Message from the Chairman of the Board

1.1

Message from the CEO

1.1

Arminio Fraga

Chairman, Board of Directors, BM&FBOVESPA

Growth depends on investment, state efficiency and improvements in education. In the near term governments can provide a push in this direction. But it is an illusion to believe that only these factors lead to sustainable and lasting growth. Much more is required. In addition to all this, governments must address major long term issues in order to assure the existence of ideal conditions to stimulate investment, without which growth is impossible without inflation. As far as can be seen, this balance between short and long term policies does not exist in the most important economies. The United States is recovering and has the worlds most efficient, creative and flexible economy. It must nevertheless implement reforms to deal with the budget deficit and public debt, which is something the political environment currently prevents. Europe has proved incapable of acting ahead of events and of reacting convincingly. It was foreseeable that Europe would experience difficulties before completing its union, which so far is a monetary and customs union, but neither fiscal nor political. The answers will be gradual and hard to execute. Brazil is in a healthy position and much better prepared than it would have been in the past to face any worsening of the global crisis. Our economy is comparatively closed, which is a negative factor that is nonetheless an advantage at an unfavorable time such as the present. Our floating exchange rate reduces the probability of speculative attacks on the currency succeeding. Our international reserves amount to more than US$350 billion. The financial system is well managed. We will not be able to avoid the effects of a global economic slowdown completely, but we can mitigate them. Brazil has to live with its hits and its misses. A number of measures will be required to assure sustained growth and enhanced competitiveness. First, a great deal more must be invested in physical and intellectual capital, as well as basic education. Second, government must be more efficient. Development cannot be engineered without it.

Taking good care of capital

The question is not the size of the state - it can be small, medium or large as long as it is efficient. Third, it is essential to create conditions for lower interest rates. Fourth, the cost of doing business in Brazil must be reduced. We welcome the signs that President Dilma Rousseffs administration is focusing on meritocracy. We are also glad to see the shift in macroeconomic policy toward more fiscal austerity and more leeway for monetary easing so that interest rates can fall. The emphasis on management and regulatory conditions will make it possible to increase investment in infrastructure, laying the foundations for faster and more sustainable economic growth. Analogously, BM&FBOVESPA has been playing its part. Sustainability is strategic for the company, as much in its own business as in the financial and capital markets generally. BM&FBOVESPA is also committed to socio-environmental responsibility and participates in initiatives such as the United Nations Global Compact, under which companies and institutions work to promote sustainable global economic growth and social inclusion, as one of many fronts on which the Exchange is active to ensure that its business grows continuously. Moreover, the Exchange has been an instrument for accumulation and for risk mitigation. It is a self-regulatory organization and offers society an example of best practice in corporate governance, transparency, and constant concern with an education that fosters healthier personal finance habits among Brazilians. It has also invested substantially in efficiency and in the capacity of its infrastructure and systems. It is increasingly cited abroad as an example of the Brazilian model to be followed in areas such as risk management. It is essential for us to take good care of the nations capital. In every detail. In the markets, in companies and in government. Arminio Fraga Chairman, Board of Directors, BM&FBOVESPA

The Exchange for all Brazilians

Edemir Pinto

Chief Executive Officer, BM&FBOVESPA

BM&FBOVESPA launched several initiatives in 2011 to diversify revenue sources and strengthen its competitive position, particularly through investment in technology. One of the highlights of the year was the launch of the BM&FBOVESPA PUMA Trading System, a multi-asset electronic trading platform developed jointly with CME Group to enhance processing capacity, reduce latency to very low levels and deliver new functionalities. The first phase of implementation of the derivatives module was completed in 2011. Implementation of the equities module is scheduled for 2012. We also laid the foundations for clearinghouse integration and development of the CORE system, which aims to integrate risk management for all market participants. We began reformulating our systems to offer the best solution for the overthe-counter and bond markets. In terms of physical infrastructure, we continued to build our new data center. Thanks to investments amounting to R$520 million in recent years, the Exchange was once again able to weather in security the effects of the deepening global crisis, especially the turbulence in Europe. The sovereign debt crisis and the strengthening of Brazils position were central in debates at the Fifth International Financial & Capital Markets Conference in August, held by the BM&FBOVESPA Institute of Education in accordance with its commitment to education and market transparency. We spread knowledge to millions of people through events, meetings, radio and television programs, the internet and social networks, confirming the Brazilian Exchanges position as the largest in its segment worldwide in terms of educational activities. Transparency was recognized for the third consecutive year when ANEFAC, FIPECAFI and Serasa Experian awarded BM&FBOVESPA the Transparency Trophy. The award goes to companies that publish clear financial statements, disclose high-quality

information and act with integrity. In addition, for the second consecutive year BM&FBOVESPA was considered the best company in corporate governance by Capital Aberto magazine. Along these same lines, this is our second annual report with non-financial as well as financial information, encouraging analysts to include socioenvironmental and corporate governance issues in their assessments of stock prices and investment decisions. BM&FBOVESPA has also reaffirmed its participation in initiatives such as the United Nations Global Compact, thus contributing to the sustainable growth of the global economy. In market internationalization, the company took a historic step by formalizing agreements with exchanges in other emerging-market countries, to begin trading a derivatives index with the ultimate goal of developing a range of cross-listed products. It is worth mentioning that exchanges in the BRICS have accounted for more than 18% of total world trading in derivatives contracts since June 2011, with an aggregate market cap of US$9 trillion. This strategy opens up countless opportunities that can be explored to augment the development of the markets involved. For 2012, we remain confident of the traction provided by the social mobility experienced in Brazil and the ascent of the middle class. The significance of the capital markets for investors and entrepreneurs is steadily increasing, and with it the role of BM&FBOVESPA as the Exchange for all Brazilians. Edemir Pinto Chief Executive Officer

ANUAL

RELATRIO

Contents
1 PROFILE 2 STRATEGIES AND RISK MANAGEMENT 3 ABOUT THIS REPORT 4 CORPORATE GOVERNANCE 5 HUMAN CAPITAL 6 SUSTAINABILITY 7 STRENGTHENING THE MARKET 8 MARKET EDUCATION AND PROMOTION 9 ENVIRONMENTAL PERFORMANCE 10 OPERATIONAL AND FINANCIAL PERFORMANCE FINANCIAL STATEMENTS GRI TABLE OF CONTENTS 8 12 18 20 29 36 47 50 56 61 73 137

Profile

2.7 2.8

BM&FBOVESPA: Renowned transparency and efficiency.

One of the worlds largest exchanges BM&FBOVESPA Bolsa de Valores, Mercadorias e Futuros S.A. was founded in 2008, when BM&F and BOVESPA merged to form one of the worlds largest exchanges and the leading exchange in Latin America. 2.1 BM&FBOVESPA is a public company and its stock trades under ticker symbol BVMF3 on the Novo Mercado, a special listing segment for companies committed to best practices in corporate governance. BM&FBOVESPA is also tracked by the Ibovespa, IBrX-50 and ITAG indexes. 2.6

Headquartered in the city of So Paulo, BM&FBOVESPA has representative offices in the United States (New York), United Kingdom (London) and China (Shanghai), offering local market participants support in activities with investors from overseas and relationships with regulators as well as publicizing its products and governance practices to potential customers. 2.4 2.5 Exchange and Over-the-Counter (OTC) markets 2.2 2.3 With operations in two major market segments, BM&F (derivatives) and BOVESPA (equities), the company develops, implements and provides systems for the trading of stocks, corporate and government bonds, financial derivatives, agricultural commodities and spot foreign exchange, among others. In the BOVESPA segment, BM&FBOVESPA offers several mechanisms for trading in the exchange and over-the-counter (OTC) markets, where the wide array of equities and fixed-income securities available includes stocks, stock receipts, Brazilian depositary receipts (BDRs) and investment funds. In the BM&F segment, BM&FBOVESPA manages electronic trading in derivatives contracts, spot foreign exchange, and public debt securities and assets, among others, as well as registration, clearing and settlement, integrated with a robust and sophisticated risk management system designed to assure optimal performance. In addition to providing the market with these products and services, BM&FBOVESPA acts as a central depository for assets and securities, publishes price quotations, manages securities lending transactions, produces market indexes, develops software, and fosters technological innovation.
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Profile

Registration, clearing, settlement and risk management are performed by BM&FBOVESPAs clearinghouses, which are of internationally recognized quality and integrated with BM&F Settlement Bank, assuring optimal functioning of the markets. Through its clearinghouses BM&FBOVESPA acts as central counterparty for all transactions in its derivatives, equity and fixed-income markets, including cash and forward trades, options, futures, and securities lending. BM&FBOVESPA also has its own market surveillance arm, BM&FBOVESPA Market Supervision (BSM), which assures compliance by participants and by the Exchange with the applicable legislation, rules and regulations. Partnership with CME Group and dialogue with exchanges in Asia and other Latin American countries increasingly strengthen the internationalization strategy pursued by BM&FBOVESPA and help facilitate access to markets. Thanks to the strength of its Exchange, Brazil is poised to play a leading role in the worlds securities markets. Development for all Besides being the only securities, commodities and futures exchange in operation in Brazil, BM&FBOVESPA also actively promotes the capital markets through financial education programs to raise awareness and disseminate understanding of the importance of saving and long-term investment for national development and personal financial security, and by maintaining special listing segments for companies committed to high standards of corporate governance (Novo Mercado, Level 1, Level 2). BM&FBOVESPA also invests in social programs that focus on the development of communities. Above all, it is strongly committed to sustainability and is a member of the United Nations Global Compact, a strategic policy initiative for businesses around the world to align operations and strategies with internationally accepted core values in the areas of human rights, labor, environment and anti-corruption. In this regard it promotes initiatives grounded in the concept of sustainability, which is an integral part of its products and services. Its business units consistently pursue and foster best practice in the area. These initiatives include development of the Corporate Sustainability Index (ISE), the Carbon Efficient Index (ICO2), and stakeholder relations programs. Technological solutions BM&FBOVESPA develops technological solutions and maintains high-performance systems to assure security, speed, innovation and cost-effectiveness for its customers. The
10

success of the Exchanges activities depends on the continuous improvement and integration of its trading and settlement platforms, as well as its capacity to develop and license the leading-edge technologies required for optimal execution of its functions. A milestone in this regard was the 2011 launch of the BM&FBOVESPA PUMA Trading System, a multi-asset electronic platform developed jointly with CME Group to enhance processing capacity, reduce latency to very low levels and deliver new functionality. The first phase of implementation of the derivatives module was completed in 2011. Implementation of the equities module is scheduled for 2012. Group companies 2.2 2.3 Following BM&FBOVESPAs absorption of BM&F S.A. and Bovespa Holding S.A., the companys equity is now structured as shown below.

The BM&FBOVESPA Group also includes the Rio de Janeiro Stock Exchange, which is not operating currently but is available for seminars, conferences, presentations, training activities, meetings, and other types of institutional event. BM&FBOVESPA had 1,455 employees and 88 interns at end-2011. The companys market value at end-2011 was R$19.4 billion. There were no changes in company size, structure or equity ownership during 2011. 2.9 Transparency and efficiency recognized 2.10 In 2011, for the third consecutive year, BM&FBOVESPA was awarded the Transparency Trophy by the National Association of Finance, Administration and Accounting Executives (Anefac), the Accounting, Actuarial & Financial Research Institute Foundation (Fipecafi) and Serasa Experian in the category Public Companies with Annual Sales of up to R$8 Billion. In addition, for the second consecutive year it won the Best Company for Shareholders prize in the category Corporate Governance, awarded by Capital Aberto magazine. The company ranked first among 100 companies that responded to a questionnaire formulated by Fipecafis Center for Governance Studies, with a score of 8.5 on a scale from zero to 10. BM&FBOVESPA also won the 2011 Exchanges and Brokers World Finance Award for the Best Sustainable Stock Exchange in Latin America from World Finance, a leading financial magazine produced in London. ABRAPP, the Brazilian closed pension fund association, awarded BM&FBOVESPA its 2011 prize for the Best Vehicle for Education on Pension Funds & Finance. It is worth noting that since 2009 the Exchange has placed its educational presentations on personal finance (Educar Finanas Pessoais) at the disposal of pension funds and public employee pension plans (RPPS).

BM&FBOVESPA
BM&FBOVESPA SUPERVISO DE MERCADO BOLSA BRASILEIRA DE MERCADORIAS BANCO BM&F BOLSA DE VALORES DO RIO DE JANEIRO
(COM ESCRITRIO DE REPRESENTAO EM XANGAI)

BM&F USA INC.

BM&FBOVESPA UK LTD.

BM&FBOVESPA Market Supervision is responsible for market surveillance in the securitities segment. It is perfectly attuned to the principles and rules that govern that segment, acting as an ancillary body to the Securities and Exchange Commission of Brazil (CVM) in assuring compliance in the Exchanges markets and in managing the Investor Compensation Mechanism (local acronym MRP). Bolsa Brasileira de Mercadorias (BBM), is a private mutualized organization in which BM&FBOVESPA holds a controlling interest. It manages the input and settlement of trades in commodities, goods and services for physical delivery as well as securities representing these products in the primary and secondary markets and in cash, forward and options modalities. In order to meet the needs of BM&FBOVESPAs customers and the markets it manages, Banco BM&F de Servios de Liquidao e Custdia S.A. - a wholly-owned subsidiary also known as the BM&F Settlement Bank - centralizes custody of assets pledged as collateral and margin requirement, for the Exchanges clearinghouses and for holders of access rights. BM&F USA Inc., also a wholly-owned subsidiary, is headquartered in New York with a representative office in Shanghai and a full branch in London. Its mission is to represent BM&FBOVESPA overseas, build relationships with other exchanges and with regulatory bodies, assist in prospecting new customers, and analyze strategic alliances.

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Strategies and Risk Management

Constant investment drives the expansion of BM&FBOVESPAs operating capacity and markets.

1.2

Regulatory infrastructure, technology and risk management Over the last ten years Brazils financial and capital markets have consolidated their position as a global beacon in terms of efficiency, security and transparency for investors and other market participants. This leadership derives from the breadth and depth of the regulatory framework developed by the Brazilian monetary authorities, and from continuous investment in market process and technological infrastructure upgrades by BM&FBOVESPA, which is proud to be one of the pillars of this transformation in the Brazilian markets. Investment in technological infrastructure The best expression of BM&FBOVESPAs commitment to the sustainable development of its markets is its continuous and substantial investment to upgrade its technological infrastructure in unremitting pursuit of the state of the art in every respect, including: Electronic trading platform Clearing and settlement systems Risk and collateral management systems Central securities depository

BM&FBOVESPA will have invested some R$1 billion to modernize and upgrade its technological infrastructure. Of this total, nearly half was disbursed to 2011, and some R$230 million will be disbursed in 2012. Part of this investment will result in: migration (scheduled for second-half 2012) from Mega Bolsa, the equities trading system, to the BM&FBOVESPA PUMA Trading System, a new platform developed jointly with CME Group; unification of the Exchanges clearinghouses, assuring benefits to users and enhanced security to the system; information security enhancements; the development of a new system for registration of trades in the over-the-counter (OTC) market; and the construction of a new data center, among other projects.
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Investment in market development Technology guarantees market security and efficiency. Another factor that differentiates BM&FBOVESPA is its commitment to excellence is constant investment in the following: Self-regulation and market supervision Through BM&FBOVESPA Market Supervision (BSM) - an independent organization that acts as an ancillary arm of the Securities and Exchange Commission of Brazil (CVM) in the sphere of securities market surveillance - the Exchange promotes regulation and assures proper functioning of markets and participants, assuring market integrity and investor protection. Financial education and popularization of the stock and bond markets The Exchanges financial education initiatives are part of its popularization program and have been in place since 2002. What began as a strategy to encourage the general public to invest in the stock market, explaining the key concepts and benefits for long-term saving, has become one of the worlds largest financial education programs, and certainly the largest developed by any exchange. Operational qualification of brokerage houses BM&FBOVESPAs Operational Qualification Program (PQO) certifies the quality of the services provided by brokerage houses, encompassing customer registration, order execution, settlement, risk management, information security and business continuity, among other processes. Execution Broker, Carrying Broker, Retail Broker, Agro Broker and Home Broker quality seals are awarded under the Operational Qualification Program. Forty one brokerage houses have been awarded one or more quality seals by the PQO Certification Committee to date. Issuer relationships, promotion and supervision BM&FBOVESPA constantly invests in the maintenance and development of a favorable environment for companies to raise funds. The total number of companies currently listed on all special corporate governance segments is 182, of which 125 are listed on the Novo Mercado. The Exchange currently monitors 733 issuers; of which 587 are companies and 146 are funds. International promotion of the Brazilian markets As part of its commitment to developing Brazilian markets, BM&FBOVESPA sponsors and actively participates in a range of initiatives to promote local markets internationally. One such is Brazil Excellence in Securities Transactions (BEST), which aims to publicize the excellence, security and sophistication of the Brazilian financial and capital
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markets to international investors by means of technical material and face-to-face meetings. Another is Brasil Investimentos e Negcios (BRAiN), an institution created to coordinate and promote Brazil as Latin Americas main global investment and business hub. Social and environmental promotion activities The Exchange has a long tradition of social investment through the BM&FBOVESPA Institute. It also sponsors a number of initiatives with the aim of encouraging listed companies to include sustainability in their business agendas. These include the BM&FBOVESPA Athletics Club, the Job Training Association, and the Socio-Environmental Investment Exchange (BVS&A). In addition to these projects, BM&FBOVESPA invests in the maintenance of markets considered incipient but which are significant for guaranteeing a complete financial and capital market structure in Brazil. This is the case for agribusiness-related markets and the listing segments for small enterprises (BOVESPA Mais), which enable producers and small and medium firms to access financing and risk management mechanisms. Finally, it is important to note that despite the substantial investment and operating expenses required to maintain all of this regulatory, operational and technological infrastructure for the Brazilian markets, the costs for investors who trade in Brazil are highly competitive against the costs of the worlds major markets. Growth and market strengthening BM&FBOVESPAs growth strategy for 2012 prioritizes projects that increase the companys competitive capacity and diversify its revenue streams. The Exchange is thus clearly focused on market development and has widened its prospecting for and motivation of new issuers. It has also stepped up BOVESPA Mais listing segment reporting, as well as the BM&FBOVESPA Institute of Educations Companies and Entrepreneurs training and education programs - which are not only an investment in the financial education of individuals, but in the guidance of opinion formers and distribution channels. Products and services The Exchange believes strongly in the development and growing sophistication of the Brazilian capital markets and their participants. It has accordingly introduced new products and pursued greater liquidity for existing ones. In the coming years the focus will be on fixed-income products. To this end BM&FBOVESPA will upgrade its op-

erating and normative infrastructure and align it with the demands and needs of the market (investors, financial institutions, fund managers, foundations, insurers, issuers, individuals etc). In addition, the company intends to facilitate access to National Treasury bonds, offering new functionalities for Tesouro Direto (Treasury Direct) investors and incentives for brokerage houses that distribute this product. In the equities market the focus has been on developing the following products:

BM&FBOVESPA has a partnership with Cinnober in which the Exchange will have operational autonomy with regard to TRADExpress RealTime Clearing, a system that provides flexibility for adaptation to different participant structures, asset classes and settlement models. Internationalization: CME, BRICS, Latin America, China BM&FBOVESPA has taken important steps to strengthen its international position, such as consolidating its strategic partnership with CME Group and building ties with exchanges in the other BRICS. The next initiative is the further strengthening of relationships with Latin American exchanges, especially Chiles, so as to promote further order routing integration. To make the Brazilian market more attractive to foreign investors, in 2012 BM&FBOVESPA will launch Brazil Easy Investing (BEI), a system that will allow stocks to be traded through Brazilian distributors and their foreign partners, all in the end investors currency. Risk Management BM&FBOVESPA follows advanced risk management procedures to deal with market, liquidity and counterparty risks. The Exchange is a global benchmark in risk and collateral management, administering four clearinghouses considered systemically important by the Central Bank of Brazil. The equities, securities, derivatives and foreign-exchange clearinghouses act as the central counterparty (CCP) for all trades executed via their systems. The clearinghouses have an advanced risk management structure that stands out among several similar models in

Securities lending (BTC), made feasible by means of Equity options, intensifying market maker programs ETFs, with the launch of new indexes and the licens BDRs
ing of new funds for trading on the Exchange; (Brazilian Depositary Receipts), extending the scope to issuers in Europe and Asia. for options on highly liquid stocks; operational and technological enhancements;

The Exchange is also developing the cross-listing of products (especially derivatives) that are licensed by other exchanges. Cross-listing agreements are being negotiated with CME Group and exchanges in all the other BRICS (Russia, India, China and South Africa). BM&FBOVESPAs main goals for 2012 in the agricultural market are to launch a cash-settled sugar futures contract and establish Brazilian ethanol futures as the global pricing benchmark for the commodity. It also plans to foster live cattle and coffee trading by hedgers, financial institutions and non-resident investors. The OTC market is growing, generating indirect demand for exchange-traded products. In synergy with this trend, BM&FBOVESPA has partnered with Calypso to develop cutting-edge technology with new functionalities, resulting in more agile and flexible trading at costs that match market expectations. Implementation of the platforms first module is planned for 2012, enabling registration of bank contracts with non-financial customers as counterparties. Module 2, for the registration of contracts with other counterparties, is to be implemented in the first quarter of 2013. Clearinghouses In 2012, BM&FBOVESPA will continue to develop the projects relating to clearinghouse unification and modernization. Market-integrated systems testing and the start of new systems implementation in production are scheduled to take place in 2013.

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BM&FBOVESPA

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Regulation and supervision BM&FBOVESPAs clearinghouses have a robust regulation and supervision structure based on exchange self-regulation, on constant assessment and supervision of the risk management and settlement models by the Central Bank of Brazil, and on CVMs supervision of the securities markets, including derivatives. This integrated system for the Brazilian clearinghouses is enhanced by legal protection of the guarantees received against bankruptcy proceedings and attempts at foreclosure by creditors. Central counterparty risk Through its clearinghouses BM&FBOVESPA acts as central counterparty for all trades in the equities market (cash, forward, options, futures, and securities lending), derivatives market (futures, forwards, options and swaps), foreign-exchange market (spot dollar), government bond market (cash, forward, repos, loans) and corporate bond market (cash, loans). By acting as central counterparty, the Exchange assumes responsibility for complete settlement of transactions executed through its systems and/or registered with them. As such it mediates between the parties of each transaction, acting as buyer for all sellers and seller for all buyers. Thus if participants fail to discharge their obligations with the clearinghouses (e.g. by not making payments on time or not delivering assets) BM&FBOVESPA must activate safeguards, falling back on its own funds in a last case scenario. In order to manage the risks inherent to this function, the CCP focuses on calculating, controlling and mitigating its credit-risk exposure from clearing participants. Safeguards To assure adequate mitigation of the risks taken on, each of BM&FBOVESPAs clearinghouses has its own risk management system and its own safeguards. These are resources and mechanisms that can be used to cover losses from clearing participants default. They include collateral pledged in the form of margin deposits, funds specifically set up for this purpose, special assets, and co-responsibility for settlement assumed by brokerage houses and clearing members or agents. BM&FBOVESPAs clearinghouses are not directly exposed to market risk because they do not hold net long or short positions in any of the contracts and securities traded on the Exchanges markets. However, significant price volatility can affect the size of amounts to be settled and increase the probability of participant default.

In addition, the clearinghouses are responsible for settlement of the transactions executed by defaulting participants. This can result in losses for the Exchange if the amounts owed exceed the value of the available collateral. Thus while there is no direct exposure to market risk, the market can nonetheless have an impact on and heighten the credit risks that have been taken on. BM&FBOVESPAs Equities and Derivatives Clearinghouses are responsible for settlement and risk management for approximately 85% and 90% of the total Latin American equities and derivatives markets respectively.

BM&FBOVESPA Clearinghouses 2011 daily averages

Daily average Trading value Required collateral Deposited collateral Equities R$6.6 billion R$38.9 billion R$64 billion Derivatives R$186.5 billion R$70.2 billion R$94.8 billion FX R$4.1 billion R$1.1 billion R$4.2 billion Govt. bonds R$1.4 billion R$52 million R$921 million

other countries. All transactions executed by financial institutions and investment funds must be registered with a centralized registration system authorized by the Central Bank of Brazil. This system requires identification of the clearing agent, brokerage house and beneficial owner responsible for each transaction. Regulators can rapidly and efficiently access all data on risk exposure and transactions executed. Risk calculation and individualized collateral requirements Risk control follows a specific methodology for each contract traded. Risk is calculated using a stress testing model in almost real time (several times during the day), and additional collateral or margin deposits are required whenever necessary. Risk calculation and collateral requirements are individualized for each beneficiary owner. Collateral is posted to custody accounts managed by the clearinghouses themselves, and final owners accounts are completely and effectively segregated from each other. BM&FBOVESPAs clearinghouses have accounts with the Central Bank of Brazil for the settlement of all transactions executed, avoiding exposure to commercial bank credit risk.
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About this Report

3.5

BM&FBOVESPA constantly enhances the process of computing and updating its indicators.
As a public company BM&FBOVESPA S.A. systematically discloses earnings and other relevant information to the market by means of information filed with the Securities and Exchange Commission of Brazil (CVM), as well as publication on its corporate website (www.bmfbovespa.com.br/ri ). This annual report details the performance of BM&FBOVESPA and all operations conducted between January 1 and December 31, 2011, at its head offices in So Paulo, Brazil. The last annual report was published in 2010 and referred to the companys operations in 2009. 3.1 3.2 3.3 3.6 3.8 BM&FBOVESPA adopted international accounting standards for the first time in 2010, comparing data for the year with 2009. The consolidated financial statements for 2011 were prepared and are presented here in accordance with International Financial Reporting Standards (IFRS), which have also been applied retroactively to 2010 in order to permit comparisons between the two periods. 3.9 In 2011 no significant restatements or changes were made to the types of information provided in 2010, meaning 2011 is entirely comparable with previous reports. Similarly, no significant changes were made to the size and structure of the company or its capital structure, and no specific restrictions were made to the scope, boundaries or measurement methods used. 3.7 3.10 3.11 This is the third consecutive annual report published by BM&FBOVESPA in accordance with Global Reporting Initiative (GRI) guidelines, continuing the effort to comply with Level C requirements. It presents information on relations with all stakeholder groups, including employees, collaborators, suppliers, market participants, shareholders, government and regulators, among others. 3.9 During the course of 2011 the Exchange conducted a new cycle of engagement for the purpose of computing and updating its indicators. The effort involved employees and collaborators in a wide array of company areas, resulting in enhanced data collection and the creation of tools designed to improve data management.
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About this Report

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The collection and production of information for the annual report, especially on the social and environmental dimensions deemed relevant to the companys strategy, was overseen by a firm of communication consultants and reviewed by BM&FBOVESPAs Executive Board and Sustainability Committee. The financial statements were audited by PricewaterhouseCoopers Independent Auditors. 3.13 The 2011 annual report will remain available online on the BM&FBOVESPA website and has been printed only in a summarized version on certified paper with vegetable oil-based ink to minimize the environmental impact of this publication. The GRI Content Index is on page 137. 3.12 For more information about the report, contact Investor Relations at the e-mail address ri@bmfbovespa.
com.br.
3.4

Corporate Governance

4.1

BM&FBOVESPA is committed to strict rules for corporate governance, transparency and business ethics.
Governance structure For BM&FBOVESPA the concept of corporate governance is not restricted to disciplining business relations and assuring the alignment of interests between the company, management, controlling shareholders and other stakeholders. Continuous improvement of corporate governance and the pursuit of best practice in this area have resulted in more transparent management, significant enhancements to the regulatory environment, and more investor protection to maximize value creation in the company and provide related parties with elements for informed strategic decision making. BM&FBOVESPA is recognized for its responsible management, transparency and efficiency. In 2011 it once again won the Transparency Trophy and a Best Companies for Shareholders Award in the category Corporate Governance. General and Extraordinary Shareholder Meetings 4.4 Meetings of BM&FBOVESPAs shareholders are convened at least two weeks in advance for the first call and one week in advance for the second call. In addition to the powers established by law or by the companys articles of incorporation and bylaws, shareholder meetings are empowered to decide on the appropriation of annual earnings and their distribution to shareholders; to approve stock option plans or the issuance of stock to executives and employees of the company and its subsidiaries and affiliates; and approve profit sharing schemes in accordance with its human resources policy. BM&FBOVESPA constantly seeks to enhance the mechanisms whereby shareholders and employees can make recommendations or offer suggestions to its highest governance body.

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ANNUAL REPORT 2011

BM&FBOVESPA

About this Report

21

Independent board member

Independent board member

Non-independent board member

Non-independent board member

Non-independent board member

Non-independent board member

Non-independent board member

Independent board member

Independent board member

Independent board member

Independent board member

Conselho de Administrao
Arminio Fraga Neto
Chairman of the Board

Marcelo Fernandez Trindade

Julio de Siqueira Candido Carvalho de Botelho Araujo Bracher

Luis Stuhlberger

Craig Steven Donohue

Renato Diniz Junqueira

Ren Marc Kern

Jos Roberto Mendona de Barros

Claudio Luiz da Silva Haddad

Pedro Pullen Parente

Diretoria Executiva
Edemir Pinto

Ccero Augusto Vieira Neto

Marcelo Maziero
Chief Product & Customer Officer

Eduardo Refinetti Guardia

Chief Financial Officer

Luis Otvio Saliba Furtado

Chief Information Officer

Vice-Chair

Chief Executive Officer

Chief Operating Officer

To facilitate and encourage participation in shareholder meetings, BM&FBOVESPA ensures there are managers routinely available to receive proxy forms with specific guidance for voting on items of business. Electronic proxy forms are also allowed, although in this case a manually signed paper form or certified copy of the original documentation must be filed as soon as possible. In 2011 BM&FBOVESPA implemented an online platform for shareholders to participate via the internet in ordinary and extraordinary general meetings by proxy voting on all items of business via valid digital certificates issued privately or by the Brazilian Public Key Infrastructure (ICP-Brasil). The company also publishes a Shareholder Manual. However, it does not maintain internet forums, pages or websites to receive and share shareholder comments on corporate affairs, not does it offer live transmission of video and/or audio during meetings. In addition to these facilities, the companys website (www. bmfbovespa.com.br ) provides a channel for contacting the Ombudsman, which permanently seeks to engage with shareholders and all other stakeholders, while the Investor Relations portal offers specific channels for investors to contact the companys IR team (http://ri.bmfbovespa. com.br/site/portal_investidores/en/servicos_investidores/contato/contato.aspx ). BM&FBOVESPA also seeks to create mechanisms through which employees can make their views known to the highest governance body via the Executive Committee and Human Resources Department, such as an organizational climate survey (Opinio de Valor) conducted in first-half 2011.
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A special committee (Comisso Opinio de Valor) was set up to strengthen the transparency and impartiality of the process, with four departmental representatives and four employee representatives elected by the entire workforce. The committee contributed to survey design, as well as facilitating and fostering employee participation in this process, in dissemination of the results, and in the preparation and management of action plans across the companys departments. Once finalized, these action plans will be submitted to the Board of Directors. In addition, the Chief Executive Officer (CEO) periodically presents employee-related decisions, findings and recommendations to the Board. Board of Directors BM&FBOVESPA is managed by a Board of Directors and an Executive Board. The members of the Board of Directors are elected at an Annual General Meeting (AGM) of shareholders. The Board of Directors then appoints the members of the Executive Board, assuring managements alignment with the companys strategic objectives and the preservation of shareholder value. It is important to note that according to BM&FBOVESPAs bylaws no member of the Board of Directors may be appointed to the Executive Board of the company or any of its subsidiaries or affiliates. The Chairman of the Board of Directors is therefore not a member of the Executive Board. 4.2 With 11 members, six of whom are independent, the Board of Directors is responsible for setting and overseeing global strategies and for the supervision of internal controls, particularly with regard to risk management. 4.3 All members of the Board of Directors serve concurrent two-year terms and can be re-elected. The Board holds

regular meetings every two months but can be convened at any time when necessary. In 2011 it met 13 times. The members of the Board of Directors have qualifications, experience and knowledge in the economic, financial, environmental and social fields. Their remuneration and that of the Executive Board are established by the Compensation Committee, including fixed and variable components as well as long-term incentives, currently consisting of the Stock Options Program approved by the AGM. Assessment of the Board of Directors is annual, formal, structured, and conducted by the Chairman. This analysis encompasses the following categories: strategic focus, knowledge of and information about the business, operational independence, the decision-making process, the conduct of meetings, motivation, and alignment of interests. The findings are consolidated and discussed. An action plan is then established to implement any improvements deemed necessary. While it does not take socio-environmental criteria directly into account when establishing the remuneration of these professionals and assessing their performance, BM&FBOVESPA believes a companys market value should reflect the interaction of economic, social and environmental performance indicators, since this creates consistent and sustainable expectations of return for society as a whole. Committees that assist the Board of Directors The Audit, Governance & Appointments, Compensation and Risk Committees are subordinated to the Board of Directors, which they advise. Their members serve twoyear terms.

Audit Committee Evaluates the quality of internal auditing and independent external auditing of both the company and its subsidiaries and affiliates. Five members, four of whom are external and one of whom is an independent member of the Board. Governance & Appointments Committee Enhances corporate governance, evaluates the adoption of best practice, and selects and nominates candidates to the Board of Directors and Executive Board. It is comprised of three members of the Board of Directors, two of whom are independent. Compensation Committee Reviews, proposes and monitors improvements to compensation and benefit parameters, guidelines and policy, and to the personnel management model. It is comprised of three members of the Board the Board of Directors, two of whom are independent. Risk Committee Monitors and evaluates market, liquidity, credit and systemic risks in the markets managed by the company, with a strategic and structural focus. It is comprised of four members of the Board of Directors, two of whom are independent. Besides the committees that assist the Board, two committees have been created to reinforce BM&FBOVESPAs corporate governance in its management strategy: the Code of Conduct Committee, and the Sustainability Committee. The members of both committees serve one-year terms. Code of Conduct Committee With seven members, this committee is led by the CEO and includes three employees in leadership positions and three others with at least
23

ANNUAL REPORT 2011

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Corporate Governance

five years of service in the organization. Its remit is to manage the Code of Conduct and enforce compliance with its provisions. Sustainability Committee With nine members, this committee too is led by the CEO and includes three directors of business areas, the Ombudsman, and one external member. Its remit includes strategic orientation, approval of planning, and approval of sustainability-related sponsorships. More information on the Board of Directors and the committees can be found in the Corporate Governance section of the Investor Relations portal (http://ri.bmfbovespa. com.br/site/portal_investidores/en/home/home.aspx ) Executive Board Appointed by the Board of Directors, BM&FBOVESPAs Executive Board consists of the Chief Executive Officer and four other executives. It executes and monitors the results of the strategic guidelines established by the Board. It also establishes guidelines of its own for BM&FBOVESPAs operational, socioeconomic and sustainability-related activities, as well as performing within its remit all the activities necessary for the organization to function properly. The company also has a number of committees that assist the Chief Executive Officer. These advisory committees to the CEO cover such fields as Agribusiness, Markets, Regulation and Athletics. Most important is the Market Risk Technical Committee, whose main remit is to analyze the macroeconomic outlook and its effects in terms of risk on the markets in which the company operates. Business drivers 4.8 BM&FBOVESPA is well aware that a convergence of values is key to assuring alignment with the interests of its stakeholders. It is therefore seeking to identify internally what defines it as an organization, its purposes and aspirations. This initiative entails describing and classifying the stakeholder groups with which the company engages, and establishing key principles and guidelines. Mission, Vision & Values The Mission Statement, Vision and Values are now being drafted and are scheduled for publication during the first half of 2012. The process includes the analysis and definition of aspects relating to economic, social and environmental responsibility grounded in the concept of sustainability and capable of being integrated into the management of the companys business.
24

BM&FBOVESPA is committed to the formation of a culture of sustainability for and with the various stakeholder groups with which it engages and to this end permanently pursues opportunities to broaden the perspectives for its actions through socio-environmental initiatives. The company does not perform any activities that pose a risk to health or the environment. Furthermore, it prioritizes responsible practices in selecting and contracting with suppliers, such as those relating to environmental impact, ethical conduct, health and safety, and non-involvement in proven cases of corruption, bribery, slave or forced labor and child labor. Corporate responsibility BM&FBOVESPA places great emphasis on the value of its employees and best corporate practice. Its activities aim to promote citizenship and democracy and to foster social and economic inclusion, especially for the most vulnerable segments of the population. In sum, the company seeks to be an outstanding example of corporate responsibility. All employees, interns and collaborators have formal employment contracts. Every effort is made to ensure that individuals are respected in the workplace. No cases of discrimination on grounds of ethnicity, color, gender, religion, ideology, nationality or social status were reported in 2011. Codes of Conduct The BM&FBOVESPA Code of Conduct establishes rules to avoid conflicts of interest, encompassing relationships with external stakeholders as well as employees, the treatment of privileged information, and securities trading. The Code of Conduct applies to BM&FBOVESPA and all its subsidiaries and affiliates, and is signed by all employees. Suspected infringements are reported in writing to the Code of Conduct Committee. Such reports are never anonymous. The committee appoints a rapporteur to take the necessary steps to investigate each report. The Audit Department monitors all such cases and submits its findings to the Code of Conduct Committee for analysis. The CEO periodically presents decisions, findings and recommendations to the Board. SO3 The Supplier Code of Conduct, published in 2011, covers principles and practices that must be part of the day-today routine of all those involved in building and maintaining relations that add value and develop society economically, socially and environmentally. They include:

Complying with all laws, rules and regulations that prescribe a minimum age for work, and not employing children aged under 14. Admitting adolescents as apprentices only when previously registered with public and/or non-governmental organizations authorized by the competent government agencies. Guaranteeing school attendance by adolescent apprentices aged over 14, and assuring respect for their labor and social security rights and specific stage of development. Strictly obeying the laws applicable to combating working conditions analogous to slavery, forced labor and child labor, on pain of immediate unilateral termination of contract. In 2011 no cases of infringement or corruption at BM&FBOVESPA were reported to the Code of Conduct Committee, and no significant fines or non-monetary penalties resulted from non-compliance with laws, rules and regulations in the period. SO4 SO8 Conflicts of interest 4.6 BM&FBOVESPAs policy on conflicts of interest is aligned with the requirements of Law 6404/76. Infringements are reported to the Governance & Appointments Committee for analysis. The committee proposes corrective action for approval by the Board of Directors. The companys bylaws include several rules designed to prevent access to certain kinds of information, as well as participation in Board of Director discussions and decisions, by Board members involved in conflicts of interest with the company. The bylaws also determine that the management of BM&FBOVESPA, including members of the Board of Directors, must sign a declaration of adherence to the Insider Information & Trading Policy Manual. In addition, the Conflict of Interest & Related Party Transactions Policy applies to all employees and executives of BM&FBOVESPA and its subsidiaries and affiliates. The company has put in place formal mechanisms for shareholders to express their opinions to top management through the Investor Relations Department. The

Ombudsman pursues consensus solutions for any conflicts among investors and participants in the markets managed by BM&FBOVESPA. Institutional representation 4.12 4.13 BM&FBOVESPA is a member of or signatory to several institutions of an economic, environmental and/or social nature. Member, Associao Viva o Centro seats on board of directors and executive board Member, Grupo de Institutos, Fundaes e Empresas (GIFE) Member, Instituto Ethos de Empresas e Responsabilidade Social Member, Instituto So Paulo contra a Violncia seat on board Member, Social Responsibility & Sustainability Committee, Federation of Brazilian Banks (Febraban) Member, EPC Program (Empresas pelo Clima) seat on advisory board Member, Sustainability Research Group, Instituto Brasileiro de Governana Corporativa (IBGC) Member, Movimento Nossa So Paulo Member, Steering Committee, Ethos Indicators, Third Generation Signatory, National Compact for the Eradication of Slave Labor Signatory, Business Compact For Integrity & Against Corruption Signatory, UN Global Compact member, Brazilian Global Compact Committee Signatory, Principles for Responsible Investment (PRI) Institutional participation 4.12 4.13 As part of its business strategy, BM&FBOVESPA participates in several domestic and international associations or organizations, where it is a project or committee member or invited to share its expertise. BRAiN (Brasil Investimentos & Negcios, a joint initiative of Anbima, BM&FBOVESPA and Febraban) associate member Ibero-American Federation of Exchanges (FIAB) member, Executive and Working Committees Post-trade forums: Member, Americas Central Securities Depositories Association (ACSDA), CCP12 (Global Association of Central Counterparties), and International Securities Services Association (ISSA) Futures Industry Association (FIA) associate member High Level Policy Dialogue, Corporate Governance Code Oversight Authorities From Europe & Emerging Markets (IFC/Global Corporate Governance Forum) regular participant
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ANNUAL REPORT 2011

BM&FBOVESPA

Corporate Governance

 Brazilian Corporate Governance Institute (IBGC) sponsoring organization and member of several committees (Guidelines, Legal, Finance, Sustainability, Communication) International Corporate Governance Network (ICGN) regularly invited to deliver presentations at conferences and an organizer of the annual conference, to be held in Brazil in 2012 International Organization of Securities Commissions (IOSCO) member of Self-Regulatory Organizations Consultative Committee (SROCC) and Council of Securities Regulators of the Americas (COSRA); member of IOSCO Working Group that coordinates Brazilian participation Latin American Corporate Governance Roundtable regularly invited to deliver presentations Capital Market Master Plan member, Executive Committee World Federation of Exchanges (WFE) member of Board, Working Committee and the Communications and the Regulation Task Forces

Stakeholder relations 4.14 4.15 4.16 4.17 BM&FBOVESPA is committed to fostering best practice in corporate governance among market participants and other stakeholders shareholders, brokerage houses, listed companies, government, investors, analysts and suppliers. The companys stakeholder engagement initiatives include application of the AA1000 corporate responsibility management standard, focusing on accounting, auditing and social/ethical reporting, educational campaigns, actions to encourage companies and individuals to participate in socio-environmental initiatives such as the Environmental & Social Investment Exchange (BVS&A) and the Em Boa Companhia (In Good Company) website, and regular meetings of the Advisory Committees set up to build closer ties with the markets with the participation of representatives of the respective segments: Soybeans & Corn, Coffee, Live Cattle & Feeder Cattle, Sugar & Ethanol, Equities, Fixed Income & FX, Real Estate, Trading & IT, Risk Analysis & Clearinghouse Integration, Listing, and Novo Mercado.

Responsible practices BM&FBOVESPA fosters best practice in transparency and management with various strategic initiatives including the creation of listing segments for companies with high levels of corporate governance development Novo Mercado, Level 2, Level 1 and BOVESPA Mais and the Special Corporate Governance Index (IGC), Corporate Sustainability Index (ISE) and Carbon Efficient Index (ICO2).

Natura). Thirdly, the weighting system used to score companies based on their responses to the questionnaire was made public. In line with a growing international trend, BM&FBOVESPA adopted Report or Explain guidance by recommending that as of 2012 listed companies state in item 7.8 of the Reference Form (Description of the companys relevant long-term relationships not elsewhere described) whether they publish a regular sustainability report and where it is available, or explain why not. In response to demand from market participants, in July 2011 BM&FBOVESPA published a new pricing policy for cash market products and listed derivatives. The new policy was designed to eliminate existing cross-subsidies between trading and post-trade activities, thereby greatly enhancing the comparability of its pricing policy with those of other exchanges. Market Ombudsman BM&FBOVESPA has an ombudsman as a channel to communicate with stakeholders. The Market Ombudsman interacts with stakeholders both actively through contacts and visits, and passively through suggestions and complaints received via the internet and by telephone. The Market Ombudsman prioritizes direct investigation of all cases, submitting the information and data collected to the Executive Board and Board of Directors at the end of each quarter. The service is available to all stakeholders but demand comes mainly from investors, most of whom are customers of brokerage houses. Many complaints refer to the difficulty of transferring custody. This problem accounted for 13% of total complaints in 2011, or 1% less than in the previous year. The most frequent reports to the Market Ombudsman complained of problems involving order execution, which accounted for 38% of the total in 2011, up from 24% in 2010. Complaints about the Home Broker online trading system fell from 21% in 2010 to 12% in 2011. The Ombudsman received no complaints of data security or privacy breaches in the period, nor were there any significant fines for failure to comply with the laws and regulations governing the supply and use of products and services. PR8 PR9 The Ombudsman responds to all contacts and invariably makes sure that both the response and the solution offered in each case are assessed, in accordance with ISO 9001 certification requirements.
27

BM&FBOVESPA continuously improves all stakeholder relationship channels. In 2011 BM&FBOVESPA strengthened its stakeholder relationships by a number of activities, among which the highlight was publication of new rules for the Novo Mercado listing segment and for the Market Arbitration Chamber. The deadline for listed companies to amend their articles and bylaws is the same as for adaptation to the new rules for listing on the Novo Mercado and Corporate Governance Level 2 segments, i.e. until they hold their AGM to approve the 2011 financial statements. This enables companies to save time by submitting proposals on both changes to the same meeting. Only 52 companies out of a total of 182 companies listed on all three special corporate governance listing segments are currently adapting their articles and bylaws to comply with the new rules; 28 have sent their amendments for prior analysis by BM&FBOVESPA, and 24 have had their submissions analyzed after sending drafts to the Periodic & Occasional Information (IPE) system available on the CVM and BM&FBOVESPA websites. In 2011 the company also held a public consultation on the Corporate Sustainability Index (ISE) questionnaire to stimulate participation by market players and wider society in discussions involving the index. Formulated by the Getlio Vargas Foundations Center for Sustainability Studies (GVces), the questionnaire was reviewed in online and face-to-face public hearings. After analysis of all contributions it was approved by the ISE Deliberative Council (CISE). One of the changes proposed to the criteria for a stocks inclusion in the ISE portfolio was scoring the climate change dimension. Secondly, a new question was introduced asking whether the company wished to have its answers to the questionnaire published. Eight out of a total of 38 responded in the affirmative (AES Tiet, Banco do Brasil, Bicbanco, CCR, Coelce, Eletropaulo, Energias do Brasil and

Stakeholder relationship channels

Shareholders IR portal Quarterly earnings reports Quarterly fact sheets Integrated reporting Listed Companies Listing segments Special Corporate Governance Index (IGC) Corporate Sustainability Index (ISE) Carbon E cient Index (ICO2) Empresas (portal for companies) Market Maker Program Brokerage Houses BM&FBOVESPA Service Center (CAB) BVMF News Operational Quali cation Program (PQO) Employees & Collaborators Voc em Alta (intranet) Opinio de Valor (organizational climate survey) Novo Valor (sustainability program) Socio-environmental campaigns Broker search (web) Corporate Governance seals Fica Mais (loyalty program) Em Boa Companhia (corporate sustainability) Monthly newsletter

Dia da Empresa (Your Company Day)

Monthly trading summary

Novo Valor (sustainability program)

Quer Ser Scio? ( nancial education)

Quer Ser Scio? ( nancial education)

Investors in General Ombudsman

Equity and futures trading simulators Courses in nancial education Educational lea ets TV BVMF Quer Ser Scio? ( nancial education) Suppliers

Analysts IR portal Analyst kit

Supplier Code of Conduct

Selection of suppliers based on sustainability criteria Government & Regulatory BM&FBOVESPA Market Supervision (BSM) New BSM bylaws Seminars and presentations on regulation
26

Control of supplier register using assessment and certi cation based on Internal Policy for the Acquisition of Goods & Contracting of Services, which includes a speci c item on responsible practices in supplier selection and contracting covering benvironmental impact, ethical conduct, health and safety, and non-involvement in proven cases of corruption, bribery, slave or forced labor and child labor.

ANNUAL REPORT 2011

BM&FBOVESPA

Corporate Governance

Indicators are monitored monthly by Customer Service (SAP) to evaluate the satisfaction of brokerage house customers and members of the public who contact BM&FBOVESPA. The findings are described in a management report, including satisfaction surveys covering the quality of telephone service and average response time. ISO 9001 for automated complaint processing was renewed in 2011. PR5 The number of contacts recorded by SAP in 2011 was 73,936. Response time averaged 1.6 days. The level of satisfaction with telephone service and via the internet was 96.96% and 69.92% respectively. More details are presented in the table below.

SAP satisfaction survey telephone service

Excellent 12,062 77.54% Very Good 2,361 15.18% Good 660 4.24% Average 200 1.29% Poor 273 1.75% Total 15,556 100%

Human Capital
Trust, transparency and ethics underlie all relationships, both personal and professional.
BM&FBOVESPAs Management of Culture and Engagement In 2011 the Exchange continued to invest in the strengthening of its organizational culture in accordance with its core values and corporate purposes. As part of the evolution of its management model and organizational culture, as well as the continuous improvement of its workplace climate, in February 2011 BM&FBOVESPA launched a structured process to manage workplace climate and employee engagement. The process began with a decision to carry out a Satisfaction and Engagement Survey and to create a special committee called Comisso Opinio de Valor to strengthen the transparency and impartiality of the process, with four departmental representatives and four employee representatives elected by the entire workforce under previously announced rules. The 2011 Satisfaction and Engagement Survey diagnosed the organizational climate and the expectations and aspirations of the workforce, focusing on what they like and what in their opinion could be different. Participation in the survey was anonymous and spontaneous. Care was taken to ensure that no employees were identified and to guarantee confidentiality. They completed the questionnaire online via the website of the Great Place to Work Institute, a consulting organization that specializes in satisfaction and engagement surveys and has applied its unique methodology to many companies for over 25 years. The number of people who completed the questionnaire was 1,228 - a response rate of 77% considering all employees and interns at BM&FBOVESPA and its subsidiaries and affiliates.

SAP satisfaction survey service via website

Excellent 231 44.25% Very Good 103 19.73% Good 31 5.94% Average 35 6.70% Poor 122 23.37% Total 522 100%

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Corporate Governance

29

The data were compiled and the findings presented to the entire company. At a later stage, employees were able to volunteer to participate in working groups set up to understand the root causes of the issues raised, and to suggest action plans. The number who participated in these workshops totaled 253. The action plans were submitted to the Executive Board. Implementation is scheduled to begin in 2012. Some of the survey findings brought important issues to the attention of top management. They were discussed during Leaders Day, a continuous structured program implemented by the Exchange in 2010 with two tracks: training (mandatory) and development. The main focus is on: Assessment: the first stage of the program, using a set of face-to-face and distance analysis tools developed by outside consultants, whereby participants can focus on their own development needs and produce an individual development plan. The process continued in 2011 for managers who had recently been promoted or inducted into the organization. All these leaders underwent assessment. Coaching: an optional stage of the program, strengthening and developing organizational competencies through specialized professional support and methodologies that stimulate reflection and applicability to everyday practice. After the 2011 coaching workshop, leaders were asked whether they wished to participate in this incentive, the cost of which is shared by company and employee. The number of leaders who opted to participate was 86, corresponding to 27% of the target audience. People Management Cycle: A face-to-face training process designed using the findings of the Engagement Survey and general results of the Assessment with the aim of strengthening the role of managers as builders of BM&FBOVESPA and equipping them for the appropriate use of people management tools. The number of leaders trained in 2011 totaled 214, or 84% of the target audience. In compliance with Ministry of Labor Ordinance 1510 instituting new rules for electronic time control, in 2011 BM&FBOVESPA acquired time recorders and implemented a new employee attendance management system.

An employee assembly was also held in 2011 to ratify the compensatory time and overtime mechanisms. To increase agility and save paper, BM&FBOVESPA introduced a new functionality into the intranet portal used by employees to check their registered personal and employment details, vacations and pay history, and to view and print pay slips. To enhance the transparency of its activities, in 2011 the company held two face-to-face employee meetings with the CEO (Nosso Encontro). At the June meeting the CEO presented the findings of the Satisfaction and Engagement Survey, and in December a retrospective of the year. Profile of BM&FBOVESPAs team LA1 BM&FBOVESPA had 1,455 employees and 88 interns at end-2011. The entire workforce (1,543 people) was located in the Southeast Region. All except for interns were employed full-time and had indefinite duration employment contracts. Attracting and integrating new employees is a significant challenge for management. Human Resources makes a considerable effort to ensure that the recruitment and selection process is consistent and to support managers by employing people aligned with the organizational culture. In 2011 BM&FBOVESPA hired 288 employees and 78 interns, who participated in a special induction program (Por Dentro da Bolsa, or Inside the Exchange) comprised of presentations, visits and Q&A sessions with representatives of the different departments. The number of people with special needs (PSN) admitted by the Exchange in the year was 21, taking the total to 72. Most PSNs work in Communication, Settlement, External Services and IT Infrastructure & Production. In 2011 the lowest salary paid to an intern corresponded to 223% of the state minimum wage; for employees the ratio was 213%. It is important to note that in 2009 and 2010 no one employed by the Exchange was paid the minimum wage. The lowest salary corresponded to 147% and 172% of the minimum wage in 2009 and 2010 respectively. EC5 Every single employee of BM&FBOVESPA is covered by a collective bargaining agreement. LA4

Number of employees and interns

Position Executive Officer Manager Coordinator Staff Intern 2009 32 71 108 868 57 2010 36 85 145 1,118 78 2011 37 94 152 1,172 88

Ratio of mens to womens basic salary by employee category LA14

Mens salary in proportion to womens Executive Officers Managers Coordinators Staff 2009 109.02% 93.09% 100.06% 91.70% 2010 114.44% 99.39% 95.44% 86.12% 2011 92.12% 101.09% 93.16% 83.99%

Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other diversity indicators LA13
Composition by gender & ethnicity (absolute numbers) 2009 2010 2011 2009 2010 2011 2009 2010 2011 2009 2010 2011

Men Executive Officers Managers Coordinators Staff Interns Total 27 49 78 592 29 775 31 57 108 771 36 1.003 30 70 114 784 54 1.052 5 22 30 276 28 361

Women 5 28 37 347 42 459 7 24 38 388 34 491 1 10 11

Black men 1 18 19 1 21 22 1 18 19

Black women 4 1 5 10 10

Composition by age & PSN (absolute numbers)

2009

2010

2011

2009

2010

2011

2009

2010

2011

2009

2010

2011

Aged 30 or less

Aged 31-50

Aged 51 or more

People with special needs (PSN) 6 8 14 50 78 1 27 28 35 35 72 72

Executive Officers Managers Coordinators Staff Interns Total

2 16 337 56 411

4 25 505 78 612

7 26 516 88 637

27 60 78 484 1 650

29 73 104 569 775

31 79 112 606 828

5 9 14 47 75

7 8 16 44 75

Employee turnover LA2

Employee turnover by gender (%)* Male Female Employee turnover by age (%)* Aged 30 or less Aged 31-50 Aged 51 or more 2009 18.57 8.27 2009 11.36 11.71 3.79 2010 9.51 5.13 2010 7.39 6.43 0.82 2011 11.67 7.00 2011 10.24 7.91 0.52
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BM&FBOVESPA

Human Capital

Number of employees who left the company

No. of employees leaving by gender Male Female No. of employees leaving by age Aged 30 or less Aged 31-50 Aged 51 or more 2009 129 133 43 2009 211 94 2010 108 94 12 2010 139 75 2011 158 122 8 2011 180 108

The Walking & Running Group offers periodic personalized training. Employees and interns who wish to participate take a physical assessment. The Exchange subsidizes 50% of the fees charged by the outside sports counselors who run this program, in which eight people participated in 2011. Flu Vaccine An annual flu vaccination campaign is held to protect employees, interns and contractors, as well as boosting other forms of prevention. This program benefited 1,420 people in 2011. Check-Up Directors, managers and senior specialists are required to have an annual check-up if aged 50 or more, while those aged 49 or less have a check-up every two years. The focus is on preventing sickness and promoting wellness. In 2011 the program had 59 participants. Health on Track Weight loss and wellness program with personalized dietary education. Some 33 employees with a BMI of more than 35 participate free of charge and will be monitored over a 12-month period. Points For You Continuing the dietary education and healthy slimming program based on the Weight Watchers method, 12 weekly in-company meetings were held in 2011 with 50% of the cost subsidized by the Exchange. The 41 people who took part lost 300 kilos in aggregate. Womens Health Week A meeting led by Dr. Albertina Duarte on Womens Health Across the Life Stages brought the first Womens Health Week to a brilliant close in 2011. The program was attended by 90 women, all of whom took in-company preventive medical examinations, and also included three meetings with renowned specialists as well as consults and lab tests (by Femme, which specializes in womens health) for 125 employees and interns. This was the first time a health laboratory service provider had ever been present inside the Exchange workplace. The initiative was praised by participants, who warmly welcomed its convenience. About 50 women attended a meeting on breast cancer prevention. A special mini-course called Women in Action with 40 participants discussed ways of improving personal finance. Tobacco Dependence Prevention & Treatment BM&FBOVESPA used World No Tobacco Day to apply the Fagerstrom test and survey employee habits with regard to smoking. After this mapping it launched a tobacco dependence prevention and treatment program. The Exchange subsidizes 50% of treatment costs, with employees paying the other half. The Exchange also covers the full cost of medication. The program currently has 17 participants.

Mais Lazer e Cultura

Exchange Kids This program helps children find out more about their parents workplace, with a full day of games, recreation and educational activities. The number of children who participated in 2011 was 205. They watched Exchange Kids videos and a financial education TV program, took part in music workshops, and rehearsed and performed in a band. Soccer Pitch BM&FBOVESPA leases a soccer pitch for use by all employees on weekends. Some 50 people play soccer there on average every Saturday. Soccer Tournaments The traditional Seven-a-Side Soccer Tournament attracted 200 participants in 2011. Awards were given to the teams that finished in first, second and third place. Each player won a medal and the teams each won a trophy. The top goal scorer and the goalkeeper who conceded the fewest goals also won awards. Mothers Day and Fathers Day Cultural, leisure and integration activities were part of the commemorations for both dates in 2011. They included exclusive theater performances for mothers and fathers employed by the Exchange, plus guests if they wished. Mothers Day: 320 people. Fathers Day: 350 people. Theater, movie and park tickets The Exchange provides an exclusive channel for employees and interns to buy theater, movie and park tickets at a discount to facilitate access to these leisure activities. Pension plan BM&FBOVESPA offers a defined-contribution pension plan for voluntary participation by all employees. The number currently participating is 1,150. The contribution corresponds to 3.60% of gross salary per month. The company pays 20% of the monthly contribution and the remaining 80% consists of prorated points according to salary, age and length of service with the company. The pension is paid out after the allotted period as monthly income, which may vary according to the funds performance, to employees who retire at the specified age or based on length of service, as well as for disability or death. EC3 Health and safety BM&FBOVESPAs workplace and activities present a low level of risk to health and safety. All employees have access to a corporate health and dental care plan, which also
33

* Number of employees leaving during year divided by total in December of each year.

Quality of Life and Benefits The Exchange believes health, leisure, culture and emotional balance exert a significant influence on the teams performance. It therefore encourages participation in the Quality of Life Program, which extends far beyond legal benefits (prescription drug discounts, life insurance, emergency loans, food vouchers, meal vouchers, childcare vouchers) to offer options that raise awareness of the importance of wellbeing. Quality of Life Program LA3 The program has three pillars, comprising interlocking activities in work-life balance (Mais Equilbrio), wellness (Mais Sade), and leisure and culture (Mais Lazer e Cultura). The first anniversary of the programs launch in 2011 was commemorated with a meeting with long-distance runner Vanderlei Cordeiro de Lima, a star member of the BM&FBOVESPA Athletics Club, who delivered a talk on overcoming obstacles and motivation. The company also launched a program called Facilities Exchange (Bolsa Facilidades) to facilitate access to goods and services that contribute to employee wellbeing through partnerships in sports, culture, recreation and leisure, as well as services such as a license for home use of Microsoft Office Professional 2010.

reading for use by all employees. The number of massages per month averaged 1,137 in 2011. Secretary Day Commemorated in 2011 with a workshop on career management led by Ana Lucia Campos Pita, who has a masters degree in communication and semiotics, discussing the profession and its importance in the business world. Secretaries were given a kit called Spa and Beauty Experiences. The number of attendees was 38. Internal Week of Workplace Accident Prevention (SIPAT) Analysis of workplace hazards, occupational disease and wellness promotion, leading to interactive initiatives designed to foster preventive habits and more conscious everyday behavior. Workshops were held in 2011 on Sustainability for Better Living and The Enigma of Happiness. A Health Circuit was unveiled at the Exchanges headquarters on Praa Antonio Prado, with spaces called Our Sleep and Our Body, Our Movement. Another highlight, with 96% approval in 2010, was Desk by Desk Wellbeing, a workstation relaxation program with massages provided by physical therapists who also help employees with breathing and stretching exercises. The numbers participating in the Health Circuit, workshops and Desk by Desk program in 2011 were 428, 267 and 1,342 respectively. World AIDS Day was also commemorated during this years SIPAT. To remind employees and interns of the importance of a healthy diet to a balanced life, health food carts began operating in November in the company buildings where products are on sale.

Mais Equilbrio
+ Voc Personal counseling and support from a multidisciplinary team (psychologist, social workers, nutritionist, psychopedagogue, lawyer, physical therapist, personal trainer, among others) to help employees and their families deal with difficulties at home, stress, legal problems and parenting. Diets are offered for specific situations (e.g. pregnancy, breastfeeding, convalescence), as well as information on physical fitness. The service is free, confidential and available 24x7 by phone and e-mail. It processed 3,497 cases in 2011. Wellness Center Relaxation suite with free shiatsu and quick massage, as well as ample space for rest and
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Mais Sade
Fitness BM&FBOVESPA encourages its people to keep fit. It has an agreement with a chain of fitness centers to offer discounts on monthly membership fees and waive enrollment fees for employees and interns. Some 600 employees and interns make use of this benefit.

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covers spouses and children up to the age of 21, or 24 for university students. In cases of serious illness requiring care not covered by the plan, benefits may be granted on the basis of an individual analysis. LA8 Employees can also use two outpatient clinics located on the Exchanges premises at Praa Antonio Prado and Rua XV de Novembro, and staffed by physicians and nurses every day of the week. The focus is on occupational medicine but urgent care is also available. The Exchange also has discount agreements with pharmacies. To discuss matters relating to accident and occupational disease prevention, the company has a specialized service comprising a physician and occupational safety technician, as well as an Internal Workplace Accident Prevention Committee (CIPA) with 18 elected members, corresponding to 1.15% of the total workforce. LA6 The CIPAs main functions are to map all workplace hazards, observe and report risks of accidents, provide employees with guidance on accident prevention, and organize the annual Internal Workplace Accident Prevention Week (SIPAT). In 2011 the number of votes cast was 849, corresponding to 61% of the workforce. Five members and four alternates were elected. LA9 Performance management Performance assessment is a process in which 100% of the workforce take part, in line with the personal development proposition established by the company. The aim is to assure results based on a commitment to merit, considering the planning dimension (what) and the behavior expected for each level and function (how). LA12 The format of the assessment consists of three structured formal conversations with the employees manager during the year, one in the first quarter dealing with targets (what) and competencies (how), and the others in midyear and year-end for assessment and recognition. Measurement starts with employee self-assessments. These are analyzed by managers and departmental meetings are then held to provide feedback. After these meetings, employees access the performance management system to acknowledge receipt of feedback and finalize the process. They then prepare an individual development plan, which is validated by management. Interns are not eligible for this process. Training In 2011 the company continued with its employee training and development initiatives, delivering 145 courses
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with 865 enrollments, 492 participants and an average of ten hours of training per employee. LA10 The BM&FBOVESPA Educational Institute delivered 58 face-to-face courses in 2011, with 342 participants and an average of 12.1 hours of training per employee. Enrollment in online programs totaled 117 and the number of participants was 71. In the case of the Education Incentive Program, which facilitates access to higher education (undergraduate and graduate courses) and language courses for professionals with growth potential, the number of participants was 264. Another highlight was a group of 21 persons with special needs (PSN) who took a two-month training course totaling 300 hours. Course modules were divided into technical and behavioral competencies. The syllabus included Portuguese, mathematics, corporate etiquette and customer service. Besides the courses mentioned, other programs run during 2011 included technical knowledge transfer relating to strategic projects such as implementation of the BM&FBOVESPA PUMA Trading System and the Post-Trading Infrastructure Project (IPN). To support these projects, 122 technical training activities were held involving 2,170 employees and 796 contractors, mainly from IT. Management and knowledge sharing tools were also created, such as the Academy, a virtual learning environment developed jointly with CME Group and offered to participants in the BM&FBOVESPA PUMA Trading System project. This knowledge repository was divided into blocks containing hundreds of learning artifacts, including videos, presentations and web content. Human Rights With the implementation of the Policy Governing the Acquisition of Goods & Services in 2010, BM&FBOVESPA directed efforts to analyzing and certifying suppliers with the aim of mitigating risks relating to corporate image, labor claims, child labor and slave labor. Although supplier evaluation focuses mainly on tax, civil and labor law matters in the federal, state and municipal spheres, the policy calls for notification of the responsible manager if any violation of human rights is detected, and for appropriate steps to be taken. Additionally, to verify these items the Exchange requires prospective suppliers to complete a questionnaire prior to a visit to their premises to make sure the suppliers have a procurement policy and an under-age apprentice program in place. HR6

In 2011 BM&FBOVESPA began gradually introducing additional requirements for supplier registration, such as clearance certificates, credit checks with Serasa Experian, and checks with the Office of the Comptroller General (www.cgu.gov.br) and Transparency Portal (www.portaltransparencia.gov.br/ceis/SaibaMais). The standard service agreement contains clauses prohibiting conditions analogous to slave labor. The Exchange had 319 accredited suppliers in November 2011, of which 178 were classified by branch of activity. It should be noted that 56% of the suppliers analyzed and accredited could pose some kind of human rights risk. HR2 As in previous years, in 2011 BM&FBOVESPA registered no cases of discrimination on grounds of ethnic origin, color, gender, religion, ideology, nationality or social origin, and received no reports of child labor or violation of the rights of indigenous peoples. HR4 HR7 HR9

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Sustainability

BM&FBOVESPA closely observes and prioritizes the movement to make sustainability an integral part of the business agenda.

An Inspiring New Management Model 4.15 4.16 4.17 BM&FBOVESPA was the worlds first exchange to sign up to the UN Global Compact, becoming a signatory in 2004. Two years later it joined the Brazilian Global Compact Committee, which it vice-chaired between 2006 and 2008. In 2010 it was the first exchange in any emerging-market country to commit officially to the Principles for Responsible Investment (PRI). It is a member of the PRI Brazil Networks Engagement Working Group. In the same year it was also the first exchange in the world to become a GRI organizational stakeholder. GRI is a network that sets internationally accepted standards and develops strategic recommendations to enhance sustainability reporting. At the start of 2011, in a meeting with the Brazilian Association of Capital Market Analysts & Investment Professionals (APIMEC), the Exchange issued its annual report with simultaneous financial and non-financial information for the first time, thus encouraging analysts to take socio-environmental and corporate governance issues into account in their assessments of stock prices and investment decisions. The company must evolve together with society and the planet for a promise-filled future. BM&FBOVESPA is inspired by the concept of sustainability in every aspect of the management of its business activities. Another important initiative is the Novo Valor website (http://www.bmfbovespa.com.br/novo-valor/en-us/index.asp ), which offers information on the Exchanges sustainability and social investment indicators and projects. The website engages with investors, companies and brokerage houses to promote the sustainable development of the capital markets. In this way, it has contributed towards greater reflection about the future of Brazil and the world.

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Sustainability

37

Published by the Exchange in 2011, Novo Valor Corporate Sustainability: How to Begin, Who to Involve, What to Prioritize is a guide to sustainability from the standpoint of the capital markets. With a foreword by PRI Executive Director James Gifford, it serves as a starting-point for each company to seek sustainability solutions.

BM&FBOVESPA initiatives to promote sustainable development Since the launch of the Novo Mercado listing segment for companies committed to best practice in corporate governance, the Exchange has introduced many other initiatives to promote sustainable development, in particular: IGC & IGCT The Special Corporate Governance Stock Index (IGC) tracks the stocks issued by companies listed on this segment and since its launch has consistently outperformed the Ibovespa. The Corporate Governance Trade Index (IGCT), launched in 2011, tracks the stocks of IGC companies that meet specific liquidity criteria, such as actively trading in at least 95% of trading sessions during the previous 12 months. ISE The Corporate Sustainability Index (ISE), launched in 2005, embodies BM&FBOVESPAs understanding that sustainability gives companies a competitive advantage and adds shareholder value while promoting a healthier, more perennial market. The ISE has become a benchmark for sustainable management practice in Brazil and the world. A survey conducted in 2010 by the International Finance Corporation (IFC), for example, showed that 64% of participating companies see the ISE as the key driver in the enhancement of their sustainability practices. ISE Enhancements The ISE tracks the return on a portfolio comprised of stocks issued by companies with a recognized commitment to sustainability. Companies must complete a specific questionnaire in order to be included in the ISE. In 2011 the ISE Board approved the following changes:

BM&FBOVESPA chairs the ISE Deliberative Council (CISE), the highest governance body for the index, comprised of representatives from nine institutions. IT Now ISE & IT Now IGCT ETFs In 2011 BM&FBOVESPA began trading IT Now ISE, an exchange-traded fund (ETF) based on the Corporate Sustainability Index (ISE), which tracks the return on a portfolio comprised of stocks issued by companies with a recognized commitment to CSR and sustainability; and IT Now IGCT, an exchange-traded fund (ETF) based on the Corporate Governance Trade Index (IGCT), which tracks the stocks of companies that voluntarily adopt high corporate governance standards (listed on the Level 1, Level 2 and Novo Mercado segments) and meet the criteria for inclusion established in its methodology. ICO2 BM&FBOVESPA considers climate change to be one of the most important items on the corporate sustainability agenda and therefore aims to go beyond the management of its own greenhouse gas emissions. One such initiative was the launch of the Carbon Efficient Index (ICO2) in partnership with BNDES, comprised of stocks of companies that are tracked by the IBrX-50 and that agree to participate in the initiative. In 2011 the Exchange announced the theoretical portfolio for the ICO2 (valid for the period September-December), with 38 stocks issued by 37 companies. All candidates were required to submit a greenhouse gas inventory covering at least Scope 1 (direct emissions) and Scope 2 (indirect emissions deriving from electricity purchased offsite). Companies that had not yet performed a Scope 3 GHG inventory (including air travel and overland logistics) could use estimates produced by specialized consultants. In line with the inclusive, constantly evolving ICO2 methodology, the Scope 3 categories of emissions will be extended in the years ahead.

100% committed to sustainable development as a formal component of their business strategies 92% had a program of awareness raising and education on climate change and GHG emissions reduction 92% formally and publicly adhered to broadly legitimated voluntary commitments relating to sustainable development for all units, subsidiaries and affiliates 90% had a formally established Sustainability or CSR committee 87% had a sustainability department that reported directly to top management 84% sought to identify the most relevant issues from the standpoint of sustainability via a structured process designed to pinpoint their material economic, environmental and social impacts and conducted with the participation of key stakeholders

In accordance with its commitments and guidelines, in April 2011 the Exchange launched the Em Boa Companhia (In Good Company) Corporate Sustainability Program to promote continuous relations with business organizations through a range of initiatives including the sharing of information by means of newsletters and other publications and face-to-face meetings with experts in sustainability. The Em Boa Companhia Program is an extension of the website launched in 2006 (www.bmfbovespa.com.br/emboacompanhia ) to foster the pursuit of sustainability by publicizing listed companies CSR and sustainability activities so that investors and other stakeholders buy into this agenda more enthusiastically. The website describes sustainability projects implemented by companies listed on BM&FBOVESPA. These private-sector initiatives have contributed increasingly to sustainable development in Brazil. In 2011 the Exchange reinforced its commitment to the trading of indexes and funds that focus on sustainability. In response to demand from market participants it launched the Corporate Governance Trade Index (IGCT) and the exchange-traded funds (ETFs) IT Now ISE and IT Now IGCT, as well as enhancing the ISE and ICO2.
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Management in synergy with the interests of society and the planet BM&FBOVESPA considers sustainability a new management model that inspires the conduct of business activities, in synergy with the present and future interests of society and the planet. The company remains committed to the mission of inducing, promoting and practicing the concepts and actions of economic, social and environmental responsibility and seeks to contribute to sustainable development. The companys organizational structure includes a sustainability department established with the aim of ensuring this approach is an integral part of its management of business. The departments remit is to integrate and manage all social investment programs developed by the BM&FBOVESPA Institute, and to develop sustainability activities in four dimensions:

Inclusion of a question asking whether the company

wishes to have its questionnaire answers published, gaining points in its score in the General dimension. Three new benefits for participating companies: an exclusive annual two-hour meeting for each company with the Getlio Vargas Foundations Center for Sustainability Studies (GVces); workshops to provide guidance on the documentation required to support verification; and enhanced detail in performance reports. Scoring of the Climate Change questionnaire dimension. Extension of protocols with insertion of detailed information to support comprehension of questions, correlation with references in sustainability, especially GRI, CDP and ISO 26000, and information on documentation to assist verification.

ISE 2011/2012
182 companies (issuers of the 200 most liquid stocks) were invited to participate in the process 59 companies effectively participated, 48 as participants and 6 as trainers, with 5 accepting the invitation but failing to complete the process Of the companies that participated in the process: 100% published a sustainability report in the past year 90% based their reports on the GRI guidelines

Management of natural resources focusing on eco Products & services building sustainability into pro Governance inducing best practice by the market Relationships stakeholder engagement
and integrating the concept into internal governance ducts and services in partnership with business areas -efficiency gains

Two other multidisciplinary spheres of governance manage sustainability in addition to the department the Sustainability Committee, responsible for strategic guidelines, approval of macro-initiatives and sustainability39

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-related sponsorships; and the Sustainability Commission, which proposes and manages the agenda. The Exchange has also put several important measures in place to promote eco-efficiency:

tes the service is faster than motorcycle couriers, largely because bicycles are easier to park. The Carona Solidria (Solidarity Car Pool) Program encourages employees to share their cars with co-workers using the Caronetas ride sharing website. The first step for an employee who wishes to participate is to register online with the program (www.caronetas.com.br/bmfbovespa ). Once a minimum number is reached, the system requests new information and looks for commute matches. Information is then emailed to put car owners in touch with co-workers with common routes so that they can agree to share rides.

Novo Valor Corporate Sustainability: How to Begin, Who to Involve, What to Prioritize http://www.bmfbovespa.com.br/ novo-valor/en-us/download/sustainability-guide.pdf Guide to sustainability from the standpoint of the capital markets. Presentation of new job training association website (Associao Profissionalizante) New menus and easier navigation make APBM&FBOVESPA website even more accessible. Publication of book about job training association Associao Profissionalizante: 15 anos promovendo a cidadania de jovens em risco social (Fifteen years promoting citizenship for at-risk youth) tells a fascinating success story and shares the associations working methodology. May Public consultation on ISE questionnaire Discussion of questionnaire used to evaluate candidates for inclusion in Corporate Sustainability Index (ISE) 20112012 portfolio. Companhia de Leitura book club Employees volunteer to work with young multipliers from Instituto Fernand Braudel in encouraging children to read at the BM&FBOVESPA Sports & Cultural Center in Paraispolis, organized by age group. June First Sustainability Week Presentation of the Exchanges 2010 greenhouse gas emissions inventory and a sustainability case study by Nike, sponsor of the BM&FBOVESPA Athletics Club, as well as opening of bicycle parking facility. Face-to-face public consultation on ISE questionnaire Event held at Getlio Vargas Foundation, with online participation.

fuse to authorize disclosure of their responses to the questionnaire. August Partnership with IBM Meeting by volunteer employees with IBM to arrange provision of IT services to social projects. GHG emission offsets Campos do Jordo Conference BM&FBOVESPA commissioned an inventory of the greenhouse gas emissions produced by the Fifth International Financial & Capital Markets Conference at Campos do Jordo and will offset them by donating funds to SOS Mata Atlntica for the planting of four trees per metric ton of GHG emissions. At its booth in the Fifth Conference Expo, the company showcased its main initiatives in the field, such as the Sustainability Manifesto (http://www.bmfbovespa.com.br/en-us/ download/manifesto-novo-valor-en-us.pdf ), the Carbon Efficient Index (ICO2) and the Corporate Sustainability Index (ISE). Sixth Paraispolis Cultural Exhibition More than 5,000 people visited an exhibition on the theme of the paths of reading.

GHG inventory
BM&FBOVESPA conducted its first inventory of greenhouse gas emissions in 2010, based on data for 2009. The 2011 inventory, based on data for 2010, built on the process by commissioning verification by ICF International, a US-based consulting firm that specializes in climate change policy.

Selective waste disposal & recycling

All workstations and corridors on every floor of BM&FBOVESPAs buildings have selective waste disposal bins to enable comprehensive recycling. All materials including batteries are collected for recycling.

2011 milestones
January Launch of the Corporate Governance Trade Index (IGCT), which begins daily evaluation of the performance of stocks issued by companies that voluntarily adopt high corporate governance standards. February Publication of 2010 Annual Report For the first time the Exchange issues its annual report with simultaneous financial and non-financial information, in a meeting with the Brazilian Association of Capital Market Analysts & Investment Professionals (APIMEC). Launch of Novo Valor website Created to publicize the Exchanges sustainability initiatives and engage with stakeholders. ICO2 workshop Held to receive suggestions on the Carbon Efficient Index from companies that participated in the process in 2010 and clarify any doubts about the methodology. March ISE workshop Presentation on changes approved by ISE Board for the next portfolio selection. April First Conference of In Good Company (Em Boa Companhia) Corporate Sustainability Program Launch of program to discuss impact of sustainability and social investment on routine business activities and increase visibility of listed companies successful experiences. Publication of Novo Valor Sustentabilidade nas Empresas, Como Comear, Quem Envolver, O Que Priorizar

Use of certified paper

All publicity and educational material, stationery and other printed documents use paper certified by the Forest Stewardship Council (FSC).

Use of eco-efficient equipment

BM&FBOVESPA uses only energy-efficient light bulbs, smart air conditioning and next-generation elevators.

Green tech
Computer monitors that generate less heat and consume less energy are prioritized.

Day-to-day sustainability
Sustainability tips are posted every week on the intranet (on Fridays). BM&FBOVESPA partners with Instituto Norberto Bobbio, which offers presentations, courses and other events to promote human rights. In 2011 employees aged over 20 and with more than six months of service with the company were invited to participate in a survey asking for their views on Brazilian companies respect for human rights. The consolidated findings will be used in a report by the United Nations. A bicycle parking facility with lockers and changing rooms has been opened as yet another initiative to reduce GHG emissions. Employees are encouraged to make sustainability part of their day-to-day routine in this way. The Exchange has also started to use bicycle messenger services provided by Carbon Zero Courier. On some rou40

July Second Conference of In Good Company (Em Boa Companhia) Corporate Sustainability Program Discussion of how nascent organizations and those at an intermediate stage of development can insert sustainable practices into their management models. Supported by the Brazilian Social Services for Industry (SESI) and by Endeavor. Publication of ISE questionnaire for 2012 portfolio Inclusion of a new question (General Dimension Transparency Criterion) asking companies to authorize or re-

Launch of a book on the 15 years of a job training association and a presentation by Bernardo Toro, both for the third sector Presentation of a systematized methodology for foundations, corporate institutes and social managers, by the Colombian educationist Bernardo Toro. September World Tree Day/World Car-Free Day Program of activities including distribution of notepads made of BOVESPA and BM&F recycled paper. Launch of the Solidarity Car Pool. Nine metric tons of old deal slips donated for recycling.
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Cancellation of printed publications Print versions of three types of notification routinely sent to institutional investors are cancelled (Monthly Custody Statements, Stock Trading Notice - ANA - and Statements of BTC Securities Lending Transactions). Launch of Athletics Club entry category Childrens Club (Clubinho) opens at BM&FBOVESPA Sports & Cultural Center to train 160 children aged 6-12, and School opens to train 90 teenagers aged 12-19 at Campinas, So Caetano do Sul and So Jos do Rio Preto. October Presentation on Sustainability in Investment Decision Making Organized by the BM&FBOVESPA Institute of Education, for financial market professionals to show how environmental, social and corporate governance issues are increasingly an integral part of the analysis, management and assessment processes conducted by business organizations. Social technology Presentation of the social technology developed over 15 years by the BM&FBOVESPA Job Training Association, delivered by Maria do Carmo Brant de Carvalho, a professor of graduate studies at the Catholic University of So Paulo (PUC-SP), in partnership with Portal Busca Jovem. Second Em Ao (In Action) Day In Action is the BM&FBOVESPA Institutes program to promote engagement by employees as volunteers in social projects. This event, held on a Saturday, is attended by 68 volunteers and more than 100 children and youngsters at the Sports & Cultural Center in Paraispolis, and 60 youngsters at the Job Training Association in Brs. Training workshops are held for 45 volunteers. November Human Rights Survey The Exchange participates in a survey on Brazilian companies respect for human rights, conducted by Instituto Norberto Bobbio with support from the Plano CDE research institution. Launch of ETFs Launch of IT Now ISE, an exchange-traded fund (ETF) based on the Corporate Sustainability Index (ISE), and IT Now IGCT, an ETF based on the Corporate Governance Trade Index (IGCT). Third Conference of In Good Company (Em Boa Companhia) Corporate Sustainability Program The last event of the 2011 series focuses on Sustaina42

bility and Value Creation, aiming to develop comprehension of the relationship between sustainability, transparency and value creation. Presentation of the 2012 portfolio for the Corporate Sustainability Index (ISE). Launch of BM&FBOVESPA Code of Conduct for suppliers The aim of the document is to align BM&FBOVESPAs values with those of its suppliers. The Code of Conduct contains the basic principles to be followed and establishes a relationship grounded in ethics and transparency and sustained by mutual respect. Exhibition: How 15-year-olds see BM&FBOVESPA Job Training Association Images produced by young people at the BM&FBOVESPA Job Training Association and Sports & Cultural Center. Meeting of International Integrated Reporting Committee (IIRC) The IIRC, now the International Integrated Reporting Council, was set up in 2010 by the Global Reporting Initiative (GRI) and Accounting for Sustainability to oversee the creation of a generally accepted integrated reporting framework that connects financial statements, corporate governance and sustainability. The IIRC has some 40 members from the corporate, investment, accounting, securities, regulatory, academic and standard-setting sectors as well as civil society. Seminar on New International Demands in Corporate Governance Organized by BM&FBOVESPA in partnership with the Brazilian Corporate Governance Institute (IBGC) and the Global Reporting Initiative (GRI), the seminar discusses why companies should build sustainability parameters into the foundations of their business and integrate these parameters into their financial statements. December Em Ao (In Action) Bazaar Held to commemorate International Volunteer Day, bringing together employees and workers from several NGOs that partner with BM&FBOVESPA. Social Responsibility Day Donation of fees Every year the Exchange donates part of its fee revenue from a days trading in the stock market to all NGOs listed on the Environmental & Social Investment Exchange (BVS&A). In 2011 the chosen day is December 13 and as a result all nine projects listed on BVS&A complete their fundraising.

Engagement and partnerships for private social investment Private social investment activities are managed by the BM&FBOVESPA Institute, a public-interest civil society organization (OSCIP) whose mission is to contribute to national development through initiatives in education, welfare, culture, sports and socio-environmental responsibility. The So Paulo and Rio de Janeiro Job Training Associations, the Socio-Environmental Investment Exchange, the Athletics Club, and the Sports & Cultural Center are the pillars of the BM&FBOVESPA Institute. The company believes these concrete actions contribute significantly to social inclusion and development. The BM&FBOVESPA Job Training Association completed its 15th year in 2011, and several events were held to commemorate this anniversary. A systematization of the social technology developed was published and presented to various audiences with the aim of disseminating this knowledge. Presentations were made to the business sector in April, and to educationists and social organizations in August with a lecture by Colombian philosopher and educationist Bernardo Toro, and in October with the participation of Maria do Carmo Brant de Carvalho and the partnership of Portal Busca Jovem. The 15th anniversary was also the subject of a photographic exhibition unveiled in November, showcasing work by young people at the Job Training Association and Sports & Cultural Center. The Programa de Voluntariado em Ao (Volunteers In Action Program) completed a year in October 2011 and in December had 353 people registered with the Em Ao Portal, where employees and their families and friends can find out about and participate in many social initiatives during the year. Another highlight was the partnership between the BM&FBOVESPA Institute and IBM to bring together employees of both companies interested in volunteering to help the social projects of the Job Training Association and Sports & Cultural Center with IT services. In 2011 the BM&FBOVESPA Institute also held a week-long event called Em Ao (In Action) Bazaar to commemorate International Volunteer Day by bringing together employees and a number of NGOs that partner with the Exchange (Amigos do Bem, Apae Araras, Arrasto, Associao Viva e Deixe Viver, Doutores da Alegria, Ip and Lua Nova), selling arts and crafts produced by the respective

workshop at the Sports & Cultural Center. The proceeds were donated to the NGOs involved. Visitors were also able to dispose of electronic waste such as cell phones, batteries and chargers in special bins provided by Ip. Partnering with Nike, Po de Acar and the City of So Caetano do Sul, the BM&FBOVESPA Athletics Club is a home for athletes who constantly represent Brazil in major international competitions, such as the Olympic Games, World Championships, Pan American Games, marathons and Grand Prix Series. In 2011, maintaining the Athletics Clubs tradition, Fabiana Murer became the first Brazilian to win a gold medal in IAAF World Championships. Murer won the womens pole vault at Daegu, South Korea, as well as receiving a Brazilian Olympic Award for the second time.

Altogether, members of the Athletics Club have won 360 gold medals, 206 silver medals and 140 bronze medals. The team has won the Brazil Trophy, Interior Open Games and Regional Games ten times. Another athletics highlight of 2011 was the launch of the Clubs entry category, with a Childrens Club (Clubinho) opening at BM&FBOVESPA Sports & Cultural Center to train 160 children aged 6-12, and a Youth School opening to train 90 teenagers aged 12-19 at Campinas, So Caetano do Sul and So Jos do Rio Preto.
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Programs & projects SO1

Name Socio-Environmental Investment Exchange (BVSA) Scope Reproduces the stock exchange environment, connecting donors to Brazilian NGOs social and environmental projects. 2009 R$691,000 raised for 24 listed projects. 2010 R$645,000 raised for 19 listed projects. 2011 R$543,000 raised for 13 listed projects R$64,000 raised for 16 new projects to be listed in January 2012. Name Philanthropy Scope Institutional support for civil society organizations in health and social service. 2009 69 institutions received R$1.35 million. 2010 69 institutions received R$1.35 million. 2011 27 institutions received R$582,000. Implementation of institutional support policy with re-registration and technical visits to all institutions supported. Team of 89 athletes, including Fabiana Murer and Marilson Gomes, plus 19 technicians and medical team with physician, physical therapist, physiologist, nutritionist and psychologist. Tenth consecutive win of Brazil Trophy, Interior Open Games and Regional Games.

BM&FBOVESPA Sports & Cultural Center

Located in Paraispolis (SP), provides sports, arts and culture for 6-18 year olds, to foster integral development, and houses Norberto Bobbio Library with some 4,000 titles.

Average of 800 children and adolescents attended to and 1,257 book loans to 564 people.

Average of 800 children and adolescents attended to and 2,415 book loans to 694 people.

Average of 800 children and adolescents attended to and 930 book loans to 309 people (book loans and readers fell because library was closed for reorganization at certain times) 252 participants in So Paulo and 287 in Rio de Janeiro.

BM&FBOVESPA Athletics Club

Contributes to national development through social inclusion and training for high-performance athletes.

Team of 99 athletes. Eighth consecutive win of Brazil Trophy, Interior Open Games and Regional Games.

BM&FBOVESPA Job Training Association

Vocational training and personal development for low-income youth in So Paulo and Rio de Janeiro.

250 participants in So Paulo and 268 in Rio de Janeiro.

251 participants in So Paulo and 269 in Rio de Janeiro.

Team of 111 athletes. Ninth consecutive win of Brazil Trophy, Interior Open Games and Regional Games. Silver medal in Youth Olympics Cornerstone of Training center unveiled at So Caetano do Sul (SP)

Future actions & commitments Sustainability & engagement Draw up and implement BM&FBOVESPA Sustainability Policy. Continue engaging with companies, internal stakeholders and suppliers. Participate in Rio+20, launching Report or Explain campaign to encourage listed companies to report socio-environmental activities by including question in Reference Form asking whether and where they publish regular sustainability reports and if not, why. ISE (to 2015) Extend market disclosure. Increase participation of companies in selection process. Increase ISE investment volume and number of products tracked.
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Make ISE an investment benchmark. Strengthen communication channels

and dialogue with stakeholders. Pursue enhancement of the questionnaires scope and of the development process (refine methodology, company selection, verification etc.).

Support development of financial products that take Promote debates on sustainability involving companies, investors and the general public. Private social investment ment Exchange). sustainability into account.

Financial products

Relaunch BVSA website (Socio-Environmental Invest Increase engagement with youth education networks. Inaugurate Athletics Club Training Center.
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Strengthening the Market

BM&FBOVESPAs growth has always been driven by technological innovation and the introduction of products and services that provide liquidity and security for all investors.
Operating excellence In 2011 BM&FBOVESPA invested in new technology, products and services to offer more effective and secure instruments to investors and participants in its markets. The years highlights were completion of the first stage of implementation of the BM&FBOVESPA PUMA Trading System; delivery of DMA Co-location Broker Mode for the BOVESPA segment; advances in clearinghouse integration and post-trade instruments; and the introduction of new products and services. BM&FBOVESPA PUMA Trading System This new multi-asset trading platform developed in partnership with CME Group is one of the foundations of BM&FBOVESPAs growth. This is because a significant proportion of projects such as market popularization, greater high-frequency investor participation and the market maker program share the need for a scalable high-performance trading platform that remains stable as its capacity expands in line with steadily growing demand. The BM&FBOVESPA PUMA Trading System will replace all of BM&FBOVESPAs trading systems. The first stage was completed on schedule in August 2011, with migration of the entire GTS system (spot FX and derivatives) to the new platform. The markets migrated gradually to reduce risks in the system. For this reason the order of asset migration was defined on the basis of liquidity, starting with the least liquid and ending with the most heavily traded. Before the implementation of the first stage of the BM&FBOVESPA PUMA Trading System, seven mock trading sessions were held with the entire market, as were internal and external

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tests. Spot FX transactions migrated first, followed later by agricultural and financial derivatives including Ibovespa futures contracts and mini-contracts. Work continues on development of the BM&FBOVESPA PUMA Trading System, which will replace the Mega Bolsa, BOVESPA FIX and SISBEX systems currently responsible for processing trades in the equities, corporate bond and government bond markets respectively. It will integrate them into a single platform with high processing capacity and very low latency. Implementation of the BM&FBOVESPA PUMA Trading System for the BM&F segment has made the environment much more reliable for all investors:
capacity increased by a factor of 25 average latency reduced by a factor of 20 standard deviation of latency reduced by a factor of 300

operational, credit, market and liquidity risks to which a central counterparty is exposed, while maximizing efficiency and robustness. OTC platform In 2011 BM&FBOVESPA signed an agreement with USbased application software provider Calypso Technology, Inc. to license its solution for over-the-counter (OTC) trade registration and management. With this platform BM&FBOVESPA aims to modernize, upgrade and expand its OTC service, offering quality and agility to customers as well as a complete set of instruments for the analysis of self-regulation and regulatory activities. IPOs BM&FBOVESPA offers four premium listing segments for the stock market: Novo Mercado, Special Corporate Governance Levels 1 and 2, and BOVESPA Mais, each with specific corporate governance requirements in addition to the obligations of Brazilian corporate law (Lei das SAs). There were 11 initial public offerings (IPOs) and ten follow-ons in 2011. Desenvix Energias Renovveis joined Nutriplant on the BOVESPA Mais listing segment in 2011, meaning two issuers are listed on this segment now. BM&FBOVESPA ended 2011 with 125 issuers listed on the Novo Mercado segment, 38 at Level 1, and 19 at Level 2. At Magazine Luizas IPO, 34,496 individual investors acquired stock in the company. The total number of investors was 36,995.

BDRs

Twenty new Unsponsored Level I BDR programs were launched in 2011, ten by Banco Bradesco S.A. and ten by Ita Unibanco S.A.

Forty one brokerage houses have been awarded one or more quality seals by the PQO Certification Committee to date. Market development events Seminar on Going Public Your Company on the Stock Exchange In April 2011 BM&FBOVESPA and the Paran State Federation of Industry (FIEP) held a seminar on Going Public Your Company on the Stock Exchange for CEOs, CFOs and other senior executives of medium and large companies interested in obtaining information on the advantages of listing on the stock market. The event included a presentation about BOVESPA Mais, the listing segment created by BM&FBOVESPA for companies that wish to access the market gradually. Seminar on Prospects for Agribusiness in 2011 and 2012 In May 2011 BM&FBOVESPA and the Brazilian Ministry of Agriculture held a seminar on Prospects for Agribusiness in 2011 and 2012. The tenth edition of the event was attended by more than 700 people, for discussions on the main trends in Brazilian agribusiness and how the macroeconomic situation affects the sector. First and Second Brazil-China Capital Markets Forum In February 2011 BM&FBOVESPA and the Shanghai Stock Exchange (SSE) hosted the First Brazil-China Capital Markets Forum, in So Paulo. The event marked the start of activities under the Brazil-China Cooperation Agreement, which aims to foster mutual knowledge exchanges between broker-dealers, investors, banks, investment funds and market participants in both countries. The Second Forum was held in China in August. Memorandum of Understanding signed A Memorandum of Understanding signed in August 2011 between BM&FBOVESPA and the Shenzhen Stock Exchange (SZSE) calls for the consideration of various points of a regulatory framework for exchange listing by small and medium enterprises.

Flexible options
Flexible Call and Put Options on the IT Now IGCT Index Fund (GOVE11) Flexible Call and Put Options on the IT Now ISE Index Fund (ISUS11) Flexible Call and Put Options on the IT Now IFNC Index Fund (FIND11)

Derivatives
Cash-Settled Soybean Futures Contract and Options on Cash-Settled Soybean Futures Mini Euro Futures Contract Swiss Franc Futures Contract Chinese Yuan Futures Contract Turkish Lira Futures Contract Chilean Peso Futures Contract South African Rand Futures Contract

Direct Market Access (DMA) BM&FBOVESPA offers Direct Market Access (DMA): traditional (Home Broker), via provider, by direct connection, or via co-location - an array of possibilities that grants investors operational autonomy and permits greater speed, thus increasing efficiency when executing trades and capturing market opportunities. It also allows the development of trading strategies based on computer programs known as automated trading systems (ATS), or algorithmic trading, which enhance investors capacity to analyze prices simultaneously in several markets. In 2011 the Exchange allowed institutions in the same economic group to share DMA Co-location Investor Mode, and began offering Broker Mode for access to the BOVESPA segment. Clearinghouse integration In 2011 BM&FBOVESPA signed an exclusive agreement with the Swedish technology company Cinnober, by which the Exchange is granted a perpetual license for Cinnobers TRADExpress RealTime Clearing software. This is an advanced multi-asset clearing solution with the flexibility and capacity to process information and calculate risk in real time. TRADExpress RealTime Clearing will be an important instrument to accelerate and enhance the project to integrate the Exchanges four clearinghouses: for equities, derivatives, FX, and other securities. One of the highlights of this project is Close-out Risk Evaluation (CORE), a system developed to minimize the legal,
48 ANNUAL REPORT 2011 Strengthening the Market

Market makers Market makers undertake to guarantee minimum liquidity and facilitate price discovery for a certain number of assets accredited for this purpose, playing a key role in the efficiency of the capital markets. In 2011 BM&FBOVESPA held four competitive bidding procedures to select market makers for:

Options on the stocks of OGX Petrleo e Gs Participa Options on the stocks of BM&FBOVESPA S.A. - Bolsa
es S.A. (OGXP3) and Itu Unibanco Holding S.A. (ITUB4) de Valores, Mercadorias e Futuros (BVMF3) and Usinas Siderrgicas de Minas Gerais S.A. (USIM5), and on the BOVESPA Index (IBOV) Options on the stock of Banco Bradesco S.A. (BBDC4), Gerdau S.A. (GGBR4) and Banco do Brasil S.A. (BBAS3) Options on the stock of Companhia Siderrgica Nacional (CSNA3), PDG Realty S.A. Empreendimentos e Participaes (PDGR3) and Cyrela Brazil Realty S.A. Empreendimentos e Participaes (CYRE3) PQO BM&FBOVESPAs Operational Qualification Program (PQO) certifies the quality of the services provided by brokerage houses, encompassing customer registration, order execution, settlement, risk management, information and business continuity, among other processes. The Operational Qualification Program awards the Execution Broker, Carrying Broker, Retail Broker, Agro Broker and Home Broker quality seals.

New products BM&FBOVESPA launched a number of products in 2011:

Indexes
Corporate Governance Trade Index (IGCT) Public Utilities Index (UTIL) Basic Materials Index (IMAT) Dividend Index (IDIV) Brazil Broad-Based Index (IBrA)

ETFs
IT Now IFNC Index Fund IT Now ISE Index Fund IT Now IGCT Index Fund

BM&FBOVESPA

49

Market education and promotion

BM&FBOVESPA invests in education and popularization programs targeting various different audiences and markets.
10 years of market popularization BM&FBOVESPA is one of the worlds largest exchanges. This means Brazil is seen internationally as a country with more credibility and new possibilities, resulting in more security for investors and stability for the markets. To address the challenge of making the markets more accessible to all Brazilians who want to be partners in the countrys growth, BM&FBOVESPA offers a range of programs in which education is the key word. What began as a strategy to bring the stock market closer to the general public by explaining the key concepts and benefits of investing in shares as a form of long-term saving has become one of the worlds largest financial education programs, and certainly the largest developed by any exchange. The Exchanges initiatives reach millions of people every year, from children, women and adolescents to market professionals and investors in general. In the past ten years 1.9 million people have participated in the Exchanges face-to-face programs and 1.6 million people in its online programs, such as simulators and financial education websites. More than 70,000 households watch its weekly financial education program on TV Cultura, a public broadcaster. Educational videos produced by the Exchange were seen by 3.2 million people online via BM&FBOVESPAs website in 2011. The education campaign Quer Ser Scio?, broadcast on television nationwide in 2011, reached more than 10 million people via TV Globo alone. The campaign minisite registered 1.1 million visits in 2011.
50 ANNUAL REPORT 2011 Market education and promotion

BM&FBOVESPA

51 51

National Financial Education Strategy Understanding the importance of financial education for conscious and well-informed decision making on the use of money and investing, since 2007 BM&FBOVESPA has supported the National Financial Education Strategy (ENEF) developed by the Brazilian government. The Exchange was responsible for formulating the chapter that contains proposals for action to include financial education in the school curriculum. The impact of the ENEF pilot program for high schools, which covered some 900 schools with 26,000 students, was assessed in partnership with the World Bank to produce a global financial education case study in 2011. International Financial & Capital Markets Conference In 2011 BM&FBOVESPA, through the Institute of Education, organized the Fifth International Financial & Capital Markets Conference. The most important event of its kind in Latin America was attended by 800 people, putting Brazil at the forefront of global economic debate.

BM&FBOVESPA Goes Where You Are This program visits institutions (companies, schools, universities, associations, unions etc.), beach resorts, agribusiness cities, trade shows and other events to disseminate information about the many investment options offered by the Exchange. In 2011 it held 61 events with 10,885 presentations attended by 39,511 people. BM&FBOVESPA Challenge The BM&FBOVESPA Challenge is a competition that simulates the capital markets, targeting students of public and private high schools throughout So Paulo State. The project has involved more than 11,000 people since its creation. In 2011, the number of schools enrolled totaled 399 and the number of participants reached 1,067. The web version had 17 registered groups and 93 participants.

Participants in course on How to invest in shares

Total 9,493

Participants in online courses

Financial Education & Personal Finance Stock Market 88,664 59,330

Simulators The Exchange has created simulators in partnership with several institutions to enable anyone to learn how to invest in stocks, bonds and derivatives, and how to diversify and increase investments. The user receives a virtual amount of cash and can simulate stock and derivative trades in real time, create an investment portfolio, and win prizes. The number of users totaled 1,294,380 in 2011. The simulation website (SimulAo) recorded 2,121,906 hits.
Simulator Participants 73,296 740,319 217,096 118,614 14,894 14,210 1,924 114,027

Turma da Bolsa Financial education portal for children, with videos also aired on the Futura channel. In 2011 the portal had 8,582 registered children and recorded 23,323 visits.

Futures Folhainvest UOL Invest SimulAo Exame Banco do Brasil* Valor Econmico* Tesouro Direto *Launched in October and December 2011 respectively.

Financial Education TV Aired every Saturday by TV Cultura, a public broadcaster, with an average audience of more than 96,594 viewers. The programs website recorded 139,958 visits in 2011.

Educar The Educar (Educate) Program delivers lectures and financial education courses free of charge to different audiences of children, youth and adults. Its 552 courses had 32,178 participants in 2011. Institutional courses and lectures In addition to Educar, the Exchange offers online courses in personal finance and the stock market as well as institutional presentations. The tables below show the numbers of participants in 2011. Main popularization programs Visits to the Exchange Raymundo Magliano Filho Visitors Center Located on the ground floor of the building on Rua XV de Novembro, the Visitors Center welcomes 450 people a day on average. Visitors watch a 3D institutional video, presentations and a mock trading session. The number of visitors totaled 94,133 in 2011.
52 ANNUAL REPORT 2011 Market education and promotion

Women in Action Program that encourages women to use the investment options offered by the Exchange. The web portal presents spreadsheets to control expenditure, educational videos and forums. In 2011 it contained 97 published articles and recorded 6,969 visits. Quer Ser Scio? Website The website for this educational campaign contains a number of instructional videos on the capital markets, online courses and information about face-to-face courses, tips on investor profiles and how to start investing, help with choosing the right broker, clarification on market risks, and a customer care service. In 2011 it recorded 1.1 million visits.

Institutional presentation attendees

Primary schools High schools Universities Companies General public Total 340 2,574 10,885 4,687 5,813 24,299

Dinheiro no Bolso Produced by the channel in partnership with BM&FBOVESPA and launched in 2011 on the Futura channel, this is a financial education program in competition format for young people. It aims to encourage the new generations to consume consciously and manage their assets responsibly, transmitting concepts in economics, finance, investment, the stock market, credit and entrepreneurship in an attractive and playful manner.
53

BM&FBOVESPA

BM&FBOVESPA TV & Radio The Exchanges website offers a large number of videos with information on its products, local and international events, and many other services. It also offers music and high-quality financial education content. BM&FBOVESPAs radio audience grew in 2011. The Desafio (Challenge) radio station ended the year with 29,631 listeners, and the Mulheres em Ao (Women in Action) radio station with 35,718. The Web Radio station delivered financial education programs to 16,984 visitors and Mulheres em Ao programs to 333.

Fica Mais This is an incentive program enabling investors to score points and exchange them for products and services. Points are awarded for registering, holding stocks, referrals, and requesting cancellation of printed bulletins via the Investors Electronic Channel (CEI). In 2011 Fica Mais ended the year with 15,695 members, 4,558 referrals, 438 referrals accepted, and 75,447 hits. Cultural Space The Cultural Space is an area for exhibiting a wide range of art tendencies and styles. Visitors have the opportunity to appreciate works by renowned Brazilian and international artists, as well as exhibitions of a more historic hue. The number of people who visited the Space, located on the ground floor of the building at Praa Antonio Prado, totaled 13,217 in 2011.

Operating segments
n

Financial, Capital & Derivatives Market School Education, training and specialization for professionals in the financial services industry (brokerage houses, banks, investment funds etc.), as well as specific training courses to operate the systems managed by the Exchange. The School imparts the skills required to perform in compliance with the standards of excellence demanded by the markets. Investor School Dedicated to forming conscious investors who learn to trade all of the products that are available in the equities market. Enterprises and Entrepreneurs School Established to foster entrepreneurial culture and support the sustainable growth of business organizations of all sizes and levels of maturity, especially those that pursue innovation as a competitive advantage. Solutions for companies Specializing in the education and training of professionals who operate in the markets managed by BM&FBOVESPA, the Institute of Education offers a range of products tailored to the needs of companies and staff: Face-to-face, distance and mixed delivery courses Training sessions Seminars Presentations 100% customized in-company training

Paulo von Poser na BM&FBOVESPA Imagens da cidade de So Paulo

De 19 de janeiro a 8 de abril de 2011

iPad, iPhone & Android The Exchange offers several applications for free download with information on its markets, real-time indexes, stock quotes, commodities and futures, as well as charts and news. The apps are also available on social networks. Publications BM&FBOVESPA produces several electronic bulletins with information on its markets and indexes, including the Daily Bulletin (BD) and updates on the ISE and ETFs. Users can register to receive email notifications when bulletins are available on the website. The Exchange also periodically publishes informational leaflets about its markets and services, as well as supporting material for the various courses it offers, and the Nova Bolsa and Sntese Agropecuria magazines.

BM&FBOVESPA Institute of Education Of renowned experience, the Institute of Education focuses on disseminating knowledge about the capital and derivatives markets, offering courses with varying degrees of depth and breadth. It also has specific training to trade in the markets managed by the Exchange.
CatalogoVonPoser.indd 1 13/1/2011 13:18:52

Certification Program The BM&FBOVESPA Institute of Education offers certification of brokerage house professionals in back office, risk management, compliance, trading, sales and technology. This certification is one of the requirements of the Operational Qualification Program (PQO).

The number of participants in the courses delivered by the Institute of Education totaled 5,797 in 2011.

www.bmfbovespa.com.br/revista

No 12/ 2011

5
ENTREVISTAS

Congresso de Campos do Jordo:

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KENNETh Rogoff, EcoNomISTA

LuIzA hELENA TRAjANo, SupERINTENdENTE do mAgAzINE LuIzA

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The Institute seeks to introduce course participants to the most innovative elements in knowledge of the financial markets and business management, via partnerships and strategic cooperation with renowned institutions in Brazil and abroad. It also has its own faculty of experts and an infrastructure of classrooms and study labs. Its library has a large collection and computerized access to facilitate the work of researchers.
55

Environmental Performance
BM&FBOVESPA steps up environmental initiatives to boost eco-efficiency.
Social responsibility, efficient consumption of water and energy, management of greenhouse gas emissions and waste reduction are recurring themes in the everyday activities of BM&FBOVESPA. The company constantly promotes internal and external actions that aim not only to reduce costs but also to contribute to improvements in the quality of life of its employees and society as a whole. Greenhouse gas emissions (GHG) In 2010, as its first environmental initiative, BM&FBOVESPA inventoried greenhouse gas emissions using 2009 data in response to the Carbon Disclosure Project (CDP). The 2011 GHG inventory, using data for 2010, extended the process to include emissions attributable to the BM&FBOVESPA Institute and offices of the Bolsa Brasileira de Mercadorias. The document was verified by ICF International, a US-based consulting firm that specializes in climate change policy. In addition, to assure full disclosure the Exchange posted its GHG inventory on the National Public Registry, an initiative of Brazils GHG Protocol Program, winning a Gold Seal for filing a complete inventory verified by a third party (www.registropublicodeemissoes.com.br ). Based on this inventory BM&FBOVESPA identified the three main sources of indirect GHG emissions air travel, electricity consumption and employee commuting and took steps to minimize their impact. Since February 2011 BM&FBOVESPA has kept employees informed about the volume of GHG emissions generated by taking a taxi during work hours. Monthly reports based on the mileage recorded by receipts or T&E expense slips are sent to departmental officers. BM&FBOVESPA is taking steps to offset the GHG emissions generated by the Fifth Financial & Capital Markets Conference, held at Campos do Jordo in So Paulo State, by planting trees that are native to the Atlantic rainforest. The Exchange commissioned a GHG inventory spe56 ANNUAL REPORT 2011 Environmental Performance

BM&FBOVESPA

57

cific to the conference and is partnering with SOS Mata Atlntica to plant four trees per metric ton emitted. Some 1,300 trees will be planted to offset these emissions. All waste from the conference was separated and offered to the City of Campos do Jordo for recycling. The canvas flats used as part of the stage design for the conference platform were donated to a social organization. Fliers and other conference materials were printed on certified paper. At the Fifth Conference the company showcased its main initiatives, such as the Sustainability Manifesto, the Carbon Efficient Index (ICO2) and the Corporate Sustainability Index (ISE). Environmental performance indicators

Green IT BM&FBOVESPA prioritizes green IT, consisting mainly of server virtualization whereby one powerful server is divided into multiple virtual environments to save electricity and other energy-hungry resources, such as air conditioning, batteries and generators. The impact of this initiative can be gauged from the comparatively small number of servers needed to operate the business. The 2011 GHG inventory has not yet been produced. The process is scheduled to begin in January 2012, with finalization due in May. The inventory will be posted on the Exchanges website.

Indirect GHG emissions Scope 3 (in metric tons of CO2)

Air travel Third-party logistics services Employee commuting Taxis Mileage refunds Total indirect emissions

EN17

2009 434.55 7.11 240.76 52.71 735.13

2010 1.242.30 38.33 386.13 65.80 2.58 1,735.14

Note: Scope 3 accounts for most GHG emissions owing to the nature of the companys business. In 2010 Scope 3 emissions corresponded to 59.53% of the total, led by air travel with 42.6% of the sources considered. One of the reasons for this is the partnership with CME Group and the resulting need for travel to Chicago (154 plane tickets were issued in 2010 vs. 28 in 2009). Emissions from employee commuting rose owing to 28.3% workforce expansion and an increase in the number of units inventoried.

Main initiatives to mitigate environmental impact EN18 EN26

Main sources of emissions Air travel Mitigation

Indirect energy consumption by primary energy source EN4 (in gigajoules)

Energy source Electricity (GJ) 2009 65,881 2010 69,052 2011 79,696

Telepresence room installed More meetings via conference calls Elevators and air conditioning equipment modernized (building on Rua XV de Novembro) CRT monitors swapped for LCD monitors Sign in elevator lobby recommending the use of stairs to go up one or down two floors (all buildings) Bike rack installed (building on Rua Florncio de Abreu) Ride sharing program in partnership with Caronetas

Electricity consumption

Energy saving due to conservation and efficiency improvements EN5 (in gigajoules)
Improvement Extra bulbs on stairs in Praa and XV buildings deactivated Elevator in Praa building deactivated during offpeak hours 2010 210 21 119 350 2011 210 21 92 323

Commuting by employees

Note: EN18 partially reported (no measurement of reductions obtained).

Direct and indirect GHG emissions and electricity consumption Scope 1 & 2 EN16 EN19 EN20 (in metric ton of CO2)
2009 Generators LPG Natural gas Fire extinguishers Cooling gas Own fleet Electricity Total direct & indirect emissions 46.29 11.76 0.24 323.75 7.31 453.31 842.66 2010 28.47 0.70

Rules on weekend use of air conditioning Total

Total volume of water withdrawn by source EN8

2009 2010 40.503 2011 41.659 Total water consumption (m3/year) Note: Source is water utility (Sabesp). 35.930

5.17 24.94 86.60 9.68 1,024.10 1,179.66

Total weight of waste by type and disposal method EN22

2009 Non-hazardous waste Restaurants, organic & non-recyclable (WCs) Disposal Landfill Weight (t) 146.54 Disposal Landfill 2010 Weight (t) 78.64 Disposal Landfill 2011 Weight (t) 100.392

Note: Scope 2 emissions (electricity consumption) rose owing to two factors: a rise of 28.3% in the number of employees (from 1,079 in 2009 to 1,384 in 2010); and installation of new equipment to increase processing capacity and for new projects such as the BM&FBOVESPA PUMA Trading System (from mid-2010). Another contribution came from a change in the national grids emissions, which averaged 0.0512 metric tons of CO2e per MWH in 2010 vs. 0.0246 metric tons of CO2e per MWH in 2009. BM&FBOVESPA does not emit any ozone-depleting substances, NOx or SOx.
58 ANNUAL REPORT 2011 Environmental Performance

Recycling

Sold

81.2

Sold

73.41

Sold

82.02

BM&FBOVESPA

59

Hazardous waste
2009 Toner cartridges1 Bulbs2 Batteries3 Healthcare (outpatient clinics)4 Returned Correct disposal5 Correct disposal5 Incinerated 0 0 0 0 Returned Correct disposal5 Correct disposal5 Incinerated 2010 0 2,863 units 0 0 Returned Correct disposal5 Correct disposal5 Incinerated 2011 292 units 1,835 units 0.08 0.01895

Notes: 1. Copiers and printers are leased. BM&FBOVESPA returns toner cartridges to the leasing company, which is responsible for final disposal. 2. Bulbs are counted by unit not by weight. Not counted in 2009. 3. Batteries disposed of by garbage collection utility. Not counted by BM&FBOVESPA. 4. Healthcare waste from outpatient clinics is collected by the municipal government, which is also responsible for incineration. 5. Correct disposal: batteries and bulbs sent to firms that specialize in decontamination before disposal.

Other initiatives to mitigate the environmental impact of products and services

Initiative Reduction in plastic consumption 2010 269 water bottles in April reduced to 82 in October by installation of water coolers. No reduction. 3.14% reduction between August and September. 22.49% reduction in volume of printed material between August and September. 2011 82 water bottles reduced to 10.

Reduction in water consumption Reduction in taxi use Reduction in printed paper

No reduction. No reduction. No reduction.

Operational and Financial Performance

Waste collection in 2011 (in kg)

Item Paper Cardboard Plastic Metal Glass Batteries Total Item Paper Cardboard Plastic Metal Glass Batteries Total January 3,819.10 971.39 1,978.80 30.82 46.20 0.00 6,846.31 August 3,659.33 1,320.68 1,746.42 29.36 45.74 7.20 6,808.73 February 3,581.70 1,051.76 2,183.00 37.48 80.03 0.00 6,933.97 September 4,346.44 943.97 1,687.98 43.02 57.70 17.20 7,096.31 March 4,034.00 923.00 2,208.00 10.00 110.00 0.00 7,285.00 October 3,964.53 849.70 1,643.64 14.32 26.58 39.80 6,538.57 April 3,378.08 2,165.41 1,430.61 23.64 59.28 0.00 7,057.02 November 4,292.44 1,805.78 1,706.70 33.00 55.40 0.00 7,893.32 May 4,542.79 1,322.28 1,727.00 23.62 18.50 12.68 7,646.87 December 2,609.00 1,121.00 1,946.00 53.45 52.60 0.00 5,782.05 June 4,938.75 1,207.35 1,557.37 78.74 91.28 0.00 7,873.49 Total 45,905.87 16,601.44 21,350.72 398.03 674.91 84.70 85,015.67 July 2,739.71 2,919.12 1,535.20 20.58 31.60 7.82 7,254.03

BM&FBOVESPA has carried on the strategies that will allow full fruition of opportunities offered by the Brazilian market.
Macroeconomic conditions After two years of feeble and uneven recovery from the financial crisis, the global economic and financial landscape in 2011 unveiled persistent weaknesses in developed economies. Events as the Eurozone sovereign debt crisis and market mistrust that European policy makers would successfully implement necessary fiscal adjustment programs in countries as Italy, Spain and Portugal, but particularly in Greece; the downgrading of the U.S. credit rating; the problem of deteriorating output growth; and the fears about Chinas economic slowdown, whose uncertainties lie in its size, all made up for an uneasy economic landscape. Meanwhile, in the domestic front, the economy experienced contrasting half-year periods as Brazils government made sensitive trade-offs between objectives and implemented measures shifting policy directions. Over the first half of the year, signaling concern about existing inflationary pressures, the government repeatedly raised the benchmark interest rate (Selic), adopting macroprudential measures to curb credit growth and consumer demand, and to arrest the persistent currency appreciation, in the latter case by expanding the taxation of financial transactions (IOF) and increasing the rates of existing IOF levies, among other things. In the second half of the year, as the U.S. debt-ceiling crisis threatened global markets, and the Eurozone sovereign debt crisis deepened, putting the global economies, including Brazil, in further peril; and as expectations for domestic GDP growth in 2011 and 2012 pointedly declined (see the chart below), while industrial production weakened, the Brazilian government responded with fresh urgency in reducing the benchmark rate, shifting policies to incentivize consumer spending on durables, cutting taxes and loosening credit restrictions in an effort to stave off economic slowdown.
61

In 2011 there were no fines or non-monetary sanctions for non-compliance with environmental laws and regulations. EN28

60 ANNUAL REPORT 2011 Environmental Performance

BM&FBOVESPA

Evolution of expectations for GDP growth in Brazil (median, in %)

5.0 2011 4.5 4.0 3.5 3.0 2.5 2012

lending facility (BTC), which shot up nearly 50.0% from one year ago; and (ii) the volume of trading on our Treasury Direct platform, which spawned over 50.0% new registered traders and an equally high jump in the volume of government bonds under custody. However, as with the Bovespa Index (Ibovespa, the main indicator of the Brazilian stock market average performance), which tossed 18.1% on a year-over-year basis, the performance of BM&FBOVESPA shares (BVMF3) over 2011 was negatively influenced by the macroeconomic landscape, the unexciting performance of average volumes, the introduction of government measures to curb currency appreciation, and by news about possible competitor. As a result, while BVMF3 stocks remained the 8th most actively traded in the market, with average financial value traded at R$146.0 million and daily average volume of 13 thousand trades, the market price of our shares took a 25.4% year-on-year dive. Our commitment towards controlling costs and expenses remains unwavering. It drove us to successfully bring them down the 2011 budget, such as announced in November 2011, and prepare our 2012 opex budget to match the improved results we achieved by setting the expense target at a lower range than originally proposed for the 2011 budget. We also reaffirm our steadfast commitment towards returning for shareholders by consistently distributing dividends and interest on shareholders equity at least in the equivalent of 80% of the net income, and by establishing share buyback programs, such as the one now ongoing, based on which we repurchased over 57 million shares in 2011 at a total of approximately R$606.0 million.

A year-over-year analysis of the fourth quarter, however, shows the market capitalization of listed companies declined towards the year end, which was an important driver of low-key market impetus to pursue profits in cash equities prompting a 5.5% tumble in average daily volume. On the other hand, turnover velocity for the quarter to December surged to 69.3% from 66.6% in the quarter to September softening the impact on volume from the dive in average market capitalization. In the options market the average daily trading value plunged 10.3% from the prior year due primarily to significant concentration of trading in options on Petrobras and Vale stocks, whose the average value traded plunged 18.8% on a year-over-year basis. Options on Petrobras and Vale stocks accounted for 79.5% of the overall average value traded for that market in 2011. Moreover, retail traders, who typically account for substantially most of the volume (54.1% of the overall value traded on the options market in 2011), showed lukewarm disposition to trading in equity options. The forward market saw a similar trend, with average daily volume retreating 19.9% year-on-year, as retail traders and institutional investors showed less trading activity. An analysis of 2011 volumes by sector stocks shows the average daily trading value in basic materials stocks (such as Vale, CSN, Gerdau and Braskem and other raw materi-

Source: Central Bank of Brazil.

als companies) dropped 8.8% year-on-year. Basic materials stocks accounted for approximately 21.0% of the overall average daily traded value in cash equities. Another highlight, the average daily traded value in oil, gas & biofuel sector stocks (covering exploration and development of oil or gas reserves, oil and gas drilling, and biofuel companies, including top-traded Petrobras stocks) tumbled 11.6% year-onyear. Oil, gas & biofuel sector stocks accounted for 16.5% of the overall ADTV in cash equities. On the other hand, the ADTV in financial sector stocks (a financial services category which includes stocks of banks, insurance companies, credit card issuers, real estate developers and exchanges) went up 12.6% from the earlier year. Financial sector stocks accounted for roughly 19.0% of the overall volumes.

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Some of the governments macroprudential measures had a direct impact on the domestic capital markets, including markets BM&FBOVESPA operates. Such was the case, for example, when in July 2011, seeking to stem hot money inflows to halt the currency appreciation, as the real rate had fallen to nearly R$1.50 to the U.S. dollar, the government broadened its financial transactions tax (IOF tax) to charge increases in short dollar exposures at a 1% rate. Then, in December, a welcomed switch when the government removed the 2% IOF tax charged on hot money inflows for investments in equity securities and equity-based derivatives for non-residents.

Bovespa segment Evolution in number of trades (in thousands)

Markets Cash Forward Options Total Markets Cash Forward Options Total 2007 113.6 1.8 37.5 152.9 2008 195.1 2.2 47.8 245.1 2009 270.6 1.3 60.4 332.3 2010 349.8 1.6 79.3 430.6 2011 476.5 1.1 89.6 567.2 CAGR Var. (2007-11) 2011/2010 43.1% -10.3% 24.3% 38.8% 36.2% -26.7% 13.0% 31.7%

4Q10 1Q11 2Q11 3Q11 4Q11 385.9 1.5 81.0 409.2 1.4 89.8 422.1 1.3 80.2 540.6 1.0 86.2 530.6 0.9 102.5

Var. Var. 4Q11/4Q10 4Q11/3Q11 37.5% -38.1% 26.6% 34.9% -1.8% -5.2% 19.0% 0.7%

468.4 500.4 503.6 627.7 632.0

Operating highlights
Operating performance highlights for 2011 within the BM&F segment include a 7.8% year-on-year rise in average daily traded volume in derivatives and a new record for the segment. This climb is attributable primarily to the volume of trading in Brazilian-interest rate futures contracts, the most actively traded contracts, followed by index-based futures and mini-sized contracts, whose year-on volumes soared 37.9% and 51.4%, respectively, and U.S. dollar-denominated interest rate futures contracts, with a 61.9% year-on surge in trading volume. Trading volume for the stock market (Bovespa segment) was virtually unchanged from the earlier year, which is explained by a number of reasons but primarily and more so towards the latter half of the year by dwindling expectations that market forecasts could still be beaten. This prompted a decline of the market capitalization of listed companies as the year drew to a close, with total average market capitalization of the stock market in the second half of 2011 giving back 10.0% first semester. Nonetheless, outstanding segment highlights include (i) the volume of business registered at our securities
62 ANNUAL REPORT 2011 BM&FBOVESPA Operational and Financial Performance

Bovespa segment Average daily traded value evolution (in R$ billions)

CAGR: 7.3 % : 0.0 % : -5.5 % : -2.7 %

4.9

5.5

5.3

6.5

6.5

6.8

6.7

6.2

6.6

6.4

Operating performance Bovespa segment The average daily trading value of R$6.5 billion for 2011 picked up just a thread from the earlier year, but still enough to hit an all-time record. This virtually unchanged performance is a result of a 1.3% year-on-year climb in average capitalization of the stock market and a slight increase in turnover velocity (to 64.2% from 63.8%), driving a 1.1% rise in volume traded in cash equities. This climb, however, was quashed by a slump in combined average daily trading value in the forward and options markets. The analysis of average daily trading value for the last five-year (2007-2011) and three-year (2009-2011) periods shows compound annual growth rates (CAGR) of 7.3%, and 10.8%, respectively.
2007 2008 2009 2010 2011 4Q10 1Q11 2Q11 3Q11 4Q11

Bovespa segment Exchange average market capitalization and turnover velocity

56.4% 63.2% 66.6% 63.8% 64.2% 61.8% 61.8% 59.5% 69.3% 66.6%

2.0

2.0

1.8

2.3

2.4

2.5

2.5

2.5

2.2

2.2

2007

2008

2009

2010

2011

4Q10

1Q11

2Q11

3Q11

4Q11

Average Market Capitalization (BRL trillions)

Turnover Velocity (%)

63

The average number of daily trades increased on both a year-on-year and quarter-on quarter basis primarily as a result of increased high frequency trading activity, which are characterized as being quantitative users small orders, driving down the average ticket size per trade. In any event, we should note that our trading and clearing systems offer much greater throughput capacity than the current volume of business, and are ready to support the future growth of our markets. The equity offering market slowed down over the year, with just 11 IPOs and 11 follow-on offerings, which in the aggregate raised gross proceeds of R$18.0 billion, far below the results for previous years. The slump was sharper in the second half of the year, as 14 of these 22 offerings were completed in the first two quarters to amass 77.4% of the overall gross proceeds from offerings carried out over 2011. The number of active custody accounts at end of 2011 fell to 611.2 thousand from 640.2 thousand one year earlier, being retail investors the bulk of this retreat. The retail average daily traded value plunged 18.6% year-on-year to R$1.4 billion. In turn, the average daily traded value by foreign investors soared to R$2.3 billion from R$1.9 billion one year earlier, much of it explained by growth in high frequency trading since foreign investors account for most of the high

frequency volume. In addition, the net flow of foreign investments hit R$7.4 billion, with a substantial chunk directed to the equity offering market, as foreign investments leaving the secondary market outstripped foreign inflows to close the year with negative net balance of R$1.4 billion. We should note that some of our recently developed investment offerings have been remarkably successful. This translated into outstanding performance, for example, in the case of the ETFs. The average daily traded value in ETFs (there are ten currently trading, three of which started in 2011) soared 70.7% year-on-year, and in a comparison of the quarters to December jumped 107.1% year-over-year. In addition, we have been yielding positive results from the initiatives we took to boost technology and facilitate access to our markets, particularly through co-location arrangements, and from the discount pricing policy introduced in late 2010. For example, high frequency value traded increased significantly, shooting the daily average up by 10.3% year-on-year and the average for the quarter to December by 146.2% from the year-ago fourth quarter. Finally, in December 2011 the Brazilian government removed the 2% IOF tax charged on inflows for investments in equity securities and equity-based derivatives, which it first introduced in October 2009 in an attempt at curbing currency appreciation. While the true effects of this rather recent regulatory movement have yet to be properly as-

Bovespa segment Net flow of foreign investments (in R$ billions)

43.2 28.3

Secondary Market Public O ers Total

8.7 7.4 (1.4) 2.9 4.4 7.3 (2.6) 3.7 1.1 1.4 4.3 5.7 0.8 0.8 1.5 (1.0)

20.5 22.7 9.1 6.0

22.4

0.0 (1.0)

(15.5) (24.6)

2008

2009

2010

2011

4Q10

1Q11

2Q11

3Q11

4Q11

Bovespa segment Average daily traded value in ETFs (in R$ millions)

CAGR: 61.7% : 70.7 % : 107.1 % : 23.5 %

48.7 18.6 28.5 32.1

53.8 39.5 34.8

66.4

2009

2010

2011

4Q10

1Q11

2Q11

3Q11

4Q11

Bovespa segment HFT average daily trading volume (buy + sell sides) (in R$ billions)
10.3%
0.17

10.3%
0.15 0.25

Bovespa segment Equity offerings (in R$ billions)

70.1
14.5

74.4 34.3 45.9

22.2 26.8 7.5
2008 2009

6.1% 4.3%
63.2 0.21 0.18 0.19 0.16
4Q10 1Q11

7.4%
0.18 0.27 0.45
2Q11 3Q11

0.32

% of overall market
0.84 0.92
ADTV (Institutionals) ADTV (Individuals) ADTV (Foreigners)

30.4 8.8
2004

0.29 0.32

13.9
4.3 4.5
2005

15.1 8.5 5.4

2006

55.6

18.0
11.2
2010 2011

Total
10.8 7.2
Follow on IPOs

15.4
2007

23.8

4Q11

* In 2010, If we were to include the oil reserves assignment the Brazilian government and Petrobras have agreed, the total gross proceeds from offering would rise to R$149.2 billion.

BM&F segment ADTV and average rate per contract (RPC)

1.524 1.223 1.365 1.134 1.106 1.099 1.040 1.127 1.106 1.157

Bovespa segment ADTV evolution by investor category (in R$ billions)

4.9 5.5
0.1 0.5 1.7 1.5 1.1
2007 2008

0.2 5.3 0.1 0.4 2.0 1.5 1.5

2009

6.5

0.4 1.8 1.4 1.6

2010

0.1 0.5 1.9 2.2 1.7

6.5

0.1 0.6 2.3 2.2 1.4

6.8

0.2 0.6 2.3 2.2 1.5

6.7

0.1 6.2 0.1 0.6 0.6 2.3 2.1 2.3 1.5 2.1 1.3
2Q11

6.6

0.1 6.4 0.1 Total 0.6 0.6 Others Companies 2.3 2.4 2.2 1.5 2.1 1.3
4Q11

Financial Institutions Foreign Investors Institutional Investors Individuals

1.7

1.6

2.5 1.5

2.7

2.6

2.9

2.7

2.8

2.5

2007

2008

2009

2010

2011
ADTV (millions)

4Q10

1Q11

2Q11

3Q11

4Q11

2011

4Q10

1Q11

3Q11

RPC (BRL)
65

64 ANNUAL REPORT 2011 BM&FBOVESPA Operational and Financial Performance

sessed, it surely removes a competitive barrier which had given an edge to ADRs traded on U.S. markets and OTC investment alternatives offered abroad by global banks, such as TRSs (total return swaps), and may well boost foreign investment inflows driving an upsurge in trading volumes. BM&F segment The 2011 average daily trading volume climbed 7.8% year on year to hit 2.7 million trades in futures contracts and other derivatives, the highest on record for the derivatives markets (BM&F Segment). An analysis of average daily trading volume for the most recent five-year (20072011) and three-year (2009-2011) periods shows CAGRs of 11.6% and 33.2%, respectively. Brazilian-interest rate contracts make up the most actively traded contract group in the derivatives segment. The average daily volume for these contracts went up 6.7% yearon-year, which is explained primarily by two important factors, one being structural growth, the other market uncertainties about the direction of the Brazilian Governments monetary policy. The structural growth factor correlates with economic growth in Brazil and the demand for hedge instruments it engenders. Heightened exposure to fixed interest rate risk incurred in transactions entered in the private lending market or the government bonds market increases the

demand of lenders and debt security holders for hedge instruments capable of eliminating or mitigating risk that interest rates or a fixed rates implied volatility will change. According to data compiled by the Central Bank, at December 31, 2011, the overall volume of fixed-rate lending had climbed 20.1% year-over-year, to R$747.2 billion from R$622.4 billion one year ago, whereas the portion of national debt paying fixed rates had grown 12.2%% to R$682.6 billion from R$608.4 billion the year before. Market uncertainties about the direction of the Brazilian governments monetary policy are a second factor to explain the heightened volume of trading in Brazilian-interest rate contracts. The governments trade-offs between objectives and shifts in policy direction translate into volatility triggered by uncertainty and differing expectations by market participants about the direction of the benchmark rate and, thus, other interest rates as well. Early in the year Brazils government adopted a restrictive monetary policy and the Central Bank raised the benchmark rate by 175 bps (to 12.5%) by July 2011. In August, in response to a deteriorating global economic outlook and slowdown in Brazil, the Central Bank caught the market unawares in a turnabout move that started a rate cut cycle with a 50 bps reduction in the interest rate. Policy shifts and uncertainties about the direction and pace of the changes in benchmark rate explain the record volumes traded in Brazilianinterest rate contracts, particularly over the quarters to March and September 2011.
CAGR 2007-2011 16.1% 1.2% 2.4% 12.7% 7.1% 18.6% 0.5% 11.6% Var. 4Q11/4Q10 -16.4% -0.3% 79.8% 22.9% -31.9% 69.0% -15.2% -6.1% Var. 2010-2011 6.7% -8.3% 37.9% 61.9% 2.6% 51.4% -8.9% 7.8% Var. 4Q11/3Q11 -15.4% -6.9% 11.4% -13.6% -40.2% -15.4% -9.4% -12.4%

However, in the quarter to December 2011 market expectations had converged and there was little doubt about the governments moves to bring the reference rate down over time. As a result, the average daily volume traded in Brazilian-interest rate contracts tumbled 16.4% when compared to the same quarter one year earlier. Additionally, in July 2011, in an attempt at stemming hot money inflows to curb the appreciation of the Brazilian real to the U.S. dollar, the government broadened its financial transactions tax (IOF tax) to charge increases in short dollar exposures at 1%. Operating and financial data available thus far show this move had a rather negative impact on volumes traded in FX derivatives. A comparison of similarly volatile periods both before and after the governments move suggest this new tax prompted a 20% tumble in average daily trading volume, to 544.1 thousand contracts from 670.2thousand contracts previously. Moreover, the average daily volume traded in Index-based derivatives contracts soared 37.9% year-on-year primarily due to increased volatility over the year, in particular the

second half of the year, and due also to heightened activity by high frequency traders. The average RPC has dropped 2.5% year-on-year across derivatives markets due mainly to: Year-over-year changes in the mix of derivatives contracts more actively traded, where volumes traded in U.S. dollar-denominated interest rate contracts and mini-sized contracts (the rates for which are lower than the average for other contract groups) built up to account for 5.4% and 4.2% of the overall volume for 2011 versus 3.6% and 3.0%, for 2010, respectively, whereas volumes traded in forex contracts accounted for a share of 18.3% of overall volume for the year versus 21.6% previously; and Year-on falls of 17.6% and 1.8% in average RPC charged for trades in U.S. dollar-denominated interest rate contracts and forex contracts, respectively, are explained by a 5.8% year-over-year average appreciation of the Brazilian real against the U.S. dollar, since our rates for these contracts are denominated in U.S. dollars.

BM&F segment Exchange rate volatility (R$ : US$)

35% 30% 25% 20% 15% 10% 5% 0%

Vol-DOL (R$/US$) Var. Margin

2009

2010

2011

Interest Rates in BRL FX Rates Stock Indices Interest Rates in USD Commodities Mini-contracts OTC Total

2007 988.1 473.0 112.0 90.0 10.1 57.8 11.5 1,742.4

2008 788.7 534.9 87.6 96.2 14.9 40.5 12.4 1,577.2

2009 843.5 447.1 80.0 78.3 10.2 52.6 9.3 1,521.0

2010 1,683.6 540.6 89.4 89.7 12.9 75.6 12.9 2,504.7

2011 1,797.2 495.5 123.3 145.2 13.2 114.4 11.7 2,700.6

BM&F segment Average rate per contract (RPC) (in Brazilian reais)
Interest Rates in BRL FX Rates Stock Indices Interest Rates in USD Commodities Mini-contracts OTC Total Interest Rates in BRL FX Rates Stock Indices Interest Rates in USD Commodities Mini-contracts OTC Total 4Q10 0.860 1.978 1.719 1.134 2.416 0.126 1.462 1.099 2007 0.950 1.859 1.501 0.942 3.194 0.054 2.111 1.223 1Q11 0.843 2.016 1.639 1.102 2.013 0.142 1.393 1.040 2008 1.140 2.062 2.142 1.257 3.585 0.162 2.355 1.524 2Q11 0.930 1.847 1.753 0.893 1.948 0.137 1.682 1.127 2009 0.979 2.161 1.619 1.357 2.307 0.176 1.655 1.365 3Q11 0.975 1.773 1.493 0.868 1.886 0.121 1.658 1.106 2010 0.889 1.928 1.564 1.142 2.168 0.128 1.610 1.134 4Q11 0.939 1.979 1.626 0.940 2.420 0.127 1.911 1.157 2011 0.918 1.894 1.614 0.941 2.029 0.129 1.635 1.106 Var. 4Q11/4Q10 9.1% 0.1% -5.4% -17.1% 0.2% 0.7% 30.7% 5.3% Var. 2011/2010 3.3% -1.8% 3.2% -17.6% -6.4% 0.8% 1.6% -2.5% Var. 4Q11/3Q11 -3.8% 11.6% 8.9% 8.3% 28.3% 4.7% 15.2% 4.6%
67

Interest Rates in BRL FX Rates Stock Indices Interest Rates in USD Commodities Mini-contracts OTC Total

4Q10 1,832.6 490.6 88.8 100.3 14.9 78.0 11.3 2,616.5

1Q11 2,127.0 422.0 87.7 127.5 10.3 76.7 14.5 2,865.8

2Q11 1,719.8 543.4 101.4 186.8 15.2 91.2 12.3 2,670.2

3Q11 1,810.3 525.1 143.4 142.7 17.0 155.7 10.6 2,804.7

4Q11 1,532.2 489.0 159.6 123.3 10.2 131.7 9.6 2,455.6

66 ANNUAL REPORT 2011 BM&FBOVESPA Operational and Financial Performance

jul aug sep oct nov dec jan feb mar apr may jun jul aug sep oct nov dec jan feb mar apr may jun jul aug sep oct nov dec

BM&F segment ADTV (in thousands of contracts)

BM&F markets saw contrasting changes in the level of activity by investor category. While the volume of trading by financial institutions gave back 3.6% year-on-year and their share of the overall volume fell to 38.1% over the year from 42.4% in 2010, they remain as the most active group of traders in derivatives. In turn, institutional investors accounted for 32.5% of the overall volume (up from 29.6% one year ago), whereas foreign investors accounted for 23.0% of the overall volume (virtually a flat line from 22.4% in the prior year). Moreover, high frequency traders accounted for 6.0% of the overall volume for the year after hitting the unprecedented daily average of 306.3 thousand contracts (buy and sell sides). Additionally, we have yielded positive results from growth-driven initiatives started in 2009 (when we introduced direct market access - DMA alternatives as co-location arrangements, and reshaped our pricing policy for these investors), as expressed in CAGR of 112.8% for the high frequency average daily trading volume in the period from 2009 to 2011. Securities lending (BTC, the securities lending facility) Securities lending has sustained the growth trend seen one year ago. The average daily value of open interest positions climbed 47.1% year-on-year, whereas the average daily number of lending and borrowing transactions registered at our securities lending facility jumped 45.4% year-on-year. Securities lending serves demand from trading or arbitrage strategies, is important to short selling and serves borrowing demand to avoid settlement fails. This growth in securities lending and borrowing unveils the increasing sophistication of participants in the domestic capital markets. Treasury Direct Treasury Direct (Tesouro Direto) is a program we established in cooperation with the Brazilian Treasury and a platform we operate through our central securities de-

pository for retail investors to trade in government bonds through the Internet and directly with the National Treasury. The number of retail traders actively doing business through this platform soared 56.7% year-on-year, to 77.0 thousand from 49.0 thousand previously, whereas the volume of Brazilian Treasury securities under custody at our depository jumped 61.1%, to R$7.5 billion from R$4.7 billion one year earlier. This growth reflects our successful strategies to further develop this investment alternative, including through incentives granted to brokerage firms that operate as part of the distribution network. Financial performance Revenues Gross revenues for 2011 of R$2,116.0 million were up 0.2% year-on-year primarily due to a 5.3% rise in revenues from trading and settlement fees earned in our BM&F segment and a 15.0% climb in other revenues unrelated to trading and settlement, which however were quashed by an 8.1% year-on decline in revenues from trading and settlement fees earned in our Bovespa segment. Revenues from trading and settlement fees earned in the Bovespa segment. Revenues under this line item accounted for 45.6% of total gross revenues and amounted to R$964.7 million, an 8.1% tumble from the prior year which reflects the 5.6% drop in revenues from trading in equity securities and equity-based derivatives and from posttrade services for these markets (combined revenues from Trading and Settlement fees1). This drop is explained primarily by virtually unchanged average volumes coupled with a slump in basis point margins (5.79 bps versus 6.19 bps one year ago). This margin decline is due mainly to (i) the larger share of overall volume attributable to high frequency and day trading, from which we derive fees at lower than average margins; and (ii) a stumble in average volumes traded in equity-based derivatives on options and forward markets, as we charge higher than average fees for these trades. In addition, revenues unrelated to secondary market trading plummeted 50.7% year-onyear explained mainly by a lower amount of equity offerings but with the caveat that in the comparative year to December 31, 2010, the same line item ballooned on a whopping R$39.7 million revenue derived from fees related to the very large Petrobras and Banco do Brasil seasoned offerings.

BM&F segment ADTV by investor category (buy + sell sides) (in millions of contracts)
0.1 0.2 1.2 0.1 0.2 1.0 0.1 0.2 1.1 0.1 0.2 1.1 1.7 1.6 1.8 1.6
Central Bank Companies Individuals Foreign Investors Institutional Investors Financial Institutions

0.1 0.2 1.1 0.1 0.3 0.6 0.8 1.7 0.1 0.2 0.6 0.7 1.4
2008 2009

0.1 0.3 1.4

0.1 0.2 1.2

0.1 0.2 0.6 0.7 1.3

2010

1.4

1.7

1.6

2.0

2.0

2.1

2.4

2.0

1.8

1.7

2007

2011

4Q10

1Q11

2Q11

3Q11

4Q11

BM&F segment HFT average daily volumes (buy + sell) (in thousands of contracts)
2.2% 4.8% 6.0% 5.0% 3.9% 5.0% 7.8% 7.2% 24.4 % in Overall Volume

419.5
CAGR: 112.8%

306.3 238.3
12.8 88.4 42.9 21.2 16.9 28.6
2010

335.2
24.4 139.6

19.1 124.9 52.2 109.7

250.9
42.5 93.4 37.7 77.3
4Q10

211.2

251.0
17.1 83.6 43.5 67.0

178.7 9.8 94.8 45.3 101.1 148.3

3Q11 4Q11

68.2

50.9 119.9

Total
Interest Rates Mini Contracts Equities FX

67.6

93.9
2011

2009

1Q11

2Q11

BTC Open interest positions and number of transactions

117.8 81.0 47.4 52.3 59.3 84.9 108.9 112.8 127.3 122.0

Evolution of the Treasury Direct activity

49 56 64 71 77

30.2 22.4

4.7

5.2

5.8

6.7

7.5

25.8

28.3

31.6

35.1

18.5

16.9

20.5 12.7

4Q10

1Q11

2Q11

3Q11

4Q11
Investors (thousands)

Assets under custody (billions)

In August 2011 we revised our pricing policies and pricing structure for trading and post-trade services, which included a rebalancing review, thus affecting the comparability of line-by-line information on trading and settlement fees for 2011 and 2010.

2007

2008

2009

2010

2011

4Q10

1Q11

2Q11

3Q11

4Q11

Average Open Interest (BRL billions)

Monthly Average Number of Trades (thousands)

69

68 ANNUAL REPORT 2011 BM&FBOVESPA Operational and Financial Performance

Revenues from trading and settlement fees derived in the BM&F segment. Revenues under this line item accounted for 35.9% of total gross revenues and amounted to R$760.2 million, a 5.3% year-on-year climb explained by a 7.8% rise in average volumes traded, which, however, was not fully captured in the form of revenue on account of a 2.5% fall in average RPC. Other operating revenues. Revenues unrelated to trading and settlement activities accounted for 18.5% of total gross revenues and amounted to R$391.0 million, a 15.0% year-on-year surge explained primarily to changes in revenue line items unrelated to trading and settlement activities, as follows: Depository, custody services. Revenues of R$91.4 million (4.3% of total revenues) went up 3.5% year-onyear. Specifically, the revenues from fees collected by our central securities depository rose 2.7% year-onyear due to a 2.3% rise in average number of custody accounts and a 0.7% lift in average financial value of assets under custody, not including custody of ADRs and custody services provided to foreign investors. Revenues from fees related to custody of Brazilian treasury bills (Treasury Direct) went up 8.1% year-on-year. Securities lending. Revenues of R$74.0 million (3.5% of gross revenues) soared 49.7% from R$49.4 million one year ago due mainly to a 47.1% upsurge in the average financial value of open interest positions (to R$30.2 billion from R$20.5 billion one year earlier). Market data sales. Revenues of R$65.0 million (3.1% of gross revenues) gave back 3.8% year-on-year due mainly to the August 2010 change in pricing policies, which slashed the fees we charge from retail traders doing business through our Home Broker platform, and impacted this line item for most of 2011. Settlement Bank. Revenues of R$20.5 million (1.0% of total gross revenues) surged 20.2% year-on-year on the increased volume of investor representation and other services the settlement bank provides. Other revenues. Revenues under this line item (1.9% of total) amounted to R$40.2 million, surging 105.9% year-on-year due primarily to R$22.6 million worth of reversed provision for contingencies and legal obligations and collection of credits owned by bankrupt company. Expenses Expenses totaled R$816.7 million soaring 28.9% year-onyear. The comparability of this line item, however, has been hampered by the transfer of R$92.3 million in restricted funds (Guarantee Fund) to BSM, which we recognized as an expense, and because of an increase in expenses with
70 ANNUAL REPORT 2011 BM&FBOVESPA Operational and Financial Performance

our stock options plan, after we recognized the effects of the amended program and additional option grants approved in January 2011, which is contrasted with absence of stock option grants in 2010. These extraordinary events are discussed below in further detail. The adjusted expenses totaled R$584.5 million, a 7.5% increase from the year before. Main changes in expense line items were the following:
2

Depreciation and amortization. Expenses in this line item totaled R$75.2 million surging 37.2% year-on-year due primarily to the depreciation of property and equipment items, most of which we purchased in the second half of 2010. Outsourced services. Expenses with outsourced services went up 7.7% year-on-year, to R$51.8 million from R$48.1 million in the prior year, due mainly to the hiring of consultants for various projects, including the auditing of market participants (brokers) for the Operational Qualification Program (PQO). Marketing and promotion. Marketing expenses of R$38.6 million retreated 8.9% from the year before due mainly to a reallocation of resources to lower-cost marketing and promotion alternatives. Contribution to MRP (Guarantee fund transferred to BSM). This expense results from a extraordinary and non-recurring transfer related to R$92.3 million in restricted funds passed to BSM. These restricted funds had been segregated from our assets and reserved as a Guarantee Fund within the scope of an investor compensation scheme in the case of claims against the MRP (Investor Compensation Mechanism Fund) managed by BSM. We had control of the Guarantee Fund. In line with our policy to strengthen and consolidate BSM as an autonomous and financially independent self-regulatory organization, enforcer and overseer of the markets, we transferred control and management of the Guarantee Fund and passed the funds to BSM, unifying the management of resources related to MRP. In doing so, we also passed on behalf of BSM any interest income earning on future financial investments of these funds. Other expenses. This operating expense line item amounted to R$47.5 million and went up 13.7%. Equity-method investment Our net share of gain from the investment in CME Group (which we account for under the equity-method) totaled R$219.5 million, soaring 473.9% year-on-year, due to (i) an incremental gain in the CME Group results from an extraordinary reversal of the provision for taxes; but also (ii) because our investment in CME shares began to be accounted for as an equity-method investment only in the third quarter of 2010, thereby affecting the year-on-year comparability of this line item. It is worth noting that this line item includes the recognition of R$62.9 million in taxes to be offset related to taxes paid abroad. Of this amount, R$44.9 million have been offset against current income tax and social contribution payable, such as discussed below.

Interest income, net Net interest income for the year hit R$280.7 million, down 2.9% year-on-year. Interest revenue climbed 8.7% from the year before influenced by an increase in average interest rate earned on financial investments and higher average cash invested in short- and long-term investments. Net interest income was negatively influenced by an increase in interest expenses which were up to R$77.0 million from R$40.0 million one year ago due to the global senior notes we issued in a July 2010 cross-border offering. Income tax and social contribution Income before taxes totaled R$1,588.2 million, as compared to R$1,592.5 million one year ago, a 0.3% year-onyear decline. The income tax and social contribution line item totaled R$539.7 million for 2011 and comprises income tax and social contribution plus deferred income tax and social contribution. The line item breaks down into current income tax and social contribution amounting to R$49.4 million, R$44.9 million offset against income tax paid abroad (such as discussed previously under profit on equity-method investment) where just the difference of R$4.5 million impacted our cash generation. Additionally, this line item includes R$490.3 million in income tax and social contribution deferred as follows: Recognition of deferred tax liabilities of R$498.3 million related to temporary differences attributable mainly to amortization of goodwill for tax purposes, with no impact on cash; and Recognition of deferred tax assets amounting to R$8.0 million and related to tax losses, negative tax base and tax credits related to other temporary provisions. EBITDA and net income EBITDA for 2011 amounted to R$1,173.1 million, an 11.4% fall from the year before, reflecting mainly the changes in revenues and expenses we discussed. EBITDA Margin was 61.6% versus 69.7% in the earlier year. Net income for the year ended December 31, 2011, amounted to R$1,048.0 million, 8.4% lower than R$1,144.6 million one year ago. This decline in net income is attributable to the effects from a relatively unchanged revenues and the upturn in operating expenses (particularly from the Guarantee Fund we passed to BSM). The table below sets forth our calculation of EBITDA and EBITDA Margin.
71

Personnel. Expenses of R$351.6 million went up 21.2% year-on-year. The main changes in the expense line items were the following: the effects (on payroll) of around 7.0% salary increase required under our collective bargaining agreements of August 2011 and 6.0% under the August 2010 bargaining agreement; the average headcount climbed 17.8% year-on-year, to 1,426 employees from 1,211 employees the year before, which is in line with our growth strategy such that most new hirings occurred in technology and businnes development areas. We should note, for comparability purposes, that most 2010 new hirings (including the internalization of 143 outsourced IT personnel) were concentrated in the second half of the year thus affecting the average headcount only partially, whereas this headcount increase impacted fully in 2011; and the expenses with stock options plan increased by 73.4% year-on-year, to R$53.6 million from R$30.9 million earlier, as we recognized the effects of the amended program and additional option grants approved in January 2011, which is contrasted with absence of stock option grants in 2010. After eliminating expenses with the stock options plan, adjusted personnel expenses amounted to R$298.0 million, up 15.0% from R$259.2 million one year ago. Data processing . Expenses totaling R$104.4 million went up just 2.7% year-on-year. The abovementioned internalization of IT personnel in 2010 was a factor in curbing a further increase in data processing expenses given our massive expenditures in modernizing and reshaping the technology infrastructure.
3

The expenses have been adjusted to eliminate expenses with depreciation, provisions, the stock options plan and taxes related to dividends received from CME Group, in addition to a transfer of restricted funds to BM&FBOVESPA Market Surveillance (BSM), such as discussed elsewhere herein. The purpose of these adjustments is to measure expenses after eliminating expenses with no impact on cash and non-recurring expenses. The expenses with outsourced IT services are registered in under the data processing line item

EBITDA Reconciliation
2011 (In R$ millions) Net income Minority interest Income tax and social contribution Financial income Depreciation and amortization Equity-method investment Tax related to the equitymethod investment (dividends) EBITDA EBITDA Margin 1,048.0 0.5 476.7 (280.7) 75.2 (156.5) 2010 (In R$ millions) 1,144.6 (0.1) 448.0 (289.0) 54.8 (38.2) Variation 2011/2010 (%) -8.4% -806.7% 6.4% -2.9% 37.2% 309.2%

Shareholders equity of R$19,257.5 million fell 0.8% yearon-year and consists mainly of capital stock of R$2,540.2 million and capital reserves of R$16,033.9 million. Other financial information 2012 Opex and Capex Budgets In December 2011 we announced the 2012 opex and capex budgets, as follows: (i) the budget for adjusted operating expenses has been set within an interval between R$580 million and R$590 million, which is the same revised interval we announced in November in connection with our 2011 opex budget; and (ii) the capex budget has been set within an interval between R$230 million and R$260 million. Payouts Our board of directors declared over the year dividends and interest on shareholders equity for the nine-month period to September 30, 2011, an aggregate of R$685.5 million. Moreover, at the coming annual shareholders meeting we are set to submit to shareholders an additional dividends proposal of R$226.7 million relative to 2011 earnings, totalizing 87% of the GAAP net income attributed to the shareholders. Share Buyback Program; cancellation of treasury stock Over 2011, we had repurchased a total of 57.6 million shares at an average price per share of R$10.52 and aggregate price of R$606.1 million. Repurchases implemented within the scope of the buyback program approved on August 12, 2010 totaled 28.05 million shares, whereas the remainder, or a total of 29.55 million shares, we repurchased within the scope of the buyback program we adopted on June 16, 2011. Our ongoing share buyback program, which was first approved on June 16, 2011, has since been extended through to June 30, 2012, and expanded to authorize repurchases of no more than 60 million shares, twofold the originally approved number of shares. Additionally, on December 13, 2011, our board of directors approved the cancellation of 64,014,295 shares held as treasury stock, such that our capital stock is now represented by 1,980,000,000 common shares. Value Added Statement BM&FBOVESPA significantly expanded in 2011 its capacity to generate and distribute wealth to the various publics, especially the internal public, as demonstrated by the Value Added Statement (Demonstrao de Valor Adicionado DVA). EC1 For additional information about our company and the markets we operate, see our Reference Form, a CVM filing accessible in our website and that of the Brazilian Securities Commission (CVM).
73

9.9 1,173.1 61.6%

4.0 1,324.0 69.7%

148.5% -11.4% -814 bps

Financial Statements

Consolidated balance sheet statement as of December 31, 2011 Main line items under Assets As determined in our consolidated audited balance sheet statement as of December 31, 2010, total assets increased 4.2% year-on-year to R$23,589.9 million. Cash and cash equivalents, including short- and long-term financial investments totaled R$3,782.4 million and accounted for 16.0% of total assets. Non-current assets totaled R$21,188.8 million, where long-term receivables (including long-term financial investments) amount to R$1,767.4 million, the equity-method investment amounts to R$2,710.1 million, property and equipment amount to R$357.2 million and intangible assets amount to R$16,354.1 million. Intangible assets consist primarily of goodwill correlated with expectations of future profitability related to the acquisition of Bovespa Holding. Goodwill has been tested for impairment in December 2011 and, pursuant to the valuation report prepared by an independent specialist firm, has required no adjustments to carrying value. Main lines items under Liabilities and Shareholders Equity Current liabilities accounted for 8.2% of total liabilities at R$1,929.9 million, surging 36.3% year-on-year. This increase is due primarily to a climb in cash collateral pledged by market participants (to R$1,501.0 million versus R$954.6 million in the prior year). Noncurrent liabilities closed the year at R$2,402.5 million and consist primarily of debt issued abroad (global senior notes issued in a July 2010 US$612 million bond offering) at the amount of R$1,138.7 million and deferred income tax and social contribution amounting to R$1,204.6 million.
72 ANNUAL REPORT 2011 BM&FBOVESPA Operational and Financial Performance

Balance Sheet at December 31

(In thousands of at December 31 Balance Sheet reais) (In thousands of reais)
(A free translation of the original in Portuguese) BM&FBOVESPA Assets Current Cash and cash equivalents Financial investments Accounts receivable Other receivables Taxes recoverable and prepaid Prepaid expenses Non-current Long-term receivables Financial investments Deferred income tax and social contribution Judicial deposits Other receivables Investments Interest in associate Interest in subsidiaries Investment property Property and equipment Intangible assets Goodwill Software and projects Total assets 7 (a) 7 (a) 7 (b) 8 9 4 (b) 19 14 (g) 6 4 (a) 4 (b) 5 6 Notes 2011 3,348,607 63,716 3,080,853 45,061 11,491 130,093 17,393 20,035,052 542,883 367,600 80,550 94,178 555 2,785,455 2,673,386 112,069 352,590 16,354,124 16,064,309 289,815 23,383,659 2010 3,010,770 103,148 2,731,324 50,052 12,253 104,997 8,996 19,410,211 478,878 331,676 54,687 91,889 626 2,353,046 2,248,325 104,721 362,400 16,215,887 16,064,309 151,578 22,420,981 Consolidated 2011 2,401,134 64,648 2,128,705 46,514 11,767 132,058 17,442 21,188,788 1,767,411 1,589,058 80,550 95,048 2,755 2,710,086 2,673,386 36,700 357,164 16,354,127 16,064,309 289,818 23,589,922 2010 2,547,589 104,017 2,264,408 51,399 12,917 105,843 9,005 20,086,386 1,216,812 1,066,920 54,687 92,378 2,827 2,286,537 2,248,325 38,212 367,134 16,215,903 16,064,309 151,594 22,633,975

Balance Sheet at December 31

(In thousands of at December 31 Balance Sheet reais) (In thousands of reais)
(continued) BM&FBOVESPA Liabilities and equity Current 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 and loans Dividends and interest on own capital payable Other liabilities Non-current Debt issued abroad and loans Deferred income tax and social contribution Provision for contingencies and legal obligations 12 19 14 13 12 11 17 10 Notes 2011 1,745,088 1,501,022 39,038 56,038 59,310 31,008 33,566 4,177 20,929 2,397,571 1,138,659 1,204,582 54,330 2010 1,220,283 954,605 34,791 80,775 63,177 23,683 2,586 33,154 2,773 24,739 1,797,933 1,010,059 732,074 55,800 Consolidated 2011 1,929,946 1,501,022 39,038 56,409 59,995 31,814 4,486 33,566 4,177 199,439 2,402,485 1,138,659 1,204,582 59,244 2010 1,416,204 954,605 34,791 80,828 64,351 23,981 5,576 33,154 2,773 216,145 1,798,723 1,010,059 732,074 56,590

Equity Capital Capital reserve Revaluation reserves Revenue reserves Treasury shares Carrying value adjustments - accumulated othercomprehensive income Additional dividend proposed Non-controlling interest Total liabilities and equity

15

19,241,000 2,540,239 16,033,895 22,532 804,025 (521,553) 128,257 233,605 19,241,000 23,383,659

19,402,765 2,540,239 16,662,480 22,971 847,658 (613,903) (88,680) 32,000 19,402,765 22,420,981

19,257,491 2,540,239 16,033,895 22,532 804,025 (521,553) 128,257 233,605 19,241,000 16,491 23,589,922

19,419,048 2,540,239 16,662,480 22,971 847,658 (613,903) (88,680) 32,000 19,402,765 16,283 22,633,975

Capital and reserves attributable to shareholders of BM&FBOVESPA

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75

Statement of Value Added - Supplementary Information

Years ended December 31 (In thousands of reais, unless otherwise stated) Statement of Value Added - Supplementary Information Years ended December 31 (In thousands of reais, unless otherwise stated)

Statement of Comprehensive Income

Years ended December 31 (In thousands of reais) Statement of Comprehensive Income Years ended December 31 (In thousands of reais)

(continued)

(continued)

BM&FBOVESPA Notes Revenue Expenses Administrative and general Personnel and related charges Data processing Depreciation and amortization Outsourced services Maintenance in general Communications Promotion and publicity Taxes Board and committee members compensation Contribution to the Mecanismo de Ressarcimento de Prejuzos Sundry Equity in results of investees Finance results Finance income Finance expenses Income before taxation of profit Income tax and social contribution Current Deferred 17 21 (339,728) (100,619) (73,428) (49,330) (9,895) (22,731) (38,100) (15,083) (6,262) (92,342) (45,303) 225,710 277,538 352,957 (75,419) 1,583,194 (535,195) (44,936) (490,259) (279,060) (98,074) (53,010) (45,533) (9,619) (25,588) (41,756) (12,413) (5,841) (37,632) 39,665 287,406 326,057 (38,651) 1,589,768 (445,207) (2,586) (442,621) 20 2011 1,872,767 (792,821) 2010 1,871,223 (608,526)

Consolidated 2011 1,904,684 (816,664) 2010 1,898,742 (633,504) Profit for the year Valuation adjustments Mark-to-market of financial assets available for sale Tax effects on mark to market of financial assets available for sale Exchange variation on investment in foreign associate Hedge of net investment in foreign operation Tax effects on hedge of net investment in a foreign operation Other comprehensive income of foreign associate Total comprehensive income for the year Attributable to: Shareholders of BM&FBOVESPA Non-controlling interest

BM&FBOVESPA 2011 1,047,999 216,937 297,278 (128,275) 43,613 4,321 1,264,936 1,264,936 1,264,936 2010 1,144,561 (166,076) (117,266) 39,870 (133,238) 59,547 (20,246) 5,257 978,485 978,485 978,485 -

Consolidated 2011 1,048,529 216,937 297,278 (128,275) 43,613 4,321 1,265,466 1,265,466 1,264,936 530 2010 1,144,486 (166,076) (117,266) 39,870 (133,238) 59,547 (20,246) 5,257 978,410 978,410 978,485 (75)

(351,608) (104,422) (75,208) (51,803) (10,588) (22,959) (38,609) (15,385) (6,262) (92,342) (47,478) 219,461 280,729 357,720 (76,991) 1,588,210 (539,681) (49,422) (490,259)

(290,107) (101,690) (54,818) (48,102) (10,219) (25,819) (42,376) (12,784) (5,841) (41,748) 38,238 289,039 329,084 (40,045) 1,592,515 (448,029) (5,408) (442,621)

22

19 (c)

Net income Attributable to: Shareholders of BM&FBOVESPA Non-controlling interest Net income per share attributable to shareholders of BM&FBOVESPA (R$ per share) 15 (h) Basic Diluted

1,047,999

1,144,561

1,048,529

1,144,486

1,047,999

1,144,561

1,047,999 530

1,144,561 (75)

0.537789 0.536588

0.572058 0.568172

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77

Statement of Changes in Shareholders Equity

Years ended December 31 (In thousands of reais) Statement of Changes in Shareholders Equity Years ended December 31 (In thousands of reais)
Attributable to the shareholders of BM&FBOVESPA Revenue reserves Revaluation Capital Notes At December 31, 2009 Mark-to-market adjustment of financial assets available for sale Exchange variation on foreign investment Hedge of net investment, net of taxes Other comprehensive income of foreign associate Total comprehensive income Realization of revaluation reserve - subsidiaries Repurchase of shares Disposal of treasury shares - exercised options Recognition of stock option plan Approval/payment of additional dividends proposed Reversal of fair value adjustments Transfer to reserves Net income Appropriation of net income Dividends Interest on own capital Constitution of statutory reserve At December 31, 2010 Exchange variation on foreign investment Hedge of net investment, net of taxes Other comprehensive income of foreign associate Total comprehensive income Effect of ownership increase Realization of revaluation reserve - subsidiaries Repurchase of shares Disposal of treasury shares - exercised options Cancellation of treasury shares Recognition of stock option plan Approval/payment of additional dividends proposed Net income Appropriation of net income Capital 2,540,239 2,540,239 2,540,239 reserve 16,492,260 (34,930) 30,921 174,229 16,662,480 (40,260) (641,955) 53,630 16,033,895 reserve (Note 15(c)) 23,551 (580) 22,971 (439) 22,532 Legal reserve 3,453 3,453 3,453 Statutory reserve (Note 15(d)) 403,191 282,928 (248,000) 406,086 844,205 (406,086) 362,453 800,572 Treasury shares (Note 15(b)) (230,102) (435,115) 51,314 (613,903) (606,889) 57,284 641,955 (521,553) Valuation Adjustments 77,396 (77,396) (133,238) 39,301 5,257 (166,076) (88,680) 297,278 (84,662) 4,321 216,937 128,257 Aditional dividends proposed 20,000 (20,000) 32,000 32,000 (32,000) 233,605 233,605 Retained earnings 460,610 (460,610) 1,144,561 (434,475) (304,000) (406,086) 1,047,999 (535,546) (150,000) (362,453) Total 19,326,535 (77,396) (133,238) 39,301 5,257 (166,076) (580) (435,115) 16,384 30,921 (20,000) 460,610 1,144,561 (682,475) (272,000) 19,402,765 297,278 (84,662) 4,321 216,937 (439) (606,889) 17,024 53,630 (438,086) 1,047,999 (301,941) (150,000) 19,241,000 Non-controlling interests 16,358 (75) 16,283 (322) 530 16,491 Total equity 19,342,893 (77,396) (133,238) 39,301 5,257 (166,076) (580) (435,115) 16,384 30,921 (20,000) 460,610 1,144,486 (682,475) (272,000) 19,419,048 297,278 (84,662) 4,321 216,937 (322) (439) (606,889) 17,024 53,630 (438,086) 1,048,529 (301,941) (150,000) 19,257,491

15(b) 18 18 15(g)

15(g) 15(g)

15(b) 18 15(b) 18 15(g)

15(g) 15(g)

At December 31, 2011

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79

Statement of Cash Flows

Statement of Cash Flows Years ended December 3131 Years ended December (In thousands of of reais) (In thousands reais
(continued)

Statement of Value Added - Supplementary Information

Years ended December 31 Statement of reais) (In thousands ofValue Added - Supplementary Information Years ended December 31 (In thousands of reais)
BM&FBOVESPA 2011 1 - Revenues Trading and/or settlement system Other operating revenues 2 Goods and services acquired from third parties Operating expenses (a) 2,082,106 1,724,947 357,159 358,320 358,320 2010 2,082,349 1,771,365 310,984 258,202 258,202 2011 2,115,983 1,724,947 391,036 368,201 368,201 Consolidated 2010 2,111,539 1,771,365 340,174 269,954 269,954

BM&FBOVESPA 2011 Cash flows from operating activities Net income for the year Adjustments for: Depreciation and amortization Profit on sale of property and equipment Software and projects write-off Deferred income tax and social contribution Equity in results of associates Expenses related to the stock option plan Interest expense Provision for losses in accounts receivable Financial investments and collateral for transactions Taxes recoverable and prepaid Accounts receivable Other receivables Prepaid expenses Judicial deposits Earnings and rights on securities in custody Suppliers Provision for taxes and contributions payable Provisions for income tax and social contribution Variation in salaries and social charges Other liabilities Provision for contingencies Net cash provided by operating activities Cash flows from investing activities Proceeds from sale of property and equipment Payment for purchase of property and equipment Payment for purchase of investment - CME Dividends received Proceeds from sale of assets not held for use Capital increase in subsidiaries Acquisition of softwares and projects Net cash used in investing activities Cash flows from financing activities Repurchase of shares Changes in borrowings New borrowings Interest payed Payment of dividends and interest on own capital Net cash used in financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year
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Consolidated 2011 1,048,529 75,208 (1,116) 7,795 490,259 (219,461) 53,630 69,412 1,086 159,982 36,772 3,799 1,362 (8,437) (2,670) 4,247 (24,419) 7,833 (1,090) (4,356) (16,706) 2,654 1,684,313 5,030 (46,070) 32,907 195 (168,582) (176,520) (606,888) (857) (67,819) (888,622) (1,547,162) (39,369) 104,017 64,648 2010 1,144,486 54,818 (183) 4,802 442,621 (38,238) 30,921 30,641 (92) (1,609) (54,699) (11,102) 5,594 (293) (7,484) 2,894 59,386 (635) 1,879 21,114 19,461 7,143 1,711,425 966 (164,548) (1,075,119) 18,636 (107,180) (1,327,245) (435,115) (9,076) 1,069,406 (972,541) (330,942) 53,238 50,779 104,017 Equity in results of investees Finance income 7 Total value added to be distributed (5+6) 8 - Distribution of value added Personnel and payroll charges Board and committee members compensation Income tax,rates and contributions (b) Federal Municipal Finance costs Interest on own capital and dividends Constitution of reserves 736,463 23,154 75,419 685,546 362,453 225,710 352,957 2,229,025 2,229,025 339,728 6,262 6 Value added transferred from others 578,667 5 Net value added produced by the company (3-4) 1,650,358 Depreciation and amortization 73,428 4 - Retentions 73,428 3 Gross value added (1-2) 1,723,786

2010 1,144,561 53,010 (183) 4,802 442,621 (39,665) 30,921 30,641 (92) 21,617 (53,854) (10,918) 3,959 (283) (8,400) 2,894 59,457 (721) 1,700 20,652 7,324 7,590 1,717,633 965 (164,508) (1,075,119) 18,636 (3,083) (107,180) (1,330,289) (435,115) (9,076) 1,069,406 (972,541) (330,942) 56,402 46,746 103,148

1,047,999 73,428 (1,102) 7,795 490,259 (225,710) 53,630 69,412 1,086 160,964 37,891 3,905 1,191 (8,397) (2,289) 4,247 (24,737) 7,325 (2,586) (3,867) (3,810) (1,470) 1,685,164 4,983 (45,504) 32,907 195 (1,433) (168,582) (177,434) (606,888) (857) (67,819) (888,622) (1,547,162) (39,432) 103,148 63,716

1,824,147 53,010 53,010 1,771,137 365,722 39,665 326,057 2,136,859 2,136,859 279,060 5,841 644,947 23,799 38,651 738,475 406,086

1,747,782 75,208 75,208 1,672,574 577,181 219,461 357,720 2,249,755 2,249,755 351,608 6,262 742,622 23,743 76,991 685,546 362,983

1,841,585 54,818 54,818 1,786,767 367,322 38,238 329,084 2,154,089 2,154,089 290,107 5,841 649,378 24,232 40,045 738,475 406,011

(a) Operating expenses (excluding personnel, Board members compensation, depreciation, taxes and rates). (b) Including: taxes and rates, PIS, COFINS, ISS and income tax and social contribution (current and deferred).

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Notes to the Financial Statements

1. Operations BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros (BM&FBOVESPA) is a publicly- traded corporation whose objective is to carry out or invest in companies engaged in, the following activities: Management of organized securities markets, promoting for 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 to 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-thecounter 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). 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 leadingedge technologies required for the good performance of its operations. The subsidiary Bolsa Brasileira de Mercadorias is engaged in the registration and settlement of spot, forward and options transactions involving commodities, assets and services for physical delivery, as well as securities representing these products, in the primary and secondary markets. With the objective of responding to the needs of customers and the specific requirements of the market, its whollyowned subsidiary Banco BM&F 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.

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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. 2. Preparation and Presentation of the financial statements This financial statements were approved by the Board of Directors of BM&FBOVESPA on February 14, 2012. The financial statements were prepared and are presented in accordance with accounting practices adopted in Brazil, in compliance with the provisions contained in the Brazilian Corporate Law, and embody the changes introduced through the Laws 11,638/07 and 11,941/09, complemented by the pronouncements, interpretations and guidelines of Accounting Pronouncements Committee CPC, approved by resolutions of the Federal Accounting Council CFC and rules of Brazilian Securities Commission CVM. The preparation of financial statements requires the use of critical accounting estimates and also the exercise of judgment by management in the process of applying the accounting policies of BM&FBOVESPA. Those areas that require higher degrees of judgment and have greater complexity, as well as areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3 (x). (a) Consolidated financial statements The consolidated financial statements are prepared and presented in accordance with accounting practices adopted in Brazil, including the pronouncements, interpretations and guidelines of the Accounting Pronouncements Committee (CPCs) and in accordance with International Financial Reporting Standards IFRS, issued by the International Accounting Standards Board - IASB The consolidated financial statements include the balances of BM&FBOVESPA and its subsidiaries, as well as special purpose entities comprising investment funds, as follows:
Ownership % Subsidiaries and controlled entities Banco BM&F de Liquidao e Custdia S.A. (Banco BM&F) Bolsa Brasileira de Mercadorias Bolsa de Valores do Rio de Janeiro BVRJ (BVRJ) BM&F USA Inc. BM&F UK Ltd. 100.00 50.12 86.95 100.00 100.00

(b) Unconsolidated financial statements The unconsolidated financial statements of the BM&FBOVESPA are prepared in accordance with accounting practices adopted in Brazil, as issued by the Accounting Pronouncements Committee (CPC) and are published together with the consolidated financial statements. In the unconsolidated financial statements (BM&FBOVESPA), subsidiaries using recorded on the equity method. The same adjustments are made both in the individual and consolidated financial statements to achieve the same result and net assets attributable to controlling shareholders. 3. Significant Accounting Practices a. Consolidation The following accounting policies are applied in preparing the consolidated financial statements. Subsidiaries Subsidiaries are all entities over which BM&FBOVESPA has the power to govern the financial and operating policies, generally accompanied by a participation of more than half of the voting rights (voting capital). The existence and effect of potential voting rights currently exercisable or convertible are considered when assessing whether BM&FBOVESPA controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to BM&FBOVESPA. Consolidation is discontinued from the date on which control ends. Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of impairment of the assets transferred. The accounting policies of subsidiaries are altered where necessary to ensure consistency with the practices adopted by BM&FBOVESPA. Associates Associates are all entities over which BM&FBOVESPA has significant influence but not control. Investments in associates are recorded on the equity method and are initially recognized at the cost of each purchase. BM&FBOVESPAs investment in associates includes goodwill identified on acquisition, net of any accumulated impairment. The share of BM&FBOVESPA in the post-acquisition profits or losses of associates is recognized in the statement of income and its share in post-acquisition changes in other comprehensive income recognized in other comprehensive income. The cumulative post-acquisition changes are adjusted against the carrying value of the investment. When the share of BM&FBOVESPA in the losses of an associate equals or exceeds its investment in the associate, including any other receivables, BM&FBOVESPA does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate. Unrealized gains arising from transactions between BM&FBOVESPA and its associates are eliminated to the extent of the participation of BM&FBOVESPA in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of impairment of the assets transferred. The accounting policies of associates have been altered where necessary to ensure consistency with the practices adopted by BM&FBOVESPA. b. Revenue recognition Revenues from the trading and settlement systems are recognized upon the completion of the transactions or the provision of the service, 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 pro rata monthly over the contractual term.

Investment funds: Bradesco Fundo de Investimento Multimercado Letters BB Pau Brasil Fundo de Investimento Renda Fixa HSBC Fundo de Investimento Renda Fixa Longo Prazo Eucalipto Araucria Renda Fixa Fundo de Investimento Supremo Renda Fixa Fundo de Investimento em Cotas de Fundos de Investimento Megainvest Fundo de Investimento em Cotas de Fundos de Investimento Renda Fixa(1)
(1)

Proportionally consolidated based on the number of quotas held

The financial intermediation results from the operations of Banco BM&F, in the amount of R$8,985, previously disclosed as financial income in 2010, were reclassified to other operating revenues, with no effect on net income and shareholders equity.

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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 classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of the financial assets when they are first recorded. Considering the nature and objective of BM&FBOVESPA and its financial investment portfolio, these are classified as financial assets at fair value through profit or loss, designated at inception. 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 (derivative financial instruments classified as current assets) or assets designated by the entity, at inception as measured at fair value through profit or loss at inception (other financial instruments (Note 4)). Gains or losses arising from the changes in fair value of financial instruments are recorded in the statement of income in financial results for the period in which they occur. Loans and receivables These comprise loans granted and receivables which are non-derivative financial assets with fixed or determinable payments, not quoted in an active market. Loans and receivables are included in current assets, except for those with maturity of more than 12 months after the balance sheet date (which are classified as non-current assets). The loans and receivables of BM&FBOVESPA comprise customer receivables and other accounts receivables. Loans and receivables are recorded at amortized cost, based on the effective interest rate method, reduced by any impairment losses. Available-for-sale financial assets Available-for-sale financial assets are non-derivatives which are 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 based on the effective interest rate method, is recognized in the statement of income as finance income. The amount relating to the changes in fair value is recorded in comprehensive income and is transferred to the statement of income when the asset is sold or becomes impaired. Management periodically monitors its outstanding positions and possible risks of impairment of 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. Subsequent recoveries of amounts previously written off are recognized in results. Fair value Fair values of investments with public quotations are based on current market prices. For financial assets without an active market or public quotation, BM&FBOVESPA determines fair value through valuation techniques, such as option pricing models. (ii) Derivative instruments Initially, derivatives are recognized at fair value on the date the derivative agreement is signed and, subsequently,
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they are measured at fair value, with the changes in fair value recognized in the statement of income, except when the derivative is recorded as a net investment hedge. (iii) Hedge of net investments Any gain or loss on the hedging instrument related to the effective portion of the hedge is recognized in other comprehensive income. The gain or loss related to the ineffective portion is recognized immediately in the statement of income. Gains and losses accumulated in other comprehensive income are transferred to the income statement when the hedged foreign operation is partially disposed of or sold. (iv) 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, other receivables and allowance for doubtful accounts Accounts receivable are amounts receivable for fees and services in the normal course of activities of BM&FBOVESPA. If the collection is expected in one year or less (or another period that meets the normal cycle of BM&FBOVESPA), the accounts receivable are classified as current assets. Otherwise, they are presented as noncurrent assets. Customer receivables are initially recognized at fair value less provision for impairment. In practice they are usually recognized at the invoice amount, adjusted by a provision if necessary. f. Prepaid expenses Prepaid expenses mainly relate to software maintenance contracts and insurance premiums, and are amortized over the life of the contracts. g. Non-current available for sale assets Non-current assets are classified as available for sale when their carrying amount is recoverable, mainly through a sale, and when this sale is practically certain. These assets are measured at the lower of the carrying amount and the fair value less costs to sell. h. Intangible assets Goodwill Goodwill represents the positive difference between the amount paid and / or payable for the acquisition of a business and the net fair value of assets and liabilities of the acquiree. Goodwill on acquisitions is recorded in intangible assets. If the difference is negative, representing a negative goodwill, it is recognized as a gain in income at the date of acquisition. Goodwill is tested annually for impairment. Goodwill is stated cost less accumulated impairment losses. Recognized impairment losses on goodwill are not subsequently reversed. Goodwill is allocated to Cash Generating Units (CGUs) for purposes of impairment testing. The allocation is made to the CGUs that should benefit from the business combination in which the goodwill arose, and are identified according to the operating segment. Software and projects Software licenses acquired are capitalized and amortized over their estimated useful life, at the rates mentioned in Note 9.
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Costs of software development or maintenance are expensed 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 statement of income 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 the other intangible asset. Expenditures for development of software recognized as assets are amortized using the straight-line method over their useful lives, at the rates described in Note 9. i. Step acquisition of associate The cost of an associate acquired in steps is measured as the total of the amounts paid in each transaction. The gains or losses previously recognized in comprehensive income, while the investment was classified as available for sale, are reversed against the investment account, which is restated to cost. Goodwill is calculated at each step of acquisition as the difference between the acquisition cost and the fair value of net assets in proportion to the interest acquired. The total book value of the investment is tested for impairment, by comparing the carrying value with its recoverable amount (proceeds from sale, net of selling cost or value in use, whichever is greater) when the requirements of the CPC 38/IAS 39 indicate a potential impairment. j. Property and equipment Recorded at cost of acquisition or construction, less accumulated depreciation. Depreciation is calculated on the straight-line method and takes into consideration the estimated useful lives of the assets, and their residual value. At the end of each year, 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 repairs and maintenance are recorded in the statement of income, as incurred. Depreciation expense is recognized in the statement of income unless it is included in the carrying amount of another asset. Depreciation of fixed assets used for development activities is included as part of the cost of the related intangible asset. k. Contingent assets and liabilities and legal obligations The recognition, measurement, and disclosure of contingent assets and liabilities and legal obligations comply with the criteria defined in CPC 25/IAS 37. Contingent assets - These are not recognized in the financial statements, except when management has full control over their realization or when there are secured guarantees or favorable court decisions to which no further appeals are applicable, such that the gain is virtually certain. Contingent assets with realization considered probable, where applicable, are only disclosed in the financial statements. Contingent liabilities - These are recognized taking into account: the opinion of legal advisors; the nature of the lawsuits; similarity with previous cases; the complexity of the proceedings; and prior court decisions. They are recognized whenever the loss is evaluated as probable, an outflow of resources for the settlement of the obligations, and the amounts involved are measurable with sufficient reliability. The contingent liabilities classified as possible losses are not recorded and are only disclosed in the notes to the financial statements, and those classified as remote are neither recognized nor disclosed. l.

Legal obligations These result from tax lawsuits in which BM&FBOVESPA is challenging the validity or constitutionality of certain taxes and charges, recognized at full amount under discussion. Other provisions - Provisions are recognized when BM&FBOVESPA has a present obligation, legal or constructive, as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made.

Judicial deposits Judicial deposits are related to tax, civil or labor contingencies and are adjusted by inflation rate and presented in non-current assets.

m. Collateral for transactions Comprises amounts received from market participants as collateral for default or insolvency. These amounts are initially recognized at fair value and subsequently at amortized cost. Amounts received (i) in cash are recorded as a liability and (ii) in other than cash are maintained in off-balance control accounts. Both types of collateral received are not subject to interest or any other charges. n. 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. o. Impairment of assets Assets that have an indefinite life, such as goodwill, are not subject to amortization and are tested annually for impairment. 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 assets carrying amount exceeds its recoverable amount. This latter amount is the higher of the fair value of an asset less selling costs and the value in use. For purposes of evaluation of impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (Cash Generating Units (CGU). The non-financial assets, except goodwill, which have suffered impairment are reviewed subsequently to analyze a possible reversal of the impairment at the balance sheet date. p. Leases Leases of property and equipment in which BM&FBOVESPA substantially assumes all ownership risks and benefits are classified as finance leases. These finance leases are recorded as a financed purchase, recognizing at the beginning of the lease a property and equipment item and a financing liability (lease). Property and equipment acquired in finance leases are depreciated over the shorter of the lease or their useful lives. A lease in which a significant portion of the ownership risks and benefits remains with the lessor is classified as an operating lease. Operating lease payments (net of all incentives received from the lessor) are charged directly to profit or loss. q. Employee benefits (i) Pension obligations

BM&FBOVESPA maintains a defined contribution plan of retirement plan, with voluntary participation open to all employees. The participants monthly contribution is 3.60% of salary. The sponsors monthly contribution is also 3.60%, calculated on the total wages of the participants and allocated to participants through apportionment. The company has no obligations to make additional payments as a sponsor. The regular contributions are included in personnel costs. In the event of termination of employment prior to the date of retirement, the participant may
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keep the plan within the rules established by the regulation or request cancellation of the registration, and in this case, may choose for: (i) the transfer 100% of the reserve constituted by the participants contributions and according to the time of participation in the plan, up to 100% of the balance of the reserves constituted by the contributions of the sponsor, or (ii) the redemption of 100% of the reserve constituted of the participants contributions, without any portion of the reserve balance constituted by the contributions of the sponsor. In any of the above options there is no additional cost to the BM&FBOVESPA. (ii) Share-based remuneration (stock options) BM&FBOVESPA maintains a long-term remuneration plan, structured by options granted to purchase the Companys shares under the Stock Option Plan. The objective is to give to 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 keep their management and employees. The fair value of options granted is recognized as an expense during the vesting period (the period during which the specific vesting conditions must be met), which typically is the period in which the service is provided. At the balance sheet date, BM&FBOVESPA reviews its estimates of the number of options 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, with a counter-entry to a capital reserve in shareholders equity. (iii) Profit sharing BM&FBOVESPA has semi-annual variable remuneration, organized and paid in cash through the Profit Sharing Program (PLR). 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, aiming to align the remuneration of employees with the short and medium-term results of the Company. The provision for the related expense is recognized in income on an accrual basis. r. Borrowings Borrowings are initially recognized at fair value, upon receipt of the funds, net of transaction costs. Subsequently, they are presented 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. s. Foreign currency translation The items included in 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 transaction dates. The foreign exchange gains and losses arising from the settlement of these transactions and of the translation, at the exchange rates at the end of period, of assets and liabilities in foreign currencies, are recognized in the income statement, except when deferred in equity relating to a hedge of a net foreign investment. Exchange differences on the net investments in foreign operations, which have a functional currency different from that of BM&FBOVESPA are recorded under Valuation Adjustments in other comprehensive income of BM&FBOVESPA, and are only taken to the statement of income when the investment is sold or written off. Exchange gains and losses on to the investment in the shares of CME Group, classified as available for sale until July 2010, were included in other comprehensive income. After July 2010, the investment in the CME Group has been recorded on the equity method (Note 7) and the currency translation effects are recognized in the valuation adjustment in the comprehensive income.

t.

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 tax and social contribution are calculated at 15% with an additional 10% on taxable income (surtax) which exceeds R$240 for income tax and 9% for social contribution and recognizes that compensation for tax losses is limited to 30% of net income. These rates have been substantively enacted at the year end. Income tax and social contribution expense of the period comprise current and deferred taxes. Taxes on profit are recognized in the income statement, except to the extent that they relate to items recognized directly in equity or other comprehensive income. In this case, the tax is also recognized in equity or other comprehensive income. Income tax and social contribution deferred taxes are calculated on tax losses for income tax, the negative basis of social contribution and the r temporary differences between the bases of calculation of tax assets and liabilities and the carrying amounts in the financial statements. Deferred tax assets are recognized to the extent that it is probable sufficient future taxable profit will be available to offset temporary differences and/or tax losses, considering projections of future income prepared based on internal assumptions and future economic scenarios which may, accordingly, not materialize as expected. Deferred tax liabilities are recognized in relation to all temporary differences that will result in amounts to be added in the calculation of taxable income for future years, when the value of the asset or liability is recovered or settled. The deferred income tax and social contribution are determined using tax rates (and tax laws) enacted, or substantively enacted, at the balance sheet date, and should be applied when the deferred tax asset is realized or when the deferred tax liability is settled. (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 recorded as an adjustment to revenue in the income statement. Banco BM&F de Servios de Liquidao e Custdia S.A. calculates the contributions to PIS and to COFINS at the rates of 0.65% and 4%, respectively, and CSLL at 15%. The subsidiaries Bolsa Brasileira de Mercadorias and BVRJ are not-for-profit entities and pay contribution to PIS at the rate of 1% on payroll. BM&FBOVESPA and its subsidiaries pay ISS over the services rendered at rates ranging from 2% to 5% depending on the nature of the service.

u. Earnings per share For purposes of disclosure of earnings per share, basic earnings per share is calculated by dividing the profit attributable to shareholders of BM&FBOVESPA by the average number of outstanding during the period. Diluted earnings per share is calculated similarly, except that the quantity of outstanding shares is adjusted to reflect the outstanding shares with potentially dilutive effects, under the stock option plan (Note 15(h)). v. Distribution of dividends and interest on capital The distribution of dividends and interest on capital to shareholders of BM&FBOVESPA is recognized as a liability in the financial statements at year end, based on the bylaws. Any amount above the minimum is accrued only on

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the date it is approved by the shareholders at a General Meeting. The tax benefit over the interest on own capital is recorded in the income statement. w. Segment information presentation Operating segments are presented in a manner consistent with the internal reports provided to the Executive Board, which is responsible for the main operational and strategic decisions of BM&FBOVESPA. x. Critical accounting estimates and judgments i. Equity method of accounting BM&FBOVESPA applies the equity method for its investments when it has the ability to exercise significant influence. The judgment of BM&FBOVESPA regarding the level of influence over the investment takes into account key factors such as the percentage of interest, representation on the Board of Directors, participation in defining policies and business strategies and material transactions between the companies. ii. Impairment BM&FBOVESPA performs, annually or when required, tests of impairment, specifically related to goodwill and other non-financial/non-current assets, according to the accounting policy described in Note 3(o). See Notes 7 and 9 for sensitivity analysis. iii. Classification of financial instruments BM&FBOVESPA classifies in financial assets in the categories of (i) measured at fair value through profit or loss and (ii) available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of financial assets at initial recognition. The basis for the original classification of financial instruments is described in Note 3(d). iv. Stock option plan BM&FBOVESPA offers a stock option plan to its management and employees and service providers. The fair value of these options is recognized as an expense over the period in which the right is acquired. Management reviews the estimated amount of options that will achieve the conditions for vesting and subsequently recognizes the impact of changes in initial estimates, if any, in the statement of income, and in equity, as shown in Note 3(q).

Details Banks - deposits in domestic currency Banks - deposits in foreign currency Total

2011 363 64,285 64,648

Consolidated 2010 3,622 100,395 104,017

Cash and cash equivalents are held with top tier financial institutions in Brazil or abroad. Deposits in foreign currency are primarily in U.S. dollars. b. Financial Investments The breakdown of financial investments by category, nature and time to maturity is as follows:
BM&FBOVESPA Without maturity Up to 3 months More than 3 and up to 12 months More than 12 months and up to 5 years More than 5 years

Details

2011

2010

Financial assets measured at fair value trough profit or loss Financial investment funds (1) Securities purchased under agreements to resell (2) Federal government securities Financial Treasury Bills National Treasury Bills 9,525 41,585 2,060 43 366,923 677 408,508 12,305 425,568 25,090 3,025,217 2,423 3,025,217 2,423

1,676,725 935,617

Total financial investments

3,034,742

43,645

2,466

367,600

3,448,453

3,063,000

Short term Long term

3,080,853 367,600

2,731,324 331,676

4 a.

Cash and Cash Equivalents and Financial Investments Cash and cash equivalents
2011 113 63,603 63,716 BM&FBOVESPA 2010 3,277 99,871 103,148

Details Banks - deposits in domestic currency Banks - deposits in foreign currency Total

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CONSOLIDATED Details Without maturity Up to 3 months More than 3 and up to 12 months More than 12 months and up to 5 years More than 5 years

Valuations that are not based on market data (unobservable) (level 3). The fair value of the main financial instruments is calculated as follows:

Financial assets measured at fair value trough profit or loss

2011

2010

Investment funds based on the value of the unit determined on the last business day prior to the balance sheet date, as disclosed by the corresponding fund Manager.
1,786,525 24,435 207,890 1,810,960 204,740 1,852,090 -

Financial investment funds (3) Securities purchased under agreements to resell Federal government securities Financial Treasury Bills National Treasury Bills Other investments
(2)

207,890

Federal government securities based on the amounts and prices disclosed by the Brazilian Association of Financial and Capital Market Institutions (ANBIMA) or, when these are unavailable, on the price defined by management which best reflects the sales value, determined based on information obtained from other institutions. Securities purchased under agreements to resell are recorded daily in accordance with the market price of the security. Financial assets at fair value through profit and loss and derivative financial instruments are classified as level 1, ie, have quoted prices (unadjusted) in active markets. During 2011 there was no impairment recorded on the financial assets available for sale.

9,538 217,428

69,339 3,540 1,859,404

4,157 2,381 43 31,016

1,361,846 83,431 677 1,445,954

103,217 103,217

1,538,559 85,812 13,798

1,187,388 4,138 34,831

3,657,019 3,283,187

Financial assets available for sale Federal government securities Financial Treasury Bills National Treasury Bills Total financial investments Short term Long term 217,428 4,574 4,574 1,863,978 14,705 1,578 16,283 47,299 39,091 796 39,887 1,485,841 103,217 58,370 2,374 60,744 48,141 48,141

Derivative financial instruments Derivative financial instruments comprise future interest rate contracts (DI1) and are stated at their market values. These contracts are included in the fund portfolios which were consolidated (Note 2(a)) and are used to cover fixed interest rate exposures, swapping fixed interest rate for floating (CDI). Even though these derivatives are designed to provide protection, management has opted not to apply hedge accounting in respect to them. 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$394 (R$686 at December 31,2010), and are presented as part of the finance result Finance income/(expenses). The amounts related to the positive/negative daily adjustments are presented in Other receivables/liabilities, respectively. The DI1 contracts have the same maturity dates as the fixed interest rate contracts to which they relate. Financial risk management policy BM&FBOVESPAs policy for cash investments favors alternatives with very low risk, resulting in a significant proportion of federal government securities in its portfolio, purchased directly, via repurchase agreements backed by government bonds and also through exclusive and non-exclusive funds. Thus, in general, BM&FBOVESPA chooses to make most of its applications in conservative financial assets, highly liquid and with sovereign risk, whose overall performance is tied to the Selic rate / CDI. Sensitivity analysis The table below presents the net exposure of all financial instruments (assets and liabilities) by market risk factors, classified in accordance with its rates:
Exposure to Risk Factors (Consolidated) Risk factor Floating Interest Rate Fixed interest rate Foreign exchange Gold price Risk Lower CDI Higher fixed rate Lower dollar Lower gold price 2011 Percentual 99.29% 0.07% 0.38% 0.26% 100.00% 2010 Percentual 99.35% 0.35% 0.05% 0.25% 100.00%

3,717,763 3,331,328 2,128,705 2,264,408 1,589,058 1,066,920

(1) Investments in funds that invest in units of other financial investment funds (fund of funds), the portfolios of which mainly comprise investments in federal government bonds, securities purchased under agreements to resell and have the CDI as their profitability benchmark. The balances presented in the tabl also include the investment funds which are proportionately consolidated in the consolidated financial statements according to the nature of the portfolio and in the proportion of the net assets. The net assets of the investment funds included in the consolidation are: (i) Bradesco FI Multimercado Letters - R$2,245,045 (R$723,402 at December 31, 2010); (ii) Megainvest FIC FI Renda Fixa - R$256,145 (R$629,049 at December 31, 2010) ; (iii) BB Pau Brasil FI Renda Fixa R$176,081; (iv) HSBC FI Renda Fixa Longo Prazo Eucalipto R$100,284; (v) Araucria Renda Fixa FI R$215,312; (vi) Supremo Renda Fixa FICFI R$258,625 at December 31, 2010. (2) Issued by first-tier banks and backed by Brazilian government bonds. (3) The non-exclusive investment fund (not consolidated is Bradesco Empresas FICFI Referenciado DI Federal, in the amount of R$207,890 (R$204,669 at December 31, 2010).

The government bonds are held in custody at the Special System for Settlement and Custody (SELIC), the units of investment funds are held in custody with their respective managers and the shares are in the custody of BM&FBOVESPAs Equity and Corporate Debt Clearinghouse. There was no reclassification of financial instruments between categories during the year. Fair value BM&FBOVESPA applies CPC40/IFRS7 for financial instruments measured at fair value, which requires disclosure of fair value measurements by level for the following hierarchy: Quoted prices (unadjusted) in active markets for similar assets or liabilities (level 1); Derived from quoted prices included in Level 1, either directly (as prices) or indirectly (Level 2);
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Interest rate risk This risk arises from the possibility that fluctuations in future interest rates for the corresponding maturities could affect the fair value of BM&FBOVESPAs transactions. Floating-rate position

partnership between the companies. In addition, it serves as a natural hedge for the USD exposure generated by the increased investment in CME Group.

5. Accounts Receivable
The breakdown of accounts receivable is as follows:
2011 11,068 4,732 9,385 16,010 10,181 (6,315) 45,061 BM&FBOVESPA 2010 16,312 4,477 10,599 17,585 6,971 (5,892) 50,052

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 indexed to floating interest rates. We present in the table below the possible impacts in the profit or loss of a change of 25% and 50% from the probable scenario for the CDI rate, for the next three months.
Effect on profit or loss Scenario Probable Scenario -25% Scenario 25% 66,669 88,126 109,224 7.40% 9.86% 12.33%

Details Fees Annuities Vendors Signal broadcast Depositary and custody fees Other accounts receivable Provision for impairment Total

Financial Investments Index rates

Risk factor CDI/Selic CDI/Selic

Scenario -50% 44,840 4.93%

Scenario 50% 129,977 14.80%

Fixed-rate position
Details Fees Annuities Vendors Signal broadcast Depositary and custody fees Other accounts receivable Provision for impairment Total 2011 11,850 4,732 9,385 16,010 10,852 (6,315) 46,514 Consolidated 2010 17,069 4,477 10,599 17,585 7,561 (5,892) 51,399

Part of BM&FBOVESPAs financial investments earn fixed interest rates and this results in a net exposure to such rates. However, in terms of percentage, in view of the amounts involved, the effects on the portfolio are not considered material. Exchange rate risk This arises from the possibility that fluctuations in exchange rates in connection with the acquisition of services, product sales and financial instruments could have an impact on the related domestic currency amounts. 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 and also own funds in foreign currency abroad. At December 31, 2011 the net foreign currency exposure amounted to R$4,938 negative (R$1,820 negative at December 31, 2010). The effects on the portfolio are not considered material. Liquidity risk The following table shows the main financial liabilities of BM&FBOVESPA by maturity, represented in its entirety by nonderivative financial liabilities, on an undiscounted cash flows basis:
Without maturity Collateral for transactions Issuance of debt abroad (1) 1,501,022 Less than 1 year 63,139 From 1 to 2 years 63,139 From 2 to More than 5 years 5 years 189,418 1,400,547

The amounts presented above are primarily denominated in Brazilian reais. Approximately 90% is of the receivables fall due within 60 days. On December 31, 2011, the amounts overdue for more than 90 days totaled R$6,838. The provisioning methodology, as approved by the management, is based on the analysis of the historical behavior of incurred losses. Therefore, on the overdue amount for defined ranges of days past due, according to the historical behavior, an estimated loss percentage has been assigned, which is intended to reflect incurred losses. Changes in the provision for impairment are as follows:
BM&FBOVESPA and Consolidated At December 31, 2009 Additions Reversals At December 31, 2010 Additions Reversals Disposal At December 31, 2011 5,984 2,701 (2,793) 5,892 2,807 (1,721) (663) 6,315
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(1) Values converted into R$ using closing the rate of R$/USD

Credit Risk and capital management BM&FBOVESPA prefers very low risk investments, where more than 99% of the allocation of assets is linked to government securities with ratings set by Standard & Poors and Moodys of a- and Baa2, respectively, for long-term issues in local currency and characterized as investment grade, in order to obtain high liquidity and sovereign risk, with overall performance linked to the Brazilian prime rate (interbank interest rate). The issue of Senior Notes (Note 12) was linked to increasing our participation in CME and the creation of a strategic
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6. Other Receivables Other receivables comprise the following:

2011 Current Advances to employees Amounts receivable - related parties (note 16) Supplies Other Total Non-current Other Total 555 555 2011 Current Advances to employees Amounts receivable - related parties (note 16) Supplies Other Total Non-current Brokers in judicial liquidation (1) Other Total 2,200 555 2,755 2,200 627 2,827 Assets Liabilities Revenue 1,672 7,169 1,378 1,189 11,408 1,523 7,448 1,527 2,419 12,917
Total

Investees

Adjusted equity

Total shares

Adjusted net % Investment Investment Accumulated Accumulated income Ownership 2011 2010 2011 2010

BM&FBOVESPA 2010 1,457 8,134 1,527 1,135 12,253

Subsidiaries Banco BM&F de Liquidao e Custdia S.A. Bolsa Brasileira de Mercadorias Bolsa de Valores do Rio de Janeiro - BVRJ BM&F USA Inc. BM&FBOVESPA UK Ltd. 49,628 17,397 59,873 646 1,016 24,000 405 115 1,000 1,000 4,693 1,415 1,232 (527) 303 100 50.12 86.95 100 100 49,628 8,720 52,059 646 1,016 44,935 8,011 51,427 348 104,721 4,693 709 1,071 (527) 303 6,249 4,980 (2) 132 (3,683) 1,427

1,572 7,794 1,378 388 11,132

626 626 Consolidated 2010

112,069 Associate CME Group, Inc. (1) Income tax recoverable (3) 40,427,242 66,131 3,060,685 5,13 2,673,386 -

2,248,325 -

156,474 62,987

38,238 -

2,673,386 2,785,455

2,248,325 2,353,046

219,461 225,710

38,238 39,665

Summary of key financial information of subsidiaries and associates:

Details Banco BM&F Bolsa Brasileira de Mercadorias 18,878 1,480 7,736 Bolsa de Valores do Rio de Janeiro BVRJ 65,332 5,458 6,888 BM&F USA Inc. 795 148 1,200 BM&FBOVESPA UK Ltd. 1,124 108 1,982 CME Group, Inc. 76,455,169 35,896,059 6,153,749

232,609 182,981 20,465

(1) Balance of accounts receivable from brokers in judicial liquidation, which considers the guarantee represented by the equity certificates pledged by the debtor.

Changes in Investments:
Investiments Banco BM&F Bolsa Brasileira de Mercadorias 8,013 (2) 132 Subsidiaries Bolsa de Valores do Rio de Janeiro - BVRJ 51,875 BM&F USA Inc. BM&FBOVESPA UK Ltd. Associate CME Group, Inc. Total

Investments

a. Investments in subsidiaries and associates Investments in subsidiaries and associates comprise the following:

At December 31, 2009 Aquisition of shares (1) Equity in results Exchange rate changes (2) Other comprehensive income of foreign associate

39,955 4,980 -

948 (3,683) -

2,351,319 38,238 (133,238) 5,257

100,791 2,351,319 39,665 (133,238) 5,257

98

99

Realization of the revaluation reserve Capital increase Dividends received At December 31, 2010 Equity in results Exchange rate changes (2) Other comprehensive income of foreign associate Realization of the revaluation reserve Capital increase Dividends received At December 31, 2011

44,935 4,693 -

8,011 709 -

(580) 51,427 1,071 (439) 3,083

(13,251) 2,248,325 156,474 297,173 4,321 (32,907)

(580) 3,083 (13,251) 2,353,046 162,723 297,278 4,321 (439) 1,433 (32,907) Exchange rate Exchange variation on foreign investment in foreign associate Exchange variation on hedge of foreign net investment Tax effect of exchange variation on hedge of foreign net investment Net effect

Impact on other comprehensive income Falling dollar Higher dollar -50% -25% 12/31/2011 25% 50% 0.9379 (1,012,370) 1.4069 (360,508) 1.8758 297,278 2.3448 943,215 2.8137 1.595,077

348 (527) 74 751 -

303 31 682 -

445,720

158.722

(128,275)

(415,273)

(702,270)

(151,545) (718,195)

(53,966) (255,752)

43,613 212,616

141,193 669,135

238,772 1,131,579

Refers to recoverble tax paid by the foreign affiliate, according to the Law 9.249/95 and Normative Instruction 213/02 of the Federal Revenue Secretariat of Brazil.

b. Investment property This category comprises properties owned by the subsidiary BVRJ - Bolsa de Valores do Rio de Janeiro rented, which are depreciated according to the estimated useful life of the asset of 25 years.
Consolidated

49,628

8,720

52,059

646

1,016

2,673,386

2,785,455

(1) As from July 2010, with the acquisition of a 3.2% interest in CME Group for the amount of R$1,075,119, increasing the ownership interest from 1.8% to 5%, BM&FBOVESPA began to recognize the investment on the equity method in accordance with CPC 18/IAS 28, because management understands that the qualitative aspects of the relationship between the two companies indicate the existence of significant influence of BM&FBOVESPA over CME Group. The fair value of the investment at December 31, 2011, based on the market price of shares, is R$1,552,022. Due to the decrease in the value of the shares of CME Group, the management of BM&FBOVESPA performed an impairment test. The result of the test did not reveal the need for recognition of impairment on the investment in CME Group at December 31, 2011. For the impairment analysis, management used the discounted cash flow method. Based on expectations for growth in markets where CME operates, the projected cash flow considers revenues and expenses related to its activities in nominal dollars. The operational flows were projected for the next five years, from January 2012 to December 2016. The cash flows were projected into perpetuity using the growth rate expected for nominal GDP in U.S. long-term, of 4.81% a year. The pre-tax discount rate utilized to calculate the present value of projected flows was 14.78% per year. The two main variables that affect the value in use calculated for the investment are the discount rates and growth in perpetuity. Sensitivity analyzes show that an increase of 0.25 percentage points (25bps) in the discount rate before tax (from 14.78% to 15.03% per year) reduces the value in use by 2.65%, while a reduction of 0.25 percentage points (25bps) in the perpetuity growth rate (from 4.81% to 4.56% per year) reduces the value in use by 3.60%. The value in use has a lower sensitivity to variations in projected net income. Considering a reduction in average annual revenue growth by 1 percentage point (100bps) in the period from 2012 to 2016, the recoverable amount is reduced by 4.90%. In none of these three scenarios has there been the need for impairment of the asset. In July 2010, BM&FBOVESPA issued debt abroad to protect part of the translation risk on the investment in CME (hedge of net investment) through the designation of a non-derivative financial instrument (debt issuance abroad) as a hedge, as presented in Note 12. We present below the sensitivity analysis to exchange rate variations for the non hedged portion of the investment in CME Group:
At December 31, 2009 Depreciation At December 31, 2010 Depreciation At December 31, 2011

39,723 (1,511) 38,212 (1,512) 36,700

8. Property and Equipment

BM&FBOVESPA Buildings Furniture and fixtures Computerrelated equipment 69,118 107,036 (32,246) 143,908 Facilities Telephone system Other Construction in progress Total

December 31, 2009 Aditions Disposal Depreciation Total December 31, 2010 Cost Accumulated Depreciation Total

107,534 13,046 (965) 422 120,037

12,500 4,111 (1,992) 14,619

19,023 25,007 (2,882) 41,148

1,906 187 (526) 1,567

26,860 4,073 (2,549) 28,384

12,737 12,737

236,941 166,197 (965) (39,773) 362,400

219,151 (99,114) 120,037

40,641 (26,022) 14,619

312,509 (168,601) 143,908

54,083 (12,935) 41,148

4,119 (2,552) 1,567

68,655 (40,271) 28,384

12,737 12,737

711,895 (349,495) 362,400

100

101

Aditions Disposal Reclassification (Note 9) Transfer to investment property available for sale Depreciation Total December 31, 2011 Custo Depreciao acumulada Total

115 (597) 183 (553) (2,210) 116,975

2,371 (67) 1,224 (2,137) 16,010

18,103 (282) 6,373 (50,514) 117,588

5,402 4 5,191 (4,709) 47,036

182 (6) 67 (332) 1,478

5,287 (809) 692 (1,855) 31,699

13,985 (4,918) 21,804

45,445 (1,757) 8,812 (553) (61,757) 352,590

9. Intangible Assets Goodwill The goodwill of R$16,064,309 is attributed to expected future profitability, supported by an economic and financial appraisal of the investment. According to the guidelines of CPC 01/IAS 36, the goodwill must be tested annually for impairment, or more frequently when there are indicators that impairment may have occurred. Goodwill is stated at cost less accumulated impairment losses. Impairment losses recognized on goodwill are not reversed. BM&FBOVESPA uses external and independent experts to assist in measuring the recoverable amount of the asset (ie, its value in use). The report submitted by the experts did not reveal the need for adjustments to the value of goodwill at December 31, 2011. Based on expectations of growth of the Bovespa segment, the projected cash flow considers revenues and expenses related to activities of the segment (CGU Bovespa). The period of projection of these flows extends from December 2011 to December 2020. The perpetuity is obtained by extrapolating the last years cash flow by an equivalent expected long-term growth rate for nominal GDP of 8.7% per year. The management uses a projection period of ten years based on the perception that the Brazilian capital market, in the equity segment, should experience sustained growth until reaching maturity in the long-term. To determine the present value of the projected flow, the experts used an average pre-tax discount rate of 18.84% per year from December 2011 until December 2013. Afterwards, the discount rate stabilizes at 18,1% a year, capturing the inflationary expectations of the period. The two main variables that affect the value in use calculated are the estimated discount rates and growth in perpetuity. The management of BM&FBOVESPA conducted sensitivity analysis to determine the impacts of changes in these variables on the calculated value in use. The discount rate equivalent before taxes for the entire period is 18.50% per annum, and an increase of 0.5 percentage points (50bps) in this rate (from 18.50% to 19% per annum) reduces the value in use by 3.8%. Regarding the growth rate in perpetuity, a reduction of half percentage point (50bps) in the rate (from 8.7% to 8.2% per annum) reduces the value in use by 4.48%. The value in use has a lower sensitivity to changes in net revenue. Considering a reduction in average annual revenue growth by 2 percentage points (200bps) in the period between December 2011 and December 2020, the value in use is reduced by 11.62%. In none of these three scenarios has there been the need for impairment of the asset. Software and projects The balance comprises costs for the acquisition of licenses and development of software and systems, with amortization rates of 20% to 33% per year, and expenditures for the implementation and development in progress of new systems and software.
BM&FBOVESPA Goodwill At December 31, 2009 Aditions Disposal Amortization Other Total At December 31, 2010 Cost Accumulated Amortization 16,064,309 16,064,309 Cost of software development 43,631 38,721 (4,802) (13,619) 63,931 Concluded software development (617) 10,199 9,582 Software 20,361 68,459 (12,620) 1,865 78,065 Total 16,128,301 107,180 (4,802) (13,237) (1,555) 16,215,887 Consolidated Total 16,128,332 107,180 (4,802) (13,252) (1,555) 16,215,903

217,367 (100,392) 116,975

43,714 (27,704) 16,010

334,027 (216,439) 117,588

64,676 (17,640) 47,036

4,344 (2,866) 1,478

72,826 (41,127) 31,699

21,804 21,804

758,758 (406,168) 352,590 Consolidated

Buildings

Furniture and fixtures

Computerrelated equipment 69,276 107,043 9 (32,301) 144,027

Facilities

Telephone system

Other

Construction in progress

Total

December 31, 2009 Aditions Disposal Depreciation Total December 31, 2010 Cost Accumulated Depreciation Total Additions Disposal Reclassification (Note 9) Transfer to assets available for sale Depreciation Total December 31, 2011 Custo Depreciao acumulada Total

109,232 13,046 (965) 336 121,649

12,684 4,112 (5) (2,031) 14,760

19,618 25,007 (1) (2,984) 41,640

1,906 187 (526) 1,567

29,223 4,084 (4) (2,549) 30,754

12,737 12,737

241,939 166,216 (966) (40,055) 367,134

221,488 (99,839) 121,649 115 (598) 182 (553) (2,296) 118,499

41,159 (26,399) 14,760 2,388 (92) 1,224 (2,179) 16,101

313,412 (169,385) 144,027 18,137 (312) 6,373 (50,553) 117,672

55,113 (13,473) 41,640 5,412 4 5,192 (4,785) 47,463

4,119 (2,552) 1,567 182 (6) 67 (332) 1,478

71,087 (40,333) 30,754 5,378 (811) 692 (1,866) 34,147

12,737 12,737 13,985 (4,918) 21,804

719,115 (351,981) 367,134 45,597 (1,815) 8,812 (553) (62,011) 357,164

219,703 (101,204) 118,499

44,236 (28,135) 16,101

334,930 (217,258) 117,672

65,717 (18,254) 47,463

4,344 (2,866) 1,478

75,351 (41,204) 34,147

21,804 21,804

766,085 (408,921) 357,164

During 2011, BM&FBOVESPA incorporated, as part of the cost of development projects, the amount of R$10,475 related to the depreciation of equipment used in developing these projects. Properties with a carrying value of approximately R$39,534 were pledged as collateral in lawsuits. BM&FBOVESPA is not allowed to assign these assets as collateral for other lawsuits or sell them. Annual rates of depreciation of fixed assets at December 31, 2011 and 2010:
Buildings Furniture and fixtures Computer devices and equipment Facilities Telephone system Other 2.5% 10% 10 to 25% 10% 20% 11% to 33%

16,388,730 (324,421)

63,931 -

10,199 (617)

178,994 (100,929)

16,641,854 (425,967)

16,641,928 (426,025)

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Total Aditions (1) Disposal Reclassification (Note 8) Amortization Total At December 31, 2011 Cost Accumulated Amortization Total

16,064,309 16,064,309

63,931 126,894 (7,997) (55,496) 127,332

9,582 43 (107) 46,992 (3,360) 53,150

78,065 66,791 (2,069) (308) (33,146) 109,333

16,215,887 193,728 (10,173) (8,812) (36,506) 16,354,124

16,215,903 193,728 (10,172) (8,812) (36,520) 16,354,127

The notes have an early partial or total redemption clause, at the option of BM&FBOVESPA, for the greater of: (i) principal plus interest accrued to date and (ii) interest accrued to 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 annum. (40 basis points). These notes have been designated as a hedging instrument for the part equivalent of US$612 million (notional) of the investment in CME Group Inc. (Note 7), in order to hedge the foreign exchange risk. Thus, the BM&FBOVESPA has adopted hedge accounting for net investment in accordance with the provisions of CPC 38/IAS 39. Accordingly, BM&FBOVESPA prepared the formal designation of the hedges by documenting: (i) the objective of the hedge, (ii) type of hedge, (iii) the nature of the risk being hedged, (iv) the hedged item, (v) the hedging instrument, (vi) the correlation of the hedge and the hedged item (retrospective effectiveness test) and (vii) the prospective test. The application of the effectiveness tests described in Note 3 (d) (iv) did not reveal ineffectiveness during the year December 31, 2011. The fair value of the debt, calculated using market data, is R$1,190,534 at December 31, 2011 (Source: Bloomberg). Additionally, BM&FBOVESPA has finance leases for computer equipment. The total amount outstanding at December 31, 2010 was R$2,975.

16,388,730 (324,421) 16,064,309

127,332 127,332

57,082 (3,932) 53,150

242,796 (133,463) 109,333

16,815,940 (461,816) 16,354,124

16,817,154 (463,027) 16,354,127

(1) Projects in progress refer mainly to the development of a new electronic trading platform for different types and classes of assets, and the development of a new business and IT architecture to support the integration of post-trade infrastructure.

BM&FBOVESPA incorporated, as part of the cost of development projects, the amount of R$14,360 related to the depreciation of equipment used in developing these projects.

10. Earnings and Rights on Securities in Custody These comprise dividends and interest on capital received from listed companies, which will be transferred to the custody agents and subsequently to their clients, who are the owners of the shares. 13. Other liabilities
2011 4,848 358 7,931 1,839 717 5,236 20,929 2011 4,848 59,165 118,350 8,138 1,839 717 6,382 199,439 BM&FBOVESPA 2010 4,413 6,470 2,652 2,081 1,839 705 6,579 24,739 Consolidated 2010 4,413 6,470 50,373 141,988 2,239 1,839 705 8,118 216,145

Details

11. Provision for Taxes and Contributions Payable

BM&FBOVESPA 2010 6,066 15,490 2,127 23,683 Consolidated 2010 6,209 15,607 2,165 23,981

Details Taxes and contributions withheld at source PIS/Cofins ISS (Municipal service tax) Total

2011 14,175 14,973 1,860 31,008

Custody agents Liability for purchase of treasury shares Amounts payable - related parties (Note 16) Outsourced services Payable for redemption of preferred shares Electricity, water and telephone Other Total

Details Custody agents Liability for purchase of treasury shares Demand deposits (1) Liabilities for securities purchased under resell agreements (2) Outsourced services Payable for redemption preferred shares Electricity, water and telephone Other Total

Details Taxes and contributions withheld at source PIS/Cofins ISS (Municipal service tax) Total

2011 14,816 15,100 1,898 31,814

12. Issuance of debt abroad and loans On July 16, 2010 BM&FBOVESPA concluded the issuance of senior unsecured notes, with face value of US$612 million, priced at 99.635% of nominal value, resulting in a net inflow of US$609 million (equivalent at the time to R$1,075,323). The interest rate is 5.50% p.a., payable half-yearly in January and July, and the principal amount is due on July 16, 2020. The effective rate was 5.64% p.a., which includes the discount and other costs related to issuance. The updated balance of the borrowing on December 31, 2011 is R$1,172,225 (R$1,040,238 at December 31, 2010), which includes the amount of R$33,566 (R$30,179 at December 31,2010) of accrued interest. The proceeds from the offering were used to purchase shares of the CME Group at that same date.
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(2) Refer to deposits held by corporations at Banco BM&F with the sole purpose for settlement of clearing operations held within the BM&FBOVESPA and Selic - Special System for Settlement and Custody pursuant to Central Bank Circular Letter No. 3196 of July 21, 2005 (3) Refers to repurchase agreements of Banco BM&F, maturing at January 2, 2012 and backed by Financial Treasury Bills (LFT) and National Treasury Bills (LTN) (2010 - consisting of repurchase agreements maturing at January 3, 2011, backed by LFT and LTN)

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14. Provisions and contingent liabilities and assets 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 future gains. b. Contingent liabilities BM&FBOVESPA and its subsidiaries are defendants in a number of labor, tax and civil lawsuits in the course of their normal operating activities. The lawsuits are classified by their probability of loss (probable, possible or remote), based on an evaluation by BM&FBOVESPA and its legal advisors, using parameters such as previous judgments and the history of loss in similar litigation. The lawsuits in which the loss is evaluated as probable mainly comprise the following: Labor claims mostly related to filed by ex-employees of BM&FBOVESPA and employees of outsourced service providers, on account of alleged noncompliance with labor legislation. There are also claims filed by former BVRJ employees, specifically as regards to noncompliance with rules related to collective bargaining agreements; Civil proceedings, mainly relate to aspects of civil liability for losses and damages. Tax cases are mainly relate to the incidence of PIS and Cofins on (i) BM&FBOVESPA revenues and (ii) receipt of interest on equity own Capital.
At December 31, 2009 (2) Provisions charged Reversals Reassessment of contingent risks Interest At Decmeber 31, 2010 (2) Provisions charged Reversals (1) Reassessment of contingent risks Interest At December 31, 2011 (2)

Civil 4,227 105 (36) (500) 449 4,245 3,624 (107) (100) 586 8,248

Labor 4,458 1,538 (490) 80 610 6,196 1,717 (568) (193) 763 7,915

Legal obligations 28,608 3,163 1,252 33,023 5,522 (11,276) 1,310 28,579

Tax 12,154 972 13,126 1,376 14,502

Consolidated Total 49,447 4,806 (526) (420) 3,283 56,590 10,863 (11,951) (293) 4,035 59,244

(1)

Included in the reversals is the conclusion of a lawsuit that confirmed that additional social security contributions are not due on (i) payroll and (ii) payments to self-employed individuals, amounting to a reversal of R$11,276 in October 2011, and respective release of judicial deposits (Note 14 (g)). Due to the nature of the provisions, the timing of cash disbursement is not currently known.

(2)

e. Possible losses The proceedings classified as a possible loss are so classified as a result of uncertainties surrounding their outcome. They are lawsuits for which jurisprudence has not yet been defined or which still depend on verification and analysis of the facts, or even involve specific aspects that reduce the chances of loss. BM&FBOVESPA and its subsidiaries have tax, civil and labor lawsuits involving risks of loss classified by management as possible, based on the evaluation of their legal advisors, for which no provision has been recorded. These proceedings comprise mainly the following: Labor proceedings, mostly related to claims filed by ex-employees of BM&FBOVESPA and employees of outsourced service providers, on account of alleged noncompliance with labor legislation. The lawsuits classified as possible losses at December 31, 2011 total R$58,841 in BM&FBOVESPA (R$32,749 at December 31, 2010) and R$60,849 on a consolidated basis (R$34,609 at December 31, 2010); Civil proceedings mainly relate to aspects of civil liability for losses and damages. The total amount involved in the lawsuits classified as possible losses at December 31, 2011 total R$70,102 in BM&FBOVESPA and on a consolidated basis (R$74,386 at December 31, 2010). This amount is almost entirely related to the possibility of being required to deliver shares of BM&FBOVESPA (surviving company of the merger with BM&F S.A.), corresponding to the shares resulting from the conversion of the membership certificate 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 tax cases of BM&FBOVESPA and its subsidiaries mainly involve a dispute over the classification of exchanges as subject to the payment of social contributions. Most of these amounts are related to two lawsuits filed by BM&FBOVESPA against the Federal Government arguing that it should not be subject to the payment of social contributions prior to the 1999 fiscal year. The amount involved in the aforementioned proceedings as of December 31, 2011 is R$48,332 (R$45,085 at December 31, 2010). The total amount involved in tax proceedings classified as possible losses is R$76,697 in BM&FBOVESPA and on a consolidated basis (R$70,141 at December 31, 2010).

c. Legal obligations These are almost entirely proceedings in which BM&FBOVESPA seeks exemption from social security additional contributions on payroll and payments to self-employed professionals, as well as discussions about the legality of Labor Accident Insurance (SAT). d. Changes in balances The activity in provisions for contingencies and legal obligations may be summarized as follows:
Civil At December 31, 2009 (2) Provisions charged Reversals Reassessment of contingent risks Interest At December 31, 2010 (2) Provisions charged Reversals (1) Reassessment of contingent risks Interest At December 31, 2011 (2) 3,671 64 (25) 51 441 4,202 31 (61) (100) 420 4,492 Labor 4,108 1,428 (463) 160 562 5,795 1,224 (91) (497) 690 7,121 Legal obligations 28,608 3,163 1,252 33,023 5,522 (11,276) 1,310 28,579 Tax 11,823 957 12,780 1,358 14,138 BM&FBOVESPA Total 48,210 4,655 (488) 211 3,212 55,800 6,777 (11,428) (597) 3,778 54,330

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f.

Remote losses BM&FBOVESPA, as successor of the former BOVESPA, and the subsidiary BVRJ are defendants in an action for tangible damages and pain and suffering filed by Mr. 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 the tangible damages and pain and suffering claimed, the plaintiffs ask that BVRJ and BM&FBOVESPA be sentenced in proportion to their responsibilities. On December 18, 2009, a sentence was published in which the claims made by the plaintiffs were considered completely unfounded. BM&FBOVESPA and its legal advisors consider that the chances of loss in this lawsuit are remote. BM&FBOVESPA received on November 29, 2010, an assessment notice from the Internal Revenue Service of Brazil (RFB), demanding the payment of income tax (R$301,686 of principal, plus fines and interest) and social contribution (R$108,525 of principal, plus fines and interest) representing the amount of those taxes that, in the view of the RFB, BM&FBOVESPA underpaid in the years 2008 and 2009 with respect to the amortization for tax purposes of the goodwill generated upon the merger Bovespa Holding SA, approved at the General Assembly of May 8, 2008. During October 2011, the RFB Judgement Office in So Paulo issued a decision on the challenge presented by BM&FBOVESPA, maintaining, in substance, the assessment notice. BM&FBOVESPA appealed to the Board of Tax Appeals on November 21, 2011, which will render a final administrative decision on the legality of amortization of goodwill for tax purposes. Based on the advice of its lawyers, BM&FBOVESPA considers 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 law.

15. Equity a. Capital At Meeting in December 13, 2011, the Board approved the cancellation of 64,014,295 shares of BM&FBOVESPAs held in treasury (Note 15 (b)) which were acquired under the share repurchase programs. As a result of such cancellation, the capital of BM&FBOVESPA at the amount of R$2,540,239, is now presented by 1,980,000,000 nominative common shares with voting rights and no par value, of which 1,927,991,988 outstanding at December 31, 2011 (1,979,921,193 at December 31, 2010.) BM&FBOVESPA is authorized to increase its capital up to the limit of 2,500,000,000 (two billion, five hundred million) common shares, through a resolution of the Board, without any amendment of the bylaws. b. Treasury shares Share buyback program In a meeting held on August 12, 2010, the Board of Directors approved a Share Buyback Program. On December 16, 2010, the Board approved the extension of the Repurchase Program, with the final date of June 30, 2011. BM&FBOVESPA repurchased the expected number of 60,000,000 common shares during the period from August 18, 2010 to June 30 2011, comprising 31,950,000 in 2010 and 28,050,000 in the first half of 2011. At a meeting held on June 16, 2011, the Board of Directors approved a new Share Buyback Program, starting July 1, 2011 and matured at December 31, 2011. At December 13, 2011, it was approved by the Board the extension of for this program for 6 months, ending on June 30, 2012. The limit of shares to be acquired by the Company is 60,000,000 common shares, representing 3.11% of total outstanding shares. Until December 31, 2011 BM&FBOVESPA repurchased 29,552,500 shares, which represented 1.53% of total outstanding shares. The shares acquired under the Share Buyback Program may be canceled or used to in connection with the exercise of the stock options by the beneficiaries of the Stock Option Plan of the BM&FBOVESPA. We present below the activity of treasury shares during the year:
Quantity At December 31, 2009 Acquisition of shares - Share Buyback Program Shares sold - stock options (Note 18) At December 31, 2010 Acquisition of Shares - Share Buyback Program Shares sold - stock option (Note 18) Cancellation of shares (Note 15 (a)) At December 31, 2011 Average cost of treasury shares (R$) Market value of treasury shares 39,247,983 31,950,000 (7,104,881) 64,093,102 57,602,500 (5,673,295) (64,014,295) 52,008,012 Amount 230,102 435,115 (51,314) 613,903 606,889 (57,284) (641,955) 521,553 10.028 509,679

g. Judicial deposits
2011 28,838 58,819 4,459 2,062 94,178 BM&FBOVESPA 2010 33,023 54,103 2,096 2,667 91,889 2011 29,202 58,819 4,459 2,568 95,048 Consolidated 2010 33,370 54,103 2,095 2,810 92,378

Details Legal obligations Tax Civil Labor Total

Of the total judicial deposits, (i) R$41,704 (R$38,139 at December 31, 2010) relates to the processes involving the dispute over the classification of exchanges as subject to the payment of social contributions, assessed as possible by management, as described in e above and (ii) R$10,201 (R$9,366 at December 31, 2010) refers to cases regarding PIS and Cofins on interest on own capital received. Of the total deposits relating to legal obligations R$29,201(R$32,594 at December 31, 2010) relates to processes in which BM&FBOVESPA claims the non-incidence of additional social security on payroll contributions and payments to self-employed professionals, and to questions about the legality of charging Occupational Accident Insurance. Due to the existence of judicial deposits related to tax processes classified as possible losses, the total tax contingencies and legal obligations are less than the total deposits related to tax claims. h. Law 11,941/09
In November 2009, BM&FBOVESPA enrolled in the Tax Recovery Program, instituted by Law 11,941/09 and Provisional Measure (MP) 470/09, with a view to settling the amount of R$2,365, related to a portion of the amount disputed in the COFINS case, deposited in court and constituted as probable loss contingency. The amount of R$2,151 will be released to the government and R$214 to BM&FBOVESPA, representing a discount of 45% in arrears interest, as permitted by the legislation. The provision remains in effect until the approval of the request to partially withdraw the lawsuit, because this is a condition for the settlement of the debt pursuant to the Tax Recovery Program.

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c. 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 on August 31, 2007, based on independent experts appraisal reports. d. Capital Reserve Refers substantially to amounts created from the merger of Bovespa Holding shares in 2008, and other corporate events permitted by the 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. Revenue reserves

Interest on own capital and dividends declared in respect to the results of the current period are detailed below:

Details

Declaration

Payment

Per share (gross) (R$)

Total amount (gross)

i. Legal Reserve
The legal reserve is established annually by allocation of 5% of net income and cannot exceed 20% of the capital. The legal reserve is intended to ensure the integrity of the capital and can only be used to offset losses and increase capital. ii. Statutory reserve These 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 bylaws, the Board of Directors may, when the amount of statutory reserves is sufficient to meet its objectives, propose that parts of the reserve be reversed for distribution to the shareholders of the Company. f. Valuation adjustments The purpose of the valuation adjustments is to record the effects of (i) currency translation adjustments of the investment in the CME Group, (ii) hedge accounting for net foreign investment, (iii) share of other comprehensive income of an associate and (iv) up to July 30, 2010, effects of mark-to-market adjustments of the shares of the CME Group (Note 7). g. Dividends and interest on own capital Pursuant to the bylaws, the shareholders are guaranteed interest on own capital or dividends, based on the net profit, adjusted in accordance with the corporate law, at a minimum percentage of 25%.
2011 Net income Legal reserve constitution (1) Basis of calculation of dividends Dividends Interest on own capital Total declared in the year 1,047,999 1,047,999 535,546 150,000 685,546 2010

Interest on own capital Interest on own capital Interest on own capital Interest on own capital Dividends Dividends Interest on own capital Dividends Total proposed/ declared in 2010 Interest on own capital Interest on own capital Dividends Dividends Dividends Total proposed/ declared in 2011

2/23/2010 3/25/2010 5/11/2010 8/12/2010 8/12/2010 11/9/2010 12/16/2010 02/17/2011

3/11/2010 4/13/2010 5/27/2010 9/10/2010 9/10/2010 11/25/2010 1/19/2011 5/16/2011

0.014951 0.029890 0.068231 0.022422 0.098957 0.119101 0.016156 0.207025 0.025461 0.051128 0.034054 0.121740 0.121139

30,000 60,000 137,000 45,000 198,600 235,875 32,000 406,086

1,144,561 50,000 100,000 66,605 235,336 233,605

2/17/2011 5/12/2011 5/12/2011 9/8/2011 11/8/2011

3/10/2011 7/5/2011 7/5/2011 10/3/2011 1/3/2012

685,546

The management of BM&FBOVESPA did not create a revenue reserve for the difference between the amount recognized and equity in the results of the associate CME Group and the amount received as dividends from the investment. h. Earnings per share
Basic Numerator Profit available to shareholders of BM&FBOVESPA Denominator Weighted average number of shares outstanding 2011 1,047,999 BM&FBOVESPA 2010 1,144,561

1,948,718,753

2,000,777,767

Basic earnings per share (in R$) 1,144,561 1,144,561 840,561 304,000 1,144,561 Dilluted

0,537789

0.572058

2011 Numerator Profit available to shareholders of BM&FBOVESPA Denominator Weighted average number of shares outstanding adjusted by the stock option plan 1,047,999

Consolidated 2010 1,144,561

1,953,080,684

2,014,463,310

(3) Legal reserve constitution not required on the basis of its value added to the value of other capital reserves exceeds 30% of the capital
110

Diluted earnings per share (in R$)

0,536588

0.568172
111

16. Related Party Transactions a. Transactions and balances with related parties
Details Bolsa de Valores do Rio de Janeiro - BVRJ Accounts payable Contribution for membership certificates Banco BM&F de Servios de Liquidao e Custdia S.A. Available Funds Accounts receivable Foreign exchange operations to settle Recovery of expenses Bolsa Brasileira de Mercadorias Accounts receivable Accounts payable Minimum contribution on membership certificates Recovery of expenses BM&FBOVESPA Superviso de Mercados Accounts receivable Recovery of expenses Mecanismo de Ressarcimento de Prejuzos Accounts receivable Accounts payable Associao BM&F Accounts receivable CME Group Accounts payable Operation expenses Other Companies Accounts receivable 2011 Assets/ (Liabilities) 2010 2011 Revenue/ (Expenses) 2010

the reimbursement to BM&FBOVESPA of the net amount paid monthly for expenses incurred in contracting resources and for the infrastructure made available to BSM to assist in the performance of its supervisory activities. b. Remuneration of key management personnel Key management personnel include Members of the Board, Executive Officers, the Director of Internal Audit, the Director of Banco BM&F and the Director of Human Resources.
Management benefits (2,315) 597 20 17 527 153 6.617 5.402 (475) Short-term benefits (salaries, profit-sharing, etc.) Post-employment benefits Employment contract rescission benefits Share based remuneration (1) 2011 25,666 11 12,867 2010 25,211 12 614 8,307

(1) Represents the expense calculated for the year in relation to the stock options granted to key management personnel, which was recognized in accordance with the criteria described in Note 18.

8 (218)

5 (337) (1,271) 62 (1,319) 115

17. Structure of Guarantees BM&FBOVESPA acting as central counterparty (CCP) manages four clearinghouses considered systemically important by the Central Bank of Brazil, i.e. the Derivatives, Foreign Exchange and Securities Clearinghouses and the Equity and Corporate Debt Clearinghouse (CBLC). The activities carried out by the clearinghouses of BM&FBOVESPA are governed by Law 10,214, of 2001, 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), in the federal bond market (spot, forwards, repurchase operations, futures and lending of securities),equities (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, securities and/ 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&F BOVESPA might have to use its own equity, as a last resort, to ensure the proper settlement of trades. The BM&FBOVESPA clearinghouses are not directly exposed to market risk, as they do not hold net long or net short positions in the various contracts 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. To mitigate the risks assumed, each BM&FBOVESPA 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 rati113

636

452 2,441 2,570

(81)

24 -

6,517

6,947

(59)

106

16

26

The main transactions with related parties are described below and were carried out under the following conditions: BM&FBOVESPA pays a minimum fee to BVRJ and Bolsa Brasileira de Mercadorias as a member of these associations. The payments to BVRJ occurred until December 31, 2010, and were no longer required by the bylaws of BVRJ as from January 1, 2011. Bolsa Brasileira de Mercadorias and Associao BM&F reimbursed monthly BM&FBOVESPA by its expenses over employment of resources and use the infrastructure provided by the BM&FBOVESPA, to aid in carrying out its activities. Banco BM&F entered into an agreement with BM&FBOVESPA which, in addition to establishing rules for occupancy of a building owned by the latter, also provides for the utilization of its technology infrastructure and also its personnel, with transfer of the corresponding costs. BSM has entered into an agreement with BM&FBOVESPA for the transfer and recovery of costs which establishes
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fied by the Central Bank of Brazil, in accordance with National Monetary Council (CMN) Resolution 2,882/01 and BACEN Circular 3,057/01. The structures of our safeguards clearinghouses are based largely on 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 with assets and operations, 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 time frame can vary depending on the nature of contracts and assets traded. The models used for calculating the margin requirements are based, in general, 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 possibility of the emergence 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 assets and contracts negotiated 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 help of statistical models for estimating risk, such as EVT (extreme value theory), estimation of implied volatilities and conditional type Garch model, and historical simulations. The qualitative analysis, in turn, considers aspects related to economic conditions and political, national and international levels and their impact on the markets managed by BM&FBOVESPA. The operations in the BM&FBOVESPA are secured by margins through deposits in cash, government and corporate securities, letters of credit and shares, among others. The guarantees received in cash, in the amount of R$1,501,022 (R$954,605 at December 31, 2010), are recorded as a liability and the other non cash collateral are maintained in off-balance control accounts in the amount of R$177,055,433 (R$142,133,052 at December 31, 2010). On December 31, 2011 the total collateral deposited by clearing, was R$178,556,455 (R$143,087,657 at December 31, 2010), as described below: (a) Safeguard structure of the Derivatives Clearinghouse i) Collateral deposited by derivatives market participants:
Derivatives Clearinghouse Federal government bonds Letters of credit Shares Certificates of deposit (CDBs) Gold Cash (1) Other Total 2011 95,413,934 3,090,051 3,242,459 1,448,298 80,619 707,212 212,935 104,195,508 2010 76,979,261 3,538,492 4,934,328 1,150,998 105,958 652,290 173,340 87,534,667

Composition Federal government bonds Letters of credit Certificates of deposit (CDBs) Equities Cash Amounts deposited Amounts that ensure clearing member/trader participation Total

2011 913,100 204,152 8,055 12,700 1,138,007

2010 921,678 172,210 52,801 15,358 75 1,162,122

(952,700) 185,307

(989,200) 172,922

Fundo de Operaes do Mercado Agropecurio, in the amount of R$50,000 at December 31, 2011 and December 31, 2010, intended to hold resources of BM&FBOVESPA allocated to guarantee the proper settlement of transactions involving agricultural commodity contracts; Fundo Especial dos Membros de Compensao, in the amount of R$40,000 at December 31, 2011 and December 31, 2010, formed by a capital transfer from BM&FBOVESPA., intended to hold BM&FBOVESPA resources allocated to guarantee the proper settlement of transactions, regardless of the type of contract; Fundo de Liquidao de Operaes, in the amount of R$380,993 (R$408,509 at December 31, 2010), formed by collateral transferred by clearing members, intended to guarantee the proper settlement of transactions after the resources of the two previous funds have been used. The fund has the following position:
2011 339,180 38,763 3,050 380,993 (293,000) 2010 354,256 35,012 14,700 4,541 408,509 (313,000)

Composition Federal government bonds Letters of credit Certificates of deposit (CDBs) Equities Amounts deposited Amounts that ensure clearing member/trader participation Total

87,993

95,509

Special equity, in the amount of R$38,906 (R$34,807 at December 31, 2010), in compliance with the provisions of Article 5 of Law 10,214, of March 27, 2001 and of Article 19 of Circular 3,057 of the Brazilian Central Bank, of August 31, 2001.

(b) Safeguard structure of the Equity and Corporate Debt Clearinghouse - CBLC i) The main components of the safeguard structure of the Equity and Corporate Debt Clearinghouse (CBLC) are described below:

ii) Other Collateral Co-responsibility for paying the broker and clearing member who acted as intermediaries, as well as collateral deposited by such participants. Fundo de Desempenho Operacional, worth R$1,138,007 thousand (2010 - R$1,162,122 thousand), formed by funds provided by holders of right of settlement in the Derivatives Clearinghouse (clearing members) and holders of unrestricted right to bargain with the sole purpose of ensuring the operations. The fund has the following position:

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115

Equity and Corporate Debt Clearinghouse - CBLC Federal government bonds Shares International bonds (1) Certificates of deposit (CDBs) Letters of credit Cash (1) Other Total

2011 34,422,215 31,417,638 2,134,513 621,817 245,616 762,113 166,210 69,770,122

2010 22,749,941 25,809,847 736,905 580,066 448,054 235,720 142,004 50,702,537

(d) Safeguard structure of the Securities Clearinghouse i) The main components of the Securities Clearinghouse are described below:
Composition Federal Government Bonds 2011 1,142,266 2010 928,786

ii) Other Collateral Fundo Operacional da Clearing de Aes, in the amount of R$40,000 at December 31, 2011 and December 31, 2010, with the purpose of maintaining funds of BM&FBOVESPA to cover losses resulting from operating or administrative failures of participants; Special equity, in the amount of R$27,395 (R$24,536 at December 31, 2010), in compliance with the provisions of Article 5 of Law 10,214, of March 27, 2001 and of Article 19 of Circular 3,057 of the Brazilian Central Bank, of August 31, 2001.

(1) American and German government bonds, ADRs (American Depositary Receipt) as well

ii) Other Collateral Joint responsibility for trade settlement by the brokerage house and clearing member that acted as intermediaries, as well as the collateral deposited by these participants; Fundo de Liquidao, in the amount of R$384,326 (R$485,409 at December 31, 2010), formed by collateral (government debt securities) transferred by clearing members, intended to guarantee the proper settlement of transactions. Special equity, in the amount of R$41,456 (R$37,210 at December 31, 2010), in compliance with the provisions of Article 5 of Law 10,214, of March 27, 2001 and of Article 19 of Circular 3,057 of the Brazilian Central Bank, of August 31, 2001.

(e) Guarantee funds and Mecanismo de Ressarcimento de Prejuzos BM&FBOVESPA Superviso de Mercados - BSM manages the Mecanismo de Ressarcimento de Prejuzos - MRP, the sole purpose of which is to assure reimbursement of loss to clients of brokerage firms that trade in BM&FBOVESPA upon the occurrence of events determined in the regulation. The resources of MRP aim to assure that their members clients are refunded for losses resulting from errors in the execution of orders accepted and from inadequate or irregular use of funds belonging to clients, under the terms of CVM Instruction 461/07. The subsidiaries Bolsa Brasileira de Mercadorias and Bolsa de Valores do Rio de Janeiro (BVRJ) also manages Guarantee Funds, special purpose entities without a legal status. The maximum liability of these Guarantee Funds is limited to the sum of their net assets. The Net assets of the MRP and Guarantee Funds amounted to R$312,097 at December 31, 2011 (2010 R$215,745). In 2011, BM&FBOVESPA made a contribution to MRP of R$92,342, which was previously considered as statutory reserve by BM&FBOVESPA and had the objective to eventually attend investors reimbursement requests were the hypothesis provided in the MRP regulation to occur. This contribution had the objective to unify the resources related to MRP, under the administration of BSM. . 18. Employee Benefits

(c) Safeguard structure of the Foreign Exchange Clearinghouse i) The main components of the safeguard structure of the Foreign Exchange Clearinghouse are described below:
Foreign Exchange Clearinghouse Federal government bonds Cash Total 2011 3,416,862 31,697 3,448,559 2010 3,855,147 66,520 3,921,667

ii) Other Collateral Fundo de Participao, in the amount of R$181,260 (R$162,235 at December 31, 2010), formed by collateral transferred by Clearinghouse participants, intended to guarantee the proper settlement of transactions. Fundo Operacional da Clearing de Cmbio, in the amount of R$50,000 at December 31, 2011 and December 31, 2010, with the purpose of maintaining funds of BM&FBOVESPA to cover losses resulting from operating or administrative failures; Special equity, in the amount of R$38,956 (R$34,848 at December 31, 2010), in compliance with the provisions of Article 5 of Law 10,214, of March 27, 2001 and of Article 19 of Circular 3,057 of the Brazilian Central Bank, of August 31, 2001.

Stock options BM&F S.A. (Transferred to BM&FBOVESPA)

At the Special General shareholders Meeting (AGE) held on September 20, 2007, approval was given for an option plan for the purchase of shares issued by BM&F S.A. for the purpose of granting purchase rights on a stated number of shares, for recognition and retention of the employees of BM&F S.A. and, subsequently, of BM&FBOVESPA, after May 8, 2008, up to a limit of 3% of the capital stock. The stock options granted under the plan of the extinct BM&F were assumed by BM&FBOVESPA, as decided at the AGE of May 8, 2008. On December 18, 2007, 27,056,316 stock options were granted under the plan with a fixed exercise price of R$1.00 per share. Subsequent to this date, no further stock options were granted or vesting conditions changed under this plan. During the period, some employees acquired the rights to exercise their options as a result of the termination of employment. At December 31, 2011 all shares granted at this stock options plan had became vested. The Plan was designed to provide managers and employees of the former BM&F (i) with a reward for their services during the period prior to the demutualization process and also (ii) to retain professionals for a period of four years subsequent to the approval of the plan and the IPO.

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The main items used as a basis for acknowledging these services and for allocating the options granted were: (i) Exercise price fixed at R$1.00; (ii) Right to exercise options even if the beneficiary is dismissed by the Company, as well as on retirement, termination of employment as a result of upon death of the beneficiary; (iii) Number of years of service of each beneficiary; (iv) The period for each exercise of options. BM&FBOVESPA recognized the expenses related to the stock options of employees that have not yet vested, of R$9,543 during the year (R$19,843 at December 31, 2010). BM&FBOVESPA considered in this calculation an estimated turnover of 5%, i.e. the estimated number of options which will not vest due to employees resignations. Stock options BM&FBOVESPA Plan On May 8, 2008, at the AGE of BM&FBOVESPA, approval was given to establish a stock option plan within the authorized limit of 2.5% of capital, having as its objective greater alignment of the interests of shareholders with those employees who are considered strategic, and employees considered as talents of BM&FBOVESPA and its subsidiaries. On December 19, 2008, the first series of options was granted at an exercise price of R$5.174 per share, corresponding to the average closing price of trading in the 20 sessions that preceded the date on which the options were granted, subject to vesting periods for exercising the options. 4,531,850 stock options were granted, distributed equally in four vesting dates over a four-year period. Some employees, who had stock options related to the series granted in 2008, acquired the rights to exercise their options as a result of termination of employment. As a result of the acceleration of vesting in these cases, BM&FBOVESPA recognized, during the period, the total expenses related to 985,450 stock options of such employees that otherwise would have been recognized in future periods. At December 31, 2011, there are 730,347 stock options granted in 2008 that have not yet vested. On January 20, 2009, the Board of Directors approved the 2009 stock option program (2009 Program), which set the date of grant as March 1, 2009. The exercise price of R$6.60 per share corresponds to the average closing price of 20 trading sessions preceding the date of the grant program in 2009, as established in the plan approved at the AGE of May 8, 2008. The 2009 program refers to the period from January 1, 2009 to December 31, 2009, the base period for the performance assessments of the program beneficiaries. At the meeting on December 17, 2009, the Board confirmed the allocation of individual stock options within the 2009 program, according to the performance assessments of BM&FBOVESPA and the beneficiaries, in the total amount of 9,947,000 stock options, divided into four vesting periods. Some employees who had stock options related to the series granted in 2009 had the right to exercise their options at the time of termination of employment. As a result of the acceleration of the vesting period in the cases of dismissal, BM&FBOVESPA recognized in the period all the costs related to 257,500 stock options of such employees that otherwise would have been recognized in future periods. On December 31, 2011 there are 1,980,500 stock options granted in 2009 that have not yet vested. On February 23, 2010, the Board of Directors approved the 2010 stock option program (2010 Program), which set the date of grant as January 3, 2011. The exercise price of R$12.91 per share corresponds to the average closing price of 20 trading sessions preceding the date of the grant on the 2010 program, as established in the plan approved at the AGE of May, 8 2008. At the meeting held on December 16, 2010, the Board confirmed the allocation of individual stock options within the 2010 program, according to the performance assessment of BM&FBOVESPA and the beneficiaries, in the total amount of 13,952,000 stock options, divided into four vesting dates. At December 31, 2011, there are 9,260,125 options granted under the 2010 program that have not yet vested.
118

As a result, the Company recognized expenses in the statement of income related to both grants of this plan in the total amount of R$44,087 during the year (R$11,078 at December 31, 2010) against capital reserves in shareholders equity. BM&FBOVESPA considered in this calculation an estimated turnover of 11% and 18%, i.e. the estimated number of options which will not vest due to employees who opt to leave the Company or whose employment is terminated before achieving vested rights to exercise the options. Until December 31, 2011, BM&FBOVESPA used 1.03% of the total limit of 2.5% of share capital for granted, leaving 1.47% of capital for new programs. As the options are exercised by the employees, BM&FBOVESPA will issue new shares, increasing its capital, or use treasury shares. The rules of the stock option plan provide that options may be exercised wholly or in part for such periods and times specified in each program and the respective Stock Option Agreements. Beneficiaries may exercise of the options effectively granted per year. The conditions of the programs provide that the option can be exercised after the expiration of each grace period, limited to a maximum term of seven years from the first grace period. Completed the waiting period, the option may be exercised wholly or partly. If the option is exercised in part, the holder may exercise the remainder within the terms already set. The option not exercised within the terms and conditions stipulated in the respective programs will be considered automatically terminated, without right to compensation. In the event of termination of the beneficiarys relationship with BM&FBOVESPA because of dismissal or resignation (in the case of a member of management), or upon dismissal or termination of service agreement without cause or through resignation : (i) the options already released from grace period may be exercised within 90 days of the termination event with the BM&FBOVESPA, subject to the maximum exercise period set in the program, and (ii) options whose grace period has not elapsed expire without the right to compensation. If the beneficiary were to die or become permanently disabled from being able to perform their function in BM&FBOVESPA, the rights arising from the options may be exercised, as appropriate, by the beneficiary or his heirs and successors, who may exercise such rights, whether or not the initial grace periods had incurred, for a period of one year from the date of death or permanent disability, after which they will become extinct without the right to compensation. Options Granted
Price per share (R$) Exercised and canceled in prior periods (6,518,096) (4,692,396) (2,573,850) (13,784,342) (829,428) (705,787) (289,862) (289,862) (2,114,939) (1,047,220) (109,500) (182,000) (182,000) Canceled in the period ended in 12/31/2011 (4,500) (4,500) (61,175) (105,550) (166,725) (287,000) (294,250) Exercised in the period ended in 12/31/2011 (134,500) (1,373,600) (2,005,446) (3,513,546) (115,350) (162,239) (239,173) (7,200) (523,962) (512,037) (1,063,750) (30,000) (30,000) Outstanding contracts 12/31/2011 Fair value of options on grant date (in reais)

Plan

Grant date

Granted

Granted

BM&F S,A, BM&F S,A, BM&F S,A,

12/18/2007 12/18/2009 12/18/2007 12/18/2010 12/18/2007 12/18/2011

1.00 1.00 1.00

6,652,596 6,329,396 6,244,396 19,226,388

263,400 1,660,600 1,924,000 188,188 264,940 542,749 730,347 1,726,224 927,493 1,313,500 1,987,750 1,980,500

21.81 21.54 21.32

BM&FBOVESPA BM&FBOVESPA BM&FBOVESPA BM&FBOVESPA

12/19/2008 12/19/2008 12/19/2008 12/19/2008

06/30/2009 06/30/2010 06/30/2011 06/30/2012

5.174 5.174 5.174 5.174

1,132,966 1,132,966 1,132,959 1,132,959 4,531,850

3.71 3.71 3.71 3.71

BM&FBOVESPA BM&FBOVESPA BM&FBOVESPA BM&FBOVESPA

03/01/2009 03/01/2009 03/01/2009 03/01/2009

12/31/2009 12/31/2010 12/31/2011 12/31/2012

6.60 6.60 6.60 6.60

2,486,750 2,486,750 2,486,750 2,486,750

2.93 2.93 2.93 2.93

119

9,947,000 BM&FBOVESPA BM&FBOVESPA BM&FBOVESPA BM&FBOVESPA 01/03/2011 01/03/2011 01/03/2011 01/03/2011 03/01/2011 03/01/2012 03/01/2013 03/01/2014 12.91 12.91 12.91 12.91 3,488,000 3,488,000 3,488,000 3,488,000 13,952,000 Total 47,657,238

(1,520,720) (17,420,001)

(581,250) (189,500) (378,375) (378,375) (447,125) (1,393,375) (2,145,850)

(1,635,787) (5,673,295)

6,209,243 3,298,500 3,109,625 3,109,625 3,040,875 12,558,625 22,418,092 4.50 4.50 4.50 4.50

The percentage of capital dilution

BM&F S.A. Granted at Stock option outstanding Outstanding shares Dilution rate 0.10% BM&F S.A. Granted at Stock option outstanding Outstanding shares Dilution rate 0.27% 0.12% 0.43% 12/18/2007 5,442,046 0.09% BM&FBOVESPA 12/19/2008 2,416,911 03/01/2009 8,426,280 16,285,237 1,979,921,193 0.82% 0.32% 0.65% 12/18/2007 1,924,000 BM&FBOVESPA 12/19/2008 1,726,224 03/01/2009 6,209,243 01/03/2011 12,558,625 22,418,092 1,927,991,988 1.16% 2011 TOTAL 2011 TOTAL

Total options exercised during the period

Exercise Month January February March April May June July August September October November December Exercised Options 2011 Exercised Options 2011 Plan BM&F Quantity carried 211,350 392,400 155,600 602,750 211,000 156,000 4,500 195,000 135,000 25,000 1,424,946 3,513,546 5,253,946 Average Market Price (R$) 12.69 11.54 11.40 11.91 11.53 10.69 9.70 8.62 9.28 9.58 9.98 10.04 Plan BM&FBovespa Quantity carried 409,650 259,300 77,112 622,400 77,700 84,650 161,412 115,050 56,800 43,525 109,325 142,825 2,159,749 1,850,935

Average Market Price per share(R$) 12.64 11.49 11.36 11.94 11.63 10.96 8.95 8.55 9.55 10.22 9.98

Effects arising from the exercise of the options

Details Amount received on sale of share -Exercised Options (-)Cost of treasury shares sold Effect on disposal of shares 2011 17,024 (57,284) (40,260) 2010 16,384 (51,314) (34,930)

Option pricing model To determine the fair value of the options granted, BM&FBOVESPA takes into account the following aspects:

Consolidated activity during the year

2011 Periods begining Granted options Exercised options Canceled and due options Periods end 16,285,237 13,952,000 (5,673,295) (2,145,850) 22,418,092 2010 23,927,317 (7,104,881) (537,199) 16,285,237

a) The model of stock options granted by BM&FBOVESPA permits the early exercise as from the future vesting date, this being between the date of grant and the date of expiry; b) The shares pay dividends between the grant date and the option expiry date. Accordingly, these options have characteristics of the European model (early exercise is not allowed) until the vesting date and characteristics of the American model (possibility of early exercise) between the vesting date and the option expiry date. This form of options is known as the Bermuda or Mid-Atlantic type and their price must be between the price of a European option and the price of an American option with similar characteristics. In relation to the dividend payment, there are two impacts on the price of the option that should be taken into account: (i) the fall in share prices after the dates on which they become ex-dividend and (ii) the influence of such payments on the decision to exercise the option early. Considering the aspects above, a modified Binomial method (Cox-Ross-Rubinstein) was used to determine the fair value of the options granted which consider the existence of two distinct periods in relation to the possibility of anticipated exercise (before and after the vesting dates). This method produces results which are equivalent to the results of the Black & Scholes model for non-complex European options, having the advantage of being able to incorporate the characteristics of an exercise and the payment of dividends associated with the stock options considered. The main assumptions used in pricing the options were:

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a) The options were valued based on the market parameters effective on each of the grant dates of the different plans; b) To estimate the risk-free interest rate, were adopted the future interest contracts negotiated for the maximum exercise period of the options; c) Since BM&FBOVESPA was a recently listed entity at the time the BM&F plan was granted, historical volatility did not provide sufficient information on share volatility, considering the contractual term for exercising the options. As a result, BM&FBOVESPA used the implicit volatility of similar entities (international stock exchanges) as a basis for estimating the volatility of its shares over periods in which liquidity was sufficient to guarantee the quality of the data gathered; d) In order to define the volatility applied by the pricing model of the second and third grants of the BM&FBOVESPA plan three measures commonly employed in finance were evaluated: (i) implied volatilities, (ii) volatilities estimated via autoregressive model (GARCH) and; (iii) volatility model estimated via exponential weighted moving average (EWMA). Although the exclusive use of implied volatilities, ie volatilities computed based on observed prices in the market, offer more accurate estimates, options trading of the shares of those grants had low liquidity on the dates of grant, and refer to lower maturities. Thus, BM&FBOVESPA used the average between the implied volatility observed and the estimated volatility via EWMA model to estimate the volatility of its shares, whereas the results obtained with the GARCH model were not satisfactory; e) The share prices were adjusted in order to take into account the impact of dividend payments; and f ) The maximum period for exercising the options granted was used as expiry date of the options. The remaining usual assumptions related to option pricing models, such as inexistence of arbitrage opportunities, as well as, constant volatility and interest rates over the period, were also considered in the calculation.

(1) Deferred income tax and social contribution liabilities arising from temporary differences between the tax basis of goodwill and its carrying value 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 value 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 liquidated, this requiring the recognition of a deferred tax liability

Net changes in deferred tax during the year:

2011 Opening Balance Tax, labor and civil contingencies Tax loss carry forwards Impairment of shares Exchange variation on foreign debt issuance Other temporary differences Goodwill amortization (1) Exchange variation on foreign debt issuance Mark to market of available for sales securities Other Closing balance (677,387) 2,730 4,072 43,613 3,838 (498,252) 5,498 (1,124,032) BM&FBOVESPA and Consolidated 2010 (17,106) 1,053 (1,160) (237,283) (20,246) 8,253 (445,155) 39,870 (5,613) (677,387)

Private pension plan

The private pension plan Fundo de Penso Multipatrocinado das Instituies do Mercado Financeiro e de Capitais (MERCAPREV) is structured as a defined contribution retirement plan and is sponsored by the following entities: Adeval, Ancor, BM&FBOVESPA, Sindival and the brokerage firms Theca, Souza Barros and Talarico. Contributions to the pension plan for the period ended December 31, 2011 amounted to R$3,252 (R$3,166 at December 31, 2010) by BM&FBOVESPA and the consolidated.

Variation of assets and liabilities of deffered tax during the year:

Tax Loss Carry Forward Impairment of available for sale securities BM&FBOVESPA and Consolidated Exchange variation on foreign debt issuance Goodwill amortization and contingencies

Deferred tax assets

Temporary differences

Total

19. Income Tax and Social Contribution on Net Income (a) Deferred income tax and social contribution The balance of deferred tax assets and liabilities is as follows:
2011 8,525 30,053 23,367 18,605 80,550 (1,200,623) (3,959) (1,204,582) (1,124,032) BM&FBOVESPA and Consolidated 2010 5,795 34,125 14,767 54,687 (702,371) (20,246) (9,457) (732,074) (677,387)

At December 31, 2009 Recognized in the statement of Income Recognized in the Comprehensive Income At December 31, 2010 Transfer from liabilities Recognized in the statement of Income At December 31, 2011

6,514 8,253 14,767 3,838 18,605

35,285 (1,160) 34,125 4,072 30,053

237,283 (237,283) -

23,367 23,367

4,742 1,053 5,795 2,730 8,525

283,824 8,146 (237,283) 54,687 23,367 2,496 80,550

Details Tax, labor and civil contingencies Tax loss carry forwards Exchange variation on foreign debt issuance Other temporary differences Total deferred tax assets Goodwill amortization (1) Exchange variation on foreign debt issuance Other Total deferred tax liabilities Net deferred tax

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BM&FBOVESPA and Consolidated Deferred tax liability Goodwill Amortization Exchange variation on foreign debt (20,246) (20,246) (23,637) 43,613 Mark to Market of available for sale (39,870) 39,870 Other Total

(c) Reconciliation of the income tax and social contribution expense The income tax and social contribution amounts presented in the statements of income at nominal rates are reconciled to the statement rates as follows:
Profit before income tax and social contribution Income tax and social contribution before additions and exclusions Additions: Stock options plan Non-deductible expenses Exclusions: Equity in results of investees Interest on own capital Other Income tax and social contribution Profit before income tax and social contribution Income tax and social contribution before additions and exclusions Additions: Adjustments from Law 11,638/07 applicable to the expenses from Stock Option plan Non-deductible expenses Exclusions: Equity in results of investees Interest on own capital Other Income tax and social contribution 127,742 76,742 51,000 564 (535,195) 2011 1,588,210 (539,991) (125,438) (18,234) (107,204) 125,617 74,617 51,000 131 (539,681) 116,846 13,486 103,360 120 (445,207) Consolidated 2010 1,592,515 (541,455) (22,087) (10,513) (11,574) 116,361 13,001 103,360 (848) (448,029) (125,215) (18,234) (106,981) (21,652) (10,513) (11,139) (538,286) (540,521) 2011 1,583,194 BM&FBOVESPA 2010 1,589,768

At December 31, 2009 Recognized in the Statement of Income Recognized in the Comprehensive Income At December 31, 2010 Transfer to assets Recognized in the Statement of Income Recognized in the Comprehensive Income At December 31, 2011

(257,216) (445,155) (702,371) (498,252) (1,200,623)

(3,844) (5,613) (9,457) 5,498 (3,959)

(300.930) (450.768) 19.624 (732.074) (23,637) (492.753) 43.613 (1,204,582)

(b) Estimated realization period The deferred income tax and social contribution assets arising from temporary differences are recorded in the books taking into consideration the probable realization of these tax assets, based on projections of future results prepared in accordance with and supported by internal assumptions and future economic scenarios that may, accordingly, not materialize as expected. It is expected that deferred tax assets (including the tax loss carryforward of R$30,053) will be realized in the amount of R$7,464 until one year and R$73,086 after one year and for the deferred liabilities the expectative of realization is over one year. At December 31, 2011, the present value of the deferred tax assets considered in the expectation amounts to R$53,722. As the income tax and social contribution taxable bases arise not only from the profit that may be generated, but also from the existence of non-taxable income, non-deductible expenses, tax incentives and other variables, there is no immediate correlation between accounting profit of BM&FBOVESPA and the income subject to income tax and social contribution. Therefore, the expectation of the use of deferred tax assets should not be considered as the only indicator of future income of BM&FBOVESPA. The goodwill amount deductible for income tax and social contribution purposes amounts to R$9,625,812 at December 31, 2011 (2010 R$11,092,942) The realization of the deferred tax liability will occur as the difference between the tax basis of goodwill and its carrying amount is reversed, that is, when the carrying value of goodwill in the balance sheet is either reduced or liquidated.

(1) Refers mainly to (i) R$31,396 of contribution to the MRP (Note 17 (e)) and (ii) R$62,987 of recoverable income tax paid abroad (Note 7).

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20. Revenue
BM&FBOVESPA 2011 2010 760,245 744,018 16,102 125 964,702 540,391 396,023 28,288 357,159 74,030 44,841 91,353 49,153 65,049 32,733 (209,339) (187,023) (22,316) 1,872,767 722,065 701,545 20,427 93 1,049,300 737,074 254,904 57,322 310,984 49,443 44,392 88,263 48,234 67,629 13,023 (211,126) (187,516) (23,610) 1,871,223 CONSOLIDATED 2011 2010 760,245 744,018 16,102 125 964,702 540,391 396,023 28,288 391,036 74,030 44,841 91,353 49,153 65,049 5,959 20,461 40,190 (211,299) (188,504) (22,795) 1,904,684 722,065 701,545 20,427 93

a)

Reversal of provision due to the final sentence on the lawsuit which confirmed that the additional social security contribution was not due (Nota 14 (d))

b) Recovery of credit for estate brokerage firm in bankruptcy, with the appropriate additions (interest and inflation)

Trading and/or settlement system - BM&F Derivatives Foreign exchange Assets Trading and/or settlement system - Bovespa Negotiation trading fees Transactions clearing and settlement Other (1) Other revenues Loans of marketable securities Listing of marketable securities Depository, custody and back office Trading participant access Vendors quotations and market information Bolsa Brasileira de Mercadorias -dividends and contributions Bank- Financial intermediation and bank fees Other (2) Deductions of revenue PIS and COFINS taxes Taxes on services Total Revenue

21. Sundry Expenses

Details 2011 10,116 7,795 6,371 4,987 4,093 2,431 2,501 813 6,196 45,303 BM&FBOVESPA 2010 7,664 4,802 7,135 5,209 2,095 2,226 2,619 1,113 4,769 37,632 Consolidated 2010 7,859 4,802 7,420 5,745 6,186 2,753 2,690 1,115 3,178 41,748

1,049,300 737,074 254,904 57,322 340,174 49,443 44,392 88,263 48,234 67,629 5,669 17,028 19,516 (212,797) (188,754) (24,043) 1,898,742

Electricity, water and sewage Expenses of intangible loss Contributions and donations Travel Sundry provisions Rental Supplies Insurance Other Total

Details Electricity, water and sewage Expenses of intangible loss Contributions and donations Travel Sundry provisions Rental Supplies Insurance Other

2011 10,335 7,795 6,540 5,525 8,492 2,945 2,609 814 2,423 47,478

(1) Refers mainly to settlements and public offerings income (2) The others income presents the following composition:
2011 11,276 11,327 6,010 364 3,756 32,733 2011 11,276 11,327 6,923 6,010 801 3,853 40,190 BM&FBOVESPA 2010 3,898 1,482 4,920 2,723 13,023 Consolidated 2010 6,174 3,898 1,702 4,920 2,822 19,516

Description Provision reversal (a) Credit of brokerage in liquidation (b) Goods classification rate Other recoveries Dividends- CME Group Others Total

22. Finance results

2011 Finance income Revenue from financial assets measured at fair value Foreign exchange gains/ (losses) Other finance income Total finance income Finance expense Interest and foreign exchange variation on debt and loans Foreign exchange gains/ (losses) Other finance expense Total finance expense Financial results 331,692 7,834 13,431 352,957 BM&FBOVESPA 2010 314,935 2,808 8,314 326,057

Description Provision Reversal (a) Credit of brokerage in liquidation (b) Income lettings (Note 7(b)) Goods classification rate Other recoveries Dividends- CME Group Others Total
126

(69,412) (4,392) (1,615) (75,419) 277,538

(30,641) (3,266) (4,744) (38,651) 287,406

127

2011 Finance income Revenue from financial assets measured at fair value Foreign exchange gains/ (losses) Other finance income Total finance income Finance expense Interest and foreign exchange variation on debt and loans Foreign exchange gains/ (losses) Other finance expense Total finance expense Finance Results 335,313 7,834 14,573 357,720

Consolidated 2010 317,441 2,808 8,835 329,084

Information by segment

Bovespa Segment BM&F Segment Corporate Segment

2011 Consolidated Total

Trading and/or Settlement system Deductions Revenue Adjusted operational expenses Depreciation and amortization Stock Options Allowance for doubtful accounts Contribution to MRP Other Total expenses Income Equity in results of investees Finance results Income Tax and social contribution Profit or the year

964,702 (98,295) 866,407 (237,399) (31,581) (20,564) (358) (4,784) (294,686) 571,721

760,245 (76,987) 683,258 (172,280) (25,996) (17,975) 110 (3,876) (220,017) 463,241

391,036 (36,017) 355,019 (174,842) (17,631) (15,091) (837) (92,342) (1,218) (301,961) 53,058

2,115,983 (211,299) 1,904,684 (584,521) (75,208) (53,630) (1,085) (92,342) (9,878) (816,664) 1,088,020 156,474 280,729 (476,694)

(69,412) (4,392) (3,187) (76,991) 280,729

(30,641) (3,266) (6,138) (40,045) 289,039

23. Information about Business Segments We present below consolidated information based on reports used by the Executive Board for making decisions, with the segments comprising Bovespa, BM&F, Corporate. In 2011, BM&FBOVESPA has improved its internal reports, incorporating the allocation of operational expenses. Therefore, the previous year information was revised to the current format. Due to the nature of the business, the Executive Board does not use any information on assets and liabilities by segment to support the decision making. Bovespa Segment The Bovespa segment covers the various stages of the trading cycle of fixed and variable income and equity securities, on the stock exchange and Over the Counter (OTC),BM&FBOVESPA manages the only national stock exchange and OTC market for trading of variable income securities, including stocks, stock receipts, Brazilian Depository Receipts, stock derivatives, subscription bonuses, various types of closed-end investment funds, shares representing audiovisual investment certificates, non-standard options (warrants) to purchase and sell securities and other securities authorized by the CVM. 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 robust and sophisticated 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 Banco BM&F and the Brazilian Commodities Exchange. Corporate segment Services provided as depository of securities, as well as loans and of securities (registration in our systems of issuers of securities for trading), data services and classification of commodities, and technological products.

571,721

463,241

145,400

1,048,529

Information by segment Trading and/or settlement system Deductions from revenue Net operating revenue Adjusted operational expenses Depreciation and Amortization Stock Options Alowance for doubtful acounts Other Total operating expenses Operating revenue Equity in income of investees Finance income Income Tax and social contribution Profit or the year

Bovespa Segment 1,049,300 (104,608) 944,692 (224,725) (22,806) (14,849) 17 (2,137) (264,500) 680,192 BM&F Segment 722,065 (75,117) 646,948 (159,353) (19,781) (10,733) 1,225 (1,435) (190,077) 456,871 Corporate Segment 340,174 (33,072) 307,102 (155,870) (12,230) (5,339) (5,085) (403) (178,927) 128,175

2010 Consolidated Total 2,111,539 (212,797) 1,898,742 (539,948) (54,817) (30,921) (3,843) (3,975) (633,504) 1,265,238 38,238 289,039 (448,029) 680,192 456,871 128,175 1,144,486

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24. Insurance Supported by its insurance brokers, BM&BOVESPA contracts in the market coverage compatible with its size and operations, The main coverage, at December 31, 2011, is ts indicated below, according to the insurance policies:
Insurance lines Amounts at risk, material damages, property and equipment Civil liability Works of art Amounts insured 272,590 66,774 16,133

IFRS 12 - Disclosure of Interests in Other Entities, deals with the disclosure requirements for all forms of participation in other entities, including joint agreements, associations, special purpose shares and other equitybalance sheet arrangements. The Company is evaluating the full impact of IFRS 12. The standard is applicable from 1st January 2013. IFRS 13 - Fair Value Measurement, issued in May 2011. The objective of FRS 13 is to improve consistency and reduce the complexity of the measurement at fair value, providing a more precise definition and a single source of fair value measurement and disclosure requirements for their use in IFRS. The Company is still assessing the full impact of IFRS 13. The standard is applicable from January 1, 2013. 26. Subsequent Event In a meeting held on February 14, 2012, the Board of Directors proposed the distribution of additional dividends for the year ended December 31, 2011 in the amount of R$226,727, to be approved by the General Assembly of Shareholders.

25. New standards, amendments and interpretations (a) New and amended standards There are no new pronouncements or interpretations of CPCs /IFRS that are effective from 2011 that could have a significant impact on the financial statements of the BM&FBOVESPA. The changes listed below, apply to BM&FBOVESPA, are effective for annual periods beginning after January 1, 2011. IFRS 7 - Financial Instruments - Emphasises the interaction between quantitative and qualitative disclosures about the nature and extent of risks associated with financial instruments. IAS 24 - Related party disclosures (revised 2009) - Amends the definition of a related party and modifies certain related-party disclosure requirements for government-related entities. (b) New standards, amendments and interpretations issued but not effective The following new standards, amendments and interpretations have been issued by IASB but are not effective for the year 2011. The early adoption of these standards, although encouraged by IASB, was not allowed in Brazil. IFRS 9 - Financial Instruments, addresses classification, measurement and recognition of assets and liabilities. IFRS 9 was issued in November 2009 and October 2010 and replaces the parts of IAS 39 relating to the classification and measurement of financial instruments. IFRS 9 requires the classification of financial assets into two categories: at fair value and measured at amortized cost. The determination is made at initial recognition. The basis of classification depends on the business model and the characteristics of the entitys contractual cash flows of financial instruments. With regard to financial liability, the rule holds most of the requirements established by IAS 39. The main change is where the fair value option for financial liabilities is adopted, the amount of change in fair value due to credit risk of the entity itself is recorded in other comprehensive income and not in the income statement, except when they result in accounting mismatch. The Company is evaluating the full impact of IFRS 9. The standard is applicable from 1st January 2013. IFRS 10 - Consolidated Financial Statements is based on existing principles, identifying the concept of control as a major factor in determining whether an entity should or should not be included in the consolidated financial statements of the parent. The standard provides additional guidance for determining the control. The Company is evaluating the full impact of IFRS 10. The standard is applicable from 1st January 2013. IFRS 11 - Joint Agreements, issued in May 2011. The standard provides a more realistic approach to agreements together by focusing on the rights and obligations of the agreement rather than its legal form. There are two types of agreements, collectively: (i) joint operations - which occurs when an operator has rights to the assets and contractual obligations and keep a record as a result its share in the assets, liabilities, revenues and expenses, and (ii) shared control - occurs when an operator has rights over the net assets of the investment contract and accounted by the equity method. The method of proportional consolidation will no longer be allowed in conjunction with control. The standard is applicable from 1st January 2013.
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Financial Statements as of December 31, 2011 and Independent Auditors Report

(A free translation of the original in Portuguese) INDEPENDENT AUDITORS REPORT TO THE BOARD OF DIRECTORS AND SHAREHOLDERS BM&FBOVESPA S.A. BOLSA DE VALORES, MERCADORIAS E FUTUROS We have audited the accompanying unconsolidated financial statements of BM&FBOVESPA S.A. Bolsa de Valores, Mercadorias e Futuros (Company), comprising the unconsolidated balance sheet at December 31, 2011 and the unconsolidated statements of income, of comprehensive income, of changes in shareholders equity and of cash flows for the year then ended and a summary of significant accounting policies and other explanatory notes. We have also audited the accompanying consolidated financial statements of BM&FBOVESPA S.A. Bolsa de Valores, Mercadorias e Futuros and its subsidaries (Consolidated) comprising the consolidated balance sheet at December 31, 2011 and the consolidated statements of income, of comprehensive income, of changes in shareholders equity and of cash flows for the year then ended and a summary of significant accounting policies and other explanatory notes.

Managements responsibility for the financial statements Management is responsible for the preparation and fair presentation of the unconsolidated financial statements in accordance with the accounting practices adopted in Brazil and of the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and in accordance with the accounting practices adopted in Brazil, as also such internal controls as management determines are 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 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 the 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 auditors 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 entitys preparation and fair presentation of the 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 entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion on the unconsolidated financial statements In our opinion, the accompanying unconsolidated financial statements refered to above present fairly, in all material respects, the financial position of the BM&FBOVESPA S.A. Bolsa de Valores, Mercadorias e Futuros as of December 31, 2011, and its financial performance and cash flows for the year then ended in accordance with the accounting practices adopted in Brazil.

Opinion on the consolidated financial statements In our opinion, the accompanying consolidated financial statements refered to above present fairly, in all material respects, the financial position of the BM&FBOVESPA S.A. Bolsa de Valores, Mercadorias e Futuros and its subsidiaries as of December 31, 2011, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and with the accounting practices adopted in Brazil. Emphasis As described in Note 2, the unconsolidated financial statements were prepared in accordance with the accounting practices adopted in Brazil. In the case of BM&FBOVESPA S.A. Bolsa de Valores, Mercadorias e Futuros, those practices differ from IFRS applicable to separate financial statements, only in reference to the accounting for the investments in subsidiaries and affiliates on the equity method, since IFRS would require them to be carried at cost or fair value. Our opinion is not qualified with respect to this matter. Other matters Statements of value added We have also audited the unconsolidated and consolidated statements of value added (DVA) for the year ended December 31, 2011, prepared under the responsibility of management, which are required to be presented by Brazilian corporate law for public companies, and are supplementary information under IFRS, which do not require the presentation of the DVA. These statements were submitted to the same auditing procedures described above and, in our opinion, are fairly stated, in all material respects, in relation to the financial statements taken as a whole.

So Paulo, February 14, 2012.

PricewaterhouseCoopers Auditores Independentes CRC 2SP000160/O-5 Luiz Antonio Fossa Contador CRC 1SP196161/O-8

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Activities of the Audit Committee The Audit Committee meets regularly at least once a month. In 2011 it held 14 regular meetings and one extraordinary session, during which 49 meetings were held with the members of the Executive Committee, internal and independent auditors, and other interlocutors. The committee met four times with the Board of Directors during 2011. Meetings with Management The committee met with the executive officers who head the various departments and their respective teams to discuss the structures and functioning of their departments, their work processes, any deficiencies in control systems, and action plans to implement improvements. Among the topics that required most attention from the committee, discussions on the following are particularly worthy of note: IT & Information Security The Audit Committee met with the new Chief Information Officer and team to discuss the main action plans to address the issues raised in the Report on Internal Controls (CVM 461) and the internal and independent auditors reports on IT and information security. The departments remit and responsibilities were explained to the Audit Committee. Particular emphasis was placed on enhancements to processes and procedures relating to information security. The committees assessments extended to action plans to address the suggestions submitted by specialized consultants regarding IT processes. At the end of 2011 the committee held further meetings with the CIO to update its review of the aforementioned action plans and of the measures taken to address the issues raised in internal audit reports and by PwC Auditores Independentes in its report on CVM 461, as well as other improvements implemented by the departments new administration. The committees assessments involving IT issues placed particular emphasis on discussions and oversight of the development of the new BM&FBOVESPA-CME trading platform, covering timetables, controls and expected results. Operational incidents relating to IT were discussed with the CIO and mitigating actions were analyzed. Financial Management & Reports With the Chief Financial Officer, independent auditors, and external consultants where applicable, the committee discussed issues relating to appraisal of the premium on BOVESPA Holding and the investment in CME. The CFO and team presented the improvements made to internal controls in Accounting, Treasury and Accounts Payable & Receivable. They also presented the process

of implementing the workflow system dedicated to contracting service providers and managing payments, and the system dedicated to managing the budget and management controls. The presentations covered goals, benefits, and the controls included in the tools concerned. A specific discussion took place on the possible effects of the new federal legislation on trading in FX derivatives and the companys revenue, as well as aspects of CVMs new ruling (CVM Instruction 509) on auditor rotation and the adaptations to the provisions in the bylaws relating to the Audit Committee required by this ruling. Legal With the Legal and Financial Departments and with the independent auditors, the committee discussed the main situations that could potentially create contingent liabilities and their respective judgments of the likelihood of success in the litigation or proceedings concerned. a) The procedure was adopted of periodically sharing with the Audit Committee the correspondence exchanged with regulatory bodies. b) Money laundering prevention mechanisms were discussed. Corporate Risks When this department was created, the committee discussed with those responsible its scope, methodology, work plans and expected outputs, as well as its hierarchical structure. It should be noted that the department has recently been restructured, with a new chief officer and new functional subordination, among other changes. Projects The following topics were discussed at a meeting with the team: a) Clearinghouse Unification Project new model, new business and IT architecture, implementation of post-trade integration program, IT team for project development. CORE, the new risk management model to be implemented by the clearinghouse key aspects such as b) architecture rationale and goals, evolution of central counterparty risk management models, proposed model, premises, expected benefits. c) Proposal to establish an integrated participant register. BSM Assessment of possible impacts of BSMs activities on BM&FBOVESPA. Meetings with independent auditors The committee met with the independent auditors for a briefing on the policy in place to assure their independence in performing their activities and ascertain whether conflicts of interest had arisen in connection with any work requested from them by the Executive Committee apart from auditing of the financial statements. It also dis135

Report of the Audit Committee

Initial information BM&FBOVESPA S.A.s Audit Committee is a statutory body that reports directly to the Board of Directors. Its five members are elected by the Board every two years, taking into consideration the independence criteria stipulated in the applicable legislation and bylaws, as well as international best practice. Powers and responsibilities The Management of BM&FBOVESPA S.A. (hereinafter also referred to as BM&FBOVESPA) is responsible for defining and implementing processes and procedures to collect the data used to produce the companys financial statements, which must be drawn up in accordance with company law, Brazilian GAAP (generally accepted accounting practices), and the rules issued by Comisso de Valores Mobilirios (CVM), Brazils securities and exchange commission. Management is also responsible for the processes, policies and internal control procedures that assure the safekeeping of assets, timely recognition of liabilities, and elimination or reduction to acceptable levels of the risks to which the institution is exposed. Internal auditing is also charged with gauging the quality of BM&FBOVESPAs internal control systems and compliance with the policies and procedures established by Management, including those used for the preparation of financial reports. Independent auditors are responsible for examining the financial statements and issuing an opinion on the adherence of these statements to generally accepted accounting principles. Their conclusions are presented in a report containing recommendations on accounting procedures and internal controls. They are also required to prepare other reports, such as limited quarterly reviews. The duties of the Audit Committee are set out in article 47 of BM&FBOVESPAs bylaws, and match those established by CVM Instruction 461 (2007). The Audit Committees judgments and opinions take into consideration the information received from Management, the representations made by management with regard to the companys information systems, financial statements and internal controls, and the findings of internal and independent auditors.
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cussed the following with the independent auditors: the audit risk assessment performed by them, their plan of activities to establish the nature, timing and scope of the main audit procedures selected, the possible points for attention identified and how they would be audited. At the end of each special review of the quarterly information packages (ITRs) prepared during the course of 2011, the auditors principal conclusions were discussed. At the start of preliminary and final activities for the FY2011 audit, specific meetings were held to re-discuss the remaining audit risk areas and respective audit procedures. All the points considered relevant were covered, with the aim of assessing the potential risks involving the financial statements and the mitigation of such risks by means of audit and control procedures. Report on internal controls In addition to specific discussions on their opinion regarding compliance with CVM Instruction 461 (PwC report, mentioned above), the independent auditors also presented the points for improvements to internal controls they had identified in auditing the financial statements in 2010, separated by nature and classified by complexity and impact on the companys processes. Meetings with internal auditors The following items were discussed in meetings with the Director of Internal Auditing: Priorities for the Auditing Plan, focusing on the main risks and processes for BM&FBOVESPAs business; Working methodology; Report formats and other ways of communicating the results of internal audits; How the departments staff allocate the available hours to the various activities for which they are responsible. Internal Auditing reports appreciated These were presented by the team and discussed with the committee, which considered satisfactory the scope of work and the audit methodology used in the reports produced on the activities performed. The Audit Committee continuously monitors the action plans derived from the audit points raised in all audited areas. The Audit Committee approved Internal Auditings work plan for 2012. The Director of Internal Auditing has a standing invitation to attend meetings of the Audit Committee.
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Audit Committees commentary and recommendations The Audit Committee continues to give priority to monitoring the progress of IT processes and controls, as well as the action plans for the medium and long term. The appointment of a new CIO brought improvements to processes in this area. Nevertheless, the Audit Committee maintains its recommendation that emphasis be placed on project management and timely implementation of action plans by the department. The challenges ahead, in the view of the Audit Committee, remain the maintenance and, where possible, enhancement of the organization of teams with clearly defined objectives and adequate training, the filling of gaps identified in the specialization of BM&FBOVESPA dedicated staff, the fulfillment of timetables for action plan implementation, and orderly management of the transition from BM&FBOVESPAs trading platforms to the new systems under development. Conclusions Based on the plans presented by the independent and internal auditors, and on the subsequent discussions of their findings, the Audit Committee concludes that the work done by both teams was satisfactory. The Audit Committee also deems satisfactory the internal controls that oriented the process of preparing financial statements for the year ended December 31, 2011. It is the considered opinion of the Audit Committee that all the material facts made known to it by the activities performed as described in this report were adequately disclosed in the Management Report and the audited financial statements for the year ended December 31, 2011, and the committee therefore recommends their approval by the Board of Directors.

GRI Table of Contents

3.12

So Paulo February 14, 2012

L. Nelson Carvalho Committee chair and independent committee member Claudio Haddad Independent member of the Board of Directors of BM&FBOVESPA S.A. and committee member as of June 16, 2011 Paulo Roberto Simes da Cunha Independent committee member Srgio Darcy da Silva Alves Independent committee member Tereza Cristina Grossi Togni Independent committee member
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Profile indicators 1. Strategy and Analysis 1.1 1.2 Statement from the most senior decision-maker of the organization. Description of key impacts, risks, and opportunities.

Page
4 and 5 13 to 17

Global Compact Supportting Statement

Profile indicators Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/or between organizations. Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report. Explain any decisions not to apply, or to substantially diverge from, the GRI Indicator Protocols. Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement (e.g.,mergers/ acquisitions, change of base years/periods, nature of business, measurement methods). Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report. Table identifying the location of the Standard Disclosures in the report. Policy and current practice with regard to seeking external assurance for the report.

Page

Global Compact

3.8

19

2. Organizational Profile 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 Name of the organization. Primary brands, products, and/or services. Operational structure of the organization, including main divisions, operating companies, subsidiaries, and joint ventures. Location of organizations headquarters. Number of countries where the organization operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report. Nature of ownership and legal form. Markets served (including geographic breakdown, sectors served, and types of customers/ beneficiaries). Scale of the reporting organization. Significant changes during the reporting period regarding size, structure, or ownership. Awards received in the reporting period. Reporting period (e.g., fiscal/calendar year) for information provided. Date of most recent previous report (if any). Reporting cycle (annual, biennial, etc.) Contact point for questions regarding the report or its contents. Process for defining report content. Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers). See GRI Boundary Protocol for further guidance. State any specific limitations on the scope or boundary of the report (see completeness principle for explanation of scope).

9 9 and 10 9 and 10 9

3.9

20 and xx

3.10

19

9 9 9 11 11

3.11 3.12 3.13

19

20 and 137 20

4. Governance, Commitments, and Engagement 4.1 4.2 Governance structure of the organization, including committees under the highest governance body responsible for specific tasks, such as setting strategy or organizational oversight. Indicate whether the Chair of the highest governance body is also an executive officer. For organizations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members. Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body. Processes in place for the highest governance body to ensure conflicts of interest are avoided. Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance and the status of their implementation.

Principles 1 and 10

21 to 24

3. Report Parameters 3.1 3.2 3.3 3.4 3.5 3.6

19 19 19 20 19

22

Principles 1 and 10

4.3

22

Principles 1 and 10

4.4 4.6

21 and 22

Principles 1 and 10 Principles 1 and 10

19

25

3.7

19

4.8

24

Principles 1 and 10

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139

4.12

Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses. Memberships in associations (such as industry associations) and/or national/international advocacy organizations in which the organization: * Has positions in governance bodies; * Participates in projects or committees; * Provides substantive funding beyond routine membership dues; or * Views membership as strategic. List of stakeholder groups engaged by the organization. Basis for identification and selection of stakeholders with whom to engage. Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group. Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting.

Environmental
25 and 26

Page
58 59 58 58 58 59

Global Compact Principle 8 Principle 8 Principles 7, 8 and 9

Principles 1 and 10

Emissions, effluents and waste EN16 EN17 EN18 EN19 Total direct and indirect greenhouse gas emissions by weight. Other relevant indirect greenhouse gas emissions by weight. Initiatives to reduce greenhouse gas emissions and reductions achieved. Emissions of ozone-depleting substances by weight. NOx, SOx, and other significant air emissions by type and weight. Total weight of waste by type and disposal method. Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation. Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and regulations.

4.13

25 and 26

Principles 1 and 10

4.14 4.15 4.16

26

EN20
26 and 37

EN22

Principle 8 Principles 7, 8 and 9 Principle 8 Global Compact

26 and 37

Products and services EN26

58

4.17 Economic

26 and 37

Compliance Global Compact EN28

60

Page Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments. Coverage of the organizations defined benefit plan obligations. Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation.

Economic performance

Social: Labor Practices and Decent Work

72 and 80

Page
30 31

EC1

Employment LA1 Total workforce by employment type, employment contract, and region. Total number and rate of employee turnover by age group, gender, and region. Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations. Percentage of employees covered by collective bargaining agreements. Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs. Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases.

EC3

33

LA2 Principle 1 Global Compact Principle 8 Principles 8 and 9 Principle 8 LA8 LA3

Principle 6

Market presence EC5

30

32

Labor/management relations LA4

30

Principle 1 and 3 Principle 1

Indirect economic impacts Environmental Energy EN4 EN5 Water EN8

140

Page

Occupational health and safety LA6

34

Indirect energy consumption by primary energy source. Energy saved due to conservation and efficiency improvements. Total water withdrawal by source.

59 59

59

34

Principle 1

141

Social: Labor Practices and Decent Work LA9 Health and safety topics covered in formal agreements with trade unions. Average hours of training per year per employee by employee category. Percentage of employees receiving regular performance and career development reviews. Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity. Ratio of basic salary of men to women by employee category.

Page
34

Global Compact

Social: Society Corruption Percentage of employees trained in organizations anti-corruption policies and procedures. Actions taken in response to incidents of corruption. Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with laws and regulations.

Page
24 25

Global Compact Principle 10 Principle 10

Training and education LA10 LA12

34 34

SO3 SO4

Compliance Principle 1 and 6 SO8

25

Diversity and equal opportunity LA13

31

Social: Product Responsibility Product and service labelling PR5

31

Page
28

Global Compact Principles

LA14

Principle 1 and 6 Global Compact

Practices related to customer satisfaction, including results of surveys measuring customer satisfaction. Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data. Monetary value of significant fines for noncompliance with laws and regulations concerning the provision and use of products and services.

Social: Human Rights Diversity and equal opportunity HR2 Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken. Total number of incidents of discrimination and actions taken. Operations identified as having significant risk for incidents of child labor, and measures taken to contribute to the elimination of child labor. Operations identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to the elimination of forced or compulsory labor. Total number of incidents of violations involving rights of indigenous people and actions taken.

Page
35

Customer privacy PR8

28

Compliance Principles 1, 2 and 6 Principles 1, 2 and 5 Principles 1, 2 and 4 PR9

27

Non-discrimination HR4

35

Child labor HR6

34

Forced and compulsory labor HR7

35

Indigenous rights HR9

35

Social: Society Community SO1 Nature, scope, and effectiveness of any programs and practices that assess and manage the impacts of operations on communities, including entering, operating, and exiting.

Page
35

Global Compact

142

143

Credits
Coordination Alcides Ferreira Sonia Favaretto Composition Rose Jordo Translation Kevin Mundy Graphic design Raphael Straub Typography GB8 Design e Editorao Ltda. Revision Daniel Cooke Content consulting The Media Group Photos Acervo BM&FBOVESPA Contact Investor Relations E-mail:ri@bmfbovespa.com.br Tel.:(+55 11) 2565-4007/4834/4728/4729/4418