Brazil’s BM&FBovespa capital announces its equity market capitalism has risen in trading in volumes and using computerized programs to deal with trades in a fraction of a second. Brazil’s finance minister Guido Mantega gave high frequency trading an extra shot by removing financial transaction tax on foreigners and bringing short term capital into the equities market. This will allow high frequency traders to move freely and quickly in and out of Brazil’s market as they wish. BM&FBovespa has been looking aggressively in its effort to attract high frequency trading traders and to generate new sources of liquidity and raise more volumes. This is done by exchanging the world’s largest market capital and by cutting fees and offering specialists services while trades are being conducted.
The growth of high frequency trading has added some burden to Brazil’s markets. The discounted fees has created margins in BM&FBovespa’s cash equity and the cost is a burden to the firm. Additionally, the investment in Brazil comes with a regulatory risk. But analysts believe that by removing the tax, it will be able to stimulate the economy and the growth of high frequency trading.