“The second phase of talks began in March,” Rofex’s chief operating officer, Ismael Caram, told FOW. “They consist of negotiations to see what kind of agreements there can be between us.”
Matba’s CEO, Gustavo Picolla, echoed Caram’s sentiments, giving cautiously optimistic backing to the talks.
“Matba’s position is that... we’re open to [a merger], as long as our shareholders are happy with the idea”, he said. “Conversations are taking place now, because both boards agreed to them, but the final decision rests with the shareholders.”
Any merged exchange would have a stronger regional and international presence, Caram suggested, a position Picolla said he agreed with “completely”.
A combined exchange could hope to engineer a continental or pan-American order routing deal with another exchange, similar to those recently signed with CME Group by Brazil’s BM&F Bovespa and Mexico’s MexDer.
Rofex held high level order routing talks with BM&F in 2004, before the Brazilian futures market merged with the Bovespa stock exchange.
The merger talks have received unequivocal backing from the Argentine regulator, the Comisión Nacional de Valores (CNV), who suggested the move would give Argentina a unified voice in regional negotiations,
“I commend Rofex and Matba – I foresee strong [market] support,” CVN president Alejandro Vanoli told FOW. “I think the cash markets in Argentina will be looking very closely to see what happens, especially Merval.
“We know they are in the process of reaching synergies,” he added, “particularly in technical issues. I think it’s a very good agenda. One problem we have in Argentina is fragmentation... we have a lot of institutions.”
“[Rofex and Matba] are very similar. Perhaps there are some compatibility issues to attend to... but we are in the process of helping as regulator. The sum of the two markets will be greater and stronger than now.”
Integrating technology would be the first step in any merger, Vanoli said. Trying to accommodate new investment decisions from one another’s client bases would also be important, he added.
Asked whether he agreed that the exchanges had broadly similar business models, Picolla agreed, though he stressed that their client bases were not exactly the same.
With respect to agricultural derivatives, Picolla suggested that Rofex had more investors trading cash-settled contracts, while Matba was more focussed on the physical market.
Economic research suggests the country will enjoy a record soybean harvest this year, Vanoli added. Argentina is one of the world’s largest producers of soybeans and derived products.
Volumewise, nearly all the trading at Rofex is in its USD Index Future, which tracks the peso/dollar exchange rate. The exchange also has soybean and corn futures and options with much lower volumes.
Matba is a purely agricultural exchange. Soybean Futures and Soybean Options are the biggest contracts, followed by Wheat Futures and Corn Futures.
Tom Osborn +44 207 779 8361 tosborn@fow.com