February 15, 2011 / 11:21 AM / in 7 years

Bats eyes Brazil as merger wave sweeps exchanges

* U.S. exchange teams up with fund manager Claritas

* Bats looking to create a new Brazilian stock market

* Pushing ahead with purchase of Chi-X Europe

By Luke Jeffs

LONDON, Feb 15 (Reuters) - U.S. exchange Bats Global Markets, in talks to buy its main European rival Chi-X Europe, might launch a stock market in the key South American market of Brazil as a wave of consolidation sweeps the sector.

Bats said on Tuesday it had teamed up with Brazilian fund manager Claritas and law firm FreitasLeite to explore whether to move into South America’s leading economy with a new national stock exchange with clearing and settlement services.

“Today’s announcement serves as an important step in exploring the unique opportunity that exists in the Brazilian market, which has many of the same frictions we have witnessed and overcome in the U.S. and Europe,” said Ken Conklin, a senior Bats vice president.

The move, which throws down the gauntlet to Brazil’s BM&FBovespa BVMF3.SA, the world’s fourth-largest financial exchange, was the latest by an international exchange in what has been a frenetic period in the sector.

Deutsche Boerse DB1Gn.DE and NYSE Euronext NYX.N said last week they planned to merge to create the world’s largest exchange one day after the London Stock Exchange (LSE) LSE.L announced its talks to buy Canadian group TMX X.TO.

A deal was expected on Tuesday. [ID:nSGE71E027]

The talks underline how established national players are trying to fend off increasingly popular new rivals such as Bats.

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Graphic on exchanges r.reuters.com/gut87r

EXCLUSIVE-BM&FBovespa eyes China, India [ID:nSGE71E00P]

TAKE A LOOK on exchange mergers [ID:nN10158463]

FACTBOX-Competition among exchanges [ID:nN09170665]

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Carlos Ambrosio, a senior partner at Claritas, said Brazil’s capital markets were ready for the best technology, adding: “There is certainly no one better than Bats for the job”.

Bats, which said in December it was in exclusive talks to buy Chi-X Europe, said last Friday it had extended the negotiating period to try and nail a deal that would propel it into the second place in Europe behind the LSE.

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