Brazilian stock brokerages improved their operational trading risk by 20% last year, according to BM&FBovespa, the Brazilian stock exchange.
The exchange’s 2010 audit programme analysed trading at 90 brokerage houses that operate at the Bovespa. By this April, audit reports had been completed on 51 of the brokerages (one brokerage had two reports, leading to a total of 52) and on June 30 a further 39 reports were in the final stages of completion.
Every shortcoming identified in the exchange’s audit programme leads to a risk score ranging from one to five, depending on the level of seriousness. Of the 52 completed reports, 39 will be used as points of reference for future analysis; one resulted in the commencement of hearings; and 12 led the regulators to request the brokers put in place measures to ensure that the detected irregularities are not repeated.
The risk scores given to the institutions whose reports were completed by the end of the first half of this year demonstrate a 20% improvement on last year. The improvements took place in areas such as registration, order execution, settlement and custody transfer.
"The improvement shows that enforcement and the auditing are working," says Luis Gustavo da Matta Machado, chief regulatory officer at BM&FBovespa.