distribution of interest on capital and by the impairment of intangible assets.
Current taxes:
Current taxes totaled R$45.6 million in 2015, including R$5.8 million in tax paid by Banco BM&FBOVESPA, with cash
impact. The difference will be set off against tax withheld overseas, with no cash impact.
We should mention that the tax payable on the result of the partial divestment of CME Group shares, amounting to
R$249.8 million, was offset by the distribution of interest on capital in 2015, and therefore had no effect on cash.
Deferred taxes:
Deferred taxes amounted to R$558.2 million in 2015, consisting of:
Reversal of deferred tax liability in the amount of R$ 15.2 million (positive), calculated as the net result between
R$550.1 million of deferred tax under temporary differences on goodwill amortization and write-off of deferred
tax liability amounting R$565.3 million arising from the impairment on the goodwill, both with no cash impact;
Discontinuity of the equity accounting method, amounting to R$604.4 million related to the recognition of deferred
tax, with no cash impact; and
Reversals/recording of other tax credits of R$31.0 million (positive), with no cash impact.
Net Income
Net income (attributable to shareholders) amounted to R$2,202.2 million. Excluding impairment expenses and the
extraordinary impacts related to the CME Group, net income was R$1,695.0 million, up by 73.5% over 2014, being this
growth partly explained by the reduction of the tax base generated by the distribution of IoC in 2015.

MANAGEMENTS DISCUSSION AND ANALISYS 2015


MAIN ITEMS OF THE CONSOLIDATED BALANCE SHEET AS AT DECEMBER 31, 2015
Asset, Liability and Shareholders Equity Accounts
In 2015, BM&FBOVESPAs equity position remained sound, with total assets of R$26,308.9 million, a rise of 4.1% on
2014, and shareholders equity of R$18,352.2 million, 3.4% down year on year.
The major changes in assets, in comparison with 2014, reflect the extraordinary effects of the partial divestment of
the CME Group and the impairment of intangible assets.
The proceeds of the partial sale of CME Group shares have been placed in financial investments, and, with equity
accounting being discontinued, the value of the remaining portion of this investment has been reclassified from
investment in associates to financial investments.
Intangible assets consist mainly of goodwill on expectations of future profitability from the acquisition of Bovespa
Holding. This goodwill was tested for impairment in December 2015 and an appraisal report prepared by an external
and independent expert identified the need to reduce the recoverable value of this asset by R$1.7 billion, due to lower
expectations for future profitability in the Bovespa segment.
Current liabilities represented 8.0% of total of liabilities and shareholders equity, reaching R$2,096.8 million in 2015,
10.8% above the balance at the end of 2014; whereas non-current liabilities accounted for 22.3% of total liabilities and
shareholders equity, at R$5,859.9 million, a 33.7% increase over 2014. The more significant variations were in the
following lines: (i) issue of debt overseas, which was affected by the devaluation of the Real against the US Dollar; and
(ii) deferred income tax and social contribution, which in addition to the establishment of deferred tax arising from
the tax amortization of goodwill, was also impacted by the discontinuity of equity accounting for the CME Group.
Shareholders equity amounted to R$18,352.2 million at the end of 2015 and consists, mainly, of a capital reserve of
R$14,300.3 million, capital stock of R$2,540.2 million and revenue reserves of R$1,951.0 million.

OTHER FINANCIAL INFORMATION


Investments
Investments of R$227.0 million were capitalized in 2015, including R$221.4 million in technology and infrastructure,
particularly in the equities phase of the new BM&FBOVESPA Clearinghouse.
Budget for adjusted expenses and investments in 2016
In December 2015, the Company announced its budget for adjusted operating expenses6 and investments in 2016, as
follows: (i) adjusted operating expenses budget guidance within a range of R$640 million to R$670 million; and (ii)
investments budget guidance within a range of R$200 million to R$230 million.
Distribution of Earnings
The Board of Directors declared a payment of R$1,242.6 million in dividends and interest on capital in 2015, bringing
the distribution to a 73.3% of the net income attributed to BM&FBOVESPA shareholders, excluding impairment
expenses and impacts related to the CME Group.
Share Buyback Program
In 2015, the Company repurchased 26.2 million of its own shares (equivalent to 1.5% of the shares in free-float at the
beginning of the year) at an average price of R$10.95, for a total of R$286.8 million. These transactions are part of the
repurchase program approved by the Board of Directors that was in force up to the end of December 2015, authorizing
the acquisition of up to 60 million shares. In addition, on December 2015, the Company approved a new repurchase
program for up to 40 million shares (2.2% of the total free-float) for 2016.

Adjusted for depreciation and amortization, the stock grant plan (principal and costs), the stock option plan and allocation of fines and
provisions.

MANAGEMENTS DISCUSSION AND ANALISYS 2015


OTHER HIGHLIGHTS
Development of Markets and Technology
Integration of the Clearinghouses: the second phase of the new BM&FBOVESPA integrated Clearinghouse, which
covers the integration of the post-trading processes for equities and corporate fixed income with the derivatives
market introduced in the first phase, made good progress throughout 2015. The technological development was
completed in 4Q15 and the integrated tests and certification with the market participants already started. The
integrated tests will continue in 2016 followed by the parallel production, which replicates in the test environment all
the transactions executed in the production environment. The final migration date will depend on the results of those
tests, as well as on authorization from the regulators. The new BM&FBOVESPA Clearinghouse will bring greater
efficient in capital allocation for collaterals related to multimarket and multi-asset portfolios, increasing Companys
competitive advantages.
iBalco Platform development: during 2015, the Company introduced a number of new functions in the fixed income
registration system, such as scalable yield and cash flow. In addition, Financial Bills (Letras Financeiras) and
Structured Notes (Certificado de Operaes Estruturadas COEs) are now accepted for registration. In the case of
OTC derivatives, the Company made progress with the migration from the existing platform to a more modern and
flexible registration platform, expanding the range of products offered, which may be with or without a central
counterparty.
Enhancements in commercial policies: throughout 2015, BM&FBOVESPA enhanced its commercial policies for the
following products and services: (i) in 1Q15, access via DMA in the BM&F segment, options on Ibovespa future
contracts, securities lending, annuity payments by issuers and analysis of tender offers and equity offers; (ii) in 2Q15,
a rebalancing of prices charged on Interest rates in BRL contracts, depository service and Mini futures contracts; and
(iii) in 3Q15, Market Data and OTC derivatives.
Market makers: in order to improve the liquidity of listed products, BM&FBOVESPA continued expanding market
maker programs. In the markets of options on stocks, ETFs and indices, the number of programs went up from 14 at
the end of 2014 to 27 at the end of 2015. In the financial derivatives and commodities market, where these programs
are more recent, there are now 8 active programs, 7 of which were introduced in 2015.
Improvements to the Treasury Direct Platform (Tesouro Direto): in March 2015, BM&FBOVESPA introduced a series
of improvements to the Tesouro Direto, the most important being: (i) a new visual identity for the Tesouro Direto
website, making it easier to use and introducing more functions; (ii) reductions in the minimum purchase amounts
and periods of suspension for investors; (iii) daily repurchase of securities by the National Treasury; and (iv) use of
Tesouro Direto securities as collateral in the BM&FBOVESPA Clearinghouses.
Investment in the Santiago Stock Exchange: in the first half of 2015, BM&FBOVESPA acquired 8.3% of the Bolsa de
Comercio de Santiago (Santiago Stock Exchange), in Chile, with an investment of R$43.6 million. This transaction forms
part of the Companys strategy to take advantage of opportunities for partnerships with other exchanges, and to invest
in opportunities for expanding activities in neighboring countries.
Corporate Governance Program for State-Owned Companies: at the end of September, BM&FBOVESPA presented its
State-Owned Companies Governance program. The program aims to recognize and give marks for good corporate
governance practices in state-owned companies that are listed or seeking a listing, on three fronts: transparency,
internal controls and management structure.
Enhancements in the unsponsored Brazilian Depositary Receipts (BDRs) market: during 2015 there were several
deliveries in the development of the unsponsored BDR market. Among them were the start of trading of 19 new
programs (raising the total to 85), including the first BDR of a Latin American company, and a filing for reservation of
other 39 programs, due to start trading in 2016. In addition, the new ICVM 555 regulation came into force, thanks to
a request by the Company and the market, allowing retail investors to acquire BDRs through investment funds.

CORPORATE GOVERNANCE AND RISK MANAGEMENT


The key objective of BM&FBOVESPAs corporate governance is to contribute on the achievements of strategic goals
and to create value for all shareholders, respecting its relationships with stakeholders.

10

MANAGEMENTS DISCUSSION AND ANALISYS 2015


The importance of good governance practices for the long-term success of BM&FBOVESPA is underlined by its
widespread ownership structure, with no controlling shareholder, and by its institutional responsibility to develop the
markets it manages.
Among the key highlights of the Companys governance structure are listings on the Novo Mercado, having a Board
of Directors consisting mainly of independent members, in accordance with CVM Instruction 461/07, and the existence
of four permanent Board advisory committees, in particular the Audit Committee, set up as required by CVM
Instruction 509/11, and the Risk and Finance Committee, whose responsibilities, apart from those provided for under
the by-laws, include assessing the risks to which the Company is exposed.
In 2015, BM&FBOVESPA was awarded the Transparency Award for the seventh time. This award is given by Anefac
(the National Association of Finance, Administration and Accounting Executives).
Internal Audit
The mission of the BM&FBOVESPA internal audit is to give the Board of Directors, the Audit Committee and the
Executive Board an independent, impartial and timely assessments of the efficacy of risk management and governance
processes, of the adequacy of controls and of compliance with rules and regulations relating to the operations of the
Company and its subsidiaries.
Aligned with the best international practices and BM&FBOVESPAs own sound risk management structure, in 2015,
Internal Audit applied for certification by the Brazilian Institute of Internal Auditors (IIA Brazil). This certificate is
granted when the internal audit function is based on a Code of Ethics, regulations, planning, policies and procedures
that meet the requirements of the Standards and Code of Ethics of The Institute of Internal Auditors (IIA).
At the end of 2015, IIA Brasil granted BM&FBOVESPA its certificate of Internal Audit Quality, which recognizes
companies adopting the best practices and the highest international standards of internal auditing.
Internal Controls, Compliance and Corporate Risk
BM&FBOVESPA uses the model of three lines of defense to manage its risks and controls. Under this model, the first
line, which minimizes risks and controls, is the business area itself. The second line of defense includes risk
management and compliance functions and is operated by an area other than business area; and the third line is
internal audit.
The department of Internal Controls, Compliance & Corporate Risk., which reports directly to the CEO, functions as
the second line of defense and provides information to assist the work of the Audit Committee and the Risks and
Finance Committee. Its key responsibilities are:
Corporate Processes and Risks: to set up a comprehensive structure to implement and support the constant
development of the organizations processes, to provide mechanisms to manage the process portfolio, to carry out
constant maintenance and enhancement, and to identify, assess and monitor corporate risks and propose
measures to contain them;
Internal controls: to assess the Companys control environment on a regular basis;
Compliance: to assist in fulfilling, complying with and applying internal and external regulations governing the
Companys activities.
Business continuity: to identify and assess the legal and regulatory requirements for business continuity, and the
internal and external threats that may jeopardize the future of the Companys operations; to set up a management
and crisis response structure, provide training and carry out tests and studies to ensure that continuity plans are
maintained and function properly.
Financial risks and modeling: to validate the parameters and methods designed by the operating areas for handling
central counterparty and financial risks.
Information security: to plan and structure strategies and actions to be taken in order to prevent the loss of
Company information and to protect it.
Central Counterparty Risk Risk Management
BM&FBOVESPA operates four clearinghouses: (i) Equities and Corporate Debt Securities, (ii) Derivatives, (iii) Currency
and (iv) Securities. These clearinghouses are classified as systemically important by the Central Bank of Brazil, and act
as central counterparties (CCPs) to guarantee the functioning of their markets.

11

MANAGEMENTS DISCUSSION AND ANALISYS 2015


As of December 31, 2015, collateral deposited by participants totaled R$305.2 billion, 26.1% higher than the total
deposited at the end of 2014. This increase was principally due to an increase in the volume of collateral deposited in
the derivatives clearinghouse, where there were higher outstanding positions in FX rates and Interest rates in USD
contracts and Mini contracts.
Collateral Deposited
Clearing houses
Equities, corporate debt securities
Derivatives
Forex
Bonds
Total

December 31, 2015 December 31, 2014 Variation


In R$ millions
In R$ millions
(%)
69,484.6
70,504.3
-1.4%
226,577.6
166,213.9
36.3%
8,819.8
4,855.4
81.7%
280.2
505.6 -44.6%
305,162.3
242,079.2
26.1%

HUMAN RESOURCES
BM&FBOVESPA has increased its efforts and introduced new initiatives for its Organizational Climate Management
and qualification of staff and leaders.
The third edition of the Value Opinion Survey was held in 2015, in partnership with Great Place to Work, to allow us
to analyze the degree of satisfaction and engagement of our staff, and to find out more about their hopes and
expectations. 92% of the staff completed the questionnaire, and the results showed substantial improvements in every
aspect of the survey, when compared with the last one in 2013.
Another front is the Leaders Day program, which is a tool to train Companys leaders in people management:
Attraction and Integration, Performance and Talent Management, Training and Development, Climate Management,
Compensation and Day-to-Day Administration. In 2015, the program was structured on three fronts: Inspiration,
Knowledge and Application and Support, with lectures, workshops, a blog and a Managers Guide to help them as they
develop. More than 200 managers attended the program during the year.
Another initiative is the Quality of Life Program, based on the pillars of +Balance, +Health and +Leisure and Culture,
which promotes events for the wellbeing of the staff and helps to improve the work environment.
At the end of the 2015 the Company had 1,323 employees.

SUSTAINABILITY AND SOCIAL INVESTMENT


During 2015, BM&FBOVESPA spread the social and environmental theme within the Company, with the Sustainability
Policy approved by the Board of Directors in 2013 as a basis. As part of the agenda of climate change, the Company
carried out its sixth Inventory of Greenhouse Gases. Emissions were practically unchanged. In recognition of the
Companys efforts to make people aware about climate change, the CDP - Driving Sustainable Economies selected
BM&FBOVESPA as one of the ten most transparent Brazilian companies in this area.
In 2015, the Corporate Sustainability Index (ISE) completed its first ten years in operation. A Platform of Indicators
was launched, with annual information supplied by participant companies.
The fourth annual update of the Report or Explain Sustainability or Integrated Report (July 2015), indicated that 72%
of the companies listed on the Exchange publish social and environmental information, or explain their reasons for
not doing so.
During the year, the Social and Environmental Securities Exchange (BVSA - Bolsa de Valores Socioambientais) raised
R$1.7 million for projects by non-governmental organizations throughout Brazil, 172% more than in 2014, reflecting
the good results of the partnership entered into with the Brazil Foundation in December 2014.
In sports, the BM&FBOVESPA Athletics Club won the Brazil Trophy for the 14th consecutive year. Fabiana Murer, who
competes in the pole vault, was elected the best sportswoman in Brazilian athletics and awarded the Olympic Brazil
Prize by the Brazilian Olympics Committee (COB).

12

MANAGEMENTS DISCUSSION AND ANALISYS 2015


SELF-REGULATION
Regulation of issuers
Under the cooperation agreement with the CVM for monitoring information disclosed by companies listed on
BM&FBOVESPA, more than 23 thousand notices were examined and nearly two thousand notifications issued for
failure to comply with CVM regulations.
In August 2015, the new Issuers Listing and Admission to Securities Trading Regulations came fully into force. These
regulations reformulate the general rules for listing issuers and admitting their securities for trading on
BM&FBOVESPA, and also give new requirements for existing listed companies, such as a prohibition of trading in socalled penny stocks.
Progress was also made in projects under the cooperation agreement with the CVM, for designing and maintaining
computer systems for preparing, delivering and consulting information, including: (i) migration from the Regular and
One-off Reporting System (IPE) to the Empresas.Net System, and the new version of the latter with changes to the
Reference Form; and (ii) development of a system for real estate investment funds to publish information, which will
come on stream in 2016.

EXTERNAL AUDIT
The Company and its subsidiaries have retained Ernst & Young Auditores Independentes to audit their financial
statements.
The Companys policy on retaining external auditing services, and that of its subsidiaries, is based on internationally
accepted audit standards that preserve work independence of this nature and consists of the following practices: (i)
the auditor cannot perform executive or managerial functions within either the Company or its subsidiaries; (ii) the
auditor cannot play an operational role within the Company or its subsidiaries that might compromise the efficacy of
the audit work; and (iii) the auditor must remain impartial avoiding the existence of conflicts of interest and loss of
independence and objective in his opinions and pronouncements about the financial statements.
In the year 2015, no services were provided by the independent auditors or related parties other than those involving
external auditing.

MANAGEMENTS REPRESENTATION
In accordance with the provisions of CVM Instruction No. 480, the Executive Board declares that it has discussed and
reviewed, and is in agreement with, the financial statements for the year ended December 31, 2015, and the opinions
expressed by the independent auditors.

ADDITIONAL INFORMATION
The focus of this Management Report is the performance of BM&FBOVESPA and its principal achievements during
2015. For more information on the Company and its market, please check the Reference Form, which is available on
the BM&FBOVESPA Investor Relations website (http://ri.bmfbovespa.com.br) and on the CVM website
(www.cvm.gov.br).

ACKNOWLEDGMENTS
Finally, the Company would like to register its thanks to its staff for all their efforts during the year, and to its suppliers
and shareholders, financial institutions and other stakeholders for the support they have provided during 2015.

13

Financial Statements
BM&F BOVESPA S.A. - Bolsa de Valores,
Mercadorias e Futuros
December 31, 2015 and 2014
with Independent Auditors Review Report

So Paulo Corporate Towers


Av. Presidente Juscelino Kubitschek, 1909
Vila Nova Conceio, So Paulo - SP, 04543-011
Tel: +55 11 2573 3000
ey.com.br

A free translation from Portuguese into English of Independent Auditors Report on individual and consolidated
financial statements prepared in Brazilian currency in accordance with accounting practices adopted in Brazil and in
accordance with the International Financial Reporting Standards (IFRS), issued by the International Accounting
Standards Board (IASB)

Independent auditors report on financial statements


The Board of Directors, Shareholders and Officers
BM&F BOVESPA S.A. Bolsa de Valores, Mercadorias e Futuros
So Paulo SP
We have audited the accompanying individual and consolidated financial statements of BM&FBOVESPA
S.A. - Bolsa de Valores, Mercadorias e Futuros (the Company), identified as BM&FBOVESPA and
Consolidated, respectively, which comprise the balance sheet as at December 31, 2015, and the related
income statement, statement of comprehensive income, of changes in equity and of cash flows for the
year then ended, and a summary of significant accounting practices and other explanatory information.

Managements responsibility for the financial statements


Management is responsible for the preparation and fair presentation of the individual and consolidated
financial statements in accordance with accounting practices adopted in Brazil, and in accordance with
the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards
Board (IASB), and for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.

Auditors responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with the Brazilian and international standards on auditing. Those
standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether these financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the preparation
and fair presentation of the Companys financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Companys internal control. An audit also includes evaluating the appropriateness of accounting
practices used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.

1
Uma empresa-membro da Ernst & Young Global Limited

We believe that the audit evidence we obtained is sufficient and appropriate to provide a basis for our
audit opinion.

Opinion
In our opinion, the individual and consolidated financial statements referred to above present fairly, in all
material respects, the individual and consolidated financial position of BM&FBOVESPA S.A. - Bolsa de
Valores, Mercadorias e Futuros as at December 31, 2015, its individual and consolidated operating
performance and its cash flows for the year then ended, in accordance with accounting practices adopted
in Brazil and with the International Financial Reporting Standards (IFRS) issued by the IASB.

Other matters
Statement of value added
We have also audited the individual and consolidated statement of value added (SVA) for the year ended
December 31, 2015, prepared under managements responsibility, whose presentation is required by the
Brazilian Corporation Law for publicly-held companies and as additional information by the IFRS, which
do not require SVA presentation. These statements have been subject to the same auditing procedures
previously described and, in our opinion, are presented fairly, in all material respects, in relation to the
overall financial statements.

So Paulo, February 18, 2016.

ERNST & YOUNG


Auditores Independentes S.S.
CRC-2SP015199/O-6

Flvio Serpejante Peppe


Accountant CRC-1SP172167/O-6

Ktia Sayuri Teraoka Kam


Accountant CRC-1SP272354/O-1

A free translation from Portuguese into English of individual and consolidated financial statements prepared in
Brazilian currency in accordance with accounting practices adopted in Brazil and in accordance with the
International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB)

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Balance sheets
December 31, 2015 and 2014
(In thousands of reais)
BM&FBOVESPA
2015
2014 (*)

Note

Consolidated
2015
2014 (*)

Assets
8,614,990
451,081
7,728,007
74,273
160,378
175,007
26,244

2,837,189
497,146
2,019,099
56,597
71,799
166,144
26,404

8,673,786
440,845
7,798,529
75,129
157,974
175,011
26,298

2,785,239
500.535
1.962.229
57.571
72.319
166.154
26.431

17,296,676

22,155,664

17,635,109

22,478,243

1,512,136
1,368,977
140,119
3,040

1,108,397
981,234
119,870
7,293

1,961,426
1,815,620
140,567
2,200
3,039

1,522,541
1.392.763
120.285
2.200
7.293

7 (a)
7 (a)
7 (b)

144,462
144,462
-

3,855,549
3,729,147
126,402
-

30,635
30,635

3,761,300
3.729.147
32.153

Property and equipment

450,124

418,502

453,094

421,186

Intangible assets
Goodwill
Software and projects

15,189,954
14,401,628
788,326

16,773,216
16,064,309
708,907

15,189,954
14,401,628
788,326

16,773,216
16.064.309
708.907

25,911,666

24,992,853

26,308,895

25,263,482

Current assets
Cash and cash equivalents
Financial investments and marketable securities
Accounts receivable
Other receivables
Taxes recoverable and prepaid
Prepaid expenses

4 (a)
4 (b)
5
6
19 (d)

Noncurrent assets
Long-term receivables
Financial investments and marketable securities
Judicial deposits
Other receivables
Prepaid expenses
Investments
Investments in associates
Investments in subsidiaries
Investment properties

Total assets

4 (b)
14 (g)
6

(*) Amounts related to deferred tax liabilities at December 31, 2014 are restated in the balance sheet net of deferred tax assets.

See accompanying notes.

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Balance sheets
December 31, 2015 and 2014
(In thousands of reais)
BM&FBOVESPA
2015
2014 (*)

Note

Consolidated
2015
2014 (*)

Liabilities and equity


Current liabilities
Collateral for transactions
Earnings and rights on securities in custody
Suppliers
Salaries and social charges
Provision for taxes and contributions payable
Income tax and social contribution
Interest payable on debt issued abroad
Dividends and interest on equity payable
Other liabilities

1,715,602
1,338,010
49,224
42,635
116,441
32,512
1,064
70,181
2,902
62,633

1,635,426
1,321,935
46,289
66,146
71,808
24,116
47,368
1,687
56,077

2,096,785
1,338,010
49,224
42,708
117,041
34,551
4,944
70,181
2,902
437,224

1,891,833
1.321.935
46.289
66.241
72.273
25.413
2.129
47.368
1.687
308.498

5,853,965

4,377,918

5,859,897

4,383,246

12
19
14 (d)

2,384,084
3,272,276
113,122

1,619,123
2,584,525
97,661

2,384,084
3,272,276
119,054

1.619.123
2.584.525
102.989

18 (c)
13

26,122
58,361

28,371
48,238

26,122
58,361

28.371
48.238

18,342,099

18,979,509

18,352,213

18,988,403

2,540,239
14,300,310
20,188
1,950,980
(365,235)
(104,383)
18,342,099
-

2,540,239
15,220,354
20,774
990,770
(983,274)
1,004,705
185,941
18,979,509
-

2,540,239
14,300,310
20,188
1,950,980
(365,235)
(104,383)
18,342,099
10,114

2.540.239
15.220.354
20.774
990.770
(983.274)
1.004.705
185.941
18.979.509
8.894

25,911,666

24,992,853

26,308,895

25,263,482

17
10

11
12
13

Noncurrent liabilities
Debt issued abroad
Deferred income tax and social contribution
Provisions for tax, civil and labor contingencies
Obligation with post-retirement health care
benefit
Other liabilities
Equity
Capital and reserves attributable to
shareholders of BM&FBovespa
Capital
Capital reserve
Revaluation reserves
Income reserves
Treasury shares
Other comprehensive income
Proposed additional dividend
Non-controlling interests
Total liabilities and equity

15

(*) Amounts related to deferred tax liabilities at December 31, 2014 are restated in the balance sheet net of deferred tax assets.

See accompanying notes.

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Income statements
Years ended December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)
BM&FBOVESPA
2015
2014

Note
Revenue
Expenses
Administrative and general
Personnel and related charges
Data processing
Depreciation and amortization
Third-party services
Maintenance in general
Communications
Promotion and publicity
Taxes
Board and committee members compensation
Sundry
Impairment of assets

2,173,466

20

Consolidated
2015
2014

1,995,160

2,216,634

2,030,433

(831,698)

(786,004)

(850,656)

(804,070)

21

(429,689)
(120,067)
(109,264)
(39,532)
(13,157)
(5,648)
(11,629)
(7,095)
(9,149)
(86,468)

(342,333)
(122,230)
(117,479)
(38,319)
(11,096)
(13,224)
(11,065)
(54,733)
(8,683)
(66,842)

(443,006)
(122,020)
(110,857)
(41,052)
(14,210)
(5,749)
(11,944)
(8,212)
(9,149)
(84,457)

(354.411)
(124.202)
(119.133)
(39.776)
(11.927)
(13.364)
(11.305)
(55.590)
(8.683)
(65.679)

(1,662,681)

(1,662,681)

Equity pickup

7(a)

157,146

226,926

136,245

212,160

Equity method discontinuation

7(a)

1,734,889

1,734,889

Gain on disposal of investment in associates

7(a)

723,995

723,995

22

505,104
740,466
(235,362)

Financial result
Financial income
Financial expenses

2,800,221

Income before income tax and social contribution


Income tax and social contribution
Current
Deferred

(597,983)
(39,777)
(558,206)

19 (c)

2,202,238

Net income from continuing operations


Net income (loss) from discontinued operations

24

Net income for the year


Attributable to:
Shareholders of BM&FBOVESPA - Continuing
operations
Shareholders of BM&FBOVESPA - Discontinued
operations
Non-controlling interests - Continuing operations
Non-controlling interests Discontinued operations
Earnings per share attributable to shareholders of
BM&FBOVESPA (in R$ per share)
Basic earnings per share
Diluted earnings per share

206,066
358,459
(152,393)
1,642,148
(657,403)
(100,603)
(556,800)
984,745
(7,692)

508,796
745,707
(236,911)
2,807,222
(603,764)
(45,558)
(558,206)
2,203,458
-

208,157
361.761
(153.604)
1,646,680
(660,959)
(104.159)
(556.800)
985,721
(7,807)

2,202,238

977,053

2,203,458

977,914

2,202,238

984,745

2,202,238

984.745

(7,692)

1,220
-

(7.692)
976
(115)

15 (h)
1.229001
1.219860

See accompanying notes.

0.531763
0.530710

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Statements of comprehensive income
Years ended December 31, 2015 and 2014
(In thousands of reais)
BM&FBOVESPA
2015
2014
2,202,238
977,053

Note
Net income for the year
Other comprehensive income (loss) to be reclassified to
income for the year in subsequent periods
Translation adjustments
Exchange rate variation on investment in foreign
associate
Exchange rate variation on financial assets
available for sale, net of taxes
Transfer of exchange rate variation to P&L due to
disposal of investment
Transfer of exchange rate variation to P&L due to
equity method discontinuation

(1,112,187)

323,739

(1,112,187)

323,739

1,718,604

451,195

1,718,604

451.195

35,969

35,969

(600,793)

(600,793)

(2,403,173)
(1,249,393)

451,195

(2,403,173)
(1,249,393)

451.195

7(a)

7(a)

Hedge of net foreign investment


Hedged value, net of taxes
Transfer of exchange rate variation to P&L due to
equity method discontinuation, net of taxes
Cash flow Hedge
Hedged value, net of taxes
Financial instruments available for sale
Mark-to-market of available-for-sale financial
assets, net of taxes
Comprehensive income of associate and subsidiary
Comprehensive income of subsidiary
Comprehensive income of foreign associate
Transfer of foreign associates comprehensive
income to P&L due to equity method
discontinuation
Transfer of foreign associates comprehensive
income to P&L due to disposal of investment

Consolidated
2015
2014
2,203,458
977,914

(488,380)

(126,669)

(488,380)

(126.669)

848,959
360,579

(126,669)

848,959
360,579

(126.669)

(14,489)
(14,489)

(14,489)
(14,489)

(133,687)
(133,687)

(133,687)
(133,687)

7(a)
7(a)

9
7,774

7(a)

(66,384)

7(a)

(16,596)
(75,197)

Other comprehensive income not reclassified to income


for the year in subsequent periods
Actuarial gains on post-retirement health care
benefits, net of taxes

(2)
(785)

(787)

9
7,774

(66,384)
(16,596)
(75,197)

(2)
(785)

(787)

Total comprehensive income for the year

3,099
3,099
1,093,150

467
467
1,301,259

3,099
3,099
1,094,370

467
467
1,302,120

Attributable to:

1,093,150

1,301,259

1,094,370

1,302,120

1,093,150
-

1,301,259
-

1,093,150
1,220

1,301,259
861

Shareholders of BM&FBOVESPA
Non-controlling shareholders

See accompanying notes.

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Statements of changes in equity
Years ended December 31, 2015 and 2014
(In thousands of reais)

Note
Balances at December 31, 2013
Translation adjustments
Hedge of net foreign investment
Financial instruments available for sale
Comprehensive income of associate and
subsidiary
Actuarial gains on post-retirement health care
benefits

Revaluation
reserves
(Note 15(c))

Capital
reserve

Capital

2.540.239 16,056,681

Attributable to shareholders of the parent company


Income
reserves (Note 15(e))
Treasury
Other
Legal
Statutory
shares
comprehensive
reserve
reserves
(Note 15(b))
income

21,360

3,453

791,320

(955,026)

Proposed
additional
dividend

Retained
earnings

Total

Noncontrolling
interests

680,499

145,703

19,284,229

14,663

Total
equity
19,298,892

451,195
(126,669)
(2)

451,195
(126,669)
(2)

451,195
(126,669)
(2)

(785)

(785)

(785)

467

467

467

Total other comprehensive income

324,206

324,206

324,206

Effect on non-controlling interests

Realization of revaluation reserve - subsidiaries

586

(937,600)

(586)

(93)

(93)

Repurchase of shares

15(b)

(937,600)

(937,600)

Disposal of treasury shares - exercise of stock


options

18(a)

(5,339)

49,559

44,220

44,220

Cancelation of treasury shares

15(b)

(859,793)

859,793

Recognition of stock option plan

18(a)

28,805

28,805

28,805

24

Approval/payment of dividend

(145,703)

Net income for the year

977,053

977,053

861

195,997

185,941
-

(781,642)
(195,997)

(595,701)
-

2,540,239 15,220,354

20,774

3,453

987,317

(983,274)

1,004,705

185,941

18,979,509

8,894

Discontinued operations non-controlling interests

Destination of profit:
Dividends
Setting up of statutory reserves
Balances at December 31, 2014

15(g)

(145,703)

(6,537)

(6,537)
(145,703)
977,914

(595,701)
18,988,403

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Statements of changes in equity (Continued)
Years ended December 31, 2015 and 2014
(In thousands of reais)
Revaluation
reserves
(Note 15(c))

Attributable to shareholders of the parent company


Income
reserves (Note 15(e))
Treasury
Other
Legal
Statutory
shares
comprehensive
reserve
reserves
(Note 15(b))
income

Capital

Capital
reserve

2,540,239

15,220,354

20,774

3,453

987,317

Total other comprehensive income

Realization of revaluation reserve - subsidiaries

Note
Balances at December 31, 2014
Translation adjustments
Hedge of net foreign investment
Cash flow Hedge
Financial instruments available for sale
Comprehensive income of associate and
subsidiary
Actuarial gains on post-retirement health care
benefits

Noncontrolling
interests

Total

18,979,509

(1,249,393)
360,579
(14,489)
(133,687)

(75,197)

3,099

Total
equity

8,894

18,988,403

(1,249,393)
360,579
(14,489)
(133,687)

(1.249.393)
360.579
(14.489)
(133.687)

(75,197)

(75.197)

3,099

3.099

(1,109,088)

586

(287,030)

(1,109,088)

(1,109,088)
-

Repurchase of shares

15(b)

Disposal of treasury shares - exercise of stock


options

18(a)

(197)

1,094

897

897

Cancelation of treasury shares

15(b)

(903,975)

903,975

Payment in cash at fair value - options

18(a)

(56,198)

(56,198)

Recognition of stock option plan

18(a)

276

276

276

Recognition of stock grant plan

18(a)

40,050

40,050

40,050

Approval/payment of dividend

15(g)

(185,941)

(185,941)

2,202,238

2,202,238

1,220

2,203,458

960,210

(223,581)
(1,019,033)
(960,210)

(223,581)
(1,019,033)
-

(223.581)
(1.019.033)
-

2,540,239

14,300,310

20,188

3,453

1,947,527

10,114

18,352,213

Net income for the year


Destination of profit:
Dividends
Interest on equity
Setting up of statutory reserves
Balances at December 31, 2015

15(g)
15(g)

See accompanying notes.

(287,030)

1,004,705

Retained
earnings

185,941

(586)

(983,274)

Proposed
additional
dividend

(365,235)

(104,383)

(185,941)

(287,030)

(56,198)

18,342,099

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Statements of cash flow
December 31, 2015 and 2014
(In thousands of reais)
BM&FBOVESPA
2015
2014

Note

Consolidated
2015

2014

Cash flow from operating activities


Net income for the year
Adjustments:
Depreciation/amortization
Gain/loss on sale of property and equipment
Software and projects written off
Gain/loss on the disposal of investment
Gain/loss on equity method discontinuation
Impairment of assets
Deferred income tax and social contribution
Equity pickup
Variation in non-controlling interests
Stock option and stock grant plan expenses
Interest expenses
Provision for tax, civil and labor contingencies
Provision for impairment of receivables
Effect of exchange rate variation on cash flow hedge

8 and 9
9
7(a)
7(a)

7(a)
18
22

Variation in financial investments and marketable securities


and collateral for transactions
Investments transferred to financial assets
Variation in taxes recoverable and prepaid
Variation in accounts receivable
Variation in other receivables
Variation in prepaid expenses
Variation in judicial deposits
Variation in earnings and rights on securities in custody
Variation in suppliers
Variation in provision for taxes and contributions payable
Variation in income tax and social contribution
Variation in salaries and social charges
Variation in other liabilities
Variation in provision for tax, civil, and labor contingencies
Variation in post-retirement health care benefits
Net cash from (used in) operating activities

2,202,238

977,053

2,203,458

977,914

109,264
(350)
6,463
(723,995)
(1,734,889)
1,662,681
558,206
(157,146)
40,326
138,064
13,911
1,664
2,220

117,479
64
2,208
7,692
556,800
(226,926)
28,805
96,923
10,177
506
-

110,857
(350)
6,463
(723,995)
(1,734,889)
1,662,681
558,206
(136,245)
1,160
40,326
138,064
13,911
1,664
2,220

119,133
64
2,208
7,807
556,800
(212,160)
258
28,805
96,923
10,197
580
-

(6,019,661)
4,958,023
(8,863)
(19,340)
(88,579)
4,413
(20,249)
2,935
(23,511)
8,396
1,064
44,633
16,679
1,550
2,446
978,593

240,483
35,202
(4,407)
9,090
(17,370)
(11,605)
(3,636)
29,467
(639)
(2,146)
491
4,113
3,139
1,852,963

(6,182,168)
4,958,023
(8,857)
(19,222)
(85,655)
4,387
(20,282)
2,935
(23,533)
9,138
2,815
44,768
138,849
2,154
2,446
969,329

323,842
35,202
(4,709)
6,825
(17,374)
(11,620)
(3,636)
21,556
(412)
696
(2,275)
(89,747)
4,482
3,139
1,854,498

727
(73,093)
86,633
1,208,662
(154,052)
1,068,877

1,172
(54,410)
167,752
(167,052)
(52,538)

1,140
(73,867)
82,633
1,208,662
(154,052)
1,064,516

1,305
(54,639)
164,802
(167,052)
(13)
(55,597)

897
(56,198)
(287,030)
(767)
(113,664)
(1,427,340)
(1,884,102)
163,368
111,997
275,365

44,220
(937,600)
(244)
(90,433)
(741,145)
(1,725,202)
75,223
36,774
111,997

897
(56,198)
(287,030)
(767)
(113,664)
(1,427,340)
(1,884,102)
149,743
115,386
265,129

44,220
(937,600)
(244)
(90,433)
(741,145)
(1,725,202)
73,699
41,687
115,386

Cash flow from investing activities


Proceeds from sale of property and equipment
Payment for purchase of property and equipment
Dividends received
Divestiture - CME
Purchase of software and projects
Cash impact from discontinued operations
Net cash from (used in) investing activities

7(a)
9

Cash flow from financing activities


Disposal of treasury shares - stock options exercised
Payment for cancelation of stock options
Repurchase of shares
Changes in financing
Interest paid
Payment of dividends and interest on equity
Net cash used in financing activities
Net increase (decrease) in cash and cash equivalents
Balance of cash and cash equivalents at beginning of year
Balance of cash and cash equivalents at end of year

18(a)
18(a)
15(b)

4(a)
4(a)

See accompanying notes.

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Statements of value added
Years ended December 31, 2015 and 2014
(In thousands of reais)

Note

BM&FBOVESPA
2015
2014

Consolidated
2015
2014

2,412,603

2,208,569

2,458,847

2,246,452

1,977,562
435,041

1,843,969
364,600

1,977,547
481,300

1,843,950
402,502

1,939,182

262,776

1,942,113

266,253

276,501
1,662,681

262,776
-

279,432
1,662,681

266,253
-

3 - Gross value added (1-2)

473,421

1,945,793

516,734

1,980,199

4 - Retentions

109,264

117,479

110,857

119,133

109,264

117,479

110,857

119,133

364,157

1,828,314

405,877

1,861,066

3,356,496

585,385

3,340,836

573,921

157,146
740,466
1,734,889
723,995

226,926
358,459
-

136,245
745,707
1,734,889
723,995

212,160
361,761
-

7 - Total value added to be distributed (5+6)

3,720,653

2,413,699

3,746,713

2,434,987

8 - Distribution of value added

3,720,653

2,413,699

3,746,713

2,434,987

429,689
9,149

342,333
8,683

443,006
9,149

354,411
8,683

811,812
32,403
235,362
1,242,614
959,624
-

895,732
29,813
152,393
781,642
195,411
7,692

820,996
33,193
236,911
1,242,614
960,844
-

902,104
30,464
153,604
781,642
196,272
7,807

1 - Revenues

20

Trading and/or settlement system


Other revenues
2 - Goods and services acquired from third parties
Expenses (a)
Impairment of assets

Depreciation and amortization

8 and 9

5 - Net value added produced by the Company (3-4)

6 - Value added transferred from others


Equity pickup
Financial income
Equity method discontinuation
Gain on disposal of investments in associates

Personnel and related charges


Board and committee members compensation
Taxes, charges and contributions (b)
Federal
Municipal
Financial expenses
Interest on equity and dividends
Setting up of statutory reserves
Discontinued operation (Note 24)

7 (a)
22
7 (a)
7 (a)

22
15 (g)

(a) Expenses (excludes personnel, board and committee members compensation, depreciation, taxes and charges).
(b) Includes: taxes and charges, Contribution Taxes on Gross Revenue for Social Integration Program (PIS) and for Social Security Financing (COFINS),
Service Tax (ISS), and current and deferred income tax and social contribution (IRPJ and CSLL).

See accompanying notes.

10

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

1. Operations
BM&FBOVESPA S.A. Bolsa de Valores, Mercadorias e Futuros (BM&FBOVESPA) is a publiclyheld corporation headquartered in the city of So Paulo, primarily engaged in to carry out or invest
in companies engaged in the following activities:
Management of organized securities markets, promoting the organization, operation and
development of free and open markets for the trading of any types of securities or contracts, that
have as reference or objective financial assets, indices, indicators, rates, goods, currencies,
energy, transportation, commodities and other assets or rights directly or indirectly related
thereto, for spot or future settlement;
Maintenance of appropriate environments or systems for carrying out purchases, sales, auctions
and special operations involving securities, notes, rights and assets, in the stock exchange
market and in the organized over-the-counter market;
Rendering services of registration, clearing and settlement, both physical and financial,
internally or through a company especially incorporated for this purpose, assuming or not the
position of central counterparty and guarantor of the definite settlement, under the terms of
applicable legislation and its own regulations;
Rendering services of central depository and custody of fungible and non-fungible goods,
marketable securities and any other physical and financial assets;
Providing services of standardization, classification, analysis, quotations, statistics, professional
education, preparation of studies, publications, information, libraries and software on matters of
interest to BM&FBOVESPA and the participants in the markets directly or indirectly managed by
it;
Providing technical, administrative and managerial support for market development, as well as
carrying out educational, promotional and publishing activities related to its objective and to the
markets managed by it;
Performance of other similar or related activities authorized by the Brazilian Securities
Commission (CVM); and
Investment in the capital of other companies or associations, headquartered in Brazil or abroad,
as a partner, shareholder or member pursuant to the pertinent regulations.
BM&FBOVESPA organizes, develops and provides for the operation of free and open securities
markets, for spot and future settlement. Its activities are carried out through its trading systems
and clearinghouses, and include transactions with securities, interbank foreign exchange and
securities under custody in the Special System for Settlement and Custody (SELIC).

11

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

1. Operations (Continued)
BM&FBOVESPA develops technology solutions and maintains high performance systems,
providing its customers with security, agility, innovation and cost effectiveness. The success of its
activities depends on the ongoing improvement, enhancement and integration of its trading and
settlement platforms and its ability to develop and license leading-edge technologies required for
the good performance of its operations.
With the objective of responding to the needs of customers and the specific requirements of the
market, its wholly-owned subsidiary Banco BM&FBOVESPA de Servios de Liquidao e
Custdia S.A. provides its members and its clearinghouses with a centralized custody service for
the assets pledged as margin for transactions.
The subsidiaries BM&FBOVESPA (UK) Ltd. located in London and BM&F (USA) Inc., located in
the city of New York, USA, and a representative office in Shanghai, China, represent
BM&FBOVESPA abroad through relationships with other exchanges and regulators, as well as
assisting in the procurement of new clients for the market.
In order to rebalance the composition of the Companys assets, through a notice to the market, on
September 9, 2015, BM&FBOVESPA announced the disposal of 20% of CME Groups shares.
Management reassessed whether or not there is significant influence over CME Group,
considering current quantitative and qualitative factors, and concluded that significant influence,
as defined by CPC 18, no longer existed. That assessment lead the Company to reclassify its
equity position for the period from "Investments in associates, measured by the equity method, to
Financial investments and marketable securities available for sale, measured at market value.
BM&FBOVESPA maintained the hedge of net investment, originated from debt issued abroad for
hedging part of the exchange rate risk of investment in CME Group until equity method
discontinuation, when a new hedge was structured (cash flow hedge).
As part of the strategic partnership between BM&FBOVESPA and CME Group, in the third quarter
of 2015, BM&FBOVESPA organized the wholly-owned subsidiary BM&FBOVESPA BRV LLC
registered in Delaware (USA), in order to ensure to the parties the full exercise of the rights
contractually agreed upon. BM&FBOVESPA BRV LLC, jointly with BM&FBOVESPA, will be coowner of all intellectual property rights related to the stock module of PUMA Trading System
platform and any other modules jointly developed by the parties, the ownership of which is
assigned to BM&FBOVESPA. Since this Company is a subsidiary engaged in protecting rights,
this special purpose entity is not expected to have operating activities.

12

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

2. Preparation and presentation of financial statements


These financial statements were approved by the Board of Directors of BM&FBOVESPA on
February 18, 2016.
The financial statements have been prepared and are being presented in accordance with
accounting practices adopted in Brazil.
Deferred tax assets and liabilities related to income are presented net in the financial statements,
in accordance with the criteria set out in CPC 32/IAS 12. As a consequence, BM&FBOVESPA is
restating the balances disclosed in the financial statements as of December 31, 2014, as follows:
Balance disclosed
at 12/31/2014

Restatement
Effects

Balance restated
at 12/31/2014

Assets
Current assets
Noncurrent assets
Deferred income tax and social contribution

2,837,189
22,430,445
274,781

(274,781)
(274,781)

2,837,189
22,155,664
-

Total assets

25,267,634

(274,781)

24,992,853

Liabilities and equity


Current liabilities
Noncurrent liabilities
Deferred income tax and social contribution
Equity

1,635,426
4,652,699
2,859,306
18,979,509

(274,781)
(274,781)
-

1,635,426
4,377,918
2,584,525
18,979,509

Total liabilities and equity

25,267,634

(274,781)

24,992,853

a)

Consolidated financial statements


The consolidated financial statements were prepared based on international accounting
standards (IFRS) issued by the International Accounting Standards Board (IASB) and
interpretations issued by the International Financial Reporting Interpretations Committee
(IFRIC), implemented in Brazil by the Brazilian Accounting Pronouncements Committee
(CPC) and through its technical interpretations (ICPC) and guidelines (OCPC), approved by
the Brazilian Securities Commission (CVM).
The consolidated financial statements include the balances of BM&FBOVESPA and its
subsidiaries, as well as special purpose entities comprising investment funds, as follows:

13

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

2. Preparation and presentation of financial statements (Continued)


a)

Consolidated financial statements (Continued)


Ownership %
2015

Subsidiaries and controlled entities


Banco BM&FBOVESPA de Servios de Liquidao e Custdia S.A.
(Banco BM&FBOVESPA)
Bolsa de Valores do Rio de Janeiro BVRJ (BVRJ)
BM&F (USA) Inc.
BM&FBOVESPA (UK) Ltd.
BM&FBOVESPA BRV LLC

100.00
86.95
100.00
100.00
100.00

2014

100.00
86.95
100.00
100.00
-

Exclusive investment funds:


Bradesco Fundo de Investimento Renda Fixa Letters;
BB Pau Brasil Fundo de Investimento Renda Fixa;
HSBC Fundo de Investimento Renda Fixa Longo Prazo Eucalipto.
b)

Individual financial statements


The individual financial statements have been prepared in accordance with accounting
practices adopted in Brazil, which comprise the provisions contained in the Brazilian
Corporate Law (Law No. 6404/76) and embodies the changes introduced through Laws
11638/07 and 11941/09, and the pronouncements, interpretations and guidelines of the
Brazilian Accounting Pronouncements Committee (CPC), approved by the Brazilian
Securities Commission (CVM).

3. Significant accounting practices


a)

Consolidation
The following accounting policies are applied in the preparation of the consolidated financial
statements.
Subsidiaries
Subsidiaries are fully consolidated from the date on which control is transferred to
BM&FBOVESPA. The consolidation is discontinued as from the date when such control ends.

14

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

3. Significant accounting practices (Continued)


a)

Consolidation (Continued)
Intercompany transactions, balances and unrealized gains on transactions between
companies included in the consolidation are eliminated. Unrealized losses are also
eliminated, unless the transaction provides evidence of impairment of the asset transferred.
The accounting practices of subsidiaries are altered where necessary to ensure consistency
with the practices adopted by BM&FBOVESPA.
Associates
Investments in associates are recorded using the equity method and are initially recognized
at cost. BM&FBOVESPAs investment in associates includes goodwill identified on
acquisition, net of any accumulated impairment.
BM&FBOVESPA applies the equity method to measure investments in companies over which
exercises significant influence. BM&FBOVESPAs judgment as regards the level of influence
on investments takes into consideration key factors, such as ownership interest percentage,
representation by the Board of Directors, participation in the definition of policies and
businesses and material intercompany transactions. For investments in CME Group, the
corresponding financial statements were originally prepared under the United States
accounting standards (USGAAP), adjusted to the accounting standards effective in Brazil
before equity pickup.
Equity method discontinuance
When there is loss of significant influence over an associate, the equity method is
discontinued and any retained interest in the investee is remeasured at its fair value, and
effects therefrom are recognized in P&L for the period. The amounts recognized in equity
under other comprehensive income, relating to that investee, are reclassified by
BM&FBOVESPA from equity - other comprehensive income to the result of the period, in
accordance with the criteria determined by CPC 18(R2)/IAS28.

b)

Revenue recognition
Revenues from the rendering of services and from trading and settlement systems are
recognized upon the completion of the transactions, under the accrual method of accounting.
The amounts received as annual fees, as in the cases of listing of securities and certain
contracts for sale of market information, are recognized in the income statement pro rata
monthly over the contractual term.

15

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

3. Significant accounting practices (Continued)


c)

Cash and cash equivalents


The balances of cash and cash equivalents for cash flow statement purposes comprise cash
and bank deposits.

d)

Financial instruments
i)

Classification and measurement


BM&FBOVESPA initially classifies its financial assets, depending on the purpose of the
asset acquisition, into the following categories: measured at fair value through profit or
loss, receivables and available for sale.
Financial assets measured at fair value through profit or loss
Financial assets measured at fair value through profit or loss are financial assets held for
active and frequent trading or assets designated by the entity upon initial recognition.
Gains or losses arising from the changes in fair value of financial instruments are
recorded in the income statement in Financial results for the period in which they occur.
Receivables
This category includes non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. Receivables of BM&FBOVESPA
mostly comprise customer receivables. Receivables are recorded at amortized cost
using the effective interest rate method less any impairment losses.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives classified in this category or not
classified in any other. Available-for-sale financial assets are recorded at fair value.
Interest on available-for-sale securities, calculated using the effective interest rate
method, is recognized in the income statement as financial income. The amount relating
to the changes in fair value is recorded as a matching entry to comprehensive income,
net of taxes, and transferred to the income statement when the asset is settled or
becomes impaired.

ii)

Derivative instruments
Initially, derivatives are recognized at fair value, with the subsequent changes in fair
value recognized in the income statement.

16

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

3. Significant accounting practices (Continued)


d)

Financial instruments (Continued)


iii) Hedge of net investments
Any gain or loss on the hedge instrument related to the effective hedge portion is
recognized in other comprehensive income, net of tax effects. The gain or loss related to
the ineffective portion is recognized immediately in the income statement.
Any cumulative gains and losses in equity are transferred to the income statement when
the hedged transaction is partially disposed of or sold.
iv) Cash flow hedge Firm commitment
Any gain or loss in the hedge instrument related to the effective hedge portion is
recognized under equity, in Other comprehensive income, net of tax effects.
Consequently, the exchange variation in hedge instruments, previously recognized in
financial result prior to its recognition as a hedge instrument, accumulates in equity and
is transferred to income/loss for the same period and the same account group under
which the hedged transaction is recognized. When the hedged transaction implies
recognition of a non-financial asset, gains and losses recognized in equity are
transferred and included in the initial measurement of the asset cost. The non-effective
portion of the hedge is immediately recognized in the income statement.
v)

Hedge effectiveness analysis


BM&FBOVESPA adopts the Dollar offset method as the methodology for retrospective
effectiveness test on a cumulative and spot basis. For prospective analysis,
BM&FBOVESPA uses stress scenarios applied to the range of 80% to 125%.

e)

Accounts receivable and provision for impairment of receivables


Trade receivables are initially recognized at transaction value and adjusted for a provision for
impairment of receivables, if necessary.

f)

Noncurrent assets held for sale


Noncurrent assets are classified as held for sale when their carrying value is recoverable,
particularly in the case of a sale and when the completion of such sale is practically certain.
These assets are measured at the lower of their carrying amount and their fair value less
costs to sell.

17

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

3. Significant accounting practices (Continued)


g)

Intangible assets
Goodwill
The goodwill recorded in intangible assets arises from acquisitions conducted by
BM&FBOVESPA and is stated at cost less accumulated impairment losses. Recognized
impairment losses on goodwill are not reversed.
Software and projects
Software licenses acquired are capitalized based on incurred costs and amortized over their
estimated useful life, at the rates mentioned in Note 9.
Expenses associated with the development or maintenance of software are recognized as
expenses as incurred. Expenditures directly associated with the development of identifiable
and unique software, controlled by BM&FBOVESPA and which will probably generate
economic benefits greater than the costs for more than one year, are recognized as
intangible assets.
Amortization expense is recognized in the income statement unless it is included in the
carrying amount of another asset. In such cases, amortization of intangible assets used for
development activities is included as part of the cost of another intangible asset.
Expenditures for development of software recognized as assets are amortized using the
straight-line method over the assets useful lives, at the rates described in Note 9.

h)

Property and equipment


Property and equipment items are recorded at acquisition or construction cost, less
accumulated depreciation. Depreciation is calculated under the straight-line method and
takes into consideration the estimated useful lives of the assets and their residual value. At
the end of each period, the residual values and useful lives of assets are reviewed and
adjusted if necessary.
Subsequent costs are included in the carrying amount or recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits will be obtained and the
cost of the item can be measured reliably. All other repair and maintenance costs are
recorded in the income statement, as incurred.

18

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

3. Significant accounting practices (Continued)


h)

Property and equipment (Continued)


Depreciation expense is recognized in the income statement unless it is included in the
carrying amount of another asset. Depreciation of property and equipment items used for
development activities is included as part of the cost of an intangible asset.

i)

Contingent assets and liabilities, provisions for tax, civil and labor contingencies, and legal
obligations
The recognition, measurement, and disclosure of provisions for tax, civil and labor
contingencies, contingent assets and liabilities, and legal obligations comply with the criteria
defined in CPC 25/IAS 37.

j)

Judicial deposits
Judicial deposits are related to tax, civil and labor contingencies, subject to monetary
adjustment and presented in noncurrent assets.

k)

Collaterals for transactions


Comprise amounts received from market participants as collateral for default or insolvency.
Amounts received in cash are recorded as liabilities and other collaterals are managed offbalance sheet. Both types of collateral received are not subject to interest or any other
charges.

l)

Other assets and liabilities


These are stated at their known and realizable/settlement amounts plus, where applicable,
related earnings and charges and monetary and/or exchange rate variations up to the
balance sheet date.

m) Impairment of assets
Assets that have an indefinite life, such as goodwill, are not subject to amortization and are
tested annually for impairment, or in a shorter basis when indications of possible impairment
are identified. The assets subject to amortization are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying value may not be recoverable.
An impairment loss is recognized at the amount by which the asset's carrying amount
exceeds its recoverable amount. Recoverable amount is the higher of an assets fair value
less costs to sell and its value in use.

19

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

3. Significant accounting practices (Continued)


m) Impairment of assets (Continued)
For purposes of impairment testing, assets are grouped at the lowest levels for which there
are separately identifiable cash flows (Cash-Generating Units (CGU)). Non-financial assets
other than goodwill that suffered impairment are reviewed subsequently for possible reversal
of the impairment at each reporting date.
n)

Employee benefits
i)

Pension obligations
BM&FBOVESPA maintains a defined contribution retirement plan with voluntary
participation open to all employees. The Company has no obligations to make additional
payments as a sponsor. The regular contributions are included in personnel costs in the
period they are due.

ii)

Share-based incentives
BM&FBOVESPA has a long-term incentive plan. Until 2014, BM&FBOVESPA would
grant stock options, at the BM&FBOVESPA Stock Option Plan (Stock Option Plan),
from which remaining outstanding options yet to be exercised arise. As from 2015,
BM&FBOVESPA began granting shares, at the BM&FBOVESPA Share Granting Plan
(Share Plan). The objective is to give the employees of BM&FBOVESPA and its
subsidiaries the opportunity to become shareholders of BM&FBOVESPA, obtaining a
greater alignment between their interests and the shareholders interests as well as allow
BM&FBOVESPA and its subsidiaries to attract and retain their management and
employees. The fair value of options and shares granted is recognized as an expense
during the vesting period (the period during which the specific vesting conditions must be
met). At the balance sheet date, BM&FBOVESPA reviews its estimates of the number of
options and shares that will vest based on the established conditions. BM&FBOVESPA
recognizes the impact of any changes to the original estimates, if any, in the income
statement, against a capital reserve in equity.

iii) Profit sharing


BM&FBOVESPA has semi-annual variable remuneration, organized and paid in cash
through the Profit Sharing Program. The program defines the potential multiple of
monthly salary, based on individual performance indicators, which consider factors
specific to each function (job level), and indicators of the overall performance of
BM&FBOVESPA. The provision for such profit sharing program is recognized in income
on an accrual basis.

20

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

3. Significant accounting practices (Continued)


n)

Employee benefits (Continued)


iv) Other post-employment obligations
BM&FBOVESPA offers post-retirement healthcare benefit to the employees who have
acquired this right until May 2009. The right to this benefit is conditional on the employee
remaining with the Company until the retirement age and completing a minimum service
period. The expected costs of these benefits are accumulated over the period of
employment or the period in which the benefit is expected to be earned, using the
actuarial methodology that considers life expectancy of the group in question, increase in
costs due to the age and medical inflation, inflation and discount rate. The contributions
that participants make according to the specific rule of the Health Care Plan are
deducted from these costs. The actuarial gains and losses on the health care plan for
retirees are recognized in the income statement in accordance with the rules of IAS 19
and CPC 33 - Employee Benefits, based on actuarial calculation prepared by an
independent actuary, according to Note 18(c).

o)

Loans and financing

p)

Loans and financing are measured initially at fair value, less transaction costs incurred, and
are subsequently carried at amortized cost. Any difference between the funds raised (net of
transaction costs) and the amount repayable is recognized in the income statement over the
period of the loans, using the effective interest rate method.
Foreign currency translation
The items included in the financial statements for each of the consolidated companies of
BM&FBOVESPA are measured using the currency of the primary economic environment in
which the entity operates (functional currency). The financial statements are presented in
Brazilian reais, which is the functional currency of BM&FBOVESPA.
Transactions in foreign currencies are translated into Brazilian reais using the exchange rates
prevailing on the dates of the transactions or the date of evaluation when items are
remunerated. The foreign exchange gains and losses arising from the settlement of these
transactions and from the translation, at the exchange rates at the end of the period, of
monetary assets and liabilities in foreign currencies, are recognized in the income statement,
except when deferred in other comprehensive income relating to a hedge of a foreign
investment.

21

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

3. Significant accounting practices (Continued)


p)

Foreign currency translation (Continued)


Exchange differences on the investments in foreign operations, which have a functional
currency different from that of BM&FBOVESPA, are recorded under Equity adjustments in
other comprehensive income, and are only taken to the income statement for the period when
the investment is sold or written off.

q)

Taxes
BM&FBOVESPA is a for-profit business corporation and accordingly its results are subject to
certain taxes and contributions.
i)

Current and deferred income tax and social contribution


Current and deferred income and social contribution taxes for the period of
BM&FBOVESPA and Banco BM&FBOVESPA are calculated at 15%, plus a 10% surtax
on annual taxable profit exceeding R$240 for income tax, and 9% (15% for Banco
BM&FBOVESPA, and 20% from September 1, 2015) on taxable profit for social
contribution tax on net profit, and take into account the offset of income and social
contribution tax losses, if any, limited to 30% of taxable profit.
Deferred income and social contribution taxes are calculated on respective tax losses,
and temporary differences between the tax base on assets and liabilities and their
carrying amounts contained in the financial statements.
Deferred tax assets are recognized to the extent that it is probable that there will be
future taxable profit available to offset temporary differences and/or tax losses.
The Bolsa de Valores do Rio de Janeiro (BVRJ) is a not-for-profit entity and, therefore,
exempt from income tax and social contribution tax.

ii)

Other taxes
The other taxes charged over trading, clearing and settlement fees and other services
were calculated at the rates of 1.65% for PIS and 7.60% for COFINS, and are deducted
in P&L under Revenues.
Banco BM&FBOVESPA calculates PIS and COFINS at the rates of 0.65% and 4%,
respectively.

22

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

3. Significant accounting practices (Continued)


q)

Taxes (Continued)
ii)

Other taxes (Continued)


The Bolsa de Valores do Rio de Janeiro (BVRJ) pays PIS at the rate of 1% on payroll.
BM&FBOVESPA and its subsidiaries pay Service Tax (ISS) on the services rendered at
rates ranging from 2% to 5% depending on the nature of the service.

r)

Earnings per share


For purposes of disclosure of earnings per share, basic earnings per share are calculated by
dividing the profit attributable to shareholders of BM&FBOVESPA by the average number of
shares outstanding during the period. Diluted earnings per share are calculated similarly,
except that the quantity of outstanding shares is adjusted to reflect the additional shares that
would have been outstanding if potentially dilutive shares had been issued for granted stock
options.

s)

Distribution of dividends and interest on equity


The distribution of dividends and interest on equity to shareholders of BM&FBOVESPA is
recognized as a liability in the financial statements at the end of the period, based on the
BM&FBOVESPAs Articles of Incorporation. Any amount above the mandatory minimum
dividend is accrued only on the date it is approved by the shareholders at an Annual General
Meeting. The tax benefit over the interest on equity is recorded in the income statement.

t)

Segment information
Operating segments are presented in a manner consistent with the internal reports provided
to the Executive Board, which is responsible for making the main operational and strategic
decisions of BM&FBOVESPA and for implementing the strategies defined by the Board of
Directors.

u)

Significant accounting estimates and judgments


Preparation of financial statements requires use of certain significant accounting estimates,
as well as use of judgment by management in the process of applying the accounting policies
of BM&FBOVESPA. Those more complex areas that require higher degree of judgment, as
well as those where the assumptions and estimates are significant for the consolidated
financial statements, are the following:

23

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

3. Significant accounting practices (Continued)


u)

Significant accounting estimates and judgments (Continued)


Equity pickup Note 3(a)
Impairment of assets Notes (3(m) and 9
Classification of financial instruments Note 3(d) Shared-based incentives Note 3(n)
Post-retirement health care plan Note 18(c)
Provisions for tax, civil and labor contingencies, contingent assets and liabilities (Note 14)

v)

Accounting pronouncements issued recently and applicable to future periods


The pronouncements below have already been published by IASB and are mandatory for the
subsequent fiscal years, without early adoption by BM&FBOVESPA. Such pronouncements
will be adopted after a technical pronouncement is issued by the Brazilian Financial
Accounting Standards Board (CPC), and after their approval by the Brazilian Securities and
Exchange Commission (CVM). Management is assessing the possible impacts of such
pronouncements on the financial statements.
IFRS 15 Revenue from Contracts with Customers Issued in May 2014, and effective on
or after January 1, 2017. IFRS 15 replaces the current rules IAS 11 Construction
Contracts and IAS 18 Revenue, and establishes the principles for measurement,
recognition and disclosure of revenue.
IFRS 9 Financial Instruments The final version was issued in July 2014, and will be
effective on and after January 1, 2018. It replaces IAS 39 Financial Instruments:
Recognition and Measurement and the previous versions of IFRS 9. IFRS 9 establishes
new requirements for classification and measurement, impairment and hedge accounting of
financial instruments.

w) Current and noncurrent assets and liabilities


Assets and liabilities are classified as current whenever their realization or settlement term is
one year or less (or another term that follows the normal cycle of BM&FBOVESPA). They are
otherwise stated as noncurrent.

24

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

4. Cash and cash equivalents and financial investments and marketable


securities
a)

Cash and cash equivalents


Description
Cash and bank deposits in local currency
Bank deposits in foreign currency

BM&FBOVESPA
2015
2014
12,435
98
262,930
111,899

Consolidated
2015
2014
208
236
264,921
115,150

Cash and cash equivalents

275,365

111,997

265,129

115,386

Bank deposits in foreign currency third-party


funds (1)

175,716

385,149

175,716

385,149

Total cash and cash equivalents

451,081

497,146

440,845

500,535

(1) Third-party funds restricted to settlement of the exchange transaction (Exchange clearing).

Cash and cash equivalents are held with top-tier financial institutions in Brazil or abroad.
Deposits in foreign currency are primarily in US dollars.

25

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

4. Cash and cash equivalents and financial investments and marketable


securities (Continued)
b)

Financial investments and marketable securities


The breakdown of financial investments and marketable securities by category, nature and
maturity is as follows:
BM&FBOVESPA

Without
Description
maturity
Financial assets measured at fair value through profit or loss
Financial investment fund (1)

More than
Within 3
12 months and
months
up to 5 years

More than
5 years

2015

2014

2,827,776

2,827,776

1,910,788

Interest-bearing account - foreign deposits

33,827

Repurchase agreements (2)

77

Government securities
Financial Treasury Bills
National Treasury Bills
National Treasury Notes

37
32,983
-

1,109,710
14
-

259,253
-

1,369,000
32,997
-

990,418
54,990
51

13,610
2,841,386

33,020

1,109,724

259,253

13,610
4,243,383

10,182
3,000,333

4,805,033
48,568
4,853,601

4,805,033
48,568
4,853,601

7,694,987

33,020

1,109,724

259,253

9,096,984

3,000,333

7,728,007
1,368,977

2,019,099
981,234

Other investments (3)


Financial assets available for sale
Shares
CME Group (5)
Other (6)
Total financial investments and marketable
securities
Short-term
Long-term

26

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

4. Cash and cash equivalents and financial investments and marketable


securities (Continued)
b)

Financial investments and marketable securities (Continued)


Consolidated

Without
Within 3
Description
maturity
months
Financial assets measured at fair value through profit or loss

More than More than


3 months 12 months
and up to and up to
12 months
5 years

More than
5 years

2015

2014

331,358

331,358

100,244

1,787

1,787

35,085

Repurchase agreements (2)

2,371,998

15,628

89

2,387,715

1,676,620

Government securities
Financial Treasury Bills
National Treasury Bills
National Treasury Notes

1,059
36,481
-

114,735
56,778
-

1,322,326
72,141
-

338,887
-

1,777,007
165,400
-

1,147,885
320,419
51

13,611
346,756

2,409,538

187,141

1,394,556

338,887

13,611
4,676,878

10,185
3,290,489

133
-

881
159
320

65,768
73
27

16,299
10

82,948
365
357

62,869
1,278
356

4,805,033
48,568
4,853,601

133

1,360

65,868

16,309

4,805,033
48,568
4,937,271

64,503

5,200,357

2,409,671

188,501

1,460,424

355,196

9,614,149

3,354,992

7,798,529
1,815,620

1,962,229
1,392,763

Financial investment fund (4)


Interest-bearing account - foreign deposits

Other investments (3)


Financial assets available for sale
Government securities
Financial Treasury Bills
National Treasury Bills
National Treasury Notes
Shares
CME Group (5)
Other (6)
Total financial investments and
marketable securities
Short-term
Long-term

(1) Refers to investments in financial investment funds, whose portfolios mainly comprise investments in federal government securities and
repurchase agreements that have the CDI (Interbank Deposit Certificate rate) as their profitability benchmark. The consolidated balances of
investment funds are presented according to the nature and maturity of the portfolio in proportion of the net assets invested.
The net assets of the main investment funds included in the consolidation process of the financial statements are: (i) Bradesco FI Renda Fixa
Letters R$1,776,830 (R$1,353,384 at December 31, 2014); (ii) BB Pau Brasil FI Renda Fixa - R$502,002 (R$333,182 at December 31,
2014); (iii) HSBC FI Renda Fixa Longo Prazo Eucalipto R$217,586 (R$123,976 at December 31, 2014).
(2) Issued by top-tier banks and backed by government securities.

27

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

4. Cash and cash equivalents and financial investments and marketable


securities (Continued)
b)

Financial investments and marketable securities (Continued)

(3) Refers mainly to investments in gold.


(4) The primary non-exclusive investment funds are: (i) Bradesco Empresas FICFI Referenciado DI Federal, amounting to R$30,071 (R$45,020
at December 31, 2014); (ii) Araucria Renda Fixa FI R$207,818 (R$874 at December 31, 2014); and (iii) Santander Fundo de Investimento
Cedro Renda Fixa - R$93,469 (R$54,333 at December 31, 2014).
(5) Refers to CME Group shares, classified as financial asset available for sale, with a negative mark-to-market of R$134,414 and exchange
variation of R$33,440, net of tax effects.
(6) These refer basically to shares of the Bolsa de Comercio de Santiago, in Chile, acquired by BM&FBOVESPA in accordance with the strategy
of exploring partnership opportunities with other exchanges, classified as available for sale.

The government securities are held in the custody of the Special System for Settlement and
Custody (SELIC); the investment fund shares are held in the custody of their respective
administrators; the local shares are in the custody of BM&FBOVESPAs Equities and
Corporate Bonds Clearinghouse; the Bolsa de Comercio de Santiago shares are in the
custody of BTG Pactual Chile; and CME shares are in the custody of Computershare United
States.
There was no reclassification of financial instruments between categories in the year.
Management periodically monitors its outstanding positions and possible risks of impairment
of its financial assets. Therefore, based on the nature of these assets (mostly highly-liquid
government securities), BM&FBOVESPA has no significant impairment history.
The carrying amount of financial assets is reduced directly for impairment impacting P&L for
the period. Subsequent recoveries of amounts previously written off are recognized in P&L for
the period.
Derivative financial instruments
Derivative financial instruments comprise future interest rate contracts (DI1) stated at their
market values. These contracts are included in the fund portfolios and used to cover fixed
interest rate exposures, swapping fixed interest rate for floating interest rate (CDI). The net
result between the derivative transactions and the related financial instrument refers to the
short position in future interest rate contracts, with market value of R$173 (R$4,927 at
December 31, 2014). DI1 contracts have the same maturity dates as the fixed interest rate
contracts to which they relate.

28

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

4. Cash and cash equivalents and financial investments and marketable


securities (Continued)
b)

Financial investments and marketable securities (Continued)


Financial investment policy and financial risk management
BM&FBOVESPAs policy for cash investments favors alternatives with very low risk, highly
liquid and with low credit risk, whose overall performance is tied to the SELIC/CDI rate,
resulting in a significant proportion of government securities in its portfolio, purchased
directly, via repurchase agreements backed by government securities and also through
exclusive and non-exclusive funds. Acquisition or disposal of strategic investments, such as
the participation in CME Group and in the Bolsa de Comercio de Santiago, are assessed
individually and carried out only in accordance with the strategic planning approved by the
Board of Directors.
Sensitivity analysis
The table below presents the net exposure of all financial instruments (assets and liabilities)
by market risk factors, classified in accordance with their rates:

Risk factor
Share price
Floating interest rate
Currency risk
Fixed interest rate
Gold

Exposure to Risk Factors (Consolidated)


2015
Risk
Percentage
66.7%
Lower share price
61.1%
Lower CDI / Selic rate
Appreciation of real vs.
34.6%
foreign currency
4.1%
Higher fixed rate
0.2%
Lower gold price

2014
Percentage
96.5%
1.4%
1.8%
0.3%

Due to the transfer of investments in CME Group to the marketable securities portfolio
(available for sale) and the shareholding interest held in the Bolsa de Comercio de Santiago,
these financial assets are subject to two risk factors at the same time: currency and share
price.
Share price risk
This risk arises from the possibility that fluctuations in the prices of CME Group shares and
the Bolsa de Comercio de Santiago shares, which BM&FBOVESPA has in its portfolio, could
affect the amounts involved.
The table below shows a sensitivity analysis on possible impacts of a change of 25% and
50% on the probable scenario for share price, for the next three months.

29

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

4. Cash and cash equivalents and financial investments (Continued)


b)

Financial investments and marketable securities (Continued)

Risk factor
CME shares in BRL
Share price in USD
Bolsa de Comercio de
Santiago shares in BRL
Share price in CLP

-50%
(2,413,601)
45.09

-25%
(1,217,885)
67.64

(24,074)
1,109,442

(11,829)
1,664,163

Impact
Probable
scenario (*)
(22,169)
90.18

25%
1,173,547
112.73

50%
2,369,263
135.27

417
2,218,884

12,662
2,773,605

24,908
3,328,326

(*) Share prices were calculated based on future price for the next three months obtained by Bloomberg.

The possible impacts shown by the sensitivity analysis would affect equity, net of taxes.
Interest rate risk
This risk arises from the possibility that fluctuations in interest rates could affect the fair value
of BM&FBOVESPAs financial instruments.

Floating-rate position

As a financial investment policy and considering the need for immediate liquidity with the
least possible impact from interest rate fluctuations, BM&FBOVESPA maintains its financial
assets and liabilities substantially indexed to floating interest rates.
The table below shows a sensitivity analysis on possible impacts of a change of 25% and
50% on the probable scenario for the CDI/Selic rate, for the next three months.

Risk factor
CDI
CDI rate

Risk factor
Selic
Selic rate

Scenario
-25%
57,223

Impact
Probable
scenario (*)
75,359

Scenario
25%
93,069

Scenario
50%
110,376

7.26%

10.88%

14.51%

18.14%

21.77%

Scenario
-50%
31,330

Scenario
-25%
46,393

Impact
Probable
scenario (*)
61,085

Scenario
25%
75,428

Scenario
50%
89,439

7.38%

11.06%

14.75%

18.44%

22.13%

Scenario
-50%
38,636

(*) CDI and SELIC indexes were calculated based on future interest rates for the next three months obtained by Bloomberg.

30

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

4. Cash and cash equivalents and financial investments (Continued)


b)

Financial investments and marketable securities (Continued)

Fixed-rate position

Part of BM&FBOVESPAs financial investments and marketable securities bears fixed


interest rates, resulting in a net exposure to such rates. However, in terms of percentage,
their effects on the portfolio are not considered material.
Currency risk
This risk arises from the possibility of fluctuations in exchange rates on product, services and
financial instruments in foreign currency having an impact on the related amounts in local
currency.
In addition to the amounts payable and receivable in foreign currencies, including interest
payments on the senior unsecured notes in the next six-month period, BM&FBOVESPA has
third-party deposits in foreign currency to guarantee the settlement of transactions by foreign
investors, own funds abroad, and also shareholding interest in stock exchanges abroad (CME
Group and Bolsa de Comercio de Santiago).
The table below shows a sensitivity analysis on possible impacts of a change of 25% and
50% on the probable scenario for forex, for the next three months.
-50%

-25%

(1,183,625)
1.9995

(562,553)
2.9993

Risk factor
USD
Exchange rate USD/BRL

Impact
Probable
scenario (*)
58,520
3.9990

25%

50%

679,592
4.9988

1,300,664
5.9985

(*) The USD/BRL exchange rate index was calculated based on the exchange rate for the next three months obtained by
Bloomberg.

The possible impacts shown by the sensitivity analysis would substantially affect equity, net
of taxes.
In view of the net amounts of other currencies, their impacts are not deemed material.
Liquidity risk
The following table shows the main financial liabilities of BM&FBOVESPA Group by maturity
(undiscounted cash flows basis):

31

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

4. Cash and cash equivalents and financial investments (Continued)


b)

Financial investments and marketable securities (Continued)

Collaterals for transactions


Debt issued abroad

Without
maturity
1,338,010
-

Within 1
year
133,626

From 1 to 2
years
133,261

From 2 to
5 years
338,812

More than 5
years
2,455,455

Credit risk
Approximately 95% of BM&FBOVESPAs investments are linked to federal government
securities, with ratings set by Standard & Poor's and Moody's of "BBB-" and "Baa3",
respectively, for long-term issues in local currency.
Cash flow hedge
In January 2015, BM&FBOVESPA has allocated part of its cash in foreign currency to cover
foreign exchange impacts of certain firm commitments in foreign currency (cash flow hedge),
in accordance with IAS 39/CPC 38.The hedged cash flows refer to payments to be made until
December 31, 2015, even if the agreement terms exceed that date. In 2015, an amount
totaling R$3,879 was transferred from Other comprehensive income to income or loss, and
the amount of R$7,535, referring to payment flows hedged as from January 2015, was
transferred from Other comprehensive income to non-financial assets. Also in that year, an
amount totaling R$4,456 was not considered for cash flow hedging purposes due to review of
firm contracts, and such amount was transferred from Other comprehensive income to
financial income.
In December 2015, BM&FBOVESPA set up a new hedge, allocating part of its cash in foreign
currency to hedge exchange differences of firm commitments, referring to payments to be
made until December 31, 2016, even if the agreement terms exceed that date. At December
31, 2015, cash in foreign currency allocated to hedge such commitments amounts to
R$67,660 and the amount recorded under equity is R$1,466, net of tax effects.
In September 2015, due to discontinuance of the net investment hedge (Note 7 (a)),
BM&FBOVESPA structured a new hedge accounting (cash flow hedge) to protect part of the
currency risk of CME Group shares still held by BM&FBOVESPA, allocating debt securities
issued abroad in 2010 (Note 12) as hedging instrument. The amount of R$15,955, net of tax
effects, was recorded in equity, under Other comprehensive income for the year.

32

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

4. Cash and cash equivalents and financial investments (Continued)


b)

Financial investments and marketable securities (Continued)


Cash flow hedge (Continued)
BM&FBOVESPA has formally allocated the transactions, documenting: (i) hedge objective,
(ii) hedge type, (iii) nature of hedged risk, (iv) identification of hedged item, (v) identification of
hedging instrument, (iv) assessment of the correlation between hedge and hedged item
(retrospective effectiveness test), and (vii) prospective effectiveness assessment.
The application of the effectiveness tests described in the accounting practices (Nota 3(d) (v))
did not identify any ineffectiveness for the year ended December 31, 2015.

5. Accounts receivable
Breakdown of accounts receivable is as follows:

Fees
Annual fees
Vendors - Signal broadcasting
Trustee and custodial fees
Other accounts receivable

BM&FBOVESPA
2015
2014
13,157
10,487
1,198
2,684
16,787
11,433
34,048
27,251
12,342
9,049

Consolidated
2015
2014
13,157
10,487
1,198
2,684
16,787
11,433
34,048
27,251
13,198
10,023

Subtotal

77,532

60,904

78,388

61,878

Allowance for doubtful accounts

(3,259)

(4,307)

(3,259)

(4,307)

Total

74,273

56,597

75,129

57,571

Description

The amounts presented above are primarily denominated in Brazilian reais and approximately
90% falls due within 90 days. At December 31, 2015, the amounts overdue above 90 days
totaled R$3,123 (R$4,281 at December 31, 2014) at BM&FBOVESPA.
The provisioning methodology, as approved by management, is based on the analysis of
historical losses. Therefore, for defined ranges of days past due, and based on historical
behavior, a percentage is attributed to past-due amounts so as to reflect expected future losses.

33

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

5. Accounts receivable (Continued)


Changes in allowance for doubtful accounts:
BM&FBOVESPA
Balance at December 31, 2013
Additions
Reversals
Write-offs
Balance at December 31, 2014
Additions
Reversals
Write-offs
Balance at December 31, 2015

Consolidated

7,677

7,929

854
(349)
(3,875)

854
(349)
(4,127)

4,307

4,307

2,350
(704)
(2,694)

2,350
(704)
(2,694)

3,259

3,259

6. Other receivables
Other receivables comprise the following:
BM&FBOVESPA
2015
2014

Consolidated
2015
2014

Current
Dividends receivable - CME Group
Receivables - related parties (Note 16)
Properties held for sale
Advance to employees
FX transactions (Banco BM&FBOVESPA)
Other

148,022
4,647
3,812
3,763
134

61,635
3,679
3,812
2,566
107

148,022
212
3,812
3,763
2,165

61,635
261
3,812
2,566
2,127
1,918

Total

160,378

71,799

157,974

72,319

Noncurrent
Brokers in court-ordered liquidation (1)

2,200

2,200

Total

2,200

2,200

(1) Balance of accounts receivable from brokers in court-ordered liquidation, which considers the guarantee represented by the equity
certificates pledged by the debtor.

34

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

7. Investments
a)

Investments in subsidiaries and associates


Investments in subsidiaries and associates comprise the following:

Companies
Subsidiaries
Banco BM&FBOVESPA de
Liquidao e Custdia S.A.
Bolsa de Valores do Rio de
Janeiro - BVRJ

Equity

72,903

Total
shares

Adjusted
%
Investment
P&L
Ownership
2015

Investment
2014

Equity
pickup 2015

Equity
pickup 2014

24,000

12,451

100

72,903

64,443

12,451

8,367

77,498

115

9,346

86.95

67,385

59,259

8,126

6,503

BM&F (USA) Inc.

1,829

1,000

218

100

1,829

1,095

218

(231)

BM&FBOVESPA (UK) Ltd.

2,345

1,000

106

100

2,345
144,462

1,605
126,402

106
20,901

127
14,766

5.0

3,729,147

136,245

131,195

3,729,147

136,245

80,965
212,160

144,462

3,855,549

157,146

226,926

Associate
CME Group, Inc. (1)
Recoverable income tax paid
abroad (2)

Total

Summary of key financial information of subsidiaries and associates at December 31, 2015:

Description

Banco
BM&FBOVESPA

Bolsa de Valores
do Rio de Janeiro BVRJ

BM&F (USA)
Inc.

84,919

1,960

BM&FBOVESPA
(UK) Ltd.

Assets

468,813

Liabilities

395,910

7,421

130

452

Revenues

35,159

11,076

1,538

1,826

35

2,797

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

7. Investments (Continued)
a)

Investments in subsidiaries and associates (Continued)


Changes in investments

Subsidiaries

Investments
Balances at December 31, 2013
Equity pickup
Exchange rate variation
Comprehensive income (loss) of
subsidiary
IOE received/receivable
Discontinued operations (Note 24)

Bolsa de
Valores
Bolsa
do Rio de
Banco
Brasileira de Janeiro
BM&FBOVESPA Mercadorias
BVRJ

BM&F
BM&FBOVESPA
(USA) Inc.
(UK) Ltd.

Total

59,028

7,692

52,756

1,189

1,353

122,018

8,367

6,503

(231)

127

14,766

137

125

262

(2)

(2)

(2,950)

(2,950)

Balances at December 31, 2014

64,443

59,259

1,095

1,605

126,402

Equity pickup

12,451

8,126

218

106

20,901

Exchange rate variation

516

634

1,150

Comprehensive income (loss) of


subsidiary

(4,000)

72,903

67,385

1,829

2,345

IOE received/receivable
Balances at December 31, 2015

(7,692)

36

(7,692)

(4,000)
144,462

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

7. Investments (Continued)
a)

Investments in subsidiaries and associates (Continued)


Changes in investments (Continued)
Associate
Investments

CME Group, Inc.

Balances at December 31, 2013

3,312,606

Equity pickup

131,195

Exchange rate variation (3)

450,933

Comprehensive income (loss) of associate

(785)

Dividends received/receivable

(164,802)

Balances at December 31, 2014

3,729,147

Equity pickup

136,245

Exchange rate variation (3)

1,717,454

Comprehensive income (loss) of associate

7,774

Dividends received

(82,633)

Disposal of 20% of ownership interest (1)

(1,101,598)

Fair-value re-measurement of investments (1)

551,634

Reclassification into financial assets available for sale (1)


Balances at December 31, 2015

(4,958,023)
-

Associate
(1)

In order to rebalance the composition of the Companys assets, BM&FBOVESPA disposed 20% of CME Groups shares
(equivalent to 3,395,544 Class A common shares, or 1% of total shares issued by CME Group), thus decreasing its
interest held in that group to 13,582,176 shares (4% of total shares issued by CME Group), as disclosed by
BM&FBOVESPA on September 9, 2015, through a notice to the market.
With the consolidation of the strategic partnership made in 2010, and the natural development of the knowledge and
technology transfer process between the two companies, in addition to the disposal of part of the investment held by the
Company, management reviewed its assessment on the Companys significant influence on CME Group, considering
current quantitative and qualitative factors, and concluded that it should no longer be characterized as a "significant
influence", as defined by CPC 18, on CME Group.
Such assessment made the Company reclassify its shareholding interest in CME Group, as from September 14, 2015
(date of the disposal financial settlement), from Investments in associate, measured by the equity method, to Financial
investments and marketable securities available for sale, measured at fair value. The previous net investment hedging
structure was discontinued, and other comprehensive income of the hedged item and instrument was recorded in income
or loss for the period.
Below are the gross effects on income or loss due to partial disposal of ownership interest in CME Group, and
discontinuance of the equity method and net investment hedge:

37

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

7. Investments (Continued)
a)

Investments in subsidiaries and associates (Continued)


BM&BOVESPA
and Consolidated
12/31/2015

Description
Divestiture

107,065

Gains on divestiture

600,793

Exchange gains (losses) reclassified from other comprehensive income


Comprehensive income (loss) of foreign associate reclassified into other comprehensive income

16,596
(459)

Other
Gross proceeds from divestiture in associate

723,995

Equity method discontinuance


Exchange gains (losses) reclassified from other comprehensive income
Exchange gains (losses) of hedged item reclassified from other comprehensive income
Exchange gains (losses) of hedged instrument reclassified from other comprehensive income
Comprehensive income (loss) of foreign associate reclassified into other comprehensive income
Re-measurement of investment in CME Group at fair value
Gross proceeds from equity method discontinuance

b)

1,116,871
1,286,302
(1,286,302)
66,384
551,634
1,734,889

(2)

Refers to recoverable tax paid by the foreign associate, according to Law No. 9249/95 and Revenue Procedure No.
1520/14 of the Brazilian Internal Revenue Service. Law No. 12973, of May 13, 2014, amended taxation rules referring to
increase in equity, on income received from foreign country by means of subsidiaries and associates, as from January 1,
2015, as well as in relation to offsetting of tax paid abroad. By virtue of Law No. 12973, which amended the criteria for
taxation on income provided by associates abroad, equity pickup is now calculated based on the respective associate's
income after taxes.

(3)

In July 2010, BM&FBOVESPA issued securities in US dollars to hedge part of the currency risk of investments in CME
Group (hedge of net investment) through the allocation of a non-derivative financial instrument (debt issued abroad) as
hedge, as described in Note 12. Due to discontinuance of the equity method, the net investment hedge was replaced by a
cash flow hedge, as detailed in Note 4.

Investment properties
This category comprises properties owned by subsidiary Bolsa de Valores do Rio de Janeiro
(BVRJ) for rent, which are carried at cost and depreciated at the rate of 4% per annum. There
were no additions or write-offs during the year and depreciation totaled R$1,518 (R$1,518 in
2014). Rental income for the year ended December 31, 2015 amounted to R$9,751
(R$10,480 in 2014).

38

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

8. Property and equipment


BM&FBOVESPA
Furniture
and fixtures

Changes

Buildings

Balances at December 31, 2013

113,501

16,756

Additions
Write-offs
Reclassification (Note 9)
Transfer (1)
Depreciation

3,494
131,011
(3,356)

Balances at December 31, 2014

244,650

Additions
Write-offs
Reclassification (Note 9)
Transfer
Depreciation

458
(1,107)
(35)
41,492
(5,298)

Computer
devices and
equipment

Construction
in progress

Facilities

Other

Total

68,740

49,981

29,955

139,921

418,854

2,947
(408)
(3,531)

12,136
(13)
101
(36,276)

4,475
171
(7,389)

1,593
(815)
(3,318)

29,765
344
(131,283)
-

54,410
(1,236)
344
(53,870)

15,764

44,688

47,238

27,415

38,747

418,502

2,602
(2,188)
1,940
(2,677)

65,170
(4,524)
25,384
(26,607)

12,093
(1)
(28,615)
(4,278)

1,969
(2,853)
(1,692)
(2,193)

1,097
(6)
(38,509)
-

83,389
(10,673)
(41)
(41,053)

1,329

Balances at December 31, 2015

280,160

15,441

104,111

26,437

22,646

At December 31, 2015


Cost
Accumulated depreciation
Net book balance

405,886
(125,726)
280,160

48,392
(32,951)
15,441

347,172
(243,061)
104,111

53,133
(26,696)
26,437

63,752
(41,106)
22,646

1,329
1,329

919,664
(469,540)
450,124

At December 31, 2014


Cost
Accumulated depreciation
Net book balance

349,187
(104,537)
244,650

48,908
(33,144)
15,764

344,942
(300,254)
44,688

85,630
(38,392)
47,238

77,845
(50,430)
27,415

38,747
38,747

945,259
(526,757)
418,502

39

450,124

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

8. Property and equipment (Continued)


Consolidated

Changes

Buildings

Furniture
and fixtures

Computer
devices and
equipment

Facilities

Other

Balances at December 31, 2013

114,849

16,779

68,810

50,272

32,519

Additions
Write-offs
Reclassification (Note 9)
Transfer (1)
Depreciation
Discontinued operation (Note 24)

3,494
131,011
(3,356)
(1,348)

2,982
(443)
(3,532)
(22)

12,186
(62)
101
(36,297)
(50)

4,475
171
(7,458)
(7)

1,737
(864)
(3,363)
(145)

Balances at December 31, 2014

244,650

15,764

44,688

47,453

29,884

2,706
(2,291)
1,939
(2,677)

65,403
(4,757)
25,384
(26,607)

12,093
(1)
(28,615)
(4,348)

2,406
(2,930)
(1,691)
(2,198)

Additions
Write-offs
Reclassification (Note 9)
Transfer
Depreciation

458
(1,107)
(35)
41,492
(5,298)

Construction
in progress

Total

139,921

423,150

29,765
344
(131,283)
-

54,639
(1,369)
344
(54,006)
(1,572)

38,747

421,186

1,097
(6)
(38,509)
-

84,163
(11,086)
(41)
(41,128)

Balances at December 31, 2015

280,160

15,441

104,111

26,582

25,471

1,329

453,094

At December 31, 2015


Cost
Accumulated depreciation
Net book balance

405,886
(125,726)
280,160

48,670
(33,229)
15,441

347,452
(243,341)
104,111

54,154
(27,572)
26,582

66,633
(41,162)
25,471

1,329
1,329

924,124
(471,030)
453,094

At December 31, 2014


Cost
Accumulated depreciation
Net book balance

349,187
(104,537)
244,650

49,112
(33,348)
15,764

345,271
(300,583)
44,688

86,651
(39,198)
47,453

80,399
(50,515)
29,884

38,747
38,747

949,367
(528,181)
421,186

(1) Refers to transfer as a result of completion of the new data center building.

In the period, BM&FBOVESPA absorbed as part of the project development cost the amount of
R$4,330 (2014 R$1,323) related to the depreciation of equipment used in developing these
projects.
BM&FBOVESPAs properties with a carrying amount of approximately R$93,894 (2014
R$37,169) were pledged as collateral in lawsuits. BM&FBOVESPA is not allowed to assign these
assets as collateral for other lawsuits or sell them.

40

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

8. Property and equipment (Continued)


Property and equipment are depreciated over their estimated useful lives. Annual depreciation
rates of property and equipment items at December 31, 2015 and 2014 are as follows:
Buildings
Furniture and fixtures
Computer devices and equipment
Facilities
Other

2.5%
10%
10 to 25%
10%
11% to 33%

9. Intangible assets
Goodwill
Changes in goodwill
Balance at December 31, 2014
Impairment of assets
Balance at December 31, 2015

16,064,309
(1,662,681)
14,401,628

The goodwill originated from the acquisition of Bovespa Holding is based on the expected future
profitability, supported by an economic and financial valuation report of the investment.
The assumptions adopted for future cash flow projections of BM&FBOVESPA, in the BOVESPA
segment (Cash Generating Unit [CGU]), were based on analysis of performance over the past
years, growth analyses and expectations in the market and managements expectations and
strategies.
The deterioration in the macroeconomic scenario over 2015, especially in the last quarter,
affected the Bovespa segment, causing a decrease in the listed companies market value and,
consequently, in traded volumes. Associated with the downturn in the current scenario, the
interest rate and country risk projections for the short and long terms also caused a decrease in
the CGUs value in use.
Based on the growth expectations of the Bovespa segment, the projected cash flow considers
revenues and expenses related to the segments activities. The projection period of these cash
flows covers the period from December 2015 to December 2025. The perpetuity was determined
by extrapolating the 2025 cash flow at a growth rate corresponding to that expected for the
nominal GDP in the long term, of 7.11% p.a.

41

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

9. Intangible assets (Continued)


Goodwill (Continued)
Management understands that a projection period of ten years (and not five) is based on the
perception that the Brazilian capital markets, in the equities segment, should experience a
prolonged growth, reflecting the necessary timing for certain indicators - such as the participation
of stocks in investors portfolio and the relation Market Cap/Brazilian PIB, among others - can
reach the same levels observed in other countries, indicating that a long-term growth maturity has
been reached.
To determine the present value of the projected cash flow, an average after-tax discount rate of
15.6% p.a. was used, which is equivalent to a 17.4% rate before taxes. (2014 equivalent to
14.1% and 15.6%, respectively).
BM&FBOVESPA uses an expert independent specialist to assist it in measuring the recoverable
amount of the asset (value in use). The report presented by the specialist reveal a negative
adjustment to the goodwill book value at December 31, 2015, in the amount of R$1,662,681.
The three most significant variables that affect the calculated value in use are the discount rates,
net revenue growth rate, and perpetuity growth rate. BM&FBOVESPA management analyzed
sensitivity in order to determine the impacts of changes in those variables on the calculated value
in use: increase by 120bps in discount rate of taxes (standard deviation of discount rates in the
past five years); decrease by 190bps in annual average revenue growth rate for the period from
2016 to 2025 (15% reduction); and decrease by 50bps in perpetuity growth rate (standard
deviation of average 10-year series of Brazilian actual GDP). Sensitivity scenarios reveal values
in use of the CGU between 3% and 14% lower than the value in use estimated in the independent
specialist report.
Management will continue to monitor over the next year the latest external and internal indicators
in order to identify any deterioration that could result in losses due to impairment of assets.
BM&FBOVESPA management reaffirms that the projection for the CGUs future cash flows
contains its best estimates and perceptions regarding the BOVESPA segment and the current
macroeconomic scenario.

42

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

9. Intangible assets (Continued)


Software and projects
BM&FBOVESPA and Consolidated

Changes
Balances at December 31, 2013

Cost of internally
generated
software under
development

Software internally
generated projects
completed

Software

Total

274,154

272,455

61,407

608,016

146,020
(2,208)
(344)
(290,014)
-

290,014
(48,218)

31,003
(25,362)

177,023
(2,208)
(344)
(73,580)

Balances at December 31, 2014

127,608

514,251

67,048

708,907

Additions
Write-offs
Reclassification (Note 8)
Transfer
Amortization

152,982
(6,463)
(1,778)
-

1,778
(54,422)

11,074
41
(23,793)

164,056
(6,463)
41
(78,215)

Balances at December 31, 2015

272,349

461,607

54,370

788,326

At December 31, 2015


Cost
Accumulated amortization
Net book balance

272,349
272,349

611,133
(149,526)
461,607

339,881
(285,511)
54,370

1,223,363
(435,037)
788,326

At December 31, 2014


Cost
Accumulated amortization
Net book balance

127,608
127,608

609,356
(95,105)
514,251

328,766
(261,718)
67,048

1,065,730
(356,823)
708,907

Additions
Write-offs
Reclassification (Note 8)
Transfer (1)
Amortization

(1) Refers substantially to transfer as a result of completion of the first phase of the Post-Trade Integration Project.

These refer to system and software development and license acquisition costs with amortization
rates ranging from 6.67% to 33% p.a., with implementation and development of new systems and
software in progress.
In the year, BM&FBOVESPA absorbed as part of the project development cost the amount of
R$5,674 (2014 R$8,648) related to the amortization of software used in developing these
projects.

43

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

9. Intangible assets (Continued)


Software and projects (Continued)
The ongoing projects refer mainly to the development of a new electronic trading platform for
different kinds and classes of assets, the construction of a new business and IT architecture to
support integration of the post-trade infrastructure and development of a new OTC Derivatives
Recording Platform.

10. Earnings and rights on securities in custody


These comprise dividends and interest on equity received from listed companies, which will be
transferred to the custody agents and by them to their customers, who are the owners of the listed
companies shares.

11. Provision for taxes and contributions payable


BM&FBOVESPA
2015
2014

Consolidated
2015
2014

Taxes and contributions withheld at


source
PIS and COFINS payable
ISS payable

10,420
19,497
2,595

7,134
14,805
2,177

12,177
19,768
2,606

8,184
15,036
2,193

Total

32,512

24,116

34,551

25,413

Description

12. Debt issued abroad


In July 2010, BM&FBOVESPA issued senior unsecured notes, with a total nominal value of
US$612 million, priced at 99.635% of the nominal value, resulting in a net inflow of US$609
million (equivalent at that time to R$1,075,323). The interest rate is 5.50% per year, payable halfyearly in January and July, and the principal amount is due on July 16, 2020. The effective rate
was 5.64% per year, which includes the discount and other funding related costs.
The restated loan balance at December 31, 2015 amounts to R$2,454,265 (R$1,666,491 at
December 31, 2014), which includes the amount of R$70,181 (R$47,368 at December 31, 2014)
referring to interest incurred until the reporting date. The proceeds from the offering were used to
purchase shares in the CME Group on the same date.

44

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

12. Debt issued abroad (Continued)


The notes have a partial or total early redemption clause, at the option of BM&FBOVESPA, for the
greater of: (i) principal plus interest accrued up to the date and (ii) interest accrued up to the date
plus the present value of the remaining cash flows, discounted at the rate applicable to U.S.
Treasuries for the remaining term plus 0.40% per year (40 basis points per year).
These notes have been designated as a hedging instrument for the portion corresponding to
US$612 million (notional) of the investment in CME Group Inc.(net investment hedge) until the
use of the equity pickup method is discontinued for the related investment (Note 7), when it was
replaced by cash flow hedge (Note 4).
The fair value of the debt, calculated using market data, is R$2,380,489 at December 31, 2015
(R$1,737,987 at December 31, 2014) (Source: Bloomberg).

13. Other liabilities


BM&FBOVESPA
2015
2014

Consolidated
2015

2014

Current
Payables CME
Payables to related parties (Note 16)
Purchase of treasury shares payable
Custody agents
Amounts to be transferred - Direct Treasury
Advance received for the sale of property
Outsourced services
Preferred shares payable
Demand deposits (1)
Repurchase agreements (2)
FX transactions (Banco BM&FBOVESPA)
Other

15,632
8,918
3,121
17,271
8,192
1,838
7,661

10,249
15,763
5,455
5,361
8,192
1,838
9,219

15,632
8,696
3,121
17,271
8,192
1,838
90,922
283,157
8,395

10,249
15,763
5,455
5,361
8,192
1,038
1,838
106,400
141,296
4,252
8,654

Total

62,633

56,077

437,224

308,498

Noncurrent
Payables CME

58,361

48,238

58,361

48,238

Total

58,361

48,238

58,361

48,238

(1)

Refer to demand deposits held by corporations at Banco BM&FBOVESPA for the sole purpose of settlement of adjustments and positions of
transactions carried out within BM&FBOVESPA and the Special System for Settlement and Custody (SELIC) pursuant to BACEN Circular Letter No.
3196 of July 21, 2005.

(2)

Refer to open market funding made by Banco BM&FBOVESPA, comprising repurchase agreements maturing on January 4, 2016 (2014 - January 2,
2015) and backed by National Treasury Notes B Series (NTN-B) and National Treasury Bills (LTN).

45

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

14. Provisions for tax, civil and labor contingencies, contingent assets and
liabilities and judicial deposits
a)

Contingent assets
BM&FBOVESPA has no contingent assets recognized in its balance sheet and, at present,
no lawsuits which are expected to give rise to significant future gains.

b)

Provisions for tax, civil and labor contingencies


BM&FBOVESPA and its subsidiaries are defendants in a number of legal and administrative
proceedings involving labor, tax and civil matters arising in the ordinary course of business.
The legal and administrative proceedings are classified by their likelihood of loss (probable,
possible or remote), based on the assessment by BM&FBOVESPAs legal department and
external legal advisors, using parameters such as previous legal decisions and the history of
loss in similar cases.
The proceedings assessed as probable loss are mostly comprised as follows:
Labor claims mostly relate to claims filed by former employees of BM&FBOVESPA and
employees of outsourced service providers, on account of alleged noncompliance with labor
legislation;
Civil proceedings mainly relate to aspects of civil liability of BM&FBOVESPA and its
subsidiaries;
Tax proceedings mostly relate to PIS and COFINS levied on (i) BM&FBOVESPA revenues
and (ii) receipt of interest on equity.

c)

Legal obligations
These are almost entirely proceedings in which BM&FBOVESPA seeks exemption from
additional social security contribution on payroll and payments to self-employed
professionals.

46

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

14. Provisions for tax, civil and labor contingencies, contingent assets and
liabilities and judicial deposits (Continued)
d)

Changes in balances
Changes in provisions for contingencies and legal obligations are detailed as follows:

Balances at December 31, 2013


Provisions
Provision expenditure
Reversal of provisions
Reassessment of risks
Monetary restatement
Balances at December 31, 2014
Provisions
Provision expenditure
Reversal of provisions
Reassessment of risks
Monetary restatement
Balances at December 31, 2015

Civil
proceedings
8,242
8
(151)
(139)
831
8,791
898
9,689

Labor
claims
24,576
5,630
(2,405)
(1,143)
738
3,279

BM&FBOVESPA
Legal
Tax
obligations proceedings
Total
35,064
15,489
83,371
4,548
(672)
(52)
3,196

622

10,186
(3,228)
(1,334)
738
7,928

30,675

42,084

16,111

97,661

2,589
(3,876)
(1,412)
463
4,277

7,193
3,988

1,341

9,782
(3,876)
(1,412)
463
10,504

32,716

53,265

17,452

Labor
claims
25,072

Legal
obligations
35,064

Tax
proceedings
15,489

113,122
Consolidated

Balances at December 31, 2013


Provisions
Provision expenditure
Reversal of provisions
Reassessment of risks
Monetary restatement
Discontinued operations (Note 24)
Balances at December 31, 2014
Provisions
Provision expenditure
Reversal of provisions
Reassessment of risks
Monetary restatement
Balances at December 31, 2015

Civil
proceedings
12,967
8
(151)
(139)
1,366
-

5,650
(2,478)
(1,200)
683
3,298
(282)

4,548
(672)
(52)
3,196
-

622
-

14,051

30,743

42,084

16,111

1,516

2,589
(3,876)
(1,433)
462
4,285

7,193
3,988

1,341

15,567

32,770

53,265

17,452

Total
88,592
10,206
(3,301)
(1,391)
683
8,482
(282)
102,989
9,782
(3,876)
(1,433)
462
11,130
119,054

Considering the characteristics of the provisions, the timing of the cash disbursements, if any,
cannot be predicted.

47

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

14. Provisions for tax, civil and labor contingencies, contingent assets and
liabilities and judicial deposits (Continued)
e)

Possible losses
The proceedings assessed as possible loss are so classified as a result of uncertainties
surrounding their outcome. They are legal or administrative proceedings for which case law
has not yet been established or which still depend on check and analysis of the facts, or even
involve specific aspects that reduce the likelihood of loss.
BM&FBOVESPA and its subsidiaries are parties to tax, civil and labor lawsuits involving risks
of loss assessed by management as possible, based on the evaluation of their legal area and
outside legal advisors, for which no provision has been recorded. These proceedings
comprise mainly the following:
Labor claims mostly relate to claims filed by former employees of BM&FBOVESPA and
employees of outsourced service providers, on account of alleged noncompliance with labor
legislation. The lawsuits assessed as possible losses at December 31, 2015 total R$47,558
in BM&FBOVESPA (R$41,822 at December 31, 2014) and R$54,812 on a consolidated
basis (R$43,328 at December 31, 2014);
Civil proceedings mainly relate to aspects of civil liability for losses and damages. The amount
involved in civil proceedings classified as possible losses at December 31, 2015 totals
R$165,917 in BM&FBOVESPA (R$134,264 at December 31, 2014) and R$355,700 on a
consolidated basis (R$354,533 at December 31, 2014);

48

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

14. Provisions for tax, civil and labor contingencies, contingent assets and
liabilities and judicial deposits (Continued)
e)

Possible losses (Continued)


The amount at December 31, 2015 and December 31, 2014 is almost entirely related to
three legal proceedings. The first one refers to the possibility of BM&FBOVESPA being
required to deliver its shares (surviving company of the merger with BM&F S.A.),
corresponding to the shares resulting from the conversion of the membership certificates of
a commodities broker in the former BM&F, or indemnify the corresponding amount, if the
cancellation of the certificates in the former BM&F is found to be illegal, as alleged by a
commodities broker in bankruptcy. The second administrative proceeding arises from the
possibility of BVRJ being required to indemnify an investor for alleged omission in an audit
report, brought before the Special Guarantee Fund Commission of BVRJ, of shares that
allegedly resulted from transactions carried out by the investor through a broker, which were
not included in the custody account. The third proceeding involves the possibility of
BM&FBOVESPA being sentenced, jointly with BVRJ, to indemnify the broker, which, for not
meeting the requirements, was not authorized to exchange the membership certificates of
BVRJ which it alleged to own, with membership certificates of the then So Paulo Stock
Exchange, which, in turn, would entitle to issue of BM&FBOVESPA shares.
The total amount involved in the tax proceedings classified as possible loss at
BM&FBOVESPA and on a consolidated basis is R$671,320 (R$627,470 at December 31,
2014). The main tax proceedings of BM&FBOVESPA and its subsidiaries refer to the
following matters:
(i)

Classification of the former BM&F and Bovespa, in the period prior to the demutualization,
as taxpayers of the Contribution Tax on Gross Revenue for Social Security Financing
(COFINS), which is the subject matter of two declaratory judgment actions pleading the
declaration that the plaintiffs have no tax obligations owed to the federal tax authorities
and seeking non-levy of COFINS on revenue arising from the exercise of the activities for
which they were established, the revenue of which does not fall under the concept of
billing. The amount involved in the aforementioned proceedings as of December 31, 2015
is R$59,693 (R$56,134 at December 31, 2014).

(ii) Collection of Withholding Income Tax (IRRF) relating to the calendar year 2008, since
the Brazilian IRS understands that BM&FBOVESPA would be responsible for
withholding and paying IRRF on the alleged capital gains earned by non-resident
investors in Bovespa Holding S.A., due to the merger of shares of Bovespa Holding S.A.
into BM&FBOVESPA. The amount involved in this administrative proceeding at
December 31, 2015 is R$197,935 (R$180,117 at December 31, 2014).

49

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

14. Provisions for tax, civil and labor contingencies, contingent assets and
liabilities and judicial deposits (Continued)
e)

Possible losses (Continued)


(iii) Alleged levy of social security tax on options granted under the Stock Option Plan of
BM&F S.A., assumed by BM&FBOVESPA and exercisable by the beneficiaries of the
Plan, in 2007 and 2008, as well as one-time fine due to the non-withholding at source
of income tax allegedly due on those options. The inquiries of the Brazilian IRS are
based on the understanding that the stock options were granted to employees in the
nature of salary as they represent compensation for services rendered. On July 6,
2015, BM&FBOVESPA was informed of CARFs decision, already declared res
judicata, which granted the Voluntary Appeal filed in the administrative proceeding that
challenges the tax assessment notice on the levy of social security contributions, with
consequent cancellation of the tax assessment notice. The tax assessment notice
cancelled was assessed as possible loss and the amount involved at June 30, 2015
totaled R$99,286 (R$94,828 at December 31, 2014). The amounts involved in such
administrative proceeding that addresses the fine for the non-withholding at source of
income tax, at December 31, 2015, totals R$55,689 (R$50,504 at December 31, 2014),
assessed as remote loss.
(iv) Alleged levy of social security taxes on options granted under the Stock Option Plan of
BM&F S.A., assumed by BM&FBOVESPA, and of BM&FBOVESPA itself, exercised by
the beneficiaries of the Plan in 2009 and 2010, as well as one-time fine due to the nonwithholding at source of income tax allegedly due on those options. The inquiries of the
Brazilian IRS are based on the understanding that the stock options were granted to
employees in the nature of salary as they represent compensation for services
rendered. The amounts involved in these administrative proceedings at December 31,
2015 are: (i) R$137,349 (R$123,486 at December 31, 2014), relating to social security
contributions allegedly due, assessed as possible loss, and (ii) R$55,046 (R$49,490 at
December 31, 2014), relating to one-time fine for the non-withholding of income tax,
assessed as remote loss.

50

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

14. Provisions for tax, civil and labor contingencies, contingent assets and
liabilities and judicial deposits (Continued)
e)

Possible losses (Continued)


(v) Alleged levy of social security taxes on options granted under the Stock Option Plan of
BM&F S.A., assumed by BM&FBOVESPA, and of BM&FBOVESPA itself, exercised by
the beneficiaries of the Plan in 2011 and 2012, as well as one-time fine due to the nonwithholding at source of income tax allegedly due on those options. The inquiries of the
Brazilian IRS are based on the understanding that the stock options were granted to
employees in the nature of salary as they represent compensation for services
rendered. The amounts involved in these administrative proceedings at December 31,
2015 are: (i) R$79,094 (nonexistent proceeding at December 31, 2014), relating to
social security taxes allegedly due, assessed as possible loss, and (ii) R$31,750
(nonexistent proceeding at December 31, 2014), relating to one-time fine for the nonwithholding of income tax, assessed as remote loss.
(vi) Alleged differences in payment of IRPJ and CSLL stemming from questioning of the
limits of deductibility of interest on equity paid by BM&FBOVESPA to its shareholders in
calendar year 2008. The total amount involved in this administrative proceeding is
R$144,088 (R$130,674 at December 31, 2014), including late-payment interest and
automatic fine.

f)

Remote losses
On November 29, 2010, BM&FBOVESPA was served a tax deficiency notice from the
Brazilian IRS challenging the amortization, for tax purposes in 2008 and 2009, of goodwill
generated upon the merger of Bovespa Holding S.A.s shares into BM&FBOVESPA in May
2008. In October 2011, the Brazilian IRS Judgment Office in So Paulo handed down a
decision on the challenge presented by BM&FBOVESPA, upholding, in substance, the tax
deficiency notice. In December 2013, the Administrative Board of Tax Appeals (CARF)
handed down a decision denying the voluntary appeal filed by BM&FBOVESPA, thus
upholding the tax deficiency notice. On March 25, 2015, CARF denied the motions for
clarification filed by BM&FBOVESPA. Currently, BM&FBOVESPA awaits the analysis of the
special appeal filed. BM&FBOVESPA understands that the risk of loss associated with this
tax matter is remote and will continue to amortize the goodwill for tax purposes as provided
for by prevailing legislation. The amount involved in this administrative proceeding at
December 31, 2015 is R$1,083,566.

51

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

14. Provisions for tax, civil and labor contingencies, contingent assets and
liabilities and judicial deposits (Continued)
f)

Possible losses (Continued)


On April 2, 2015, BM&FBOVESPA was served a tax deficiency notice from the Brazilian IRS
challenging the amortization, for tax purposes in 2010 and 2011, of goodwill generated upon
the merger of Bovespa Holding S.A.s shares into BM&FBOVESPA in May 2008, and filed an
administrative appeal on April 30, 2015. BM&FBOVESPA considers that the likelihood of loss
in this tax procedure is remote and will continue to amortize the goodwill for tax purposes as
provided for by prevailing legislation. The amount involved in this administrative proceeding at
December 31, 2015 is R$2,111,622.
BM&FBOVESPA, as successor of the former BOVESPA, and subsidiary BVRJ figure as
defendants in a claim for property damages and pain and suffering filed by Naji Robert
Nahas, Selecta Participaes e Servios SC Ltda., and Cobrasol - Companhia Brasileira de
leos e Derivados, on the grounds of alleged losses in the stock market sustained in June
1989. The amount attributed to the cause by the plaintiffs is R$10 billion. In relation to
property damages and pain and suffering claimed, the plaintiffs ask that BM&FBOVESPA and
BVRJ be sentenced in proportion to their responsibilities. A decision was handed down
whereby the claims by the plaintiffs were considered completely unfounded. This decision
was confirmed by the High Court of Justice of Rio de Janeiro State by means of a decision
published on December 18, 2009. The plaintiffs filed special and extraordinary appeals, both
of which were denied. Interlocutory appeals were filed with the High Court of Justice and with
the Federal Supreme Court of Brazil, and the appeal was granted for appreciation by the High
Court of Justice, so that the special appeal lodged by the plaintiffs may be examined by a
higher court. The special appeal was partially disclosed and was unanimously denied in
connection with this portion. The plaintiffs lodged motions for clarification against this
decision, which were unanimously denied, then they lodged motions for reconsideration,
which are currently awaiting admissibility at the High Court of Justice. Considering this
decision, the plaintiffs filed request for reconsideration and, alternatively, a special appeal.
The High Court of Justice considered the request for reconsideration as a special appeal and
dismissed it, against which the plaintiffs lodged motion for clarification. The proceeding is
currently awaiting decision on the motion for clarification. BM&FBOVESPA understands that
the likelihood of loss in this suit is remote.

52

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

14. Provisions for tax, civil and labor contingencies, contingent assets and
liabilities and judicial deposits (Continued)
f)

Possible losses (Continued)


BM&FBOVESPA, as the successor of Bolsa de Mercadorias e Futuros - BM&F ("BM&F") and as
disclosed in its Form of Reference (item 4.3), figures as a defendant in civil public actions and
class actions filed in order to investigate the practice of possible acts of administrative
impropriety, and to receive compensation for alleged damages to the federal treasury as a result
of transactions conducted by the Central Bank of Brazil in January 1999 in the US dollar futures
market run by the former BM&F. On March 15, 2012, those proceedings were deemed valid in
the trial court and sentenced most of the defendants, among them, BM&F. The total amount
arising from this unfavorable decision is R$7,005 million, and, according to one of the decisions
handed down, the gains that the Central Bank of Brazil obtained by reason of the non-use of
international reserves, amounting to R$5,431 million, may be deducted. BM&FBOVESPA was
also sentenced to pay a civil penalty of R$1,418 million. The figures were measured in January
1999 and should be adjusted for inflation, plus interest and burden of defeat. BM&FBOVESPA
believes that these actions are fully groundless and will not recognize in its financial statements
any provision for such lawsuits as the risk of loss is remote. Appeals were filed, which have
caused the execution of the trial court judgment to be suspended. Currently, BM&FBOVESPA
awaits the analysis of these appeals by the Federal Court of Appeals of the 1st Chapter.

g)

Judicial deposits
Description
Legal obligations
Tax proceedings
Civil proceedings
Labor claims
Total

BM&FBOVESPA
2015
2014

Consolidated
2015
2014

52,989
73,895
5,577
7,658

40,133
69,022
5,236
5,479

52,989
74,185
5,577
7,816

40,133
69,286
5,236
5,630

140,119

119,870

140,567

120,285

Out of the total judicial deposits, the following are highlighted: (i) R$54,149 (R$50,431 at
December 31, 2014) relates to the disputes over the classification of the exchanges as
subject to the payment of COFINS, which are assessed as possible loss by BM&FBOVESPA,
as described in item e above; and (ii) R$13,127 (R$12,212 at December 31, 2014) refers to
cases regarding PIS and COFINS on interest on equity received. Of the total deposits relating
to legal obligations, R$52,541 (R$39,693 at December 31, 2014) relates to the processes in
which BM&FBOVESPA claims non-levy of additional social security contribution on payroll
and payments to self-employed professionals, and challenges the legality of FAP (an index
applied to calculate the occupational accident insurance owed by employers).

53

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

14. Provisions for tax, civil and labor contingencies, contingent assets and
liabilities and judicial deposits (Continued)
g)

Judicial deposits (Continued)


Due to the existence of judicial deposits related to tax proceedings classified as possible
losses, the total tax contingencies and legal obligations are less than the total deposits
related to tax claims.

15. Equity
a)

Capital
At the meeting held on February 10, 2015, the Board of Directors approved the cancellation
of 85,000,000 shares (Note 15 (b)) issued by BM&FBOVESPA, held in treasury, which were
purchased under the share buyback program. Due to such cancellation, the capital of
BM&FBOVESPA of R$2,540,239 is now represented by 1,815,000,000 registered common
shares with voting rights and no par value, of which 1,782,094,906 common shares are
outstanding at December 31, 2015 (1,808,178,556 common shares at December 31, 2014).
At the Special Shareholders Meeting held on April 13, 2015, the shareholders resolved on
amendment of Companys Articles of Incorporation in order to reflect the new number of
shares representing the capital.
BM&FBOVESPA is authorized to increase its capital up to the limit of 2,500,000,000 common
shares, through a resolution of the Board of Directors, without any amendment to its Articles
of Incorporation.

b)

Treasury shares
Share buyback program
At a meeting held on December 11, 2014, the Board of Directors approved the Companys
Share Buyback Program, starting on January 1, 2015 and ending on December 31, 2015.
The limit of shares that could be repurchased by BM&FBOVESPA was 60,000,000 common
shares. In 2015, BM&FBOVESPA acquired 26,187,400 shares, representing 43.6% of the
total shares in the share buyback program.

54

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

15. Equity (Continued)


b)

Treasury shares (Continued)


Share buyback program (Continued)
At the meeting held on December 10, 2015, the Board of Directors approved the new Share
Buyback Program, starting on January 1, 2016 and ending on December 31, 2016. The limit
of shares that can be repurchased by BM&FBOVESPA is 40,000,000 common shares.
The shares acquired under the Share Buyback Program may be canceled or used to meet
the exercise of options to purchase shares by the beneficiaries of the Stock Option Plan, or
transfer of shares to beneficiaries of the Share Plan.
The changes in treasury shares for the year are as follows:
Number
Balances at December 31, 2013
Purchase of shares - Share buyback program
Shares cancelled
Shares sold - stock options (Note 18)
Balances at December 31, 2014
Purchase of shares - Share buyback program
Shares cancelled (Note 15(a))
Shares sold - stock options (Note 18)
Balances at December 31, 2015
Average cost of treasury shares (R$ per share)
Market value of treasury shares

c)

Amount

86,417,144

955,026

89,961,600
(80,000,000)
(4,557,300)

937,600
(859,793)
(49,559)

91,821,444

983,274

26,187,400
(85,000,000)
(103,750)

287,030
(903,975)
(1,094)

32,905,094

365,235
11.100
358,336

Revaluation reserves
Revaluation reserves were established as a result of the revaluation of works of art in
BM&FBOVESPA and of the properties of the subsidiary BVRJ in 2007, based on independent
experts appraisal reports.

55

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

15. Equity (Continued)


d)

Capital reserve
This refers substantially to amounts originated in the merger of Bovespa Holding shares in
2008, and other corporate events allowed by the Brazilian Corporation Law, such as (i) capital
increase through merger, (ii) redemption, repayment or purchase of shares, and (iii) events
associated with the stock option plan.

e)

Income reserves
(i)

Legal reserve
Legal reserve is annually set up with allocation of 5% of net income for the year, capped
at 20% of capital. The legal reserve aims at ensuring integrity of capital and may only be
used to absorb losses and increase capital. The legal reserve is not required to be set up
considering that its amount plus the capital reserves exceed 30% of the Company
capital.

(ii) Statutory reserves


Represent funds and safeguard mechanisms required for the activities of
BM&FBOVESPA, in order to ensure the proper settlement and reimbursement of losses
arising from the intermediation of transactions carried out in its trading sessions and/or
registered in any of its trading, registration, clearing and settlement systems, and from
custody services.
Pursuant to the Articles of Incorporation, the Board of Directors may, when the amount of
the statutory reserve is sufficient to meet the purposes for which it was originally
established, propose that part of the reserve be distributed to the shareholders of the
Company.
f)

Other comprehensive income


The purpose is to record the effects of (i) exchange variation of the investments abroad, (ii)
hedge accounting on net foreign investment (Note 12), (iii) cash flow hedge (Note 4), (iv)
comprehensive income of subsidiaries,(v) actuarial gains/losses on post-retirement health
care benefits, (vi) mark-to-market of financial assets available for sale.

56

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

15. Equity (Continued)


g)

Dividends and interest on equity


As provided for in the Articles of Incorporation, shareholders are entitled mandatory minimum
dividends of 25% of net income for the year, adjusted under Brazilian Corporation Law.
2015

2014

Net income for the year

2,202,238

977,053

Dividends
Interest on equity

223,581
1,019,033

781,642
-

Total approved for the year

1,242,614

781,642

The dividends approved in relation to P&L for the period are as follows:

Description
Dividends
Interest on equity
Interest on equity
Interest on equity

Date
approved

Date of
payment

Gross amount
per share (R$)

Total gross
amount

05/14/2015
08/13/2015
11/12/2015
12/10/2015

05/29/2015
09/08/2015
12/04/2015
12/29/2015

0.124110
0.142749
0.176557
0.252512

223,581
254,392
314,641
450,000

Total proposed/approved for 2015


Dividends
Dividends
Dividends
Dividends

1,242,614
05/08/2014
08/07/2014
11/13/2014
02/10/2015

05/30/2014
08/29/2014
11/28/2014
04/28/2015

Total proposed/approved for 2014

0.111538
0.109381
0.104814
0.103163

204,914
200,061
190,726
185,941
781,642

57

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

15. Equity (Continued)


h)

Earnings per share


Basic
2015

Consolidated
2014

Numerator
Net income from continuing operations
Net income from discontinued operations

2,202,238
-

984,745
(7,692)

Net income available to shareholders of BM&FBOVESPA

2,202,238

977,053

1,791,892,507

1,837,383,111

1.229001

0.531763

Denominator
Weighted average number of outstanding shares
Basic earnings per share (in R$)
Diluted

2015

Consolidated
2014

Numerator
Net income from continuing operations
Net income from discontinued operations

2,202,238
-

984,745
(7,692)

Net income available to shareholders of BM&FBOVESPA

2,202,238

977,053

Denominator
Weighted average number of outstanding shares adjusted
by effects of stock options plans

1,805,320,708

1,841,030,654

1.219860

0.530710

Diluted earnings per share (in R$)

58

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

16. Transactions with related parties


a)

Transactions and balances with related parties


Assets/(liabilities)
2015
2014

Description
Banco BM&FBOVESPA de Servios de Liquidao e Custdia S.A. (1)
Accounts receivable
Interest on equity receivable
Recovery of expenses
Income from fees
Interest on equity

1,033
3,400
-

Bolsa Brasileira de Mercadorias (Note 24)


Accounts receivable
Accounts payable
Suppliers
Minimum contribution on membership certificates (fees)
Data processing
Property rental
Recovery of expenses

BM&F (USA) Inc. (1)


Accounts payable
Sundry expenses
BM&FBOVESPA (UK) Ltd. (1)
Accounts payable
Sundry expenses

Income/(expense)
2015
2014

909
2,508
2
(99)
(2,464)
-

11,456
14
4,000
-

10,407
18
2,950
(1,193)
(2,464)
25
78

(80)
-

(1,529)

(1,026)

(142)
-

(1,836)

(1,424)

Bolsa de Valores do Rio de Janeiro (1)


Accounts receivable
Recovery of expenses

2
-

CME Group
Dividends receivable
Accounts payable
Financial expenses
Expenses with fees
Income from fees

1
-

21

22

61,635
(48,245)
-

(781)
(1,895)
66

(898)
(2,111)
50

196
(8,695)
-

245
(9,904)
-

(12,690)
2,721

(15,466)
3,035

Associao BM&F
Accounts receivable
Accounts payable
Recovery of expenses
Expenses with courses
Donation
Sponsorship

6
(1)
-

4
(239)
-

105
(1,270)
(1,757)
(3,200)

186
(1,458)
(239)
-

Other related parties


Accounts receivable
Donation
Recovery of expenses
Sundry expenses

10
-

(125)
136
-

(63)
125
(163)

BM&FBOVESPA Superviso de Mercados


Accounts receivable
Accounts payable
Donation/Contribution
Recovery of expenses

(1)

Subsidiaries included in the consolidation process.

59

10
-

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

16. Transactions with related parties (Continued)


a)

Transactions and balances with related parties (Continued)


BM&FBOVESPA follows a policy on transactions with related parties, approved by the Board
of Directors, which aims to establish rules to ensure that all decisions involving related-party
transactions and other situations of potential conflict of interest are taken to the interests of
BM&FBOVESPA and its shareholders.
The main recurring transactions with related parties are described below and were carried out
under the following conditions:
The amounts owed by Banco BM&FBOVESPA to BM&FBOVESPA refer to the Companys
funds used by Banco BM&FBOVESPA in performing its activities under a formal agreement
signed by the parties.
Accounts payable to CME Group refer to the remaining portion for the acquisition of the
perpetual license of modules related to the multi-asset class electronic trading platform,
PUMA Trading System, which was developed together with the CME Group. In September
2015, CME Group ceased to be a related party to BM&FBOVESPA given the
disqualification of its significant influence and consequent discontinuance use of the equity
method of accounting (Note 7).
BSM has entered into an agreement with BM&FBOVESPA for the transfer and recovery of
costs, which establishes the reimbursement to BM&FBOVESPA for expenses incurred for
resources and infrastructure made available to BSM to assist in the performance of its
supervision activities. Such costs are determined on a monthly basis using the methodology
specified in the agreement signed by the parties and also include the activities related to the
Mecanismo de Ressarcimento de Prejuzos (Loss Recovery Mechanism), as this
mechanism is administered by BSM.
BM&FBOVESPA makes transfers in order to supplement financing for the activities of BSM
and regular transfers of fines for failure to settle debts and deliver assets by BSM, as set out
in Circular Letter 044/2013 of BM&FBOVESPA.
BM&FBOVESPA monthly pays BM&F (USA) Inc. and BM&FBOVESPA (UK) Ltd. for
representing it abroad by liaising with other exchanges and regulators and assisting in
bringing new clients to the Brazilian capital market.
Associao BM&F, Associao Bovespa, Instituto BM&FBOVESPA and Associao
Profissionalizante BM&FBOVESPA periodically reimburse BM&FBOVESPA for expenses
associated with the resources and infrastructure provided by BM&FBOVESPA to assist
them in performing their activities.

60

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

16. Transactions with related parties (Continued)


a)

Transactions and balances with related parties (Continued)


BM&FBOVESPA pays the cost of courses taken by its employees directed to the financial
and capital markets offered by Instituto Educacional BM&FBOVESPA, administered by
Associao BM&F.

b)

Key management personnel compensation


Key management personnel include Members of the Board of Directors, Executive Officers,
Internal Audit Officer, Corporate Risk Officer, Officer of Banco BM&FBOVESPA and Human
Resources Officer.
Management fees
Short-term benefits (salaries, profit sharing, etc.)
Share-based payment (1)
Consideration - cancellation of Stock Options and labor
and social security charges (Note 18)

2015

2014

30,695
31,127

29,881
13,306

35,093

(1) Refers to expenses computed in the year relating to share-based payment, increased by labor and social security charges,
and stock options of key management personnel. These expenses were recognized according to the criteria described in
Note 18.

17. Collateral for transactions


BM&FBOVESPA operating as a central counterparty (CCP) manages four clearinghouses
considered systemically important by the Central Bank of Brazil: BM&FBOVESPA (former
Derivatives Clearinghouse), Foreign Exchange, Assets, and the Equities and Corporate Bonds
Clearinghouse (CBLC).
In its Circular Letter 046/2014, dated August 7, 2014, the Central Bank of Brazil granted
BM&FBOVESPA authorization to operate its new clearinghouse, the BM&FBOVESPA
Clearinghouse. The new clearinghouse is part of the post-trade integration (IPN) project, an
initiative adopted by BM&FBOVESPA to start an integrated clearinghouse that will consolidate the
activities performed by the four clearinghouses.
The activities of BM&FBOVESPA Clearinghouse will be limited, in this first phase of the project, to
the financial derivatives and commodities market and the gold market, including not only both
exchange-traded but also OTC contracts.

61

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

17. Collateral for transactions (Continued)


The activities carried out by the clearinghouses are governed by Law No. 10214/01, which
authorizes the multilateral clearing of obligations, establishes the central counterparty role of the
systemically important clearinghouses and permits the utilization of the collateral obtained from
defaulting participants to settle their obligations in the clearinghouse environment, including in
cases of civil insolvency, agreements with creditors, intervention, bankruptcy and out-of-court
liquidation.
Through its clearinghouses, BM&FBOVESPA acts as a central counterparty in the derivatives
market (futures, forward, options and swaps), spot foreign exchange market, government
securities market (spot, forwards, repurchase operations, futures and lending of securities),
variable income (spot, forward, option, futures and lending of securities) and private debt
securities (spot and lending of securities). In other words, by assuming the role of a central
counterparty, BM&FBOVESPA becomes responsible for the proper settlement of trades carried
out and/or registered in its systems, as established in the applicable regulations.
The performance of BM&FBOVESPA as a central counterparty exposes it to the credit risk of the
participants that utilize its settlement systems. If a participant fails to make the payments due, or
to deliver the assets or commodities due, it will be incumbent upon BM&FBOVESPA to resort to
its safeguard mechanisms, in order to ensure the proper settlement of the transactions in the
established time frame and manner. In the event of a failure or insufficiency of the safeguard
mechanisms of its Clearinghouses, BM&FBOVESPA might have to use its own equity, as a last
resort, to ensure the proper settlement of trades.
The clearinghouses are not directly exposed to market risk, as they do not hold net long or net
short positions in the various contracts and assets traded. However, an increase in price volatility
can affect the magnitude of amounts to be settled by the various market participants, and can also
heighten the probability of default by these participants. Furthermore, as already emphasized, the
clearinghouses are responsible for the settlement of the trades of a defaulting participant, which
could result in losses for BM&FBOVESPA if the amounts due surpass the amount of collateral
available. Accordingly, despite the fact that there is no direct exposure to market risk, this risk can
impact and increase the credit risks assumed.
Each clearinghouse has its own risk management system and safeguard structure. The safeguard
structure of a clearinghouse represents the set of resources and mechanisms that it can utilize to
cover losses relating to the settlement failure of one or more participants. These systems and
structures are described in detail in the regulations and manuals of each clearinghouse, and have
been tested and ratified by the Central Bank of Brazil (BACEN), in accordance with National
Monetary Council (CMN) Resolution No. 2882/01 and BACEN Circular No. 3057/01.

62

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

17. Collateral for transactions (Continued)


The safeguard structures of the clearinghouses are based largely on a loss-sharing model called
defaulter pays, in which the amount of collateral deposited by each participant should be able to
absorb, with a high degree of confidence, the potential losses associated with its default.
Consequently, the amount required as collateral for participants is the most important element in
our management structure of the potential market risks arising from our role as a central
counterparty.
For most contracts and operations involving assets, the required value as collateral is sized to
cover the market risk of the business, i.e. its price volatility during the expected time frame for
settlement of the positions of a defaulting participant. This timeframe can vary depending on the
nature of contracts and assets traded.
The models used for calculating the margin requirements are based, in general, on the concept of
stress testing, in other words, a methodology that attempts to measure market risk into account
not only recent historical volatility of prices, but also the possibility of the occurrence of
unexpected events that modify the historical patterns of behavior of prices and the market in
general.
The main parameters used for margin calculation models are the stress scenarios, defined by the
Market Risk Committee for the risk factors that affect the prices of contracts and assets traded on
our systems. For the definition of stress scenarios, the Market Risk Committee uses a
combination of quantitative and qualitative analysis. The quantitative analysis is done with the
support of statistical models for estimating risk, such as EVT (extreme value theory), estimate of
implied volatilities, GARCH (Generalized Autoregressive Conditional Heteroskedasticity) models,
and historical simulations. The qualitative analysis considers aspects related to domestic and
international economic and political conditions and their impacts on the markets managed by
BM&FBOVESPA.
On March 5, 2014, according to BM&FBOVESPA Circular Letter No. 003/2014, new versions of
BM&FBOVESPA Clearinghouses rules became effective, aiming towards convergence with
international capital requirement rules under Basel III Accord by financial institutions subject to
credit risk of clearinghouses. These changes were approved by BACEN in January 2014.

63

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

17. Collateral for transactions (Continued)


The operations in the BM&FBOVESPA markets are secured by margin deposits in cash,
government and corporate securities, letters of guarantee and shares among others. The
guarantees received in cash, in the amount of R$1,338,010 (R$1,321,935 at December 31, 2014),
are recorded as a liability under Collateral for transactions and other non-cash collaterals, in the
amount of R$303,824,243 (R$240,757,242 at December 31, 2014), are recorded in memorandum
accounts. At December 31, 2015, collaterals amounted to R$305,162,253 (R$242,079,177 at
December 31, 2014), as follows:
a)

Collaterals deposited by participants


2015

BM&FBOVESPA
Clearinghouse

Equities and
Corporate
Bonds
Clearinghouse
(CBLC)

Foreign
Exchange
Clearinghouse

Government securities
Letters of guarantee
Shares
International securities (1)
Bank Deposit Certificates (CDBs)
Cash amounts deposited
Gold
Other

216,955,868
3,552,464
3,458,610
1,394,602
1,027,657
12,012
176,345

37,116,275
397,000
27,241,604
4,151,480
277,305
134,437
3,162
163,372

8,644,122
175,716
-

280,222
-

Total

226,577,558

69,484,635

8,819,838

280,222

Assets
Clearinghouse

2014
Equities and
Corporate
Bonds
BM&FBOVESPA Clearinghouse
Clearinghouse
(CBLC)

Foreign
Exchange
Clearinghouse

Assets
Clearinghouse

Government securities
Letters of guarantee
Shares
International securities (1)
Bank Deposit Certificates (CDBs)
Cash amounts deposited
Gold
Other

156,814,586
2,542,590
4,696,902
1,177,107
815,294
31,264
136,110

34,636,888
572,310
33,007,191
1,800,371
245,456
121,288
120,835

4,470,253
385,149
-

505,583
-

Total

166,213,853

70,504,339

4,855,402

505,583

(1)

American and German government securities as well as ADRs (American Depositary Receipts).

64

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

17. Collateral for transactions (Continued)


b)

Other safeguard mechanisms


i)

BM&FBOVESPA Clearinghouse
Joint liability for paying the broker and clearing member that acted as intermediaries, as
well as collaterals deposited by such participants.
Minimum Non-operating Collateral, composed of collaterals transferred by
BM&FBOVESPA clearing members and by full trading participants, intended to
guarantee the transactions. By the close of business on August 15, 2014, the resources
that represent contributions by the clearing member to the Operating Performance
Fund were automatically allocated as Minimum Non-operating Collateral at the opening
of the BM&FBOVESPA Clearinghouse on August 18, 2014. Minimum Non-operating
Collateral is broken down as follows:
Breakdown

2015

2014

Government securities
Letters of guarantee
Bank Deposit Certificates (CDBs)
Cash amounts deposited

730,429
72,200
2,700
-

725,794
128,500
5,300
4

Amounts deposited

805,329

859,598

Amounts required of participants

600,000

672,000

Amount in excess of the minimum required

205,329

187,598

Fundo de Liquidao (Settlement Fund), comprising collaterals transferred by clearing


members and BM&FBOVESPA funds. By the close of business on August 15, 2014,
the resources that represent contributions by the clearing member to the Settlement
Fund were automatically allocated to the Settlement Fund at the opening of the
BM&FBOVESPA Clearinghouse on August 18, 2014. The Settlement Fund is broken
down as follows:
Breakdown

2015

2014

Government securities
Letters of guarantee

851,458
18,000

776,632
34,000

Amounts deposited

869,458

810,632

Amounts required of participants


Amount required of BM&FBOVESPA (1)

308,000
308,000

344,000
344,000

Amount in excess of the minimum required

253,458

122,632

(1) Comprising government securities.

65

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

17. Collateral for transactions (Continued)


b)

Other safeguard mechanisms (Continued)


i)

BM&FBOVESPA Clearinghouse (Continued)


Patrimnio Especial (Especial equity), in the amount of R$57,526 (R$50,752 at
December 31, 2014), in compliance with the provisions of Article 5 of Law No. 10214 of
March 27, 2001 and article 19 of BACEN Circular No. 3057 of August 31, 2001.

ii)

Equities and Corporate Bonds Clearinghouse (CBLC)


Joint liability for paying the broker and clearing member that acted as intermediaries, as
well as collaterals deposited by such participants.
Fundo de Liquidao (Settlement Fund), composed of collaterals transferred by
clearing members and BM&FBOVESPA funds, intended to guarantee the proper
settlement of transactions.
Breakdown

2015

2014

Government securities

893,423

665,380

Amounts deposited

893,423

665,380

Amounts required of participants


Amount required of BM&FBOVESPA (1)

298,900
298,900

280,400
280,400

Amount in excess of the minimum required

295,623

104,580

(1) Comprising government securities.

Patrimnio Especial (Especial equity), in the amount of R$61,494 (R$54,256 at


December 31, 2014), in compliance with the provisions of Article 5 of Law No. 10214 of
March 27, 2001 and article 19 of BACEN Circular No. 3057 of August 31, 2001.

66

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

17. Collateral for transactions (Continued)


b)

Other safeguard mechanisms (Continued)


iii) Foreign Exchange Clearinghouse
Fundo de Liquidao de Operaes de Cmbio, formerly Fundo de Participao,
composed of collaterals transferred by Foreign Exchange Clearinghouse participants
and BM&FBOVESPA funds, intended to guarantee the proper settlement of
transactions.
Breakdown

2015

2014

Government securities
Cash amounts deposited

364,804
200

306,762
200

Amounts deposited

365,004

306,962

Amounts required of participants


Amount required of BM&FBOVESPA (1)

105,650
105,650

104,650
104,650

Amount in excess of the minimum required

153,704

97,662

(1) Comprising government securities.

Patrimnio Especial (Especial equity), in the amount of R$57,619 (R$50,838 at


December 31, 2014), in compliance with the provisions of Article 5 of Law No. 10214 of
March 27, 2001 and article 19 of BACEN Circular No. 3057 of August 31, 2001.
iv) Assets Clearinghouse
Fundo Operacional da Clearing de Ativos, in the amount of R$40,000 at March 31,
2015 and December 31, 2014, intended to hold funds from BM&FBOVESPA to cover
losses arising from participants operational or administrative failures.
Patrimnio Especial (Especial equity), in the amount of R$40,507 (R$35,737 at
December 31, 2014), in compliance with the provisions of Article 5 of Law No. 10214 of
March 27, 2001 and article 19 of BACEN Circular No. 3057 of August 31, 2001.

67

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

18. Employee benefits


a)

Stock options - long-term benefit


Pursuant to the Notice to the Market published on February 4, 2015, BM&FBOVESPA
decided to offer to the beneficiaries of the Companys Stock Options Plan (respectively
Beneficiaries and Options) the following choices: (i) remaining as holders of their Options,
or (ii) cancelling their outstanding Options and receiving an amount in cash with respect to
those Options which had already vested (Vested Options), or receiving shares of the
Company, to be transferred on future dates, with respect to those Options which had not yet
vested (Non-vested Options).
Nearly all of the beneficiaries opted for their share cancellation and the shares received with
respect to the cancellation of Non-vested Options were subject to the Stock Grant Plan
approved by the Company in an Extraordinary General Meeting on May 13, 2014.
BM&FBOVESPA believes that the resulting long-term incentive model will more effectively
align the interests of beneficiaries to those of BM&FBOVESPA and its shareholders in the
long term, as well as retain key personnel.
The amounts paid in cash and granted in shares for cancellation of the Options, as defined in
CPC 10 (R1) approved by CVM Rule No. 650/10, were calculated based on the fair value of
the Options on January 5, 2015, and the results of these calculations were reviewed and
validated by specialized external consultants.
The cancelled Vested Options resulted in cash payments equivalent to the Fair Value of
those Options. The cancelled Non-vested Options, meanwhile, resulted in the granting of a
number of Company shares which was calculated based on the Fair Value of the Non-vested
Options on January 5, 2015 and on the closing price of the shares on the same date
(R$9.22).

68

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

18. Employee benefits (Continued)


a)

Stock options - long-term benefit (Continued)

Programs
2008
2009
2010
2011
2012
2013
2011 additional
2012 additional
2013 additional
Total

# of
Converted vested options
outstanding
options
Fair value
Total fair
(Dec/14)
(R$)
# of options
value (R$)
178,412
4.48
173,412
776,886
621,780
3.72
581,780
2,164,222
7,183,875
1.94
6,498,875
12,607,818
6,484,900
3.37
3,971,275
13,383,197
7,728,386
3.45
3,391,618
11,701,082
9,755,809
4.09
2,414,578
9,875,624
2,113,241
4.90
1,025,300
5,023,970
1,936,513
4.34
2,971,880
4.87
38,974,796
18,056,838
55,532,798

Converted non-vested
options
# of options
2,257,375
4,228,018
7,243,731
1,025,280
1,919,785
2,971,880
19,646,069

# of shares
825,138
1,582,170
3,213,606
544,906
903,694
1,569,771
8,639,285

1) This does not include 1,259,389 options granted in the past to employees who have been recently terminated by
BM&FBOVESPA, which had term conditions and, therefore, fair values different from those described above. Out of these,
837,389 options were cancelled, resulting in payment in cash of R$665 while 422,000 options were not converted, since
there was no program enrollment by the terminated employees. Total cash payment was R$56,198.
2) 12.5 thousand options were not converted, since there was no enrollment by the beneficiaries.

The shares granted in exchange for the cancelled Non-vested Options will be subject to the
same rules in cases of dismissal, disablement, death or retirement. Furthermore, these
shares will have dates for transfer that are the same as the vesting periods established for
each Option program and will be transferred to the Beneficiaries in January each year:
3,139,275 in 2016; 3,192,082 in 2017; 1,523,046 in 2018; and 784,882 in 2019.
The guidelines and conditions for the cancellation of options, as well as the cash and equity
settlement, were approved by the Board of Directors of BM&FBOVESPA at a meeting held on
December 24, 2014, and all of the actions required for its implementation were approved by
the Compensation Committee of the Board of Directors at a meeting held on February 4,
2015.
BM&FBOVESPA recognized expenses related to grants of the Option Plan in the amount of
R$276 for the year ended December 31, 2015 (2014 - R$28,805), matched against capital
reserves in equity.
BM&FBOVESPA entered into commitments with beneficiaries to hold them harmless from
any potential liabilities related to assessment notices. At December 31, 2015, the potential
liabilities are recognized for R$24,300 (2014 - R$17,700).

69

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

18. Employee benefits (Continued)


a)

Stock options - long-term benefit (Continued)


Stock Options Summary/Changes

Program
Program 2008
Program 2009
Program 2010
Program 2011
Program 2012
Program 2013
Board of Directors grant
2013
Additional Program 2011
Additional Program 2012
Additional Program 2013
Total Programs
(1)

Vested
optionscash settled

Non-vested
options
converted
into shares

Nonconverted
options

178,412
621,780
7,183,875
6,484,900
7,728,386
9,755,809

173,412
581,780
6,861,875
4,190,025
3,485,368
2,497,078

2,257,375
4,228,018
7,243,731

5,000
40,000
322,000
37,500
15,000
15,000

297,000
2,113,241
1,936,513
2,971,880

1,087,961
16,728
-

1,025,280
1,919,785
2,971,880

297,000
-

39,271,796 18,894,227

19,646,069

731,500

Outstanding
contracts at
12/31/2014

Exercised
at
12/31/2015

Outstanding
Lapsed at contracts at
12/31/2015 12/31/2015

(40,000)
(33,750)
(15,000)
(15,000)

(322,000)
-

(103,750)

(322,000)

Fair value
Dilution
of options percentage
on the
(1)
grant date
(R$ per
share)

5,000
3,750
-

3.71
2.93
4.50
2.79
5.55
3.43

297,000
-

2.98
4.19
6.98
4.33

305,750

The number of outstanding shares at December 31, 2015 is 1,782,094,906.

Effects arising from the exercise of options


2015
Amount received from the exercise of options
(-) Cost of treasury shares disposed of
Effect from disposal of shares

2014

897
(1,094)

44,220
(49,559)

(197)

(5,339)

Pricing model
Stock Options
Major assumptions considered in pricing options are as follows:
a)
b)

Options were evaluated considering the market parameters in force on every grant date
of different Stock Option Programs;
To estimate the risk-free interest rate, the future interest contracts negotiated for the
maximum exercise period of each option were considered; and

70

0.02%
0.02%

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

18. Employee benefits (Continued)


a)

Stock options - long-term benefit (Continued)


Pricing model (Continued)
Stock Options (Continued)
c)

The maximum exercise period of options granted in each Stock Option Program was
considered to be the maturity term.

Other usual assumptions related to option pricing models, such as inexistence of arbitrage
opportunities and constant volatility over time were also considered in the calculation.
Stock Grant - long-term benefit
The Special Shareholders Meeting held on May 13, 2014 approved the Stock Grant Plan,
which replaced the grant mechanism for the Stock Plan shares as a long-term benefit.
The Stock Plan vests the Board of Directors with power to approve stock grants and manage
them, through Stock Grant Plans, which should define, among other specific conditions: (i)
the beneficiaries; (ii) the total number of BM&FFBOVESPA shares under the grant program;
(iii) criteria for election of the beneficiaries and determining the number of shares to be
assigned; (iv) splitting shares into lots; (v) vesting periods for the transfer of shares; (vi) any
restrictions on the transfer of shares received by the beneficiaries; and (vii) any provisions on
penalties.
For each Stock Program, there should be a minimum total period of three (3) years from the grant
date of the shares in a given program and the last date of transfer of shares granted under the
same program. Moreover, a minimum vesting period of twelve (12) months should be observed
from: (i) the grant date of a program and the first date of transfer of any shares under that
Program, and (ii) between each of the transfer dates of shares of that program after the first
transfer.

71

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

18. Employee benefits (Continued)


a)

Stock options - long-term benefit (Continued)


Stock Grant - long-term benefit (Continued)
The Stock Plan also defines a specific mechanism for granting shares to the members of the
Board of Directors, whereby: (i) the members of the Board of Directors are eligible to be
beneficiaries of the grant from the date the General Meeting elects them to office, or another
period as defined by the General Meeting; (ii) the beneficiaries members of the Board of
Directors as a whole may annually receive a total 172,700 shares of BM&FBOVESPA, which
will be distributed on a straight-line basis among the members of the Board of Directors, as
approved at the General Meeting; (iii) stock will be granted to members of the Board of
Directors in one single lot on the same dates the Programs approve stock grants to other
beneficiaries; (iv) the stock considered in the contracts with beneficiaries that are members of
the Board of Directors will be transferred two years after the end of term of each Board
member in which the contract was executed.
BM&FBOVESPA recognized expenses related to Stock Plan grants in the amount of
R$40,050 for the year ended December 31, 2015, matched with capital reserves in equity,
based on the fair value of the share at the grant date of the plans. BM&FBOVESPA also
recognized charges in the amount of R$26,442 as personnel expenses for the year ended
December 31, 2015, calculated based on the fair value of the share as at December 31,
2015.
BM&FBOVESPA will record the expenses relating to the Stock Grant Program which were
granted for replacement of unvested options of the Stock Option Plan, for the same fair value
of options previously granted, in accordance with CPC 10 (R1)/IFRS 2.

72

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

18. Employee benefits (Continued)


a)

Stock options - long-term benefit (Continued)


Stock Grant Summary/Changes

Program
Stock Grant Converted Options

Stock Grant Additional Converted Options

Stock Grant - Program 2014

Stock Grant Additional Program 2014

Stock Grant - Board of Directors Grant 2014

Conversion/
grant date

Vesting

Number of
shares

1/5/2015
1/5/2015
1/5/2015

1/5/2016
1/5/2017
1/5/2018

2,687,425
1,862,287
1,071,202

(87,722)
(58,020)
(29,950)

2,599,703
1,804,267
1,041,252

5,620,914

(175,692)

5,445,222

451,850
1,329,795
451,844
784,882

(3,797)
-

451,850
1,325,998
451,844
784,882

3,018,371

(3,797)

3,014,574

930,290
930,278
930,272
930,265

(6,316)
(6,316)
(47,369)
(47,368)

923,974
923,962
882,903
882,897

3,721,105

(107,369)

3,613,736

384,968
384,968
384,954

(8,473)
(8,472)

384,968
376,495
376,482

1,154,890

(16,945)

1,137,945

1/5/2015
1/5/2015
1/5/2015
1/5/2015

1/2/2015
1/2/2015
1/2/2015
1/2/2015

1/2/2015
1/2/2015
1/2/2015

1/2/2015

1/5/2016
1/5/2017
1/5/2018
1/7/2019

1/4/2016
1/2/2017
1/2/2018
1/2/2019

1/4/2016
1/2/2017
1/2/2018

4/30/2017

Total

172,700

172,700

172,700

172,700

13,687,980

(1)

The number of outstanding shares at December 31, 2015 is 1,782,094,906.

73

Canceled at
12/31/2015

Outstanding
share
contracts at
12/31/2015

(303,803)

13,384,177

Fair value
of shares
on the
grant date
(R$ per
share)

Dilution
percentage
(1)

9.22
9.22
9.22

0.15%
0.10%
0.06%

9.22
9.22
9.22
9.22

0.03%
0.07%
0.03%
0.04%

9.50
9.50
9.50
9.50

0.05%
0.05%
0.05%
0.05%

9.50
9.50
9.50

0.02%
0.02%
0.02%

9.50

0.01%

0.75%

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

18. Employee benefits (Continued)


a)

Stock options - long-term benefit (Continued)


Pricing model
Stock Grant
For options granted under the Stock Option Plan, the fair value corresponds to the option
closing price on the grant date.

b)

Supplementary pension plan


Pension plan Fundo de Penso Multipatrocinado das Instituies do Mercado Financeiro e
de Capitais (Mercaprev) is structured as a defined contribution (DC) plan and is sponsored
by BM&FBOVESPA among other entities, with voluntary participation open to all employees.

c)

Post-employment health care benefit


BM&FBOVESPA maintains a post-retirement health care plan for a group of employees and
former employees. At December 31, 2015, the actuarial liabilities related to this plan
amounted to R$26,122 (R$28,371 at December 31, 2014), calculated using the following
assumptions:
Discount rate
Economic inflation
Medical inflation
Mortality table

2015
7.3% p.a.
5.0% p.a.
3.0% p.a.
AT-2000

2014
6.2% p.a.
5.0% p.a.
3.0% p.a.
AT-2000

Average life expectancy in years of a pensioner retiring at age 65 is as follows:


Retirement at balance sheet date (age 65)
Retirement in 25 years (age 40 today)

20 years
20 years

74

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

18. Employee benefits (Continued)


c)

Post-employment health care benefit (Continued)


Changes in defined benefit obligations for the year as shown below:
2015

2014

At beginning of year

28,371

25,940

Current service cost


Past service cost
Interest cost
Benefit paid by the plan
Effect of changes in financial assumptions
Effect of plan experience

33
288
3,202
(1,076)
(4,038)
(658)

46
1,110
2,883
(900)
642
(1,350)

At end of year

26,122

28,371

Amounts recognized in the income statement are as follows:


2015

2014

Current service cost


Interest on defined benefit obligations
Past service cost

33
3,202
288

46
2,883
1,110

Total recognized in income

3,523

4,039

Amounts recognized in the statement of comprehensive income are as follows:

Effect of changes in financial assumptions


Effect of plan experience
Tax effects
Total recognized in comprehensive income, net of
taxes

2015

2014

(4,038)
(658)

642
(1,350)

1,597

241

(3,099)

(467)

The sensitivity of the actuarial liability at December 31, 2015 to the changes in key
assumptions is as follows:
Increase of 0.5% Decrease of 0.5%
Discount rate
Medical inflation

(2)
2

2
(2)

Life expectancy
+1

Life expectancy
-1

(1)

Mortality table

75

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

19. Income and social contribution taxes


a)

Deferred income and social contribution taxes


The balances of deferred tax assets and liabilities are as follows:
BM&FBOVESPA and Consolidated
2015
2014 (*)
Deferred tax assets
Tax, civil and labor contingencies
Tax loss carryforwards
Exchange variation on issue of debt abroad
Mark to market - CME
Other temporary differences

24,487
30,581
445,562
69,243
62,123

20,360
29,107
185,753
39,561

Deferred tax liabilities


Goodwill amortization (1)
Mark to market
Effect of exchange rate variation on cash flow hedge
Effect of exchange rate variation on shares abroad
Discontinued use of equity method - CME
Other temporary differences

(2,834,715)
(374)
(755)
(455,872)
(589,862)
(22,694)

(2,849,923)
(9,383)

Deferred taxes, net

(3,272,276)

(2,584,525)

(*) Amounts related to deferred tax liabilities at December 31, 2014 are restated in the balance sheet net of deferred tax assets.
(1) Deferred income and social contribution tax liabilities arising from temporary differences between the tax base of goodwill and its carrying
amount on the balance sheet, considering that goodwill is still amortized for tax purposes, but is no longer amortized for accounting purposes
as from January 1, 2009, resulting in a tax base smaller than the carrying amount of goodwill. This temporary difference may result in amounts
becoming taxable in future periods, when the carrying amount of the asset will be reduced or settled , this requiring the recognition of a
deferred tax liability.

Changes in deferred tax assets and liabilities during the year:

2014 (*)
Deferred tax assets
Tax, civil and labor contingencies
Deferred assets on tax loss carryforwards
Exchange variation on issue of debt abroad
Mark to market - CME
Other temporary differences

(1)

20,360
29,107
185,753
39,561

BM&FBOVESPA and Consolidated


(Debit) credit in
(Debt) credit in the
comprehensive
income statement
income
4,127
1,474
437,343
22,562

(177,534)
69,243
-

2015
24,487
30,581
445,562
69,243
62,123

Deferred tax liabilities


Goodwill amortization (1)
Mark to market
Effect of exchange rate variation on cash flow hedge
Effect of exchange rate variation on shares abroad
Discontinued use of equity method - CME
Other temporary differences

(2,849,923)
(9,383)

15,208
(437,343)
(589,862)
(11,715)

(374)
(755)
(18,529)
(1,596)

(2,834,715)
(374)
(755)
(455,872)
(589,862)
(22,694)

Deferred taxes, net

(2,584,525)

(558,206)

(129,545)

(3,272,276)

Changes refer to the net amount between the reversal of R$565,312 in deferred tax liabilities arising from goodwill impairment
(Note 9), and deferred tax liabilities recognized in the amount of R$550,104 on the goodwill tax amortization.

76

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

19. Income and social contribution taxes (Continued)


a) Deferred income and social contribution taxes (Continued)
(*)
assets.

b)

Amounts related to deferred tax liabilities at December 31, 2014 are restated in the balance sheet net of deferred tax

Estimated realization period


Deferred income and social contribution tax assets arising from temporary differences are
recorded in the books taking into consideration their probable realization, based on
projections of future results prepared based on internal assumptions and future economic
scenarios that may, accordingly, not materialize as expected.
Deferred tax assets (including tax loss carryforwards of R$30,581) are expected to be
realized in the amount of R$47,209 within one year and R$584,787 after one year and
realization of deferred tax liabilities is expected to occur after one year. At December 31,
2015, the present value of the deferred tax assets, considering their expected realization, is
R$385,778.
Since the income tax and social contribution base arises not only from the profit that may be
generated, but also from the existence of nontaxable income, nondeductible expenses, tax
incentives and other variables, there is no immediate correlation between BM&FBOVESPA
net income and the income subject to income tax and social contribution. Therefore, the
expected use of tax assets should not be considered as the only indicator of future income of
BM&FBOVESPA.
The balance of goodwill that is deductible for income and social contribution tax purposes
amounts to R$3,156,980 at December 31, 2015 (R$4,774,932 at December 31, 2014).
The realization of the deferred tax liabilities will occur as the difference between the tax base
of goodwill and its carrying amount is reversed, that is, when the carrying amount of the asset
is either reduced or settled.

77

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

19. Income and social contribution taxes (Continued)


c)

Reconciliation of income tax and social contribution expense


Reconciliation of the income tax and social contribution amounts recorded in P&L (Company
and consolidated) and their respective amounts at statutory rates is as under:
BM&FBOVESPA
2015
2014
Continuing operations
Discontinued operations
Income before income taxes

2,800,221
2,800,221

Income tax and social contribution before additions


and exclusions computed at the statutory rate of 34%

1,642,148
(7,692)
1,634,456

2,807,222
2,807,222

1,646,680
(7,807)
1,638,873

(952,075)

(555,715)

(954,455)

(557,217)

Additions:
Stock Option Plan
Nondeductible expenses - permanent
Dividends received abroad
Income abroad
Adhesion to Refis

(44,119)
(94)
(14,056)
(29,860)
(109)
-

(177,812)
(9,794)
(35,866)
(81,020)
(51,132)

(41,774)
(94)
(11,711)
(29,860)
(109)
-

(175,900)
(9,794)
(33,954)
(81,020)
(51,132)

Exclusions:
Equity pickup
Interest on equity

398,541
52,070
346,471

76,100
76,100
-

(330)

Other

(597,983)

Income and social contribution taxes

d)

Consolidated
2015
2014

24
(657,403)

392,795
46,324
346,471

72,134
72,134
-

(330)
(603,764)

24
(660,959)

Taxes recoverable and prepaid


Taxes recoverable and prepaid are as follows:
Description

BM&FBOVESPA
2015
2014

2015

2014

Prepaid IRPJ/CSLL current year


IRRF Financial investments - current year
IRPJ and CSLL tax losses - prior years
Recoverable taxes paid abroad
PIS/COFINS recoverable
Other taxes

7,580
66,010
39,987
53,551
1,618
6,261

28
73,407
2,654
56,260
27,645
6,150

7,580
66,010
39,987
53,551
1,619
6,264

447
73,407
2,654
55,841
27,645
6,160

175,007

166,144

175,011

166,154

Total

78

Consolidated

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

19. Income and social contribution taxes (Continued)


e)

Transitional Taxation Regime (RTT)


Revenue Procedure No. 1397, published September 16, 2013, and Law No. 12973/2014,
published May 13, 2014, as passed from Executive Order No. 627/2013, significantly
changed the federal tax regulations, especially insofar as they refer to the adjustments
required for termination of the Transitional Taxation Regime introduced by Law No. 11941, of
May 27, 2009. Law No. 12973/2014 will be effective from calendar year 2015 (article 119),
with an option for early adoption as of calendar year 2014 (article 75).
Based on management's analysis on the potential tax impacts from the new provisions of Law
No. 12973/2014, BM&FBOVESPA opted for adopting the provisions of articles 1, 2 and 4 to
70th of said Law for calendar year 2014, under the terms and conditions established in the
regulation issued by Brazils IRS.

20. Revenue
BM&FBOVESPA
2015
2014
Trading and/or settlement system - BM&F
Derivatives
Foreign exchange
Assets

2015

Consolidated
2014

1,074,546
1,053,513
20,909
124

866,595
850,607
15,988
-

1,074,531
1,053,513
20,894
124

866,577
850.607
15.970
-

Trading and/or settlement system - Bovespa


Trading trading fees
Transactions clearing and settlement
Other

903,016
146,645
734,866
21,505

977,374
162,620
793,493
21,261

903,016
146,645
734,866
21,505

977,373
162,620
793,493
21.260

Other revenue
Securities lending
Securities listing
Depository, custody and back-office
Trading participant access
Vendors quotations and market information
Banco BM&FBOVESPA financial intermediation and
bank fees
Other

435,041
103,203
50,058
130,829
39,493
98,434

364,600
81,203
47,445
117,089
39,333
70,032

481,300
103,203
50,058
130,829
39,493
98,434

402,502
81,203
47,445
117,089
39,333
70,032

13,024

9,498

35,161
24,122

27,220
20.180

Deductions
PIS and COFINS
Service Tax

(239,137)
(208,062)
(31,075)

(242,213)
(210,591)
(31,622)

(216,019)
(186.770)
(29,249)

Revenue

2,173,466

79

(213,409)
(184,658)
(28,751)
1,995,160

2,216,634

2,030,433

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

21. Sundry expenses


Description

BM&FBOVESPA
2015
2014

Consolidated
2015
2014

Contributions and donations


Sundry provisions (1)
Electricity, water and sewage
Travel
Expenses with entities abroad
Rental
Consumption material
Minimum trading fees BBM
Insurance
Transportation
Discontinued project intangible asset
Incentive program cash market
Other

23,415
15,575
18,437
4,387
3,365
3,367
700
883
1,029
6,463
5,834
3,013

24,860
10,682
10,827
2,765
2,449
2,619
1,084
1,193
848
1,179
2,208
1,889
4,239

23,513
15,624
18,677
4,732
10
3,647
767
884
1,044
6,463
5,834
3,262

24,945
10,776
11,010
3,009
2,868
1,131
1,193
850
1,220
2,208
1,889
4,580

Total

86,468

66,842

84,457

65,679

(1)

Basically refers to the provision for tax, civil and labor contingencies (Note 14) and allowance for doubtful accounts.

22. Financial income (expenses)


BM&FBOVESPA
2015
2014
Financial income
Income from financial assets measured at
fair value
FX gains
Other financial income
Dividends on foreign equity (1)
(-)PIS and COFINS on financial income (2)

Financial expenses
Interest and exchange variation on foreign
debt
FX gains
Other financial expenses

Financial income

Consolidated
2015
2014

466,232
91,943
21,469
174,769
(13,947)
740,466

317,408
26,008
15,043
358,459

471,552
91,942
21,513
174,769
(14,069)
745,707

320,667
26,008
15,086
361,761

(138,064)
(85,915)
(11,383)
(235,362)

(96,923)
(27,843)
(27,627)
(152,393)

(138,064)
(85,916)
(12,931)
(236,911)

(96,922)
(27,836)
(28,846)
(153,604)

505,104

206,066

508,796

208,157

(1) Given the disqualification of the significant influence and consequent discontinued use of the equity method of accounting for CME
Group (Note 7), dividends received have been recorded as financial income in the income statement.
(2) From July 2015, pursuant to Decree No. 8426, of April 1, 2015, which reinstated PIS and COFINS rates levied on financial income
earned by legal entities subject to the related noncumulative tax computation.

80

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

23. Segment information


We present below consolidated information based on reports used by the Executive Board for
making decisions, comprising the following segments: Bovespa, BM&F, Institutional and
Corporate Products. Due to the nature of the business, the Executive Board does not use any
information on assets and liabilities by segment to support decision-making.
BM&F Segment
The BM&F segment covers the main steps of the cycles of trading and settlement of securities
and contracts: (i) trading systems in an environment of electronic trading and trading via internet
(WebTrading), (ii) recording, clearing and settlement systems, integrated with a risk management
system to ensure the proper settlement of the transactions recorded, and (iii) custodian systems
for agribusiness securities, gold and other assets.
In addition, this segment includes the trading of commodities, foreign exchange, and public debt,
and services provided by BM&FBOVESPA Bank.
Bovespa Segment
Bovespa Segment covers the various stages of the trading cycle of fixed and variable income
securities and equity securities on stock and over-the-counter (OTC) markets. BM&FBOVESPA
manages the national stock exchange and OTC markets for trading of variable income securities,
including stocks, stock receipts, Brazilian Depository Receipts, stock derivatives, subscription
warrants, various types of closed-end investment fund shares, shares representing audiovisual
investment certificates, non-standard options (warrants) to purchase and sell securities and other
securities authorized by the CVM.
Institutional and Corporate Products Segment
Mainly refers to services provided as depository of securities, as well as lending and listing of
securities (registration in BM&FBOVESPA systems of issuers of securities for trading), data
services and classification of commodities, and technological products.

81

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

23. Segment information (Continued)


Institutional and Corporate Products Segment (Continued)
2015
Consolidated
Institutional and
Corporate Products
Segment
481,300
(44,852)
436,448

BM&F
Segment
1,074,531
(105,263)
969,268

Bovespa
Segment
903,016
(92,098)
810,918

Adjusted expense
Depreciation and amortization
Stock Options and Stock Grant
Allowance for doubtful accounts and other
provisions
Transfer of fines

(212,209)
(45,030)
(35,123)

(204,355)
(40,860)
(31,961)

(197,785)
(24,967)
(31,898)

(614,349)
(110,857)
(98,982)

(7,959)
-

(10,356)
-

(2,662)
(5,491)

(20,977)
(5,491)

Total expenses

(300,321)

(287,532)

(262,803)

(850,656)

668,947

523,386

173,645

Trading and/or settlement system


Deductions
Revenue

Income (loss)

Total
2,458,847
(242,213)
2,216,634

1,365,978
136,245

Equity pickup

(1,662,681)

Impairment of assets
Discontinued use of equity method

1,734,889

Proceeds from investment disposal

723,995

Financial income (expense)

508,796
(603,764)

Income and social contribution taxes


Net income for the year

668,947

82

523,386

173,645

2,203,458

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

23. Segment information (Continued)


Institutional and Corporate Products Segment (Continued)
2014
Consolidated
Institutional and
Corporate Products
Segment
402,502
(33,664)
368,838

BM&F
Segment
866,577
(84,658)
781,919

Bovespa
Segment
977,373
(97,697)
879,676

Adjusted expense
Depreciation and amortization
Stock Options
Allowance for doubtful accounts and other
provisions
Transfer of fines
Other

(211,063)
(52,308)
(10,175)

(191,526)
(39,818)
(9,164)

(183,505)
(27,007)
(9,466)

(586,094)
(119,133)
(28,805)

(4,499)
(2,405)
(19,385)

(5,893)
(3,023)
(24,364)

(4,102)
(703)
(5,664)

(14,494)
(6,131)
(49,413)

Total expenses

(299,835)

(273,788)

(230,447)

(804,070)

482,084

605,888

138,391

Trading and/or settlement system


Deductions
Revenue

Income (loss)

Total
2,246,452
(216,019)
2,030,433

1,226,363

Equity pickup

212,160

Financial income (expense)

208,157

Income and social contribution taxes

(660,959)

Discontinued operations (Note 24)


Net income for the year

(7,807)
482,084

605,888

138,391

977,914

24. Discontinued operations


BM&FBOVESPA had been considering its interest in Bolsa Brasileira de Mercadorias over the
past few years and determined that the assumptions regarding the expected supplementation of
activities performed by Bolsa Brasileira de Mercadorias in the commodities market and activities
performed by BM&FBOVESPA (then BM&F) in the futures market would represent opportunities
to both entities did not materialize. In this context, BM&FBOVESPA put forward some proposals
for discussion with the Board of Directors of Bolsa Brasileira de Mercadorias with a view to
realigning the structure of Bolsa Brasileira de Mercadorias. Given that those proposals did not
evolve as expected by BM&FBOVESPA, it decided to dispose of its interest in Bolsa Brasileira de
Mercadorias, having ceased to act in the capacity of Founding Member.

83

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

24. Discontinued operations (Continued)


This decision was informed to the Extraordinary General Meeting held by Bolsa Brasileira de
Mercadorias on December 16, 2014, when the matter was deliberated upon and approval was
given to the conditions required of BM&FBOVESPA to cease to act in the capacity of Founding
Member and to waive its rights and duties. Moreover, an agreement was entered into by Bolsa
Brasileira de Mercadorias and BM&FBOVESPA, whereby the former irrevocably and
unconditionally relieves the latter from its obligations as a member, and from any responsibility for
the liabilities and contingencies of Bolsa Brasileira de Mercadorias, whether currently known or to
exist in the future, except in case of malicious intent or gross negligence by BM&FBOVESPA, fully
acknowledged in a final judgment. With the waiver to the equity securities issued by Bolsa
Brasileira de Mercadorias owned by BM&FBOVESPA and related disassociation from Bolsa
Brasileira de Mercadorias, BM&FBOVESPA recognized the investment disposal in the amount of
R$ 7,539, based on its book value as at November 30, 2014.
The results from discontinued operations for 2014 are summarized below:
Result from discontinued operations
BBM
11/30/2014
Operating revenue
Members contributions - BM&FBOVESPA
Members contributions - Other

3,326
1,094
1,132

Net operating revenue

5,552

General and administrative expenses


Depreciation and amortization
Provision for contingencies/Allowance for
doubtful accounts
Financial income
Deficit for the period

(6,366)
(110)
(302)
958
(268)

Investment disposal

(7,539)

Net income from discontinued


operations, net of taxes

(7,807)

84

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

24. Discontinued operations (Continued)


Balance sheet
BBM
11/30/2014
Assets
Current assets
Noncurrent assets
Total

15,089
1,488
16,577

Liabilities and equity


Current liabilities
Noncurrent liabilities
Equity

2,103
398
14,076

Total

16,577

Cash flow from discontinued operations


BBM
11/30/2014
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Net cash generated

119
(25)
(92)
2

25. Other Information


a)

BM&FBOVESPA seeks advice from insurance brokers to ensure that it has a sufficient level
of insurance cover for its size and operations. The main coverage in its insurance policies at
December 31, 2015 is shown below:
Insurance line

Amounts insured

Amounts at risk, property damages, buildings and equipment


Civil liability
Works of art

85

569,869
134,000
16,133

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros


Notes to financial statements (Continued)
December 31, 2015 and 2014
(In thousands of reais, unless otherwise stated)

25. Other information (Continued)


b)

Associao Profissionalizante BM&FBOVESPA (APBM&FBOVESPA) is a not-for-profit entity


engaged in promoting educational, social welfare and sports activities. The sports-related
initiatives included offering support to the BM&FBOVESPA Athletics Club and sponsorship to
athletes (these activities were incorporated by specific association, known as Clube de
Atletismo BM&FBOVESPA in July 2013). APBM&FBOVESPA is supported by the
BM&FBOVESPA Institute, a not-for-profit association that has BM&FBOVESPA as its
founding member.
APBM&FBOVESPA figures as a defendant in legal and administrative proceedings involving
tax matters, classified as probable loss, most of which are related to challenges by Brazilian
IRS about social security contributions allegedly owed by APBM&FBOVESPA on payments
made to third parties and on sponsorships to athletes of the BM&FBOVESPA Athletics Club.
If the outcome of these proceedings is not favorable to APBM&FBOVESPA, BM&FBOVESPA
may have to provide funds to maintain the activities of such club. The amount involved in said
proceedings at December 31, 2015 is R$18,912.

86

Audit Committee Report


Initial information
The Audit Committee of BM&FBOVESPA S.A. is the statutory advisory body directly linked to
the Board of Directors. It consists of two directors and four other members, one of whom is a
financial specialist and all of them independent, appointed every two years by the directors,
who take into account the criteria provided for in the applicable legislation and regulations, as
well as best international practices.
Duties and responsibilities
The Management of BM&FBOVESPA S.A. (hereinafter referred to as BM&FBOVESPA) is
responsible for defining and implementing processes and procedures aimed at collecting data
for preparing the financial statements, in compliance with corporate legislation, the
accounting practices adopted in Brazil and the rules and applicable regulations issued by the
Brazilian Securities Commission.
Management is also responsible for the internal control processes, policies and procedures
that ensure the integrity of the assets, timely recognition of liabilities and the elimination or
reduction of the companys risk factors to acceptable levels.
The Department of Internal Controls, Compliance and Corporate Risk is responsible for
overseeing the respective environments of these three areas of the company. Furthermore, it
is in charge of providing information to support the work of the Audit Committee and the Risk
Committee of BM&FBOVESPA.
The duties of the internal audit department are to verify the quality of the internal control
systems of BM&FBOVESPA and compliance with the policies and procedures defined by the
Management, including those employed when preparing the financial reports.
The independent auditors are responsible for examining the financial statements so as to issue
an opinion regarding the latters compliance with the applicable rules. As a result of their work,
the independent auditors issue reports with recommendations about accounting procedures
and internal controls, without prejudice to other reports it is charged with preparing, such as
special quarterly reviews.
The Audit Committees functions are described in its Internal Rules and Regulations (available
on www.bmfbovespa.com.br, tab "Relaes com Investidores", "Governana Corporativa" in
"Estatutos, Cdigos e Polticas"), which provides for the duties defined in CVM Instruction
509/11.
The Audit Committee bases its judgments and forms its opinions taking into account the
information received from the Management, the representations made by the Management
about information systems, financial statements and internal controls, and the outcome of the
work of the Department of Internal Controls, Compliance and Corporate Risk, the Internal
Auditors and the Independent Auditors.

Activities of the Audit Committee


The Audit Committee convened at 9 ordinary and 1 special session, at which there were 96
meetings with members of the Executive Board, internal and independent auditors and other
stakeholders. As a member of the Board of Directors, the Committee Coordinator narrates
relevant facts to the Board of Directors whenever applicable.
Meetings with the Central Bank of Brazil
During the Central Banks inspection of the company in 2015, the Audit Committee met with
the leadership of the inspection team, and discussions involved primarily:
- corporate governance issues;
- information technology controls and procedures;
- internal controls on corporate risks;
- operation of the Audit Committee.
Meetings with the Executive Board
The Committee met with the Ombudsman and with the executive officers and their respective
teams to discuss the structures, the workings of the respective areas, their work processes,
occasional shortcomings in the control systems and the enhancement plans.
Among the subject matters requiring special attention from the Committee, the highlights
were:
IT and Information Security During 2015, the Audit Committee continued to give priority
attention to the advances in information technology processes and controls and the mediumand long-term action plans.
A meeting with the Executive Officer for Information Technology and Security and his team
discussed matters involving information security processes, particularly improvements related
to access management and preventing information leakage. With the Audit Department, the
Committee discussed aspects involving Overarching Controls on Information Technology,
including Information Security.
The Committee was informed of the results of the business continuity tests carried out during
2015 and monitored by internal audit department.
Financial Management and Reports Discussions with the Financial and Corporate
Department, the internal auditors and, when applicable, specialized outside consultants were
also dedicated to aspects concerning the evaluation of the premium in BOVESPA Holding and
the investment in CME, particularly the accounting treatment regarding the partial sale of
BVMFs investment in this company.

The draft Reference Form, especially its section on corporate risks, was reviewed and
discussed with Management.
Contingencies Joint discussions with Legal Department, Financial Department, the
Independent Auditors and the lawyers responsible involved the principal administrative and
legal proceedings and the respective judgments exercises with regard to the probability of
success.
Anticorruption Law and Anti-Money Laundering (AML) Discussions with the Legal Office and
with the Executive Office for Operations, Clearing and Depository involved aspects relating to
the Anticorruption Law and Anti-Money Laundering (AML)
Human Resources Discussions with Human Resources Department centered on matters
concerning management compensation and benefits, as well as the accounting and tax effects
of the new stock grant plan.

Internal Controls and Corporate Risks


The Committee monitored the works developed for dealing with compliance, and will go on
monitoring progress of this structure and its activities in 2016 through to completion of the
data survey and implementation stages.
The Committee reviewed the Corporate Risks Report that meets the requirements of CVM
Instruction 461/07 and the Internal Controls Report drawn up in accordance with section 3 of
CMN Resolution 2554/97.
The Committee regularly receives a summary of the notifications forwarded by the Regulatory
Agencies and the Judiciary concerning matters within the Committees scope.
The Audit Committee, with the support of Internal Audit, became aware of the policies and
procedures on related party transactions, use of the companys assets by its management and
expenses incurred by management on behalf of the company, and no cases of non-compliance
were observed.
The Audit Committee is of the opinion that the procedures intended to raise the efficacy of the
internal control and risk management processes are appropriate.

Independent Auditors
The Committee met with the independent auditors to gather information about the policy for
maintaining independence when executing their work and decided that there were no conflicts
of interest in the work, over and above auditing the financial statements, which the Executive
Board may occasionally request. Also discussed by the Audit Committee and the independent

auditors were: risk analysis of the audit they carried out, work planning in order to establish
the nature, time and extent of the principal audit procedures chosen, possible attention points
identified and how these were to be audited. In addition, discussions with EY covered the
results of the audit it had carried out on Central Counterparty Risk and IT.
Upon conclusion of the special review work on the Quarterly Information (ITR) during 2015,
the main conclusions were discussed with the auditors. At the start of the preliminary and final
audit work on December 31, 2015, specific meetings were held to revisit the audit risk areas,
the respective procedures and the main findings.
All points deemed relevant were covered so as to assess the potential risks involving the
financial statements and how to mitigate those risks using audit and control procedures.
In January 2016, the Committee carried out a formal evaluation of the independent auditors,
having considered the quality and the volume of information provided sufficient.
No situations were detected that might compromise the independence of the external
auditors.

Internal Audit
At the end of 2015, the Internal Audit Office was given the Quality Certification by Instituto dos
Auditores Internos do Brasil (the Institute of Internal Auditors of Brazil), or IIA Brasil.
BM&FBOVESPA S.A. was found to be in compliance with the best practices and highest
international standards for Internal Audit.
The Audit Committee has technical oversight of the Internal Audit. In 2015 it approved the
Annual Internal Audit Plan and its modifications, and periodically accompanied its progress.
The audit reports were submitted and discussed with the Committee, which considers the
scope, methodology and results of the work carried out satisfactory.
The Audit Committee continues to monitor the Action Plans arising from the audit points
raised in all areas that were audited.
In January 2016, the Committee formally evaluated the internal audit, at which time significant
improvements in the quality of the work carried out were identified.
Audit Committee Recommendations
During 2015 the action plans resulting from previous years recommendations were properly
implemented, duly monitored by the Audit Committee.

Conclusion
The Audit Committee asserts that all relevant facts which it was given in order to understand
the work carried out and described in this report are properly disclosed in the Management
Report and in the audited financial statements as at December 31, 2015, recommending their
approval by the Board of Directors.
So Paulo, February 18, 2016
Nelson Carvalho Committee Coordinator, Financial Specialist and Representative of the
Board of Directors of BM&FBOVESPA S.A.
Luiz Antnio de Sampaio Campos Representative of the Board of Directors of BM&FBOVESPA
S.A.
Paulo Roberto Simes da Cunha
Pedro Oliva Marcilio de Sousa
Srgio Darcy da Silva Alves
Tereza Grossi

(A free translation of the original in Portuguese)

CETIP S.A. Mercados Organizados


Financial Statements as at
December 31, 2015

CETIP S.A. Mercados Organizados


Financial statements at
December 31, 2015

Contents

Managements Report

3-24

Independent auditors report on the individual and consolidated financial statements

25-26

Individual and consolidated Balance sheets

27

Individual and consolidated Statements of income

28

Individual and consolidated Statements of comprehensive income

29

Statements of changes in shareholders equity

30

Individual and consolidated Statements of cash flows

31

Individual and consolidated Statements of value added

32

Notes to the financial statements

33-89

Report of the Audit Committee

90-92

CETIP S.A. Mercados Organizados


Financial statements at
December 31, 2015

Managements report
Dear Shareholders,
We submit to your appreciation the Financial Statements of CETIP S.A. Mercados Organizados
(CETIP or Company) relating to the fiscal year ended December 31, 2014, together with the
independent auditors' report of the financial statements.
All the Companys operating and financial information below, except when otherwise indicated,
is presented in million reais based on the individual financial statements prepared according to
the generally accepted accounting principles in Brazil, including the accounting pronouncement
established by the Accounting Pronouncement Committee (CPC) and according to the
International Financial Reporting Standards (IFRS) established by the International Accounting
Standards Board (IASB).
Additional information regarding the Companys operating and financial performance are
available on the internet at (www.cetip.com/ir).

MESSAGE FROM THE MANAGEMENT TEAM


During 2015, we have faced an extremely challenging macroeconomic environment, with lower
economic activity growth, including credit contraction in real terms, higher inflation, rising
interest rates, strong currency depreciation and greater volatility of asset prices in general,
what significantly impacted our businesses.
Such scenario tested and demonstrated, once more, the resilience of Cetips business model.
Our net revenue reached R$ 1.4 billion in 2015, 11.5% higher than in 2014, and our EBITDA
totaled R$ 790.3 million, a 10.5% growth as compared to previous year. Our operating cash flow
generation grew 26.3% in 2015, a meaningful result that allowed us to keep our commitment to
maximize shareholder value generation, distributing R$ 423.0 million in dividends and interest
on own capital and destining R$ 143.1 million to a share buyback program, without jeopardizing
the strength of our balance sheet, which ended the year with a net leverage equivalent to 0.3x
EBITDA.
Our Securities Unit had an exceptional year, with revenue growing by 20.8%. This result was
driven by a significantly higher derivatives volume, a reflection of the years sharp currency
volatility, and b