|New players intensify the competition among market makers|
The market maker service was ended by several companies looking to reduce costs during the 2008 financial crisis. However, it is back in force this year and is already attracting new financial institutions interested in providing the service. The role of the market maker is to permanently maintain sales and purchase offers, providing liquidity and stabilizing prices.
The startups are Itau BBA’s Itauvest DTVM, and XP Investimentos. From the 12 companies that hired a market maker or switched their providers in October and November, 11 of them hired the services of one of the startups – Itauvest (BR Malls, Gafisa, BR Properties, Cyrella Realty and Direcional) and XP (MPX, BHG, Trisul , General Mall, Brasil Ecodiesel and Panamericano).
Traditional names still dominate the market. BTG Pactual maintains contracts with 25 companies, representing 26.8% of the 93 equity securities that currently have market makers. Next comes Credit Suisse with 19 clients. However, due to the rapid expansion of new players, the comfort zone of the leaders could be threatened. "We are actively looking prospects," says Henry Loyola, managing partner of XP.
The Rio de Janeiro-based brokerage confirms its aggressiveness toward companies that already have other market makers. "We convinced them (the companies) that we have a good service, a broad base of retail customers and a derivatives desk that can further enhance the liquidity of their shares," said Loyola, who has four new contracts under negotiation. Another institution that recently debuted in the role of market maker is Indusval. It acts specifically in maintaining the liquidity of 11 non-sponsored Brazilian Depositary Receipts (BDR) programs.