A tax on currency derivatives imposed by the Brazilian government last month to curb the real’s appreciation won’t cause a migration of derivatives trading offshore, said Craig Donahue, chief executive officer of CME Group Inc. (CME), the world’s largest futures market.
The 1 percent tax on some bets against the dollar “is a function of the larger dynamics of the currency appreciation,” Donahue said today in an interview at the BM&FBovespa derivatives conference in Campos do Jordao, Brazil. “I don’t expect it to be permanent so I think it won’t result in that outcome,” Donahue said.
The government on July 27 levied a 1 percent tax on some net short dollar positions by investors in the country’s futures market. The government may increase the tax by up to 25 percent if needed, according to the decree signed by President Dilma Rousseff. Brazil will begin collecting the tax on Oct. 5, according to the Finance Ministry.
BM&FBovespa SA, the operator of Latin America’s biggest securities exchange, holds a five percent stake in CME and CME holds a five percent stake in BM&F Bovespa, according to the Sao Paulo-based exchange. CME Group is based in Chicago.
To contact the editor responsible for this story: Allen Wan at awan3@bloomberg.net
