* CFO sees better-than-expected earnings on volume growth
* BM&FBovespa to expand high frequency services in Nov.
* Shares rise on expectations for earnings gains (Recasts, adds comments, trading data)
By Elzio Barreto
SAO PAULO, Nov 11 (Reuters) - Brazil’s BM&FBovespa (BVMF3.SA), the world’s fourth-largest exchange operator by market value, sees better-than-expected stock and derivatives trading volumes in 2009 helping to stoke earnings, Chief Financial Officer Carlos Kawall said on Wednesday.
Average trading volumes for stocks reached a record in October, while a recovery in derivatives trading underscores a “very positive” future for the company, he added.
“What we see internally today is that the year is clearly better than what we imagined in terms of volumes and, therefore, in terms of results,” Kawall said in a conference call with journalists.
BM&FBovespa shares rose 2.1 percent to 12.72 reais in early afternoon trade, compared with a 1.2 percent gain in the benchmark Bovespa index .BVSP on optimism over future earnings. The shares have more than doubled in price so far in 2009, compared with a 78 percent gain in the Bovespa index.
The company reported late on Tuesday its third-quarter profit rose less than expected because of a slump in revenue from derivatives trading that offset a decline in operating costs. [ID:nN10327547]
In a report on Wednesday, Credit Suisse reiterated a neutral rating for BM&FBovespa stock, saying the stock was already pricing in an increase in trading volumes in 2010.
BM&FBovespa has benefited from a surge in volumes from high frequency and algorithmic trading, but revenue edged lower as it cut prices to lure more investors into Brazil’s stock and derivatives markets.
Average trading at the Sao Paulo stock exchange surged 35.9 percent in the third quarter from a year earlier, but revenue firmed only 0.3 percent year on year to 267.5 million reais. Trading of derivatives dropped 8.3 percent, pushing revenue 18.8 percent lower.
Kawall expects volumes to rise further as the company expands services for high frequency and algorithmic traders in stocks in November. The company has cut delays in data transmission, or latency, since the beginning of the year and expects it to fall to 10 milliseconds by the end of 2009 from 16 milliseconds in October, making it easier for high frequency investors to trade in Brazil, he added.
“We see a strong growth potential from those investors,” he added. “They didn’t have the ideal environment around here, particularly because of the high latency, but we have changed that and now the environment is better.” (Editing by Dave Zimmerman)