SAO PAULO, Oct 7 (Reuters) - Brazilian bourse BM&FBovespa SA's integration of fixed-income instruments, derivatives, equities and commodities clearinghouses will provide a lifeline to local brokerages by helping them target new niches and cut operating costs, a fund manager said on Monday.
The project, which will be concluded by the end of next year, will save investors in Brazil 500 million reais ($226 million) a day by freeing up collateral and reducing transaction costs. Brokerages will be able to capture part of the savings, said Luiz Fernando Figueiredo, a former central bank director who oversees BM&FBovespa's risk management committee.
Brokerages are grappling with years of increased competition and aggressive technology investments by banks that are forcing smaller shops out of business. As fees decline too, many small brokerages that remain afloat are surviving with the proceeds from the 2007 initial public offerings of the firms that the year after merged to create BM&FBovespa.
"The brokerage business has suffered for a long time, and that's why I'm sure the new rules are key to help them find a business niche," Figueiredo, who also oversees 2.5 billion reais in assets for Mauã Sekular Investimentos, said at an event sponsored by Brazil's banking federation Febraban.
Although some brokerages expect fees to remain stable this year, and trading volumes have risen to a record, banks' brokerages units are seen as the ones that will reap most of the gains from such improved environment.
Apart from helping investors allocate their capital in a more efficient way in capital market transactions, the single clearinghouse plan will also create a more balanced market for stock lending - the mechanism that paves the way for short-selling strategies, Figueiredo said.
Short-selling is a strategy in which investors borrow shares from others to profit from their decline.