Arthur Pinheiro Machado on electronic trading in LatAm | Americas Trading Group | Video
World Finance interviews Arthur Pinheiro Machado, COO of Americas Trading Group, on pioneering electronic trading in Latin America and its new joint venture with the New York Stock Exchange
The Americas Trading Group was founded in 2010 as a technology company, specialising in electronic trading in Brazil. Arthur Pinheiro Machado, COO of Americas Trading Group, discusses how ATG filled a critical gap in the trading market in Latin America, explains what is driving the increase in high-speed trading in the region, and introduces about ATS Brazil, a new exchange in the Brazilian market, formed in partnership with the New York Stock Exchange.
World Finance: So tell us more about ATG.
Arthur Pinheiro Machado: Americas Trading Group is a broker-neutral, high performance liquidity centre, which connects brokers and end-users with the key markets in the Americas, such as the US, Brazil, Colombia, Mexico, Chile and Peru.
ATG offers the buy and sell side, full support in electronic trading solutions to the Latin American market. So, we provide an array of products and services to ensure that the clients will have the best order execution and strategic control.
“ATG offers full support in electronic trading solutions to the Latin American market”
World Finance: So what was the key need in the Brazilian marketplace when you started, and how did you go about servicing that need?
Arthur Pinheiro Machado: At the time, Brazil had an underdeveloped market, and the financial community under-utilised electronic trading solutions. So there was a lack of companies specialising in electronic trading solutions. So, considering the experience that our management team has in the brokerage business – we were partner of one of the largest brokers in Brazil, which was sold in 2008 – plus the fact that we were pioneers in applied electronic trading on the Brazilian market, we decided to create ATG to fill this gap. And today we are the largest electronic trade provider in the region.
World Finance: And have you seen a significant increase in high-speed trading activity in Latin America? And if so, where has it come from?
Arthur Pinheiro Machado: Definitely. And ATG’s helping the buy and sell side to access these markets electronically. High-frequency trading currently accounts for 15 percent of trades in Brazil. The main direct market access accounts for more than 50 percent, and part of these numbers represent automation of the trading process. But there are also new players in the market – in fact, most of them are UK and US investors.
“High-frequency trading currently accounts for 15 percent of trades in Brazil”
World Finance: How do you see electronic trading evolving in Brazil over the next few years?
Arthur Pinheiro Machado: The Brazilian Securities Commission, the CVM, has begun reasonable discussion on new regulation for Brazil. And this is very important, and the most important is much of the industry has been making positive statements favouring opening the market, so we are very very confident, and strongly believe that Brazil represents today a huge opportunity for new venues, providers, and vendors. So, we are very optimistic as well.
World Finance: What then does Brazil need to do to move its financial markets forward?
Arthur Pinheiro Machado: Three basic things. First, introduce real competition at the exchange level. Second, make our market regulation friendlier for new-comers; both local and international. And, be supportive of real competition and innovation in long-term trade solutions and products.
World Finance: Provide us with some detail on your partnership with the New York Stock Exchange.
Arthur Pinheiro Machado: Certainly. In June, we submitted a request for a new stock exchange called ATS Brasil – Americas Trading System Brasil. NYSE holds 20 percent of the new venture, and ATG holds 80 percent. We are prepared to launch the exchange as soon as we have the licence, and we expect that should happen some time next year.
“We have only 360 listed companies. This is nothing, considering the size of our economy”
World Finance: And what were the reasons, the factors, that inspired this venture?
Arthur Pinheiro Machado: The fact that the local market does not truly represent the Brazilian economy. We have a huge opportunity to fix that. Only 10 stocks account for more than 50 percent of all trades in Brazil. On the futures side, five contracts – only five contracts! – account for more than 90 percent of all trades.
We have only 360 listed companies. This is nothing, considering the size of our economy. We are the sixth economy in the world, so there is a huge opportunity, and we are there to take it.
World Finance: What will be the initial focus of the exchange, and how do you see it expanding in the future?
Arthur Pinheiro Machado: At first we concentrated on stocks. We have a strong background in this area, and we know how to create liquidity. So it is the obvious choice. However, futures, derivatives, and even fixed income, are now in our plans down the road.
We’re not afraid to be bold, but we need to take it one step at a time, right? We cannot lose our focus, which is offering a viable solution, a viable option, for investors wanting to efficiently access the Brazilian market.
“If Brazil wants to attract new investors, and have a strong and dynamic market, being connected globally is a must”
World Finance: So is this part of the overall plan to open the Brazilian markets to the rest of the world?
Arthur Pinheiro Machado: We believe that we have to open up the Brazilian market. Brazil – if Brazil wants to attract new investors, and have a strong and dynamic market, being connected globally is a must. And we are the fourth fund in the world, with over $1trn in assets under management, and for Brazilian investors abroad it’s hard. So, it doesn’t make any sense. We have to be cured, we need to be cured of this Peter Pan syndrome and start thinking big.
World Finance: Arthur, thank you.
Arthur Pinheiro Machado: Thank you Nick.