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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros The Brazilian Securities, Commodities and Futures Exchange 2010 Financial Statements

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - 2010 Dear Shareholders, BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros (BM&FBOVESPA, Exchange or Company) is pleased to present you with the Management‟s Discussion and Analysis of Financial Condition and Results of Operations for 2010. FOREWORD The Brazilian economy consolidated in 2010 the recovery started in earlier, in the aftermath of the global economic downturn triggered by the international financial crisis of 2008. While other countries still wrestled with the downturn longer-term effects and European policy makers tackled market mistrust trying to prevent a sovereign-debt collapse triggered by the additional economic difficulties faced by certain eurozone countries, in particular Greece, Ireland, Portugal and Spain, the Brazilian economy was visibly coming around. Evidencing the recovery, the Brazilian economy grew, credit availability and domestic consumption increased, and the Brazilian currency registered strong appreciation against the U.S. dollar. This economic environment has positively impacted on our financial and operating performance. Volumes traded in 2010 hit unprecedented record highs in both the stock market (Bovespa segment) and the derivatives markets (BM&F segment). The average daily volume traded soared 64.7% in the BM&F segment, whereas having climbed 22.7% in the Bovespa segment when compared to 2009. This strong operating performance translated into 25.7% rise in gross revenues, a 29.9% jump in net income1 and 34.9% increase in EBITDA2, which shot EBITDA Margin to 69.6% from 64.9% previously. In addition, we implemented over the year a number of strategic actions spanning areas as diverse as technology, financial education and development of new products, which are designed to build a new cycle of growth and strengthen our relations with international exchanges, the highlight being our global preferred strategic partnership with the CME Group. This discussion tackles these matters in further detail below. Stock performance. Our shares have appreciated 11.4% over the year, ranking fifth most actively traded stock by average daily volume traded at 10.7 thousand daily trades worth R$167.0 million. Set forth below is a discussion of the evolution of the economic landscape and our operating and overall performance. MACROECONOMIC AND MARKET CONDITIONS Consolidation of the economic recovery over the course of 2010 clearly pushed the volume of business transacted on our markets. In the Bovespa segment, where for months market overhang sparked by uncertainties around the nearing Petrobras offering had slowed trading volumes significantly, the volume of trading sprang back promptly after the offering closed. In addition, the rebound in market prices for stocks had a positive impact on volumes traded. While at year-end the Ibovespa, or Bovespa Index, the primary index of the
1 2

Net income attributable to BM&FBOVESPA shareholders. EBITDA is Earnings before interest, taxes, depreciation and amortization.

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Brazilian stock market, had climbed just 1.0% year on year, the average Ibovespa3 rose 27.8% over the 2009 average. In the BM&F segment, the average daily volume traded in the top most actively traded group of contracts, i.e., Brazilian-interest rate futures contracts, rose nearly 100%, primarily as a result of the increase in credit availability and of volatility correlated with expectations about the Central Bank‟s decisions on the direction and size of the Selic rate, which is the Brazilian base interest rate. Underpinning the active trading in Brazilian-interest rate futures contracts and forex contracts and the recaptured volumes in the BM&F segment is a combination of growth in credit availability, including non-directional credit, which presented repeated jumps in the last few years, and growth of the foreign trade account as the volumes of both exports and imports increased 36.6% year on year in the wake of economic recovery.
Evolution in credit availability (in R$ billions)
1.800 1.600 1.400 1.200 1.000 800 600 400 200 0 jan/06

Total exports and imports (in US$ billions)

1,704
Non earmarked Total
281.3
370.9

383.6 280.7

882

229.2

jan/07

jan/08

jan/09

jan/10

2006

2007

2008

2009

2010

(Source: Central Bank of Brazil)

Further denoting the economic recovery is the rebound seen in the equity offering market, where IPOs, follow-on and seasoned offerings made for our best year on record, placing the Brazilian equity offering market as the third largest worldwide by gross proceeds from offerings, in no small part due to the largest ever equity offering across the world conducted by Brazil‟s oil and gas giant Petrobras. However, while not having affected the fundamentals of the Brazilian economy, the international economic environment did impact on our markets, particularly the stock market, as the eurozone crisis sparked by the sovereign debt crisis deepened leading to uncertainties about the future of the Euro, to negative market sentiment and high volatility. In addition, the October 2010 changes in IOF taxation (tax on financial transactions), which the Brazilian government adopted in an exercise designed to curb the appreciation of the Brazilian real against the U.S. dollar, also affected volume by containing market sentiment on account of uncertainties about additional future measures towards the same end. These market movements and our investments in technology, including in our order routing systems and in enhancing throughput capacity and the overall performance of our trading systems, have combined to significantly boost our yearly revenues. Having completed our initial efforts to consolidate the integration of BM&F and Bovespa, the two former independent exchanges, 2010 marked a shift in our strategy, now focused on pursuing new growth opportunities in Brazil and elsewhere, increasing the number of listings, developing new products, and realizing our clear objective of investing in financial education and forming an investment-minded middle class so as to widen capital markets penetration. Moreover, we have been investing heavily on our
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Because the average Ibovespa provides an indication of the average market prices of stocks traded on the Brazilian stock market and of the market capitalization of all listed issuers, the performance of the average Ibovespa closely correlates with the financial value traded on the stock market and, therefore, correlates also with our revenues from trading fees charged as a rate of financial value traded.

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technology infrastructure and in strengthening our strategic partnership with the CME Group in order to establish a solid foundation on which to accomplish our strategic growth plan and build our future. We believe the prospective outlook for the medium to long-term horizon to be quite promising for both the country and our Company on account of the expected build up of investments in and around major sports events (the 2014 FIFA World Cup and the 2016 Olympic Games), coupled with the upcoming start of operations to put in place the infrastructure required for exploration of pre-salt oil fields off the coast of Brazil and the pressing need for wide improvements to Brazil‟s infrastructure should positively impact on the economy, in addition to expected increases in the average income of the population, in particular the lower and middle-income classes. Moreover, these two large movements (investment build up and middle class growth) coupled with continuing increases in credit availability should push deeper changes in the Brazilian economy and create new growth opportunities for our Company, in particular in terms of the equity offering market, with new listings of companies seeking long-term funding for their projects, and in terms of the larger and stronger middle class, amongst whom prospective retail investors whose savings these new entrants are likely to pursue. DISCUSSION AND ANALYSIS OF OPERATING PERFORMANCE Bovespa segment The ADTV (average daily traded value in the case of Bovespa Segment and average daily traded volume in the case of BM&F Segment) of R$6.5 billion for 2010 accounts of a record high volume traded and 22.7% year-over-year growth. An analysis of average daily traded value for the last five-year period shows compounded annual growth rate (CAGR) of 27.8%
Bovespa segment – ADTV evolution
(in R$ billions)
CAGR: 27.8% ∆: 22.7%
∆: -0.7%

∆: 15.0%

4.9 2.4
2006 2007

5.5

5.3

6.5

6.8

6.6

6.7

5.9

6.8

2008

2009

2010

4Q09

1Q10

2Q10

3Q10

4Q10

Markets Cash Forward Options Total

2006 2007 2008 2009 2010 2.3 0.1 0.1 2.4 4.6 0.2 0.2 4.9 5.2 0.2 0.2 5.5 4.9 0.1 0.2 5.3 6.0 0.1 0.3 6.5

CAGR Var. Var. Var. 4Q09 1Q10 2Q10 3Q10 4Q10 (2006-10) 2010/2009 4Q10/4Q09 4Q10/3Q10 27.9% 22.0% 6.4 6.1 6.2 5.5 6.4 -0.2% 15.6% 16.0% 52.7% 0.1 0.2 0.1 0.1 0.2 23.1% 25.8% 34.2% 25.7% 0.3 0.3 0.4 0.3 0.3 -20.7% -1.7% 27.8% 22.7% 6.8 6.6 6.7 5.9 6.8 -0.7% 15.0%

A comparison of average daily traded value for the quarters to December and September 2010 (4Q10 versus 3Q10) shows 15.0% quarter on quarter increase, whereas the comparison of the quarters to December 2010 and 2009 (4Q10 versus

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4Q09) points to a 0.7% year over year drop in the daily average. The increase is due primarily to the effects of the Petrobras offering, which closed in late September after a delayed market overhang which slowed trading activities significantly, in particular in the third quarter, since routinely Petrobras stocks are very actively traded (for example, the daily average in July 2010 was R$0.4 billion versus averages between R$0.8 billion and R$0.9 billion earlier in the year). After the offering placement, overall volumes bounced back to peak in October 2010 at the historical record daily average of R$7.8 billion. In addition, the number of matches surged 29.6% from the same period in 2009, and the five-year compounded annual growth rate hit 48.9%. The average financial value by trade over the last few years fell to R$15.1 thousand in 2010 from R$15.9 thousand in the prior year and R$27.8 thousand in 2006. This drop is due mainly to more active trading activities by retail investors and the sophisticated strategies used by certain investors, which are facilitated by wider electronification of the means for access to our trading platforms.
Bovespa segment – Evolution in number of trades
(in thousands)

Markets 2006 2007 2008 2009 2010 Cash Forward Options Total 59.7 113.6 195.1 270.6 349.8 1.1 1.8 2.2 1.3 1.6 26.7 37.5 47.8 60.4 79.3 87.5 152.9 245.1 332.3 430.6

CAGR Var. 4Q09 1Q10 2Q10 (2006-10) 2010/2009 55.6% 29.2% 318.9 326.7 348.1 8.7% 18.4% 1.8 1.9 1.5 31.3% 31.3% 71.1 77.8 81.5 48.9% 29.6% 391.8 406.4 431.1

3Q10 4Q10 338.5 385.9 1.4 1.5 76.8 81.0 416.7 468.4

Var. Var. 4Q10/4Q09 4Q10/3Q10 21.0% 14.0% -18.1% 7.3% 13.9% 5.4% 19.6% 12.4%

In another unprecedented record the exchange market capitalization, i.e. the total market capitalization of all listed issuers, reached annual average of R$2.3 trillion, surging 27.8% from one year ago. In the quarter to December 2010 this average hit R$2.5 trillion. These climbs are explained by the higher market prices at which stocks have been trading, as denoted by 27.8% year over year rise of the average Bovespa Index. In addition, the gross proceeds from primary equity offerings carried out in the year to December 2010 totaled R$138.5 billion, which also contributed to raise the exchange market capitalization.
Bovespa segment – Exchange average market capitalization and turnover velocity
4,0

3,0 42.3%
2,0

56.4%

63.2%

66.6%

63.8%

70.1%

64.7%

69.2% 60.1%

80,0% 61.8%

60,0%
40,0%

1,0
-

1.3
2006

2.0

2.0

1.8

2.3

2.2

2.3

2.2

2.3

2.5

20,0%
0,0%

2007

2008

2009

2010

4Q09

1Q10

2Q10

3Q10

4Q10

Average Market Capitalization (BRL trillions)

Turnover Velocity (%)

Turnover velocity dropped to 63.8% in 2010 from 66.6% the prior year, with the largest drop having been registered in the quarter to September 2010 on account of market

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overhang related to the Petrobras offering, which also justifies a slight recoup in the fourth quarter of 2010, when turnover velocity rose to 61.8%. Exchange-traded funds. The daily value traded in shares of the seven ETFs currently listed on our equities market ranged between R$22 and R$33 million over the course of 2010, underlining a 231% year on year surge in number of trades. Moreover, in August 2010 we announced another ETF, which will track the Financial Services Index, or IFNC.
ADTV of ETF
(in R$ millions)

21.9 8.5
1Q09 2Q09

23.3

20.3

24.9

28.9

28.2

32.1

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

In another highlight of the year, the equity offering market rebounded to reach record high gross proceeds from IPOs, follow-on and seasoned offerings, totaling R$74.4 billion, above the R$70.1 billion famously grossed in 2007. If we were to include the oil reserves assignment the Brazilian government and Petrobras have agreed, the total gross proceeds from offering would rise to R$149.2 billion.
Bovespa segment – Equity offerings
(in R$ billions)
70.1 74.4

14.5 45.9
30.4 34.3

63.2 22.2 23.8

8.8 2004

4.3 4.5

13.9 8.5 5.4 2005

15.1

55.6 26.8 7.5 2007 2008 Follow on 2009 11.2 2010

15.4 2006 IPOs

The equity offering market is a significant driver of volume growth for the stock market, as it increases the number of stocks in the market. A total of 22 offerings have been completed over the year, 11 of them IPOs, the remainder consisting of follow-on and seasoned offerings. Moreover, as of February 9, 2011, already 6 offerings came to the market, four of which IPOs and two follow-on offerings. In addition, this market rebound sends a strong signal of renewed market confidence, in particular by foreign investors who typically account for most of the sales in any offering. The net flow of foreign investments in both equity offerings and secondary market trading hit R$28.3 billion in 2010. Interestingly, in the second quarter of 2010, as worries over the Euro crisis spread for fear contagion would bring the Euro down, we registered negative flow of foreign investments, a by-product of heightened risk aversion. In contrast, the solid flow of foreign investments registered in the third quarter (R$16.7 billion) related closely with completion of the Petrobras offering.

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Bovespa segment – Net flow of foreign investments
(in R$ billions)
43.2 28.3 12.6 4.5 (0.1) (15.5) 2008 2009 2010 4Q09 1Q10 2Q10 3Q10 4Q10 16.7 7.3

Additionally, Bovespa markets saw broad-based growth across the categories of investors, each group having accounted for a relatively even share of the overall volume for the segment (domestic institutional investors at 33%; foreign investors at 30%; retail investors at 26%). The group consisting of domestic institutional investors presented higher year-over-year growth rate, with average daily traded value rising to R$2.2 billion from R$1.4 billion one year ago.
Bovespa segment – ADTV evolution by investor category
(in R$ billions)
6.5 4.9
0.5

6.8
0.1 0.7 2.2 1.9 0.1

6.6
0.6

6.7
0.2 0.6 1.9 0.1

6.8

5.5
0.1
0.4 0.2

5.3
0.4 0.1

0.5 1.9

5.9
0.4
1.7

0.1

0.6

0.2

1.8 2.0 2.1

2.3

2.4
0.3 0.9 0.7 0.6 0.1

1.7 1.5 1.1

2.0
1.5 1.5

1.8
1.4 1.6 2.2

2.3

2.1 1.5

2.2 1.5

1.7

2.0

1.7

2006

2007

2008

2009

2010
Foreign Investors

4Q09

1Q10

2Q10

3Q10

4Q10
Others

Individuals

Institutional Investors

Financial Insitutions

Companies

Lastly, we should highlight the September 2010 launch of three other DMA connection models (DMA via Provider, via Direct Connection and via Co-Location Arrangements, which we call models 2, 3 and 4). And in November the implementation of our new pricing policy for high frequency traders gave another push towards boosting high frequency trading on our equities markets. As a result of these initiatives (further discussed elsewhere herein), the high frequency volume climbed to account for 4.5% and 4.0% of the overall volume in November and December 2010, with daily averages (buy and sell sides) of R$0.6 billion and R$0.5billion, respectively. BM&F segment The 2010 average daily traded volume soared 64.7% year on year to hit 2.5 million trades in futures contracts and other derivatives, the highest on record for the Brazilian derivatives markets. An analysis of average daily traded volume for the most recent five-year period shows compounded annual growth rate (CAGR) of 21.4%.

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BM&F segment – ADTV and average rate per contract (RPC)
(volume by number of contracts)
4,0 3,5



(RPC in Brazilian reais)

1.522 1.247 1.224

1.365 1.134

1.333 1.126 1.145 1.167 1.099

1,600 1,400

3,0
2,5 2,0

1,200
1,000 0,800

1,5
1,0

0,5
-

1.2
2006

1.7

2.5 1.6
2008

2.5 1.6

2.5

2.4

2.6

0,600
0,400

1.5
2009 2010

0,200
-

2007

4Q09

1Q10

2Q10

3Q10

4Q10

ADTV (millions)

RPC (BRL)

The average daily traded volume sustained higher levels (above 2.0 million contracts) throughout 2010 when compared to 2009. In the quarterly analysis, ADTV for 4Q10 climbed 7.8% on a quarter-on-quarter basis, having soared 67.8% on a year-on-year basis. This improved performance correlates mainly with the average volume of trading in Brazilian-interest rate contracts, which increased by whapping 99.6% year-over-year and by 128.8% in the quarter to December 2010 from the same quarter one year ago.
BM&F segment – ADTV
(in thousands of contracts)
2006 Interest Rates in BRL FX Rates Stock Indices Interest Rates in USD Commodities Mini Contracts OTC Total 710.8 265.7 53.9 64.4 5.9 35.8 16.2 1,152.7 2007 988.1 473.0 112.0 87.9 10.1 57.8 11.5 1,740.3 2008 788.7 534.9 87.6 94.3 14.9 40.5 12.4 1,573.3 2009 843.5 447.1 80.0 78.3 10.2 52.6 9.3 1,521.0 2010 1,683.6 540.6 89.4 89.7 12.9 75.6 12.9 2,504.7 CAGR 2006-2010 24.1% 19.4% 13.5% 8.7% 21.4% 20.5% -5.6% 21.4% Var. 2010/2009 99.6% 20.9% 11.7% 14.6% 26.0% 43.6% 38.7% 64.7%

4Q09 Interest Rates in BRL FX Rates Stock Indices Interest Rates in USD Commodities Mini Contracts OTC Total 800.8 494.1 98.4 83.2 11.3 57.6 13.8 1,559.2

1Q10 1,605.8 589.8 85.2 77.9 11.5 68.2 15.3 2,453.6

2Q10 1,635.7 603.5 99.3 84.5 10.1 79.5 10.8 2,523.4

3Q10 1,661.0 481.3 84.4 95.8 15.0 76.5 14.1 2,428.1

4Q10 1,832.6 490.6 88.8 100.3 14.9 78.0 11.3 2,616.5

Var. 4Q10/4Q09 128.8% -0.7% -9.8% 20.6% 32.4% 35.3% -17.8% 67.8%

Var. 4Q10/3Q10 10.3% 1.9% 5.2% 4.7% -0.2% 1.9% -20.0% 7.8%

The heightened volume of trading in Brazilian-interest rate contracts is due not only to structural growth of the domestic market, but also to deepening volatility and uncertainty about a possible uptrend in the Selic rate (base rate), and expectations about the Central Bank‟s decision on the matter. Market structural growth is evidenced by widespread increase in exposure to fixed rates, whether under private loans and financing arrangements or the Brazilian government‟s public debt, which requires lenders and market participants holding debt securities to hedge exposure to fluctuations in interest rates in an attempt at mitigating

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risk that interest rates or the fixed rates‟ implied volatility will change. According to data compiled by the Central Bank, at December 31, 2010, the overall volume of fixed-rate loans had climbed 26.7% year-over-year, to R$623.6 billion from R$492.2 billion one year ago, whereas in the same period the portion of national debt paying fixed interest rate had grown 29.0%, to R$608.4 billion from R$471.5 billion previously. The other component that explains the heightened volume of trading in Brazilianinterest rate contracts correlates with volatility triggered by the diversity of opinions and expectations of market participants about the direction of the base rate and, as a result, of other interest rates. Over the course of the year the Central Bank has changed the base rate three times, in April, June and July. A monthly analysis of average daily traded volumes shows these volumes peaked in the months in which the Selic rate changed, preceded by a build-up process in the months leading up to these rate moves. The analysis also indicates a substantial build-up in the months of November and December, which we believe is substantially attributable to expectations about additional rate moves, which materialized in January 2011.
BM&F segment – ADTV for Brazilian-interest rate contracts, by maturity
(in thousands of contracts)
1.200
1.000

1st. Maturity

2nd. Maturity

3rd Maturity

4th. Maturity

5th Maturity

800
600

Increase in the uncertainty and speculation on the Central Bank

400
200

-

Jan-10

Feb-10

Mar-10

Apr-10

May-10

Jun-10

Jul-10

Aug-10

Sep-10

Oct-10

Nov-10

Dec-10

Changes in the Selic rate

In addition, in peak months the volumes traded in Brazilian-interest rate contracts largely concentrate in short-term contracts (first and second maturity dates), as speculative moves and bets on the Central Bank‟s decisions tend to focus on these maturity dates. A natural effect of this, given that our pricing policy does take maturity date into account, is the negative impact of volume concentration on our yearly average rate per contract for Brazilian-interest rate contracts, which in 2010 fell 9.1% year-over-year, and quarterly average, which in 4Q10 dropped 17.0% from the same quarter one year earlier and 9.6% quarter-on-quarter.
BM&F segment – average rate per contract
(in Brazilian reais)

2006 Interest Rates in BRL FX Rates Stock Indices Interest Rates in USD Commodities Mini Contracts OTC Total 0.906 2.244 1.419 1.094 4.749 0.034 1.571 1.247

2007 0.950 1.859 1.501 0.965 3.195 0.054 2.111 1.224

2008 1.141 2.062 2.143 1.211 3.571 0.162 2.342 1.522

2009 0.979 2.161 1.619 1.357 2.307 0.176 1.655 1.365

2010 0.889 1.928 1.564 1.142 2.168 0.128 1.610 1.134

Var. 2010/2009 -9.1% -10.8% -3.4% -15.8% -6.0% -26.9% -2.7% -16.9%

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4Q09 Interest Rates in BRL FX Rates Stock Indices Interest Rates in USD Commodities Mini Contracts OTC Total 1.037 1.927 1.577 1.017 2.349 0.150 1.508 1.333

1Q10 0.838 1.929 1.527 1.218 1.878 0.134 1.526 1.126

2Q10 0.905 1.838 1.515 1.163 2.106 0.129 1.772 1.145

3Q10 0.951 1.989 1.499 1.076 2.181 0.125 1.687 1.167

4Q10 0.860 1.978 1.719 1.134 2.416 0.126 1.462 1.099

Var. Var. 4Q10/4Q09 4Q10/3Q10 -17.0% -9.6% 2.6% -0.5% 9.0% 14.6% 11.5% 5.4% 2.8% 10.8% -15.7% 1.0% -3.0% -13.3% -17.6% -5.8%

The average RPC has dropped across derivatives markets influenced also by the heightened volume concentration on Brazilian-interest rate contracts, which accounted for 67.2% of the overall volume for 2010 (versus 55.5% in the prior year) and for 70.0% of the overall volume in the quarter to December 2010. Forex contracts were the second group more actively traded over the year. The average daily traded volume rose by 20.9% year-over-year, again the highest on record. This performance was particularly positive in the first half of the year, a period of heightened volatility in the foreign exchange market. Highlights among the commodities derivatives include live-cattle futures contracts whose average volume for 2010 surged 50.3% year on year, at 5.5 thousand daily contracts versus 3.6 thousand one year ago, followed by cash-settled corn futures whose 2010 average daily volume soared 72.8% year on year, at 2.0 thousand daily contracts. In addition, products we launched over the year include cash-settled ethanol fuel futures contracts and cash-settled soybean futures (and put and call options on these futures), which started trading in May 2010 and January 2011, respectively. Moreover, BM&F markets saw broad-based growth across categories of investors, in whose volumes doubled from the prior year, with the group formed by financial institutions still accounting for the larger share of the overall volume traded on derivatives markets due to intensive trading in Brazilian-interest rate contracts.
BM&F segment – ADTV by investor category (buy + sell sides)
(in millions of contracts)
0.2 1.1 0.3 0.6 0.8
1.7 0.1

0.2 0.1 1.0 0.2 0.1 0.7
0.7

0.2 0.1
1.2 1.3

0.2 0.1 1.0

0.2 0.1 1.0 1.6

0.1

0.2 0.3 0.5 1.1

0.0

0.2 0.1 0.6 0.7
1.4

0.2 0.6 0.7

0.1

1.4

1.3

1.4

1.3

2.0

1.3

2.0

2.1

2.0

2.1

2006

2007

2008

2009

2010

4Q09 Foreign Investors

1Q10 Individuals

2Q10

3Q10

4Q10

Financial Institutions

Institutional Investors

Companies

Central Bank

As a percentage of the overall volume, the share contributed by institutional investors increased to 29.6% in 2010 from 24.3% one year ago, having climbed to 33.0% in the quarter to December 2010 from 30.1% in the prior quarter. The share foreign investors contributed to the overall yearly volume rose to 22.4% from 20.0% in the earlier year, despite a fourth quarter drop to 19.7% versus 22.4% in the prior quarter.

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In addition, the introduction of new IOF levies, which the Brazilian government adopted to contain hot money inflows in an effort to curb the appreciation of the Brazilian real against the U.S. dollar, had relatively low impact on the volumes traded on derivatives markets. While we did observe a 5.2% fall in average daily volumes traded by foreign investors between the third and fourth quarters, we cannot state this was due to the new levies. However, as the volumes traded by foreign investors failed to go up in line with the volumes attributable to other investor groups, this may be indication that the new levies do affect the potential for growth in foreign investor volumes, and therefore affects the derivatives markets as a whole. We continue to implement our plans towards enhancing the electronification of trading processes, in particular by broadening direct market access (DMA) alternatives. The volume of trades executed via DMA has been increasing consistently as new access models are launched. In 2010, trading via any of our DMA models has increased to 16.2% of the overall volume, as compared to 9.7% in 2009. While implemented relatively recently, DMA provided pursuant to co-location arrangements is considered highly efficient, a window into the evolution and technology changes which can be expected for the derivatives markets, and was the best performing model in terms of volume growth, having accounted for 3.1% of the overall volume for 4Q10, as compared to 0.4% for the same quarter one year ago. The better example of this transformation is high frequency trading. High frequency traders began to do business on our markets in 2009, a year in which the HFT flow accounted for 2.2% of the overall volume, while in 2010 it accounted for 4.8% of the total. The peak HFT volume occurred in 2Q10, particularly in May 2010, when volatility in forex contracts surged, an environment in which HFT strategies typically thrive. The HFT volume in May 2010 accounted for 18.3% of the volume traded in forex contracts and 8.9% of the overall volume traded on derivatives markets.
BM&F segment – HFT average daily volumes (buy + sell)
(in thousands of contracts)
6.0% 4.8%
13 88
93

4.8% 4.4%
90 42 93

3.8%
4.8%
50
77

2.2%
21 17 29

43 94

53
44

41
69

155

43 74

38
77

50

2009

2010

4Q09

1Q10

2Q10

3Q10

4Q10

FX

Equities

Mini contracts

Interest Rates

% in Overall Volume

While forex contracts, stock index futures and mini-sized forex and stock index futures contracts remain the most actively traded derivatives, there are signs high frequency traders may have been looking for opportunities provided by other contracts, in particular Brazilian-interest rate contracts and commodities derivatives. While high frequency traders still account for a relatively small share of total volume traded in contracts within this contract group, the fourth quarter trading volume implies positive suggestion that the HFT flows could be further drawn to these contracts.

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BM&F segment – share of the HFT volume by contract group
70,0%

60,0%
50,0%

54.7%

40,0% 30,0%
20,0% 20.7% 8.1% 1.5% 1.3%

10,0%
0,0%

Mini contracts

Equities

FX

Interest Rates

Commodities

Securities lending The financial value of 971 thousand securities lending transactions carried out on our markets in 2010 hit record high R$465.6 billion, soaring 80% from one year ago. The average volume of open interest positions for 2010 climbed 61.5% year on year, whereas average of R$22.4 billion for 4Q10 was up 43.0% from the same quarter in the prior year.
Securities lending – open interest positions and number of lending transactions
25,0

81.0
20,0

83.0 69.6

86.3

84.9

100,0

Open interest

59.3
15,0
10,0 5,0

61.1
60,0

47.4 22.6

52.3

18.5

16.9

20.5 12.7

15.7

19.0

19.9

20.8

22.4

40,0 20,0

6.6
2006 2007 2008 2009 2010 4Q09 1Q10 2Q10 3Q10 4Q10

-

-

Average Open Interest (BRL billions)

Monthly Average Number of Trades (thousands)

This growth is evidenced by a 36.5% year on year increase in monthly average number of transactions, to 81.0 thousand in 2010 from 59.3 previously, and correlates closely with the uptrend in stock prices, which typically contributes to market participants undertaking heightened exposure in the securities lending market.

Central securities depository (CSD), custody and back-office services The number of active investors trading on Bovespa segment markets went up 11.2% year on year, to a total of 640 thousand custody accounts at December 31, 2010, where 95.4% (611 thousand accounts) are held by retail investors. This increase in number of retail investors reflects the good performance shown by the stock market and is in line with our decision to deepen our ongoing financial education efforts.

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Number of trades

80,0

CSD – financial value of assets held in custody and number of custody accounts
2.400,0

558.6
1.800,0

575.7

640.2

700,0

600,0

477.9
500,0

400,0
1.200,0

233.7
600,0

300,0

729.8
-

1,123.3 650.4 2007 2008 Value under custody (BRL billions)

872.6

1,239.8

200,0

100,0

-

2006

2009 # of accounts (thousands)

2010

The financial value of stocks held in custody at year-end totaled R$1,239.8 billion, a 42.1% year on year climb primarily due to the increase in the market prices of stocks. An analysis of the last five-year period shows CAGR of 14.2%. DISCUSSION AND ANALYSIS OF FINANCIAL PERFORMANCE Our annual financial statements have been prepared and are presented in accordance with accounting practices adopted in Brazil, pursuant to guidelines provided under Law No. 11,638/07, complemented by the framework, accounting standards, implementation guidance and interpretations issued by the Brazilian Accounting Standards Board (Comitê de Pronunciamentos Contábeis), or CPC, and approved for promulgation by the Brazilian Securities Commission (Comissão de Valores Mobiliários), or CVM, whose primary objective is the convergence between the accounting practices previously adopted in Brazil and the International Financial Reporting Standards, or IFRS, adopted by the International Accounting Standards Board, or IASB. As a result of these changes in accounting practices, we have, for comparability purposes, adjusted our financial information for the prior year (balance sheet statement and statement of income) and are presenting retrospective financial statements as of and for December 31, 2009, revised for adoption of such accounting standards, guidance and interpretations. Operating revenues Gross operating revenues of R$2,102.6 million in 2010 were up 25.7% from R$1,672.9 million in 2009 primarily due to the recovery in volumes traded on both stock and derivatives markets. Revenues from trading and settlement fees derived in the Bovespa segment climbed 25.3% year on year and amounted to R$1,049.3 million (accounting for 49.9% of total gross revenues), thus reflecting the 22.7% surge in total value traded in the year, in addition to the increase in number of equity offerings, from which we derived settlement revenues of R$47.4 million (versus R$14.2 million one year ago). However, as measured in basis points, the margins dropped to 6.11 bps from 6.25 bps in the before year, as a result of a change in the mix types of investors more actively trading in the period, including increase in trading activities by domestic institutional investors, from whom we charge lower average fee rates. Revenues from trading and settlement fees derived in the BM&F segment soared 35.2% year on year and amounted to R$722.1 million (accounting for 34.3% of total

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gross revenues) due primarily to a 64.7% year on year upsurge in volumes traded, which tough was not captured in full due to a 16.9% drop in average rate per contract (RPC). Revenues unrelated to trading and settlement activities rose 9.9% year on year to R$331.2 million (15.8% of total gross revenues) from R$301.4 million (18.0% of the total) one year earlier. The more significant business lines unrelated to trading and settlement activities were the following:  Vendors - market data sales: revenues of R$67.6 million (3.2% of total revenues), up 4.6% year on year due mainly to a 4.0% growth in number of customer terminals. Market participant access fees: revenues of R$48.2 million (2.3% of total revenues), up 4.7% year on year from R$46.1 million previously, mainly as a result of the increase in volumes traded. Depository, custody services: this line item climbed 22.3% year on year, to R$88.3 million (4.2% of total revenues) from R$72.2 million in the earlier year. Revenues derived solely from the activities of central securities depository rose 18.4% year on year, to R$69.2 million from R$58.4 million previously, primarily on account of a 10.3% rise in average number of custody accounts (610.8 thousand in 2010 versus 553.7 thousand one year ago) and 25.8% lift in average financial value of assets under custody (to R$472.6 billion from R$375,6 billion in the year before), not including custody of ADRs and custody services provided to foreign investors. Securities lending: revenues of R$49.4 million (2.4% of total revenues) were up 49.9% year on year due mainly to a 61.5% upsurge in the average financial value of open interest positions (to R$20.5 billion from R$12.7 billion one year earlier). Listing fees: revenues of R$44.4 million (2.1% of total revenues) were up 12.2% year on year due mainly to the revenues from offering registration application fees, which soared 83.6% year on year, the revenues from listing annuities, which went up 7.5% from the prior year; and a reduction in discounts previously granted on listing annuities.









Operating expenses Operating expenses totaled R$633.5 million, climbing 11.2% year on year. The adjusted operating expenses4 totaled R$543.9 million, representing a 21.8% year on year rise. The principal changes in expense line items were the following: Personnel: expenses of R$290.1 million, virtually unchanged from the prior year (0.1% year on year rise). This movement is explained by the following factors:   the August 2010 salary increase required under the existing collective bargaining agreement, which represented a 6% increase in payroll; and the headcount climbed 12.3%5 year on year, in line with our growth strategy, such that most new hirings occurred in technology areas and the business development department. year on year drop of 48.1% in expenses with the stock options plan, to R$30.9 million from R$59.6 million one year ago. After eliminating expenses with the



4

Operating expenses adjusted to eliminate expenses related to depreciation, allowance for doubtful accounts, stock options plan and taxes related to equity pickup (equity method of accounting). The purpose of these adjustments is to measure operating expenses by eliminating those with no impact on cash flow and those over which management has no control. 5 Includes the internalization of 143 previously outsourced IT personnel with R$8.0 million impact on payroll (personnel expenses line).

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stock options plan, adjusted personnel expenses amounted to R$259.2 million, up 12.6% from the prior year. In addition, in 2009, personnel expenses were impacted by severance payments in the aggregate of R$18.0 million due to terminations over the course of that year on account of the functional restructuring process. The table below sets forth the headcount data, including outsourced personnel. Headcount
Employees 6 Outsourced IT personnel Total 2009 1,079 315 1,394 2010 1,384 175 1,559

Data processing: expenses totaling R$101.7 million were substantially steady (0.9% drop), with a note to rent payments started in July 2010 for the premises at which our new backup data center is located, which were counterbalanced by the previously mentioned internalization of outsourced IT personnel partially, in addition to an increase in time billed by outsourced providers in connection with certain capital expenditure projects, which costs are allocated to the relevant projects. Marketing and promotion: marketing expenses reached R$42.4 million, having soared 116.7% year on year primarily as a result of our redoubled financial education initiatives and enhanced and marketing campaigns, in particular those that aim to attract prospective retail investors. Outsourced services: expenses with outsourced services went up 5.7% year on year, to R$48.1 million, primarily as a result of legal services related to international partnership agreements we entered into over the year. Other expenses: sundry expenses totaling R$36.3 million rose 61.8% from R$22.4 million one year ago, substantially explained by intangibles written off in connection with projects started in earlier years (R$4.9 million); the provision for accounts payable by BVRJ out of its guarantee fund in connection with certain litigated claims (R$1.9 million); and increases in gifts and contributions (a R$4.2 million year on year rise); and in travelling expenses (which climbed R$2.1 million). In December 2010 we announced the 2011 Budget contemplating adjusted operating expenses and capital expenditures, as follows:  The budget for adjusted operating expenses is set at R$625 million, allowing for a R$10 million upward or downward variance; and  The capital expenditure budget is set at an interval between R$235 million and R$255 million. Interest income, net Net interest income for the year hit R$298.0 million and was up 17.4% year on year. Interest revenues climbed to R$354.8 million from R$289.7 million one year ago, influenced by the increase in interest rates earned on financial investments and the higher average cash invested. Net interest income was influenced by an increase in interest expenses which were up to R$56.8 million from R$35.8 million in the prior year due to the bond offering we completed in July 2010.

6

The expenses with outsourced IT services are registered in under the ‘data processing’ line item.

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Income tax and social contribution Income before taxes totaled R$1,592.5 million, as compared to R$1,186.6 million one year ago, a 34.2% year on year increase due primarily to our improved operating and financial performance. The line item comprising income tax and social contribution plus deferred income tax and social contribution totaled R$448.0 million, where R$442.6 million have been deferred as follows:  deferred tax liabilities of R$445.2 million related to temporary differences from amortization of goodwill for tax purposes, with no impact on cash flow; and  recognition of tax credits amounting to R$2.6 million related to other temporary provisions. As a result, the actual tax rate for 2010 was 28.1% of earnings before tax. EBITDA and net income EBITDA for 2010 amounted to R$1,315.0 million, or a 34.9% rise over 2009 EBITDA, which amounted to R$975.1 million. EBITDA Margin was 69.6%. Net income for the year ended December 31, 2010 amounted to R$1,144.6 million, 29.9% higher than R$881.1 million one year ago. This increase in net income is attributable to our improved operating and financial performance and the equity accounting of the investment in the CME Group. The table below set forth our calculation of EBITDA.
R$ mil Net income (-) Minority interest (-) Income tax and social contribution (-) Financial income (-) Depreciation and amortization (-) Equity accounting (-) Tax related to the equity accounting EBITDA 2009 881,050 (1,019) (304,505) 253,862 (42,396) 975,108 2010 1,144,561 75 (448,029) 298,024 (54,818) 38,238 (3,975) 1,315,046

Main lines items under Assets Total assets As determined in our consolidated audited balance sheet statement as of December 31, 2010, total assets increased 8.6% year on year to R$22,634.0 million. Cash and cash equivalents; financial investments Cash and cash equivalents, including short- and long-term financial investments totaled R$3,435.3 million and accounted for 15.2% of total assets. Noncurrent assets Non-current assets totaled R$20,086.4 million, where long-term receivables (including long-term financial investments) amount to R$1,216.8 million, equity method investments amount to R$2,286.5 million, property and equipment amount to R$367.1 million and intangible assets amount to R$16,215.9 million. Intangible assets consist primarily of goodwill correlated with expectations of future profitability related to the acquisition of Bovespa Holding. Goodwill has been tested for

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impairment in December 2010, based on the valuation report prepared by a specialist firm, and has not resulted in need for adjustments to carrying value. Interest in affiliates totaling R$2,248.3 million comprise our 5.0% ownership interest in shares of the CME Group, where our Company is the largest individual shareholder7. Main lines items under Liabilities and Shareholders’ Equity Current liabilities Current liabilities of R$1,416.2 million accounted for 6.3% of total liabilities, a 24.0% rise from R$1,142.1 one year ago when it accounted for 5.5% of total liabilities. This increase is due primarily to a climb in cash collateral pledged by market participants (R$954.6 million versus R$810.3 million in the prior year), and a rise in the „other liabilities‟ line item (R$216.1 million versus R$196.7 million previously). Noncurrent liabilities Noncurrent liabilities closed the year at R$1,798.7 million, a 409.7% year on year increase due mainly to the following:  Bond offering: On July 16, 2010 we carried out a US$612 million issuance of 6,120 global senior unsecured notes. The notes pay coupons every six months, in January and July, at the annual rate of 5.50%. The principal matures on July 16, 2020. As of December 31, 2010, the outstanding balance under the Notes was R$1,040.2 million; Deferred income tax and social contribution, and the provision for contingencies and legal obligations. Shareholders’ equity Shareholders‟ equity of R$19,419.0 million went up 0.4% year on year, essentially comprising capital stock of R$2,540.2 million and capital reserves of R$16,662.5 million. Distributions (Dividends and Interest on Shareholders’ Equity) Based on 2010 results, our board of directors approved over the year distributions of dividends and interest on shareholders‟ equity amounting to an aggregate of R$738.5 million. Moreover, we are set to submit to shareholders a proposal for yet another distribution based on 2010 earnings. Share Buyback Program On August 12, 2010, our board approved a share buyback program permitting the repurchase of no more than 31 million shares through to December 31, 2010. However, the program was subsequently amended to authorize total buyback of 60 million shares for an extended period ending June 30, 2011. At December 31, 2010, we had repurchased 31.95 million shares at an average price of R$13.60 per shares and aggregate price of R$434.5 million. In addition, in January 2011, we repurchased additional 16.57 million shares at an average price of R$12.33 per shares. In all thus far, we have repurchased 48.52 million shares at an average price of R$13.17 per shares and aggregate price of R$638.9 million.

7

Source: Thomson Reuters

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Performance by BVMF3 Stocks BM&FBOVESPA shares were the fifth most actively traded stocks in the equities market, with 10.7 thousand average daily number of trades and R$167.0 million average daily financial value traded. Turnover velocity for BVMF3 shares was 159.0%, a very high turnover for the domestic market standards. BVMF3 shares appreciated 11.4% over the year (as adjusted for distributions), whereas the Bovespa Index rose1.0% year on year. In addition, BVMF3 stocks integrates a number of stock index portfolios, and as of December 31, 2010 had been allocated the following theoretical individual participation in index portfolios:
      

Bovespa Index - Ibovespa (3.8% participation – ranks 3rd) Brazil 50 Index - IBrX50 (3.2% participation – ranks 9th) Brazil Index - IBrX (2.7% participation – ranks 9th) Corporate Governance Stock Index - IGC (4.7% participation – ranks 5th) Special Tag Along Stock Index - ITAG (4.4% participation – ranks 4th) Mid-Large Cap Index - MLCX (2.8% participation – ranks 9th) Financial Index – IFCN (13.0% participation – ranks 4th).

OTHER HIGHLIGHTS Pricing policy With the aim of fine-tuning and adapting our general pricing policy in line with our new strategy and in response to market trends, and furthermore in order to boost trading activities, we have changed some of our fees. High Frequency Traders. Pursuant to our policy for high frequency traders, effective from November 1, 2010, high frequency traders hold HFT registration accounts and are granted progressive discounts based on intraday trading volume bands. Central Securities Depository. In June 2010 we announced the last stage of our pricing policy for custody services, according to which fee rates are charged on the value of securities held under custody at the central depository. Unexecuted Order Fee. In March 2010 we announced a reduction in the fee we charge for unexecuted orders and by-minute offers which are entered in our systems in excess of certain thresholds. For this purpose, we have raised the threshold for unexecuted orders (orders-by-trade ratio rose to eight from six earlier) and the fee per offer in excess of the threshold is now down to R$0.03 from R$0.04 previously; Home Broker and Technology Package. As part of our actions to increase the retail investor base, effective from August 2010 we have reduced the price for access to the Home Broker system, and adopted a new pricing policy for the technology package provided to market participants. Credit Ratings Moody's. On May 27, 2010, Moody's Investors Service assigned a local currency issuer ratings of A1 on the global scale and Aaa.br on the Brazilian national scale to BM&FBOVESPA. The outlook on the ratings is stable. In addition, on July 12, 2010, it assigned a Baa2 long-term foreign currency debt rating to the notes issued by us, with a positive rating outlook.

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Standard & Poor’s: Dated June 22, 2010, Standard & Poor's Ratings Services assigned its 'BBB+ (long-term)‟ and „A-2 (short-term)' counterparty credit ratings to BM&FBOVESPA. The outlook on the ratings is stable. MAIN DEVELOPMENTS New products We focus great attention on developing new products that anticipate or capture market requirements and trends. In 2010 we launched a number of new products for the Bovespa segment, in particular new ETFs and non ponsored BDRs, and for the BM&F segment, with a special note for a number of currency futures contracts and certain cash-settled commodities contracts, including cash-settled ethanol fuel futures contracts. Moreover, in 2011, additionally to certain products now being developed, we will be focusing on the stock options market, regarding which we have plans for a market maker program, and on products for the real estate market and the commodities markets. Technology developments BM&FBOVESPA aims to offer prime information technology resources and services to customer market participants and investors. To this end, we invested in 2010 an aggregate of R$219.3 million, in a number of projects. The discussion below highlights the main projects on whose implementation we have been working: New trading platform. In the first half of 2010, consistent with our partnership agreement with the CME Group, we have started the joint development of a multi-asset class trading platform for the trading of equities, derivatives, fixed income securities and other exchange-traded or OTC-traded assets, which is set for phased implementation over the course of the coming year, as it will ultimately replace the four existing trading systems. New data centers. As a result of the 2008 exchange integration process that combined BM&F and Bovespa we absorbed four data centers, meaning the primary and backup centers of each exchange. We are now in the process of reorganizing and streamlining our technology infrastructure, for which purpose we have planned two new data centers that will be more efficient, provide heightened security features and offer greater capacity than the existing ones they are set to replace, and should thus better support our strategic growth plan. Construction of our new primary data center will begin in 2011 and is scheduled to end in the second half of 2012, whereas since June 2010 our new backup data center is located at a leased hosting facility. New DMA models for the Bovespa segment. In August 2010 the CVM authorized, and in September 2010 we launched three other Direct Market Access connection models, i.e., DMA via Provider, via Direct Connection and via Co-Location Arrangements (which we call DMA models 2, 3 and 4), which for their efficiency should attract more sophisticated investors to the Brazilian equities markets. Expansion of throughput capacity. High throughput capacity and scalability to support market growth and expansion in trading activities are key competitive strengths which require us to invest continually in technology improvements. In the third quarter we completed the expansion of throughput capacity in the BM&F segment (which climbed to 400 thousand daily trades from 200 thousand previously), and in the fourth quarter completed the implementation for the Bovespa segment, where throughput went up to 3.0 million daily trades from 1.5 million earlier.

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Partnership with Trading Technologies. As announced in April 2010, we agreed a partnership with Trading Technologies International (TT), an independent software vendor that develops high-performance trading software, including the X-TRADER® platform and front-end screen, their flagship order entry product. TT will have a server connected to our data center under a co-location arrangement and the ability to connect their customers to our trading systems.

Internationalization Dated June 22, 2010, BM&FBOVESPA and the CME Group, Inc. executed the transaction documents contemplated in a February 11 Term Sheet, which implement our mutual global preferred strategic partnership. These documents include (i) a Share Purchase Agreement whereby we will increase to 5% (from 1.8%) our ownership interest in CME shares; (ii) a Technology Agreement contemplating the joint development of a multi-asset class electronic trading platform; and (iii) a Preferred Strategic Partnership Agreement whereby we agree to cooperate in identifying strategic co-investment opportunities, including commercial partnerships with other international exchanges, which operate equities and derivatives markets. This partnership is entirely consistent with our internationalization strategy, which we continue to pursue by seeking to attract new business to our markets through additional agreements and partnerships, in addition to having restructured our international representation offices and subsidiaries for this purpose. Latin America. In December 2010 we entered into an agreement with the Santiago Stock Exchange (Bolsa de Comercio de Santiago) contemplating our joint cooperation in developing business, including a bilateral order routing arrangement, which we expect to develop in 2011 and joint development of new markets and products. Asia. Also in December 2010 we entered into a protocol of intent with the Hong Kong Stock Exchange (Hong Kong Exchanges and Clearing Limited) contemplating a partnership to allow for dual listing arrangements and facilitate access to both markets by investors based in each of our countries.

2011 Projects We should underline some of our highlight projects set to launch in 2011. One, named Brazil Easy Investing, is a data feed and order routing software system developed in partnership with Chi-X Global, a company specializing in electronic trading systems, which software system is designed to convert stock quotes into different foreign currencies in real time, and give foreign investors the ability to transmit orders to the Brazilian exchange in their local currencies. Two other projects under development stem from our partnership with the CME Group and relate to listings of mini-sized futures contracts, including cash-settled soybean futures contract and E-mini S&P 500 futures contract, whose final cash settlement prices would be based on similar derivatives traded on the Chicago Mercantile Exchange (CME). While further consideration still has to be given to these projects and related details, they aim to give local investors the ability to bet on the Chicago price of commodities and other derivatives that are regarded as global benchmarks for the underlying. Yet another project aims to develop the Bovespa Mais listing segment, which was conceived especially to capture listings of small- and middle-sized companies and could be quite an important stepping stone for these companies, in addition to performing a meaningful role in our strategy to attract new listings to our markets.

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Integration of clearing facilities We have taken during the year the first steps of a large project designed to integrate our four clearing houses into a single clearing facility (equities, derivatives, spot FX and fixed-income securities). Important milestones have already been reached, with the unification of the operating codes of clearing members and of the collateral acceptance system, creation of a single allocation system (permitting brokers to identify the customer through a single system, regardless of market or type of transaction), which we are set to implement in the first half of 2011, and finally the consolidation of our customer information system, as the Investor E-Channel (Canal Eletrônico do Investidor), or CEI, will provide investors with information on both stocks and derivatives. Implementation is set to be completed by 2012.

Operating Qualification Program, or PQO In 2005 the Company established a quality certification program for brokerage firms that operate in BM&F markets, which includes training and guidance on market standards with the aim of strengthening their position as brokerage firms and market participants, whereas ensuring sound market practices. Under the program, brokerage firms are classed under any of five broker categories, as follows: “Web Broker,” “Retail Broker”, “Agro Broker,” “Carrying Broker” and “Execution Broker.” Each of these categories implies adoption of a particular strategic approach to business. We grant certification seals to these brokerage firms based on our audits of a firm‟s adherence to both general and special quality standards. Brokerage firms are permitted to seek qualification seals in any number of certification categories. Now, this program has been extended also to securities brokerage firms that operate in the stock market (Bovespa segment), with the aim of further developing skills and standards, as these are the primary distributors of our products and services. Moving forward we will thus be granting certification under a Bovespa Seal as well. At December 31, 2010, we had granted certification to 90 brokerage firms that operate in the BM&F segment, 10 of them under the “Web Broker” seal, 19 under the “Retail Broker” seal, 15 under the “Agro Broker” seal, 14 under the “Carrying Broker” seal and 32 under the “Execution Broker” seal. CORPORATE GOVERNANCE We believe having an efficient corporate governance structure is a key factor of BM&FBOVESPA‟s success and perpetuity as a market operator. Given that control is widespread and the ownership structure comprises over 80 thousand local and foreign shareholders, the largest of whom holds a 5.1% ownership interest in our shares of stock, we believe it is crucial for us to have a corporate governance structure befitting this diversified shareholder base, and capable of providing high standards of transparency and accountability. In addition, given our role as self-regulatory organization, charged also with exercising market and participant oversight, we believe it is pivotal we ensure fairness is the underpinning hallmark of our relations with all stakeholders. Moreover, in our role as market managers and operators of clearing facilities, we are deeply concerned with fulfilling our responsibility of properly managing systemic risk, for which purpose it is essential that we keep sophisticated internal controls and efficient risk management practices.

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Our corporate governance structure comprises a board of directors and management. The board of directors is composed of a maximum of eleven directors. Our current board, whose term of office is set to terminate by the time we hold our 2011 annual shareholders‟ meeting, is made up of well-recognized and experienced professionals highly knowledgeable of the markets in which we operate and the industry as a whole. In addition, management is under responsibility of a board of five executive officers led by the chief executive officer. These two layers of management and corporate governance, as supported by advisory committees and our internal departments, ensure our adopted principles of good corporate governance and better recommended practices prevail. Additionally, a number of specialist advisory committees assist the board of directors and management in decision-making processes. Four specialist board advisory committees have been established, i.e., an Audit Committee, a Nominations and Corporate Governance Committee, a Compensation Committee, and a Risk Committee. Moreover, we have established specialist advisory committees whose responsibility is to assist the CEO and upper management, and market consulting committees, which are composed of representatives of market participants and other capital market entities. Furthermore, BM&FBOVESPA shares trade on the Novo Mercado listing segment (under ticker symbol BVMF3). Novo Mercado is the listing segment which adopts more stringent corporate governance standards, including a requirement for issuance of common shares only, and full tag along rights for all shares. Internal Audit Department Our internal audit team has the mission of providing our board, the audit committee and management with independent, objective, impartial and timely assessment of the effectiveness of our risk management practices, suitability of our internal controls and level of compliance with rules and regulations applicable to our operations and those of our subsidiaries, for this purpose adopting a systematic and disciplined approach. In addition, as part of their responsibilities, the internal audit team monitors our implementation of projects and action plans with the aim of continually improving our processes and controls. In 2010, based on a work plan approved by the Audit Committee, the internal audit department carried out thorough assessments of our IT general controls system and processes, and of our financial and accounting controls, central counterparty risk controls, and those of the BM&F settlement bank. Going forward, the internal audit department is set to perform an active role in the implementation of our new multi-asset class trading platform, developed jointly with the CME Group, and will be crucial in testing IT controls and assessing potentially ensuing risks for the organization. Moreover, the audit office monitors employee activities to ensure compliance with our policy for trading in BM&FBOVESPA securities and with our Code of Conduct, reporting its findings to the Code of Conduct Committee. Corporate Risk Department With the aim of further improving the corporate governance structure, in July 2010 we established a corporate risk department whose responsibilities encompass oversight of internal activities. The corporate risk team reports to the risk committee (a board advisory committee), which ensures the independence of functions related to corporate risk management. This department analyzes, monitors and assesses risks intrinsic to trading, information technology and strategic processes, evaluating the internal controls

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system from the standpoint of corporate risk, and continually monitors and measures the quality of our risk management practices. One of the primary projects in which the new department will be engaged over the course of 2011 is the implementation of an integrated tool system for management of corporate risk and auditing processes, which will provide us with automated generation of measures and indicators from the interaction of our data base, reports and control panels in their multiple dimensions. Audit indicators Supporting each of the internal audit and corporate risk departments, we created a measurements department which is responsible for defining, developing, testing and calculating performance indicators specifically for use in internal audit processes and the auditing of market participants within the scope of our Operating Qualification Program, or PQO. The adoption of the indicators should make for more streamlined process and assessments on a rolling-period basis. Moving forward, the measurements department will consolidate and widen use of this management tool. OPERATIONAL RISK MANAGEMENT E INTERNAL CONTROLS Information security policy Consistent with the new information security management model implemented in 2009, which adopted multiple controls, over the year the information security team consolidated and improved on special workflow and automation tools adopted in connection with these controls, including access privilege controls and security monitoring within computer environments. In addition, we implemented an information security awareness campaign and implemented special training sessions for new employees, provided as part of their integration process. Improvements to internal controls – financial reports Improvements to internal controls planned for 2010 were part of an action plan designed within the scope of the exchange integration to ensure the efficiency and reliability of financial processes conducted by the Company and subsidiaries. Additional initiatives were also implemented to enhance internal controls and for identification and review of information and process flows for proper integration to the ERP system, in addition to an ERP workflow module for all purchases, hirings and payments; new Budget and Management Information system, which provides more detailed information through a more streamlined process; and the first stages of a Costing by Activity system, which will provide us with information on contribution margin by product. Both implemented and ongoing projects aim for a quality internal controls structure, which spurs gains in efficiency and provide increased assurance as to the accuracy of both internal processes and those conducted with our customers and providers. Central Counterparty risk – risk management BM&FBOVESPA manages the following central counterparty clearing facilities absorbed during the exchange integration process of BM&F and Bovespa: (i) equities clearing house (formerly CBLC), (ii) derivatives clearing house, (ii) FX clearing house; and (iii) clearing house for government bonds and debt securities. The Central Bank considers these clearing facilities perform systemically material roles. They act as

22

central counterparty (CPP) for the equities markets (including cash, forward options, futures and securities lending markets), as well as for the derivatives market (including futures, forward, options and swap markets), the spot forex market, the government bonds markets (cash, forward and repo) and the private fixed-income securities market (cash and securities lending markets). The central counterparty clearing facilities are responsible for providing efficiency and stability to the market by ensuring trades are properly cleared and settled. A CCP interposes itself between counterparties to financial transactions, becoming the buyer to the sellers and the seller to the buyers. Acting in the capacity of central counterparty, our clearing houses absorb the risks of the counterparties in-between a trade transaction and its clearing and settlement, carrying out multilateral activities for financial settlement and clearing of securities and financial assets, in the event of default resorting to certain safeguard mechanisms, or in extreme situations resorting to our own net assets. In modeling and managing CCP risks, we focus on calculation, controls and mitigation of credit risk intrinsic to clearing participants. For proper risk mitigation, each clearing house has its own risk management system and safeguard structure. These structures comprise the universe of mechanisms and remedies a clearing house may resort to in order to cover losses from a participant‟s failed settlement. The key components of these safeguard structures include collaterals deposited by market participants, often in the form of margin, plus special funds intended to cover possible losses due to default and, in addition, co-liability undertaken by broker and clearing agents regarding transactions they intermediate or clear. Models adopted for margin calculation are stress-test based, meaning they are designed to assess market risk taking into account not only recent historical volatility in market prices, but also the possibility that unexpected events would imply behavioral change in price movements or lead to atypical market moves. The primary parameters we use in calculating margin are stress scenarios the Market Risk Committee defines for risk factors that affect the prices of securities, futures contracts and financial instruments traded on BM&FBOVESPA markets. Key risk factors for stress testing include, among other things, the Brazilian real exchange rate, the forward structure of the Brazilian fixed interest rate yield curve; the forward structure of the Dollar-denominated Brazilian yield curve (“cupom cambial”), the Bovespa index and the cash market prices of stocks. As of December 31, 2010, pledged collaterals amounted to an aggregate of R$143,087.7 million, a 40.8% year on year increase from R$101,641.1 million registered one year ago, which is due mainly to a 44.4% climb in collaterals for transactions carried out within the scope of our derivatives clearing house, and correlates with the upsurge volumes traded and in open positions of market participants.

23

Pledged collaterals Clearing houses (1) Equities clearing house Stocks Government bonds (2) Other collateral Derivatives clearing house Government bonds Sureties and bank letters of guarantee (2) Other collateral FX clearing house Securities clearing house Total collaterals
(1) (2) (3)

December 2010 December 2009 (in R$ millions) 50,702.5 36,437.4 25,809.8 17,208.3 22,749.9 15,665.7 2,142.7 3,563.3 87,534.7 76,979.3 3,538.5 7,016.9 3,921.7 928.8 143,087.7 60,605.5 53,754.9 1,479.3 5,371.3 3,766.1 832.1 101,641.1

(3)

Clearing facility for stocks and private debt securities. „Other collateral‟ includes private debt and international securities, fund shares, bank letters of guarantee and sureties, gold and cash . Clearing facility for government bonds.

HUMAN RESOURCES At end-2010, after 542 new hirings (468 employees and 74 interns), we had 1,384 employees and 78 interns. We adopt a multi-dimensional human resources management model to assist us in creating an integrated process for contracting new roles, developing new competencies and improving value-adding practices and processes across our company. Key initiatives adopted in 2010 in support of this model include action programs as (i) performance management, in line with our commitment to meritocracy and personal development. The performance management process sets the foundation for rewarding excellence; (ii) training and cross-training, as we believe excellence entails an ongoing process of personal growth, the highlight being our Leadership Journey program, which focuses on developing and strengthening job mastery, professional development and leadership skills. In 2011 this program will focus on transferring knowledge related to our new multi-asset class trading platform, developed jointly with the CME Group; (iii) wellness and quality of life, as we believe these issues impact on employee turnover. Our program aims to raise awareness to the benefits of fitness, wellness and healthy work/life options, and to promote better quality of life practices in all its dimensions, including leisure and entertainment, helping employees manage the challenges of a career, achieve emotional balance and a balanced way of life; and (iv) building and strengthening the BM&FBOVESPA culture, as we believe that engaging both internal and external audiences in our vision, mission and values will heighten and reinforce our leadership and imprint our particular brand of attributes and ethical standards amongst the investing public and the Brazilian capital markets. OMBUDSMAN Consistent with our original goal of enhancing the credibility and transparency of the Brazilian capital markets, in 2010 the role of the Ombudsman took on a more proactive and encompassing quality, and is performed in direct contact with audiences as diverse as our shareholders and brokerage firms, regulatory entities and the investing public, and all other stakeholders. In addition, moving forward the Ombudsman will be appointed for two-year terms, and may be reappointed twice at most. In addition, in 2010 our Ombudsman service was awarded ISO 9001 quality certification.

24

Call center service A survey conducted by us to measure satisfaction with the quality of our call center services representing 24.8% of the user universe, resulted in a 97.7% satisfaction rate. MARKET POPULARIZATION - INVESTOR EDUCATION PROGRAMS In September 2010 we launched our market popularization campaign named "Quer ser sócio?" ("Wanna be a partner?"), starred by former soccer champion Pelé, which focuses primarily on educating future and potential retail investors through mass media initiatives (including paid TV channels, free-to-air television and radio broadcasts, and the Internet) designed to illustrate the dynamics of investing in the stock market (www.quersersocio.com.br). For support to our financial education and market popularization campaigns and programs, we have developed a financial education infrastructure based on which the following primary programs are ongoing: Brazil’s National Financial Education Strategy (Estratégia Nacional de Educação Financeira), or ENEF. Based on our sponsorship of this Brazilian government program, we will be printing teaching material for distribution to 900 schools in a variety of Brazilian states; The Exchange Crowd (Turma da Bolsa). This is a program designed to provide financial education to over 6.8 thousand enrolled children, whose website registered over 91 thousand accesses; BM&FBOVESPA Challenge (Desafio BM&FBOVESPA). This is a student contest initiative aimed to educate young adult students about the capital markets and build a savings and investment culture. Over 270 schools in the state of São Paulo participate in this program. In addition, we recently launched a web version of the contest, permitting students across Brazil to participate and access other financial education programs. Financial Education TV Show. This is a partnership with Cultura, a São Paulo state-owned TV channel, which broadcasts TV shows for popularization of concepts and principles on economics, management of personal finances, investments and investment planning. According to a poll conducted by Ibope (a media research and statistical organization) an audience of approximately 85 thousand households in the state of São Paulo and in excess of 95 thousand viewers watch this financial education show. In addition, previous program episodes are accessible online at the program website (www.tveducacaofinanceira.com.br), which in the year was accessed by nearly 135 thousand persons; Investment simulators. We have developed stock market and derivatives market simulators for average citizens to test their knowledge of these markets (http://www.bmfbovespa.com.br/pt-br/educacional/simuladores). The website has registered over 895 thousand accesses; BM&FBOVESPA Goes to You (BM&FBOVESPA Vai Até Você). This is a program that seeks to reach its audience wherever it may be (in the corporate environment, or in schools, universities, professional or commercial associations, unions, and so forth) delivering to prospective retail investors targeted lectures on investment alternatives offered by the Exchange. A total of 67 events have been organized for audiences totaling 50 thousand persons.

25

SUSTAINABILITY; Socially and Environmentally Responsible Investments Our commitment towards sustainability is underpinned by the realization that our Company has the key mission of “inducing, promoting and practicing socially and environmentally responsible principles and investments, designed to promote sustainable development.” Our 2010 actions towards realizing these aspirations and ensuring these values are built into our approach to business include the following: The principal projects and programs we implemented over 2010 include:  Our first inventory of greenhouse gas emissions and energy use data, in response to the Carbon Disclosure Project (natural resources dimension);  Application of our Corporate Sustainability Index (ISE) questionnaire, for an internal sustainability diagnosis;  Adherence to the United Nations Principles for Responsible Investment and participation in the PRI Brazil corporate engagement workgroup (corporate governance and close relationships dimensions);  Launch of the Carbon Efficient Index (ICO2) (products and services dimensions). Private social investment Over the year, in addition to restructuring our BM&FBOVESPA Institute, which going forward will concentrate our work around established social actions originally initiated by BM&F and Bovespa, we also created (in October 2010) an internal volunteer program built around our Volunteer Gateway (www.bvmfemacao.com.br), in a partnership with the V2V (Volunteer to Volunteer) social network. By year-end, 199 employees had adhered to the program and 32 take part in the program‟s steering committee. Programs and projects Our social investing initiatives, developed through the BM&FBOVESPA Institute, include the following: BVS&A Socially Responsible Investment Exchange (Bolsa de Valores Sociais e Ambientais). This is a pioneering program inspired in the operating model of a stock exchange, which works as a hub for investors interested in making and advancing socially and environmentally responsible investments, in particular through education and community projects in search of sponsors and financing. In 2010 the program raised R$643 thousand to finance 18 community-oriented and environmental projects. Sports and Cultural Space (Espaço Esportivo e Cultural). Located in Paraisópolis, a poor and overpopulated district in the city of São Paulo, this is a center for the practice of sports and cultural and artistic activities by children and teenagers of the region. The Space also offers a library with a catalog comprising over four thousand books. In 2010, 800 youngsters were enrolled in sports classes, cultural activities and supplementary learning classes. Job Training Association (Associação Profissionalizante BM&FBOVESPA). The Association is committed to promoting social inclusion by investing in education actions targeting lower income communities in São Paulo and Rio de Janeiro, so young adults are given an opportunity to build on their capabilities and skills for a better future. Programs offered by the Association include Building Employability Skills (Capacitação para Empregabilidade), Handyman (Faz Tudo) and Beauty Space (Espaço Beleza). Over 250 young adults were benefited by these programs in São Paulo and Rio de Janeiro in the year to December 2010.

26

Philanthropy. Contributions made over the year to 69 nonprofit and anchor institutions active in different sectors of the community totaled R$1.35 million. BM&FBOVESPA Athletic Club. Our Company actively supports sports as a means of social inclusion and for development and sponsorship of high-performance athletes, in particular track and field athletes. Track and field athletics is very popular, permit us to sponsor a number of athletes that otherwise might not have the opportunity, and have positive impact on lower income communities. In addition, athletes the Club sponsors include Marílson Gomes dos Santos two-time winner of the New York City Marathon and three-time winner of the São Silvestre Street Run, as well as world No.1 pole vaulter and Diamond League winner Fabiana Murer. In all, we sponsor a team of 111 track and field athletes. In 2011, the team won the Brazil Trophy, the Jogos Abertos do Interior (open track and field games), the Regional Track and Field Games, and the Youth Olympic Games track and field silver medal. BM&FBOVESPA Market Surveillance (BSM) BSM is a not-for-profit and financially autonomous functional entity responsible for performing market surveillance and oversight activities relative to the securities market, ensuring market integrity. It has been organized and exists in accordance with the principles and standards set forth in CVM Instruction 461/07, which governs regulated securities markets. Accordingly, BSM performs activities that are supplementary to the surveillance and oversight activities performed by the Brazilian Securities Commission, or CVM. Over the year BSM continued to pursue plans for enhanced market surveillance, more streamlined processes and improvements to the regulatory and self-regulatory instruments, for which purpose it has been working in close cooperation with regulatory agencies and entities. The discussion below highlights some of these initiatives. BSM has implemented a new surveillance method which uses statistical tools for enhanced and more comprehensive analysis of transactions carried out in BM&FBOVESPA‟s trading systems, issuing warnings on detecting signs of irregularity. This has brought greater efficiency to BSM‟s particular analysis of certain transactions, as our team now has the ability to better focus on inquiries and investigations. BSM audits market participants. Started in 2010, our new audit plan includes important improvements oriented towards verifying compliance with anti-money laundering and concealment of assets law and regulations. INDEPENDENT AUDITORS Our Company and subsidiaries have retained PricewaterhouseCoopers to audit the financial statements The policy that governs the engagement of external audit services by us and our subsidiaries is based on internationally accepted accounting principles, which preserve service independence and include the following practices: (i) the auditors cannot hold executive or managerial positions in the Company or its subsidiaries; (ii) the auditors cannot perform operating activities in the Company or its subsidiaries which could compromise the auditing function; and (iii) the auditors must be impartial in order to avoid conflicts of interest and loss of independence, and must be objective in their opinions and reports about the financial statements. In the year to December 2010, the independent auditors and their related parties have provided no audit-unrelated services to us.

27

ARBITRATION COMMITMENT The Company, its shareholders, directors, officers and fiscal council members (where active) are required to settle by arbitration any and all disputes arising among them, or related to, or arising from the application, validity, effectiveness, interpretation, violation and effects of violation of the provisions of our Bylaws, the Brazilian Corporate Law (Law No. 6.404/76, as amended), the rules issued by the Brazilian National Monetary Council, the Central Bank of Brazil and the Brazilian Securities Commission (CVM), in addition to other rules and regulations regarding the operation of the Brazilian capital markets, including the Novo Mercado Listing Regulation, the Agreement for Participation in the Novo Mercado, the Arbitration Regulation of the Market Arbitration Chamber established by BM&FBOVESPA. Any such arbitration proceedings will be conducted before an arbitration tribunal established in accordance with the Arbitration Regulation of the Market Arbitration Chamber. MANAGEMENT’S REPRESENTATION Pursuant to the requirements set forth in CVM Instruction 480, Management represents to have discussed, reviewed and agreed with the financial statements as of and for the year ended December 31, 2010 and with the opinions expressed in the independent auditors‟ report. ADDITIONAL INFORMATION This report focuses on a discussion and analysis of our 2010 operating and financial performance, in addition to the main developments occurring over the year, and the principal programs and actions implemented in the period. For additional information about our Company and the markets we operate, you should read our Reference Form, a CVM filing which is accessible through our website and that of the Brazilian Securities Commission (CVM). ACKNOWLEDGEMENTS Finally, we wish to express our gratitude to employees for their commitment and dedication throughout the year, and to providers, shareholders, market participants, financial institutions and other stakeholders for their support over 2010.

28

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros
Parent Company BR GAAP and Consolidated IFRS and BR GAAP
Independent Auditor’s Report on the Financial Statements at December 31, 2010
(A free translation of the original in Portuguese)

Independent Auditor’s Report on the Financial Statements
To the Board of Directors and Shareholders BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros

We have audited the accompanying financial statements1 of BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros ("Parent Company"), which comprise the balance sheet as at December 31, 2010 and the statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. We have also audited the accompanying consolidated financial statements of BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros ("Consolidated"), which comprise the consolidated balance sheet as at December 31, 2010 and the consolidated statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s responsibility for the financial statements Management is responsible for the preparation and fair presentation of the Parent Company financial statements in accordance with accounting practices adopted in Brazil, and for the Consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and accounting practices adopted in Brazil, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Brazilian and International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

2

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion on the Parent Company financial statements In our opinion, the Parent Company financial statements present fairly, in all material respects, the financial position of BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros as at December 31, 2010, and its financial performance and cash flows for the year then ended in accordance with accounting practices adopted in Brazil. Opinion on the Consolidated financial statements In our opinion, the Consolidated financial statements present fairly, in all material respects, the financial position of BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros and its subsidiaries as at December 31, 2010, and their financial performance and cash flows for the year then ended in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and accounting practices adopted in Brazil. Emphasis of matter As discussed in Note 2 to these financial statements, the Parent Company financial statements have been prepared in accordance with accounting practices adopted in Brazil. In the case of BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros, these practices differ from IFRS applicable to separate financial statements only in relation to the measurement of investments in subsidiaries and affiliate based on equity accounting, while IFRS requires measurement based on cost or fair value.

3

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros

Other matters Statements of value added We also have audited the Parent Company and Consolidated statements of value added for the year ended December 31, 2010, the presentation of which is required by the Brazilian corporate legislation for listed companies, but is considered supplementary information for IFRS. These statements were subject to the same audit procedures described above and, in our opinion, are fairly presented, in all material respects, in relation to the financial statements taken as a whole. São Paulo, February 17, 2011

PricewaterhouseCoopers Auditores Independentes CRC 2SP000160/O-5

Edison Arisa Pereira Contador CRC 1SP127241/O-0

4

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros Balance Sheet
at December 31, 2010 and 2009
(In thousands of reais) BM&FBOVESPA 12/31/2009 3,424,607 46,746 3,257,365 39,042 21,598 51,143 8,713 17,212,509 746,476 378,537 626 283,824 83,489 100,791 100,791 236,941 16,128,301 16,064,309 63,992 20,637,116 (A free translation of the original in Portuguese) Consolidated 12/31/2009 3,468,852 50,779 3,295,356 40,205 22,656 51,143 8,713 17,368,987 958,993 585,648 4,626 283,824 84,895 39,723 39,723 241,939 16,128,332 16,064,309 64,023 20,837,839

Assets Current assets Cash and cash equivalents Financial investments Accounts receivable Other receivables Taxes recoverable and prepaid Prepaid expenses Non-current Long-term receivables Financial investments Other receivables - net Deferred income tax and social contribution Judicial deposits Investments Interest in affiliates Interest in subsidiaries Investment property Property and equipment Intangible assets Goodwill Software and projects Total assets

Notes

12/31/2010 3,010,770 103,148 2,731,324 50,052 12,253 104,997 8,996 19,410,211 478,878 331,676 626 54,687 91,889 2,353,046 2,248,325 104,721 362,400 16,215,887 16,064,309 151,578 22,420,981

1/1/2009 2,432,611 40,921 2,263,590 104,481 5,955 9,539 8,125 17,333,713 927,406 468,892 6,647 359,354 92,513 92,063 92,063 224,657 16,089,587 16,064,309 25,278 19,766,324

12/31/2010 2,547,589 104,017 2,264,408 51,399 12,917 105,843 9,005 20,086,386 1,216,812 1,066,920 2,827 54,687 92,378 2,286,537 2,248,325 38,212 367,134 16,215,903 16,064,309 151,594 22,633,975

1/1/2009 2,493,995 40,227 2,322,515 105,169 8,419 9,540 8,125 17,455,485 1,094,616 629,945 11,432 359,354 93,885 41,235 41,235 230,001 16,089,633 16,064,309 25,324 19,949,480

4 (a) 4 (b) 5 6

4 (b) 6 19 14 (g)

7 (a) 7 (a) 7 (b) 8 9

The accompanying notes are an integral part of this Financial Statements. 4

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros Balance Sheet
at December 31, 2010 and 2009
(In thousands of reais) BM&FBOVESPA 12/31/2009 958,946 810,317 31,897 21,318 42,525 24,404 886 9,295 839 17,465 351,635 2,495 300,930 48,210 (A free translation of the original in Portuguese) Consolidated 12/31/2009 1,142,074 810,317 31,897 21,444 43,237 24,616 3,697 9,295 839 196,732 352,872 2,495 300,930 49,447 -

Liabilities and shareholders’ equity Current Collateral for transactions Earnings and rights on securities in custody Suppliers Salaries and social charges Provision for taxes and contributions payable Income tax and social contribution Financing Interest payable on debt issued abroad and loans Dividends and interest on own capital payable Other liabilities Non-current Debt issued abroad and loans Deferred income tax and social contribution Provision for contingencies and legal obligations Other liabilities

Notes

12/31/2010 1,220,283 954,605 34,791 80,775 63,177 23,683 2,586 33,154 2,773 24,739 1,797,933

1/1/2009 709,931 585,963 36,020 18,392 20,288 21,091 4,087 13,957 10,133 45,278 43,657 1,621

12/31/2010 1,416,204 954,605 34,791 80,828 64,351 23,981 5,576 33,154 2,773 216,145 1,798,723 1,010,059 732,074 56,590 -

1/1/2009 876,297 585,963 36,020 18,442 20,806 21,280 2,652 4,087 13,957 173,090 46,729 46,160 569

17 10

11 12 13

12 19 14 13

1,010,059 732,074 55,800 -

Shareholders’ equity 15 Capital and reserves attributable to shareholders of the parent Capital Capital reserve Revaluation reserves Statutory reserves Revenue reserves Treasury shares Valuation adjustments Additional Dividend proposed Interest of non-controlling shareholders Total liabilities and shareholders’ equity

19,402,765 2,540,239 16,662,480 22,971 847,658 (613,903) (88,680) 32,000 19,402,765 22,420,981

19,326,535 2,540,239 16,492,260 23,551 403,191 (230,102) 77,396 20,000 19,326,535 20,637,116

19,011,115 2,540,239 16,432,624 24,131 (185,880) 200,001 19,011,115 19,766,324

19,419,048 2,540,239 16,662,480 22,971 847,658 (613,903) (88,680) 32,000 19,402,765 16,283 22,633,975

19,342,893 2,540,239 16,492,260 23,551 403,191 (230,102) 77,396 20,000 19,326,535 16,358 20,837,839

19,026,454 2,540,239 16,432,624 24,131 (185,880) 200,001 19,011,115 15,339 19,949,480

The accompanying notes are an integral part of this Financial Statements. 5

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros Statement of Income
Periods ended December 31, 2010 and 2009
(In thousands of reais, unless otherwise stated) (A free translation of the original in Portuguese)

Notes Gross operating revenues Trading and/or settlement system - BM&F Derivatives Foreign exchange Assets Trading and/or settlement system - Bovespa Negotiation – trading fees Transactions – clearing and settlement Other

2010 2,082,349 722,065 701,545 20,427 93 1,049,300 737,074 254,904 57,322 310,984 49,443 44,392 88,263 48,234 67,629 3,898 9,125 (211,126) (187,516) (23,610) 1,871,223 (608,526) (279,060) (98,074) (53,010) (45,533) (9,619) (25,588) (2,226) (2,619) (41,756) (12,413) (5,841) (32,787) 39,665 287,406 326,057 (38,651) 1,589,768

BM&FBOVESPA 2009 1,651,002 534,189 513,185 20,849 155 837,326 605,244 207,914 24,168 279,487 32,989 39,549 72,167 46,051 64,650 4,304 19,777 (168,610) (149,668) (18,942) 1,482,392 (550,959) (284,231) (98,672) (40,598) (42,145) (10,067) (23,204) (2,464) (2,409) (18,850) (1,940) (5,252) (21,127) 6,374 245,216 260,251 (15,035) 1,183,023 (301,973) 34,616 (336,589)

2010 2,102,554 722,065 701,545 20,427 93 1,049,300 737,074 254,904 57,322 331,189 49,443 44,392 88,263 48,234 67,629 3,898 5,669 8,043 15,618 (212,797) (188,754) (24,043) 1,889,757 (633,504) (290,107) (101,690) (54,818) (48,102) (10,219) (25,819) (2,753) (2,690) (42,376) (12,784) (5,841) (36,305) 38,238 298,024 354,806 (56,782) 1,592,515 (448,029) (5,408) (442,621)

Consolidated 2009 1,672,894 534,189 513,185 20,849 155 837,326 605,244 207,914 24,168 301,379 32,989 39,549 72,167 46,051 64,650 4,304 7,146 8,290 26,233 (170,350) (150,786) (19,564) 1,502,544 (569,832) (289,806) (102,596) (42,396) (45,495) (11,007) (23,428) (3,032) (2,510) (19,555) (2,323) (5,252) (22,432) 253,862 289,686 (35,824) 1,186,574 (304,505) 32,085 (336,590)

20

Other operating revenues Loans of marketable securities Listing of marketable securities Depository, custody and back office Trading participant access Vendors – quotations and market information Commodity classification fee Bolsa Brasileira de Mercadorias - trading fees and contributions Banco BM&F - banking fees Other 21 Deductions of revenue PIS and COFINS taxes Taxes on services Net operating revenue Operating expenses Administrative and general Personnel and related charges Data processing Depreciation and amortization Outsourced services Maintenance in general Communications Rents Supplies Promotion and publicity Taxes Board and committee members’ compensation Sundry Equity in the results of subsidiaries Financial results Financial income Financial expenses Income before taxation of profit Income tax and social contribution Current Deferred 19 (c)

22 7 23

(445,207) (2,586) (442,621)

Net income for the period Attributable to: Shareholders of the parent Non-controlling interest (1) Information relating to earnings per share are presented in Note 15(g)

1,144,561

881,050

1,144,486

882,069

1,144,561 -

881,050 -

1,144,561 (75)

882,069 1,019

The accompanying notes are an integral part of this Financial Statements. 6

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros Statement of Comprehensive Income
Periods ended December 31, 2010 and 2009
(In thousands of reais) (A free translation of the original in Portuguese)

2010 Net income for the quarter Valuation adjustments Mark to market of financial assets available for sale Tax effects on mark to market of financial assets available for sale Exchange variation on foreign investment in associate Hedge of net investment abroad Tax effects on hedge of net investment in a foreign operation Reflex effect on other comprehensive income from overseas subsidiary Total comprehensive income for the quarter Attributable to: Shareholders of the parent Non-controlling interest 1,144,561 (166,076) (117,266) 39,870 (133,238) 59,547 (20,246) 5,257 978,485 978,485 978,485 -

BM&FBOVESPA 2009 881,050 77,396 117,266 (39,870) 958,446 958,446 958,446

2010 1,144,486 (166,076) (117,266) 39,870 (133,238) 59,547 (20,246) 5,257 978,410 978,410 978,485 (75)

Consolidated 2009 882,069 77,396 117,266 (39,870) 959,465 959,465 958,446 1,019

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros Statement of Changes in Shareholders’ Equity Periods ended December 31, 2010 and 2009 (In thousands of reais) Atributable to shareholders of the parent Revenue reserves Statutory Treasury Legal reserves shares reserve (Note 15(d)) (Note 15(b)) (185,880) (75,125) 30,903 -

Notes At January 1, 2009 Mark to market adjustment of financial assets available for sale Realization of revaluation reserve - subsidiaries Repurchase of shares Disposal of treasury shares - exercised options Recognition of stock option plan Approval/Payment of additional dividends proposed Net income for the period Appropriation of net income: Dividends Interest on own capital Constitution of statutory reserves At December 31, 2009 Mark to market adjustment of financial assets available for sale Exchange variation on foreign investment Hedge of net investment Reflex effect on comprehensive income related to overseas subsidiaries Total other comprehensive income Realization of revaluation reserve - subsidiaries Repurchase of shares Disposal of treasury shares - exercised options Recognition of stock option plan Approval/Payment of additional dividends proposed Effect of impairment reversal , net of tax Restatement of reserves by reversal of AFS devaluation reserves Net income for the period Appropriation of net income: Dividends Interest on own capital Constitution of statutory reserves At December 31, 2010 18 18 15(f) 26 26 18

Capital 2,540,239 -

Capital reserve 16,432,624 59,636 -

Revaluation reserve (Note 15(c)) 24,131 (580) -

Valuation Adjustments 77,396 -

Aditional Dividends Proposed 200,001 (200,001) -

Retained earnings (20,859) 881,050

Total 19,011,115 77,396 (580) (75,125) 10,044 59,636 (200,001) 881,050 (183,500) (253,500) 19,326,535 (77,396) (133,238) 39,301 5,257 (166,076) (580) (435,115) 16,384 30,921 (20,000) 460,610 1,144,561 (682,475) (272,000) 19,402,765

Non-controlling interest 15,339

Total Equity 19,026,454 77,396 (580) (75,125) 10,044 59,636 (200,001)

1,019

15(f) 15(f)

2,540,239 -

16,492,260 (34,930) 30,921 174,229 -

23,551 (580) -

3,453 -

403,191 403,191 282,928 -

(230,102) (435,115) 51,314 -

77,396 (77,396) (133,238) 39,301 5,257 (166,076) -

20,000 20,000 (20,000) -

(183,500) (273,500) (403,191) 460,610 (460,610) 1,144,561

16,358

882,069 (183,500) (253,500) 19,342,893 (77,396) (133,238) 39,301 5,257 (166,076) (580) (435,115) 16,384 30,921 (20,000) 460,610

(75)

1,144,486

15(f) 15(f)

2,540,239

16,662,480

22,971

3,453

(248,000) 406,086 844,205

(613,903)

(88,680)

32,000 32,000

(434,475) (304,000) (406,086) -

-

(682,475) (272,000) 19,419,048

16,283

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros Statement of Cash Flows
Periods ended December 31, 2010 and 2009
(In thousands of reais) (A free translation of the original in Portuguese) BM&FBOVESPA 2010 Cash flows from operating activities Net income for the period Adjustments for: Depreciation and amortization Profit on sale of property and equipment Softwares and projects write off Deferred income tax and social contribution Equity in results of subsidiaries Expenses related to the stock option plan Interest expense 1,144,561 53,010 (183) 4,802 442,621 (39,665) 30,921 30,641 881,050 40,598 382 336,589 (6,374) 59,636 562 1,144,486 54,818 (183) 4,802 442,621 (38,238) 30,921 30,641 882,069 42,396 382 336,590 59,636 562 2009 2010 BM&FBOVESPA 2009

Variation in financial investments and collateral for transactions Variation in taxes recoverable and prepaid Variation in accounts receivable Variation in other receivables Variation in prepaid expenses Variation in judicial deposits Variation in earnings and rights on securities in custody Variation in suppliers Variation in provision for taxes and contributions payable Variation in provisions for income tax and social contribution Varition in salaries and social charges Variation in other liabilities Variation in provision for contingencies Net cash provided by operating activities Cash flows from investing activities Receipt on sale of property and equipment Payment for purchase of property and equipment Payment by the acquisition of investments Dividends received Receipt on sale of assets held for sale Capital increase in subsidiaries Acquisition of softwares and projects Net cash (used in) provided by investing activities Cash flows from financing activities Disposal of treasury shares - stock options exercised Repurchase of shares Variation in financing Debt issued Redemption of preferred shares Payment of dividends and interest on own capital Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period

21,617 (53,854) (11,010) 2,482 (283) (8,400) 2,894 59,457 (721) 1,700 20,652 7,324 7,590 1,716,156

(561,939) (41,604) 65,439 (26,701) (588) 9,024 (4,123) 2,926 (15,661) 886 22,237 8,004 4,553 774,896

(1,609) (54,699) (11,194) 4,118 (293) (7,484) 2,894 59,386 (635) 1,879 21,114 19,461 7,143 1,709,949

(587,064) (41,603) 64,964 (25,457) (588) 8,990 (4,123) 3,001 (15,638) 1,045 22,431 25,922 3,287 776,802

965 (164,508) (1,075,119) 20,112 (3,082) (107,180) (1,328,812)

3,363 (66,280) 7,969 8,981 (2,934) (28,792) (77,693)

966 (164,548) (1,075,119) 20,112 (107,180) (1,325,769)

3,363 (66,393) 7,969 8,981 (28,792) (74,872)

16,384 (435,115) (9,076) 1,069,406 (972,541) (330,942) 56,402 46,746 103,148 -

10,044 (75,125) 7,141 (2,293) (631,145) (691,378) 5,825 40,921 46,746

16,384 (435,115) (9,076) 1,069,406 (972,541) (330,942) 53,238 50,779 104,017

10,044 (75,125) 7,141 (2,293) (631,145) (691,378) 10,552 40,227 50,779

The accompanying notes are an integral part of this Financial Statements. 9

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros Statement of Value Added
Periods ended December 31, 2010 and 2009
(In thousands of reais) (A free translation of the original in Portuguese)

BM&FBOVESPA 2010 1 - Revenues Trading and/or settlement system Other operating revenues 2 – Goods and services acquired from third parties Operating expenses (a) 2,082,349 1,771,365 310,984 255,976 255,976 2009 1,651,002 1,371,515 279,487 216,474 216,474 2010 2,102,554 1,771,365 331,189 267,201 267,201

Consolidated 2009 1,672,894 1,371,515 301,379 227,023 227,023

3 – Gross value added (1-2)

1,826,373

1,434,528

1,835,353

1,445,871

4 - Retentions Depreciation and amortization

53,010 53,010

40,598 40,598

54,818 54,818

42,396 42,396

5 – Net value added produced by the company (3-4)

1,773,363

1,393,930

1,780,535

1,403,475

6 – Value added transferred from others Equity in results of subsidiaries Financial income

365,722 39,665 326,057

266,625 6,374 260,251

393,044 38,238 354,806

289,686 289,686

7 – Total value added to be distributed (5+6)

2,139,085

1,660,555

2,173,579

1,693,161

8 - Distribution of Value Added Personnel and related charges Board and committee members’ compensation Income tax, taxes and contributions (b) Federal Municipal Interest and rents (c) Interest on own capital and dividends Constitution of statutory reserves

2,139,085 279,060 5,841 644,947 23,799 40,877 738,475 406,086

1,660,555 284,231 5,252 453,425 19,098 17,499 457,000 424,050

2,173,579 290,107 5,841 649,378 24,232 59,535 738,475 406,011

1,693,161 289,806 5,252 457,458 19,720 38,856 457,000 425,069

(a) Operating expenses (excludes personnel, Board and committee members’ compensation, depreciation, rents and taxes). (b) Including: taxes, PIS, COFINS, ISS and income tax and social contribution (current and deferred). (c) Including: rents and financial expenses.

-

-

The accompanying notes are an integral part of this Financial Statements. 11

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

1

Operations

BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros (BM&FBOVESPA) is a publicly traded corporation whose main objective is to invest in companies engaged in the following activities:  Management of organized markets of marketable securities, providing for the organization, performance and development of free and open markets for the negotiation of any types of securities or contracts, that have as reference or objective financial assets, indices, indicators, rates, goods, currencies, energy, transportation, commodities and other assets or rights directly or indirectly related to such assets, for spot or future delivery;  Maintenance of proper environments or systems for carrying out purchases, sales, auctions and special operations involving marketable securities, securities, rights and assets, in the stock exchange market and in the organized over-the-counter market;  Rendering services of registration, offset and settlement, both physical and financial, through an internal agency or a company especially incorporated for this purpose, assuming or not the position of central counterparty and guarantor of the definite settlement, under the terms of the legislation in force and its own regulations;  Rendering services of central depository and fungible and custody of non-fungible goods, marketable securities and any other physical and financial assets;  Providing services of standardization, classification, analysis, quotations, statistics, professional education, preparation of studies, publications, information, libraries and software on matters of interest to the Company and the participants of markets directly or indirectly managed by it;  Providing technical, administrative and managerial support for market development, as well as carrying out educational, promotional and publishing activities related to its objective and to the markets managed by it;  Performance of other similar or correlated activities explicitly authorized by the Brazilian Securities Commission (CVM); and  Investment in the capital of other companies or associations, headquartered in Brazil or abroad, as a partner, shareholder or member pursuant to the regulations in force. BM&FBOVESPA organizes, develops and provides for the operation of free and open securities markets, for spot and future delivery. Its activities are organized through its trading systems and clearinghouses and include transactions with securities, interbank foreign exchange and securities under custody in the Special System for Settlement and Custody (Selic) markets.

13

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

BM&FBOVESPA develops technology solutions and maintains high performance systems, providing its customers with security, agility, innovation and cost efficiency. The success of its activities depends on the ongoing improvement, enhancement and integration of its trading and settlement platforms and its capacity to develop and license leading-edge technologies required for the proper performance of its operations. Its subsidiary Bolsa Brasileira de Mercadorias is involved in the registration and settlement of spot, forward and options transactions involving commodities, assets and services for physical delivery, as well as the securities representing these products, in the primary and secondary markets. With the objective of responding to the needs of clients and the specific requirements of its markets, its wholly-owned subsidiary Banco BM&F de Serviços de Liquidação e Custódia S.A. provides its members and its clearinghouses with a centralized custody service for the assets pledged as collateral for transactions. BM&F USA Inc., a wholly-owned subsidiary located in the city of New York (USA), with a representative office in Shanghai (China) and a wholly-owned subsidiary in London (BM&FBOVESPA (UK) Ltd. – constituted in the last quarter of 2009), represents BM&FBOVESPA abroad through relationships with other exchanges and regulatory agents, as well as assisting in the procurement of new clients.

2

Preparation and Presentation of the financial statements

This financial statements were approved by the Board of Directors of BM&FBOVESPA on February 17, 2011.

The financial statements have been prepared considering the historical cost basis and have been adjusted to reflect financial assets classified as available for sale and financial assets (including derivative instruments) measured at fair value through profit and loss. The preparation of financial statements requires the use of critical accounting estimates and also the exercise of judgment by management in the process of applying the accounting policies of BM&FBOVESPA. Those areas that require higher degrees of judgment and have greater complexity, as well as areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3 (v).

14

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

(a) Consolidated financial statements
The consolidated financial statements have been prepared and presented in accordance with accounting practices adopted in Brazil, complemented by pronouncements, interpretations and guidelines of the Accounting Pronouncements Committee (CPCs). The consolidated financial statements were also prepared and are presented in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board. These are the first financial statements prepared in accordance with IFRS and CPCs by BM&FBOVESPA. The main differences between accounting practices previously adopted in Brazil (old BR GAAP) and CPCs / IFRS, including the reconciliations of equity and the statement income, are described in Note 26. The consolidated financial statements include the balances of BM&FBOVESPA and its subsidiaries, as well as the special purpose entities, comprising the exclusive investment funds (CVM Instruction 408/2004), as presented below: Stake % Subsidiaries and controlled entities Banco BM&F de Liquidação e Custódia S.A. (“Banco BM&F”) Bolsa Brasileira de Mercadorias Bolsa de Valores do Rio de Janeiro – BVRJ (“BVRJ”) BM&F USA Inc. Exclusive investment funds Supremo Renda Fixa – Fundo de Investimento em Cotas de Fundos de Investimento Bradesco Fundo de Investimento Multimercado Letters 100.00 50.12 86.09 100.00

(b) Individual financial statements
The individual financial statements of the parent have been prepared under accounting practices adopted in Brazil issued by the Accounting Pronouncements Commitee (CPC) and are published together with the consolidated financial statements. In the individual financial statements (BM&FBOVESPA), the subsidiaries are recorded on the equity method. The same adjustments are made both in the individual financial statements and consolidated financial statements to achieve the same result and net assets attributable to controlling shareholders. Accounting practices adopted in Brazil applicable to individual financial statements differ from IFRS

15

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

applicable to separate financial statements, only with respect to the valuation of investments in subsidiaries and affiliates on the equity method, while IFRS would require cost or fair value.

3

Significant Accounting Practices

a. Consolidation
The following accounting policies are applied in preparing the consolidated financial statements. Subsidiaries

Subsidiaries are all entities (including special purpose entities) in which BM&FBOVESPA has the power to govern the financial and operating policies, generally accompanied by a participation of more than half of the voting rights (voting capital). The existence and effect of potential voting rights currently exercisable or convertible are considered when assessing whether BM&FBOVESPA controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to BM&FBOVESPA. Consolidation is discontinued from the date on which control ends. Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of impairment of transferred assets. The accounting policies of subsidiaries are altered where necessary to ensure consistency with the practices adopted by BM&FBOVESPA. Affiliates Affiliates are all entities over which BM&FBOVESPA has significant influence but not control. Investments in associates are recorded on the equity method and are initially recognized at the cost of each purchase. BM&FBOVESPA's investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss. The share of BM&FBOVESPA in the post-acquisition profits or losses of associates is recognized in the statement of income and its share in post-acquisition reserves changes is recognized in reserves. The cumulative post-acquisition changes are adjusted against the carrying value of the investment. When the share of BM&FBOVESPA in the losses of an associate equals or exceeds its share in the associate, including any other receivables, BM&FBOVESPA does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate.

16

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Unrealized gains arising from transactions between BM&FBOVESPA and its associates are eliminated to the extent of the participation of BM&FBOVESPA in the affiliates. Unrealized losses are also eliminated unless the transaction provides evidence of impairment of assets transferred. The accounting policies of associates have been altered where necessary to ensure consistency with the practices adopted by BM&FBOVESPA.

b. Revenue Recognition
Revenues from the Trading and/or settlement system are recognized upon the completion of the transactions or the provision of service, under the accrual method of accounting. The amounts received as annual fees, as in the cases of listing of securities and certain contracts of sale of market information, are recognized pro rata on monthly over the contractual term.

c. Cash and cash equivalents
The balances of cash and cash equivalents for cash flow statement purposes comprise cash and bank deposits.

d. Financial instruments (i) Classification and calculation
The Company classifies its financial assets in the following categories: recorded at market value through profit or loss, loans and receivables, held to maturity and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of the financial assets when they are first recorded.

Financial assets recorded at fair value through profit or loss
The financial assets recorded at fair value through profit or loss are financial assets held for active and frequent trading or assets designated by the entity, when first recorded, as measurable at fair value through profit or loss. Derivatives are also classified as held for trading and accordingly, are recorded in this category. The assets in this category held for trading are classified as current assets. Gains or losses arising from the fair value variations of financial assets recorded at fair value through profit or loss are recorded in the statement of income in "financial results" for the period in which they occur.

17

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Loans and receivables
These comprise loans granted and receivables which are non-derivative financial assets with fixed or determinable payments, not quoted in an active market. Loans and receivables are included in current assets, except for those with maturity of more than 12 months after the balance sheet date (which are classified as non-current assets). The Company's loans and receivables comprise trade accounts receivable and other accounts receivable. Loans and receivables are recorded at amortized cost, based on the effective interest rate method.

Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives which are classified in this category or not classified in any other. They are included in non-current assets, unless the management intends to sell the investment within 12 months subsequent to the balance sheet date. Available-for-sale financial assets are recorded at fair value. Interest on available-for-sale securities, calculated based on the effective interest rate method, is recognized in the statement of income as financial income. The amount relating to the fair value variation is recorded in shareholders' equity, in the Carrying value adjustments account, and is realized in net income when the asset is sold or becomes impaired.

Fair value
Fair values of investments with public quotations are based on current market prices. For financial assets without an active market or public quotation, the Company determines fair value through valuation techniques, such as option pricing models. The Company evaluates, at the balance sheet date, if there is objective evidence that a financial asset or a group of financial assets is deteriorated.

(ii) Derivative instruments and hedge activities
Initially, the derivatives are recognized at fair value on the date on which the derivative agreement is signed and, subsequently, they are recalculated at their fair value, with the fair value variations recorded in income, except when the derivative is recorded as a cash flow hedge.

(iii) Hedge of net investments
Any gain or loss on the hedging instrument related to the effective portion of the hedge is recognized in equity. The gain or loss related to the ineffective portion is recognized immediately in income as "other gains (losses), net".

18

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Gains and losses accumulated in equity are included in the income statement when the foreign operation is partially disposed of or sold.

e. Accounts receivable, other receivables and allowance for doubtful accounts
Accounts receivable are the amounts receivable for services in the normal course of activities of the BM&FBOVESPA. If the deadline for receipt is equivalent to one year or less (or another period that meets the normal cycle of BM&FBOVESPA), the accounts receivable are classified as current assets. Otherwise, they are presented as noncurrent assets. Accounts receivable are initially recognized at fair value less provision for doubtful debts (PDD). In practice they are usually recognized at the invoice amount, adjusted for a provision if necessary.

f. Prepaid expenses
Prepaid expenses mainly recognize amounts related to software maintenance contracts and insurance premiums, which are amortized based on the terms of the contracts in force.

g. Intangible assets
An intangible asset is an identifiable non-monetary asset without physical substance, such as goodwill.

Goodwill
Goodwill represents the positive difference between the amount paid and / or payable for the acquisition of a business and the net fair value of assets and liabilities of the acquired subsidiary. Goodwill from acquisitions of subsidiaries is recorded in "intangible assets". If the difference is negative, representing a discount to fair value, it must record the amount as a gain in income at the date of acquisition. Goodwill is tested annually for impairment. Goodwill is stated cost value less accumulated impairment losses. Recognized impairment losses on goodwill are not reversed. Goodwill is allocated to Cash Generating Units (CGUs) for purposes of impairment testing. The allocation is made to the Cash Generating Units that should benefit from the business combination from which the goodwill arose, and are identified according to the operating segment.

19

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Software and projects Software licenses acquired are capitalized and amortized over their estimated useful life, at the rates described in Note 9. Costs of software development or maintenance are expensed as incurred. Expenditures directly associated with identifiable and unique software, controlled by the Company and which will probably generate economic benefits greater than the costs for more than one year, are recognized as intangible assets. Direct expenditures include remuneration of the software development team. Expenditures for development of software recognized as assets are amortized using the straightline method over their useful lives, at the rates described in Note 9.

h. Step Acquisition of affiliate
The cost of an affiliate acquired in steps is measured by the total amount paid in each transaction. The gains or losses previously recognized in comprehensive income, while classified as available for sale, are reversed against the investment account to recompose the cost. Goodwill is calculated at each step of acquisition as the difference between the acquisition cost and the fair value of net assets in proportion to the interest acquired. The total book value of the investment is tested for identification of potential reduction in the recoverable value, by comparing the carrying value with its recoverable amount (proceeds from sale, net of sale cost or value in use, whichever is greater) when the requirements of the CPC 38/IAS 39 indicate that the investment can be affected, in other words, indicate some loss of reduction to its recoverable amount.

i. Property and equipment
Recorded at cost of acquisition or construction. Depreciation is calculated on the straight-line method and takes into consideration the useful economic life of the assets, at the rates listed. Subsequent costs are included in the carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits will flow to the item and that the cost of the item can be measured reliably. All other repairs and maintenance are recorded in income, when incurred.

20

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

j. Contingent assets and liabilities and legal obligations
The recognition, measurement, and disclosure of contingent assets and liabilities and legal obligations comply with the criteria defined in CPC 25/IAS 37.  Contingent assets - These are not recorded, except when management has full control over their realization or when there are secured guarantees or favorable decisions to which no further appeals are applicable, such that the gain is almost certain. Contingent assets with realization considered probable, where applicable, are only disclosed in the financial statements. Contingent liabilities - These are recognized based on a number of factors including: the opinion of legal advisors; the nature of the lawsuits; similarity to precedents; the complexity of the proceedings; and prior court decisions. They are recognized whenever the loss is evaluated as probable, since this would give rise to a probable outflow of resources for the settlement of the obligations, and the sums involved are measurable with sufficient reliability. The contingent liabilities classified as possible losses are not recorded and are only disclosed in the notes to the financial statements, and those classified as remote are neither recognized nor disclosed. Legal obligations – These result from tax lawsuits in which the Company is discussing the validity or constitutionality of certain taxes and charges. These are fully recognized in the financial statements, regardless of the assessment of their probability of success. Other Provisions - Provisions are recognized when BM&FBOVESPA has a present obligation, legal or constructive, as a result of past events, it is probable that an outflow of resources is required to settle the obligation, and a reliable estimate of the amount can be made.







k. Judicial deposits
Judicial deposits are monetarily restated and presented in non-current assets.

l. Other assets and liabilities
These are stated at their known and realizable/settlement amounts plus, where applicable, related earnings and charges and monetary and/or exchange rate variations up to the balance sheet date.

21

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

m. Impairment of assets
Assets that have an indefinite life, such as goodwill, are not subject to amortization and are tested annually for impairment. The assets subject to amortization are reviewed for verification of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment loss is recognized by at the amount by which the asset's carrying amount exceeds its recoverable amount. This latter amount is the higher of the fair value of an asset less selling costs and the value in use. For purposes of evaluation of impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (Cash Generating Units (CGU)). The non-financial assets, except goodwill, which has suffered impairment are reviewed subsequently to analyze a possible reversal of the impairment at the date of the report.

n. Leases
Leases of property and equipment in which the Company substantially assumes all ownership risks and benefits are classified as financial leases. These financial leases are recorded as a financed purchase, recognizing at the beginning of the lease a property and equipment item and a financing liability (lease). Property and equipment acquired in finance leases are depreciated at the rates defined in Note 8. A lease in which a significant portion of the ownership risks and benefits remains with the lessor is classified as an operating lease. Operating lease payments (net of all incentives received from the lessor) are charged directly to results.

o. Employee benefits (i) Pension obligations
The Company has no defined benefit plans. The Company offers its employees a defined contribution plan and pays contributions on contractual or voluntary bases. Once the contributions have been made, the Company has no obligations related to additional payments. The regular contributions comprise net periodic costs for the period in which they are payable and, therefore, are included in the personnel costs.

(ii) Share-based remuneration (stock options)
The Company offers to its employees and executives share-based remuneration plans, to be settled in Company stock, according to which the Company receives services in consideration for

22

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

stock options. The fair value of options granted related to services to be provided is recognized as an expense during the period in which the right is obtained, i.e., the period during which specific vesting conditions must be met. On the date of the balance sheet, the Company revises the estimated number of options which will vest and subsequently, recognizes the impact of the change on initial estimates, if any, in the statement of income, with a contra-entry to the capital reserve in shareholders' equity on a prospective basis.

(iii) Profit sharing
The provision is recorded as an accrual basis in accordance with the remuneration policy of the BM&FBOVESPA BM&FBOVESPA recognizes a liability and an expense for profit sharing based on a formula that takes into account the profit attributable to shareholders after certain adjustments. BM&FBOVESPA recognizes a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

p. Financing and Borrowing
Financing and borrowing are initially recognized at fair value, upon receipt of the funds, net of transaction costs. Subsequently, the financing is presented at amortized cost, that is, plus charges and interest in proportion to the period incurred ("pro rata temporis"). Any difference between the funds raised (net of transaction costs) and the redemption value is recognized in the income statement over the period of the loans, using the effective interest rate method.

q. Foreign currency translation
The items included in financial statements for each of the consolidated companies of BM&FBOVESPA are measured using the currency of the primary economic environment in which the company operates ("functional currency"). The quarterly information is presented in Brazilian reais, which is the functional currency of BM&FBOVESPA. The transactions with foreign currencies are translated into the functional currency, using the exchange rates prevailing on the transaction dates or evaluation dates. The foreign exchange gains and losses arising from the settlement of these transactions and of the translation, at the exchange rates at the end of period, of assets and liabilities in foreign currencies, are recognized in the income statement, except when deferred in equity as part of a hedge of net investment abroad. In the case of exchange variation of investments abroad, which have a functional currency different from tha of BM&FBOVESPA, variations in the value of an investment arising solely from exchange rate changes are recorded under "Asset Valuation Adjustment" in comprehensive

23

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

income of BM&FBOVESPA, and are only taken to income when the investment is sold or written off. When applying the equity method, unrealized gains on transactions with subsidiaries and associated companies are eliminated.

The exchange gains and losses on non-monetary financial assets related to shares of CME Group, classified as available for sale until July 2010, are included in comprehensive income. After July 2010, the investment in CME Group was recorded on the equity method (Note 7) and the currency effects are recognized in comprehensive income.

r. Taxes
The expenses of income tax and social contribution of the period comprise current and deferred taxes. The income taxes are recognized in the income statement, except to the extent that they relate to items recognized directly in equity or comprehensive income. In this case, the tax is also recognized in equity or comprehensive income. BM&FBOVESPA is a for-profit business corporation and accordingly its income is subject to certain taxes and other contributions which are listed below. Provisions for income tax, social contribution and other taxes are calculated at the rates presented below:      Income tax Additional income tax CSLL PIS COFINS 15.00% 10.00% 9.00% 1.65% 7.60%

Banco BM&F de Serviços de Liquidação e Custódia S.A. calculates the contributions to PIS and to COFINS at the rates of 0.65% and 4%, respectively, and CSLL at 15%. The subsidiaries Bolsa Brasileira de Mercadorias and BVRJ are not-for-profit entities and calculate the contribution to PIS at the rate of 1% on payroll. Deferred taxes are calculated on income tax and social contribution losses and the temporary differences between the tax calculation bases of assets and liabilities and the respective book values in the financial statements.

24

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Deferred tax assets are recognized to the extent that it is probable sufficient future taxable profit will be available to be offset by temporary differences and/or tax losses, considering projections of future income prepared based on internal assumptions and future economic scenarios which may, accordingly, undergo change. Deferred tax liabilities are recognized in relation to all taxable temporary differences, that is, differences that will result in taxable amounts in determining taxable profit (tax loss) of future periods when the carrying amount of the asset or liability is recovered or settled. Deferred income tax and social contribution are not recorded if it results from the initial recognition of an asset or liability in a transaction other than a business combination, which, at the time of the transaction does not affect the net income or the taxable income (tax loss). The deferred income tax and social contribution are determined using tax rates (and tax laws) enacted, or substantially enacted, at the balance sheet date, and should be applied when its deferred tax asset is realized or when the deferred tax liability is settled.

s. Net income per share
For purposes of disclosure of earnings per share, the basic earnings per share is calculated by dividing the net profit attributable to shareholders of the parent by the average number of outstanding during the period. The diluted earnings per share is calculated similarly, except that the quantities of outstanding shares are adjusted to reflect the additional outstanding shares with potentially dilutive effects, due to the stock option plan (Note 16g), had been issued during the respective periods.

t. Distribution of dividends and interest on capital
The distribution of dividends and interest on capital to shareholders of the Company is recognized as a liability in the financial statements at year end, based on the Company’s Bylaws. Any amount above the minimum required is only accrued on the date it is approved by shareholders at the General Assembly

u. Segment Report presentation
The report by operating segments is presented in a consistent manner with the internal report provided to the management, which is responsible for the main operational and strategic decisions of the Company.

25

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

v. Critical accounting estimates and judgments
i. Equity method of accounting BM&FBOVESPA applies the equity method for its investments when it has the ability to exercise significant influence over the operations and financial policies of the investee. The consolidated net income includes our proportionate interest in the net income of the CME Group (note 7). The judgment of BM&FBOVESPA regarding the level of influence over the investment takes into account key factors such as the percentage of interest, representation on the Board of Directors, participation in defining policies and business settings and material transactions between the companies. ii. Impairment Annually, BM&FBOVESPA performs tests of impairment, specifically related to goodwill and fixed assets, according to the accounting policy described in note 3.l. iiii. Classification of financial instruments BM&FBOVESPA classifies the financial assets in the categories of (i) measured at fair value through profit or loss and (ii) available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of financial assets at initial recognition. The record of financial assets, starting with its original classification, is described in Note 3.c. ivi. Stock option plan BM&FBOVESPA offers a stock option plan to its employees and executives. The fair value of these options is recognized as expense over the period in which the right is acquired. Management reviews the estimated amount of options that will achieve the conditions for vesting and subsequently recognizes the impact of changes in initial estimates, if any, in the statement of income, with an offset to the reserve account in equity, as shown in note 3(o).

4
a.

Cash and Cash Equivalents and Financial Investments
Cash and Cash Equivalents For the purposes of the statement of cash flows, the following balances are being considered as cash and cash equivalents:

26

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Details Banks - deposits in domestic currency Banks - deposits in foreign currency Total

12/31/2010 3,277 99,871 103,148

12/31/2009 62 46,684 46,746

BM&FBOVESPA 01/01/2009 23,178 17,743 40,921

Details Banks - deposits in domestic currency Banks - deposits in foreign currency Total

12/31/2010 3,622 100,395 104,017

12/31/2009 160 50,619 50,779

Consolidated 01/01/2009 21,824 18,403 40,227

Cash and cash equivalents are held in domestic or outside first class financial institutions. Deposits in foreign currency are primarily in U.S. dollars.

b.

Financial Investments The breakdown of financial investments by nature and time to maturity is as follows:

27

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

BM&FBOVESPA More than 3 and up to 12 months More than 12 months and up to 5 years

Details Measured at fair value through profit and loss (3) Financial investment funds (1) Offshore deposits – interest-bearing Securities purchased under resell agreements Financial Treasury Bills Shares Other investments Available for sale CME Group Shares (2)

Without Up to 3 maturity months

More than 5 years 12/31/2010

12/31/2009

01/01/2009

1,676,725 – – – 15,603 8,230 1,700,558

– – – 90 – 586

– – 935,617

– – –

– – – – – – -

1,676,725 – 935,617 425,568 15,603 9,487 3,063,000

1,518,855 – 1,015,439 383,353 11,604 11,079 2,940,330

1,260,807 181,317 292,321 373,593 126 46,012 2,154,176

94,433 331,045 – 40 – 631

676 1,030,090 331,676











-

695,572

578,306

Total financial investments

1,720,558

676 1,030,090 331,676

-

3,063,000

3,635,902

2,732,482

Short term Long term

2,731,324 331,676

3,257,365 378,537

2,263,590 468,892

28

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

CONSOLIDATED More than 3 and up to 12 months More than 12 months and up to 5 years

Details

Without maturity

Up to 3 months

More than 5 years 12/31/2010

12/31/2009

01/01/2009

Measured at fair value through profit and loss Financial investment funds (1) Offshore deposits – interestbearing Securities purchased under resell agreements Financial Treasury Bills National Treasury Bills Shares Other investments Available for sale CME Group Shares – – – – – 695,572 578,306 204,740 – – – – 17,838 8,256 230,834 – – 898,570 4,901 2,808 – 586 906,865 – – 953,520 171,819 1,330 – 40 1,126,709 – – – 1,057,798 – – 8,111 1,065,909 – – – 1,011 – – – 1,011 204,740 – 1,852,090 1,235,529 4,138 17,838 16,993 3,331,328 977,428 – 1,488,578 644,407 40,333 13,126 21,560 3,185,432 881,734 181,317 486,327 736,442 63,018 126 25,190 2,374,154

Total financial investments

230,834

906,865

1,126,709

1,065,909

1,011

3,331,328

3,881,004

2,952,460

Short term Long term

2,264,408 1,066,920

3,295,356 585,648

2,322,515 629,945

(1) Investments in funds that invest in quotas of other financial investment funds, the portfolios of which mainly comprise investments in federal government bonds, securities purchased under resell agreements and bank certificates of deposit and have the CDI as their profitability benchmark. The balances presented in the table of BM&FBOVESPA also include the exclusive investment funds which were consolidated in the financial statements according to the nature of the portfolio. The net assets of the exclusive investment funds included in the process of consolidation of the quarterly information are: (i) Supremo Renda Fixa - FICFI - R$258,625 (R$ 364,792 at December 31,

29

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

2009; R$ 378,303 at January 1th 2009), (ii) Bradesco FI Multimercado Letters - R$ 723,402 (R$ 176,550 at December 31, 2009; R$ 1,154 at January 1th 2009); (iii) Megainvest FIC FI Renda Fixa R$ 629,049. The main investment funds that were not consolidated are detailed in the table below: BM&FBOVESPA and Consolidated 31/12/2009 01/01/2009 642,020 624,629 335,177 151,890 104,735

Fund FIC Megainvest FIC Referenciado DI Federal FIC Bradesco 777

Bank Details Santander Exclusive fund that invests in quotas of retail funds; Bradesco Retail fund that invests in quotas of other investment funds; Bradesco Exclusive fund that invests in quotas of other investment funds;

31/12/2010 204,669 -

(2) As from July 2010, the shares of CME Group started to be recorded on the equity method with the reversal of the impairment, net of taxes, recorded against retained earnings (Note 7). (3) The government bonds are held in custody at the Special System for Settlement and Custody (SELIC), the quotas of investment funds are held in custody with their respective managers and the shares are in the custody of BM&FBOVESPA’s Equity and Corporate Debt Clearinghouse. Classification Considering the nature and objective of the Company and its financial investments, these are classified as financial assets recorded at fair value through profit or loss, designated by management when they are first recorded. Fair value The fair value of the main financial investments is calculated as follows: Quotas of investment funds – fair value calculated based on the amount of the quota determined on the last business day prior to the balance sheet date, as disclosed by the corresponding Manager. Federal government securities – calculated based on the amounts and prices disclosed by the Brazilian Association of Financial and Capital Market Institutions (ANBIMA) or, when these are unavailable, on the price defined by management which best reflects the sales price, determined based on information gathered from other institutions.

30

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Bank certificates of deposit (CDB) and securities purchased under resell agreements (guaranteed by Federal Government Bonds) – calculated at amounts adjusted to the balance sheet date, based on contractual interest, indexed to the CDI/Selic rate. As directed by CPC40/IFRS7, financial assets at fair value through profit and loss, financial assets available for sale and derivative financial instruments are classified as level 1, ie, have quoted prices (unadjusted) in active markets.

Derivative financial instruments
The derivative financial instruments comprise One-Day Interbank Deposit Futures Contracts (DI1) and are stated at their market values. These contracts are included in the exclusive fund portfolios which were consolidated (Note 2) and are used to cover the fixed interest rate exposure, swapping the interest rate to floating (CDI). Even though these derivatives are designed to provide protection, hedge accounting is not adopted. The net result from derivative transactions and the related financial instrument refers to the short position contracts for future interest rates, with market value R$ 686 (R$ 396 on December 31,2009) The DI1 contracts have the same maturity dates as the preset position that (fixed interest rate) to which they are related.

Financial risk management policy
The Company’s investment policy for the cash balance that favors alternatives with very low risk, which translates into significant proportion of federal government securities in its portfolio, being purchased directly, via repurchase agreements backed by government bonds and also through exclusive and non-exclusive funds. Thus, in general, the BM&FBOVESPA has on principle directing most of its applications in conservative financial assets, high liquidity and with sovereign risk, whose overall performance is tied to the Selic rate / CDI

Sensitivity analysis
The table below presents a summary of the financial instruments’ exposure classified by market risk factors:

31

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Risk Factors (Consolidated) Risk factor CDI Fixed interest rate USD Gold price Risk Falling CDI Rising fixed rate Falling dollar Falling gold
12/31/2010 Percentual 99.35% 0.35% 0.05% 0.25% 100.00% 12/31/2009 Percentual 98.03% 1.27% 0.50% 0.20% 100.00% 01/01/2009 Percentual 98.68% 1.78% 1.37% 0.20% 100.00%

Interest Rate Risk This risk arises from the possibility that fluctuations in future interest rates for the corresponding maturities could affect the fair value of the Company’s transactions.  Floating-rate Position

As a financial investment policy and considering the need for immediate liquidity with the least possible impact from interest rate fluctuations, the Company maintains its financial assets and liabilities indexed to floating interest rates. We present in the table below, as required by the CVM, the impacts of a range of 25% and 50% from the likely scenario of the CDI rate, because it is the risk factor with greater exposure.

Effect on the Income Statement (scenario for 3 months) Likely Risk factor -50% -25% Cenario 25% Financial Investments Index rates  CDI/Selic CDI/Selic 44,497 5.51% 66,094 8.27% 87,282 11.03% 108,079 13.79%

50% 128,502 16.54%

Fixed-rate Position

The Company has a portion of its financial investments bearing fixed interest rates with results in a net exposure to fixed interest rates. However, in terms of percentage, considering the amounts involved as presented in the table of Risk Factors (Consolidated), the effects on the portfolio are not considered material.

32

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Exchange rate risk This arises from the possibility that fluctuations in the exchange rates for the acquisition of services, product sales and the contracting of financial instruments could have an impact on the related domestic currency amounts. In addition to the amounts payable and receivable in foreign currencies, the Company has third-party deposits in foreign currency to guarantee the settlement of transactions by foreign investors and also own funds in currency abroad. At December 31, 2010 the Company’s net foreign currency exposure amounted to R$1,820 (R$16,930 at December 31, 2009; R$ 30,165 at January 1th 2009). Considering the amounts involved, as presented in percentage terms in the table of Risk Factors (Consolidated), the effects on the portfolio are not considered material. Inflation index and gold position Considering the amounts and percentages involved, as detailed in the table of Risk Factors (Consolidated), the effects on the portfolio are not considered material.

5

Accounts Receivable
BM&FBOVESPA 01/01/2009 66,654 1,746 5,768 4,184 28,988 (2,859) 104,481

The breakdown of accounts receivable is as follows:
Details Trading, other fees receivable Annuity Vendors – Signal broadcast Trustee and custodial fees Other accounts receivable Provision for doubtful accounts Total 12/31/2010 16,312 4,477 10,599 17,585 6,971 (5,892) 50,052 12/31/2009 10,979 2,719 9,657 10,383 11,288 (5,984) 39,042

33

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Details Trading, other fees receivable Annuity Vendors – Signal broadcast Trustee and custodial fees Other accounts receivable Provision for doubtful accounts Total

12/31/2010 17,069 4,477 10,599 17,585 7,561 (5,892) 51,399

12/31/2009 11,632 2,719 9,657 10,383 11,798 (5,984) 40,205

Consolidated 01/01/2009 66,924 1,746 5,768 4,184 29,406 (2,859) 105,169

The amounts presented above are primarily denominated in Brazilian reais, approximately 90% is represented by receivables falling due within 60 days. On December 31, 2010, and the amounts over 90 days amounted to R$ 5,709. Changes in allowance for credit losses:

2010 Balance at January 1th Additions Reversal Balance at December 31 5,984 2,701 (2,793) 5,892

2009 2,859 4,552 1,427 5,984

34

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

6

Other Receivables
BM&FBOVESPA 01/01/2009 203 4,752 1,000 5,955

Other receivables comprise the following: 12/31/2010 Current Advances to employees Amounts receivable - related parties (note 16) Receivable Dividends CME Group Warehouse Other Total Non-current Receivable Sale of Property Other Total 626 626 626 626 4,045 2,602 6,647 Consolidated 01/01/2009 228 1,778 4,295 2,118 8,419 1,457 8,134 1,527 1,135 12,253 12/31/2009 959 13,859 3,333 1,293 2,154 21,598

12/31/2010 Current Advances to employees Linked Credits Amounts receivable - related parties (note 16) Receivable Dividends CME Group Warehouse Other Total Non-current Brokers in liquidation Receivable Sale of Property Other Total 2,200 627 2,827 1,523 557 7,448 1,527 1,862 12,917

12/31/2009 970 1,776 11,674 3,333 1,293 3,610 22,656

4,000 626 4,626

4,000 4,045 3,387 11,432

35

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

(1) Balance of accounts receivable from brokers in liquidation, which considers the equity certificates pledged by the debtor as collateral.

7

Investments

a. Investments in subsidiaries
Investments in subsidiaries comprise the following:
BM&F BOVESPA

Subsidiaries and controlled entities

Adjusted shareholders' equity

Total comon shares

Adjusted net income

% Stake

Investment 12/31/2010

Investment 12/31/2009

Equity in Equity in income income Investment Accumulated Accumulated 01/01/2009 2010 2009

Subsidiaries Banco BM&F de Liquidação e Custódia S.A. Bolsa Brasileira de Mercadorias Bolsa de Valores do Rio de Janeiro -BVRJ BM&F USA Inc.

44,935

24,000

4,980

100

44,935

39,955

34,680

4,980

5,275

15,983

405

-4

50.12

8,011

8,013

7,934

-2

79

59,736 348

115 1,000

153 -3,683

86.09 100

51,427 348

51,875 948

48,381 1,068

132 -3,683

4,074 -3,054

Affiliate CME Group, Inc. (1) 33,424,138 66,793,000 699,126 5.08 2,248,325 38,238 -

Total

2,353,046

100,791

92,063

39,665

6,374

36

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Summary of key financial information of subsidiaries and affiliates:
Bolsa Brasileira de Mercadorias 17,849 1,865 7,322 Bolsa de Valores do Rio de Janeiro - BVRJ 61,109 1,372 7,758

Description Assets Liabilities Revenue

Banco BM&F 241,183 196,248 33,794

BM&F USA Inc 758 410 -

CME Group, Inc. 58,391,812 24,969,613 5,005,265

Changes in Investments:
Bolsa de Valores do Rio de Janeiro BVRJ 48,381 4,074 (580) 51,875 132 (580) 51,427

Investiments At January 1th 2009 Equity in results Realization of the revaluation reserve Capital increase At December 31, 2009 Acquisition of shares (1) Equity Exchange rate (2) Reflex effect on affiliate Realization of the revaluation reserve Capital increase Dividends received At December 31, 2010

Banco BM&F 34,680 5,275 39,955 4,980 44,935

Bolsa Brasileira de Mercadorias 7,934 79 8,013 (2) 8,011

BM&F USA Inc 1,068 (3,054) 2,934 948 (3,683) 3,083 348

CME Group, Inc. 2,351,319 38,238 (133,238) 5,227 (13,251) 2,248,325

Total 92,063 6,374 (580) 2,934 100,791 2,351,319 39,655 (132,238) 5,227 (580) 3,083 (13,251) 2,353,046

37

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

(1) As from July 2010, with the acquisition of a 3.2% interest in CME Group for the amount of R$ 1,075,119, increasing the ownership interest from 1.78% to 5%, BM&FBOVESPA began to recognize the investment on the equity method, because management understands that the qualitative aspects of the relationship between the two companies indicate the existence of significant influence of BM&FBOVESPA on CME Group. The fair value of the investment at December 31, 2010, based on the market price of shares is R$ 1,820,351. Additionally, the evaluation of the possibility of impairment by the method of value in use has not indicated the existence of such losses (2) From July 2010, the BM & FBOVESPA conducted an operation to protect (hedge of net investment) part of the exchange risk through the designation of a non-derivative financial instrument (debt issuance abroad), as presented in Note 12

b. Investment Property
This category comprises by properties owned by the subsidiary BVRJ - Bolsa de Valores do Rio de Janeiro and leased to others, which are depreciated according to the estimated useful lives of the asset, in 50 years. Consolidated 2010 2009 Balance at January 1th Depreciation Account Balance 39,723 (1,511) 38,212 41,235 (1,512) 39,723

38

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

8

Property and Equipment
BM&FBOVESPA
Furniture and fixtures Apparatus and equipment Facilities Telephone system Construction in progress

Buildings At January 1 2009 Cost Accumulated depreciation Net ammount At December 31, 2009 Opening balance Aditions Disposal Reclassification Accumulated Depreciation Net Amount At December 31, 2009 Cost Accumulated Depreciation Net Amount At December 31, 2010 Opening balance Aditions Disposal Accumulated Depreciation Net Amount At December 31, 2010 Cost Accumulated Depreciation Net Amount

Other

Total

174,663 (86,920) 87,743

27,392 (15,001) 12,391

190,486 (128,470) 62,016

25,064 (13,681) 11,383

18,006 (16,479) 1,527

41,923 (18,886) 23,037

26,560 26,560

504,094 (279,437) 224,657

87,743 32,407 (12,616) 107,534

12,391 771 (39) 8,406 (9,029) 12,500

62,016 46,611 (260) (31,364) (7,885) 69,118

11,383 11,067 (862) (6,193) 3,628 19,023

1,527 959 (144) (14,889) 14,453 1,906

23,037 6,872 (2,058) 17,845 (18,836) 26,860

26,560 (26,560) -

224,657 66,280 (3,363) (20,348) (30,285) 236,941

207,070 (99,536) 107,534

36,530 (24,030) 12,500

205,473 (136,355) 69,118

29,076 (10,053) 19,023

3,932 (2,026) 1,906

64,582 (37,722) 26,860

-

546,663 (309,722) 236,941

107,534 13,046 (965) 422 120,037

12,500 4,111 (1,992) 14,619

69,118 107,036 (32,246) 143,908

19,023 25,007 (2,882) 41,148

1,906 187 (526) 1,567

26,860 4,073 (2,549) 28,384

12,737 12,737

236,941 166,197 (965) (39,773) 362,400

219,151 (99,114) 120,037

40,641 (26,022) 14,619

312,509 (168,601) 143,908

54,083 (12,935) 41,148

4,119 (2,552) 1,567

68,655 (40,271) 28,384

12,737 12,737

711,895 (349,495) 362,400

39

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Consolidated
Furniture and fixtures Apparatus and equipment Telephone system Construction in progress

Buildings At January 1, 2009 Cost Accumulated depreciation Net ammount At December 31, 2009 Opening balance Aditions Disposal Reclassification Accumulated Depreciation Net Amount At December 31, 2009 Cost Accumulated Depreciation Net Amount At December 31, 2010 Opening balance Aditions Disposal Accumulated Depreciation Net Amount At December 31, 2010 Cost Accumulated Depreciation Net Amount

Facilities

Other

Total

177,000 (87,471) 89,529

27,874 (15,287) 12,587

191,301 (129,167) 62,134

26,095 (14,014) 12,081

18,006 44,534 (16,479) (18,952) 1,527 25,582

26,561 26,561

511,371 (281,370) 230,001

89,529 32,407 (12,704) 109,232

12,587 811 (39) 8,406 (9,081) 12,684

62,134 46,686 (260) (31,367) (7,917) 69,276

12,081 11,067 (862) (6,193) 3,525 19,618

1,527 959 (144) (14,889)

25,582 6,870 (2,058) 17,661

26,561 (26,561) -

230,001 66,393 (3,363) (20,536) (30,556) 241,939

14,453 (18,832) 1,906 29,223

209,407 (100,175) 109,232

37,052 (24,368) 12,684

206,360 (137,084) 69,276

30,107 (10,489) 19,618

3,932

67,007

-

553,865

(2,026) (37,784) 1,906 29,223

- (311,926) 241,939

109,232 13,046 (965) 336 121,649

12,684 4,112 (5) (2,031) 14,760

69,276 107,043 9 (32,301) 144,027

19,618 25,007 (1) (2,984) 41,640

1,906 187 (526) 1,567

29,223 4,084 (4) (2,549) 30,754

12,737 12,737

241,939 166,216 (966) (34,087) 373,102

221,488 (99,839) 121,649

41,159 (26,399) 14,760

313,412 (169,385) 144,027

55,113 (13,473) 41,640

4,119

71,087

12,737

719,115

(2,552) (40,333) 1,567 30,754

- (351,981) 12,737 367,134

40

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

The review of the rates of useful lives of depreciation ICPC Technical Interpretation 10, was performed for all property included in fixed assets in accordance with prospective effect as from January 1, 2010. The useful lives of assets were evaluated by a specialized company and in line with the Brazilian Institute of Evaluations and Expert Engineering (IBAPE) and the ASA - American Society of Appraisers. The table below represents the changes in annual rates of depreciation of fixed assets classified as:

Previous Buildings Furniture and fixtures Computer Related-Equipment Facilities Telephone System Other 4% 10% 10 a 20% 10% 10% 10% a 20%

Actual 2.50% 10% 10 a 25% 10% 20% 11% a 33%

9

Intangible Assets

Goodwill The goodwill of R$ 16,064,309 is based on expectations of future income and supported by an economic of the appraisal and financial investment. The goodwill attributed to expected future profitability is annually tested for impairment. The test, based on an appraisal report prepared by experts, has not indicated the need for adjustments to the value of goodwill at December 31, 2010. The assumptions adopted for the projection of future cash flows of BM&FBOVESPA, the BOVESPA segment (cash-generating unit - CGU), were based on analysis of its performance in recent years, the analysis and expectations of growth in its market, as well as expectations and strategies of Directors. The projected values are reported in nominal terms, that is considering future effects of inflation, and operating cash flows were projected for the period December 1, 2010 through December 31, 2019.

41

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

To calculate the residual value, we considered the present value of the perpetuity of cash flows of the last projected year plus a constant nominal growth rate constant, equal to the expected growth of Brazilian GDP, plus the inflation forecast. The discount rate used to calculate the present value of projected cash flow, was 15.80% per year. The macroeconomic assumptions used in the projections were from the Central Bank: Macroeconomic assumptions 2011 2012 4.50% 4.50%

2010

2013 4.50% 4.50%

2014 4.50% 4.50%

GDP 7.54% 4.51% Inflation (IPCA) 5.76% 5.20% Source: BACEN – Mediana at 11/30/2010.

Software and projects The balance comprises costs for the acquisition and development of software and systems, with amortization rates of 20% to 33% per year, and expenditures for the implementation and development in progress of new systems and software.

42

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Consolidated
Cost of software development Concluded software development

Goodwill At January 1, 2009 Cost Accumulated Amortization Net amount At December 31, 2009 Opening balance Additions Reclassification Amortization Other Net Amount At December 31, 2009 Cost Accumulated Amortization Net Amount At December 31, 2010 Opening balance Additions Disposal Amortization Other Net Amount At December 31, 2010 Cost Accumulated Amortization Net Amount

Software

Total

16,388,730 (324,412) 16,064,318

22,800 22,800

-

80,548 (78,024) 2,524

16,492,078 (402,436) 16,089,642

16,064,309 16,064,309

22,800 20,831 43,631

-

2,524 7,961 19,688 (10,328) 547 20,392

16,089,633 28,792 19,688 (10,328) 547 16,128,332

16,388,730 (324,421) 16,064,309

43,631 43,631

-

108,744 (88,352) 20,392

16,541,105 (412,773) 16,128,332

16,064,309 16,064,309

43,631 38,721 (4,802) (13,619) 63,931

(617) 10,199 9,582

20,392 68,459 (12,635) 1,865 78,081

16,128,332 107,180 (4,802) (13,252) (1,555) 16,215,903

16,388,730 (324,421) 16,064,309

63,931 63,931

10,199 (617) 9,582

179,068 (100,987) 78,081

16,641,928 (426,025) 16,215,903

43

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

10

Earnings and Rights on Securities in Custody

These comprise dividends and interest on capital received on behalf of the owners of securities from listed companies, which will be transferred to the custody agents and subsequently to their clients, who are the owners of the shares.

11

Provision for Taxes and Contributions Payable

At December 31, 2010 and December 31, 2009, the breakdown of this balance was as follows:

Details

12/31/2010

BM&FBOVESPA 12/31/2009 01/01/2009

Withholding taxes and contributions payable PIS/Cofins ISS (Municipal service tax) Total

6,066 15,490 2,127 23,683

7,783 14,471 2,150 24,404

10,652 8,904 1,535 21,091

Details

12/31/2010

12/31/2009

Consolidated 01/01/2009

Withholding taxes and contributions payable PIS/Cofins ISS (Municipal service tax) Total

6,209 15,607 2,165 23,981

7,838 14,596 2,182 24,616

10,700 9,014 1,566 21,280

44

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

12

Issuance of Debt Abroad and Financing

On July 16, 2010 BM&FBOVESPA concluded the issuance of senior unsecured notes, with face value of US$ 612 million, priced at 99.635% of nominal value, resulting in a net inflow of US$ 609 million (equivalent at the time to R$ 1,075,323). The interest rate is 5.50% pa, payable half-yearly in January and July, and with the principal amount due on July 16, 2020. The effective rate was 5.64% pa, which includes the issue discount and other costs related to issuance. The updated balance of the borrowing on December 31, 2010 is R$ 1,041,025. The proceeds from the offering were used to purchase shares of CME Group at that date. The notes have an early partial or total redemption clause, at the Company´s option, at the greater of: (i) principal plus interest accrued to date and (ii) interest accrued to date plus the present value of the remaining cash flows, discounted by the rate applicable to U.S. Treasuries for the remaining term plus 0.40% pa (40 basis points per annum). As from the issue date, exchange rate effects on the principal amount of the debt will be considered as a hedging instrument, in order to protect exchange rate risk on the portion equal to US$ 612 million (notional) of the investment in CME Group Inc. (Note 7). Accordingly, the Company adopted net investment hedge accounting in accordance with the provisions of CPC 38, preparing a formal designation of the hedge documenting: (i) objective of the hedge, (ii) type of hedge, (iii) the nature of the risk to be hedged, (iv) identification of the hedged item, (v) identification of the hedging instrument, (vi) test of the correlation of the hedge and the hedged item (retrospective effectiveness test) and (vii) the prospective effectiveness test. For the retrospective effectiveness test, the company adopts the method of the ratio of accumulated gains or losses on the debt to the gains or losses on net investment (Dollar Offset method on a cumulative and spot basis). For prospective tests, the Company uses stress scenarios applied to the hedged variable. The application of such effectiveness tests revealed no ineffectiveness on December 31,2010. The fair value of debt, calculated with market data, is R$1,037,774 at December 31, 2010 (Source: Bloomberg). Additionally, the Company has financial leases of computer equipment. The balance at December 31, 2010 is R$ 2,975 (R$ 11,790 at December 31, 2009; at January 01, 2009 - R$ 4,087), maturing in April 2011.

45

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

13

Other liabilities
12/31/2010 4,413 6,470 2,652 2,081 1,839 7,284 24,739 24,739 12/31/2009 4,108 4,946 1,398 1,839 5,174 17,465 17,465 BM&FBOVESPA 01/01/2009 3,825 2,262 578 4,132 957 11,754 10,133 1,621 Consolidated 01/01/2009 3,825 30,619 130,608 512 4,132 3,963 173,659 173,090 569

Details Custody agents Payable for repurchase of shares Amounts payable - related parties (Note 16) Third parties services Preferred shares to settle (1) Other Total Current Non-current

Details Custody agents Payable for repurchase of shares Demand deposits (2) Liabilities for securities purchased under resell agreements (2) Amounts payable - related parties (Note 16) Outsourced services Preferred shares to settle (1) Other Total Current Non-current

12/31/2010 4,413 6,470 50,373 141,988 2,239 1,839 8,823 216,145 216,145 -

12/31/2009 4,108 35,468 144,513 3,264 1,398 1,839 6,142 196,732 196,732 -

(1) Refers to the balance of the redemption of preferred shares and corresponds basically to amounts outstanding of foreign investors. (2) Ammounts related to operations with Banco BM&F.

46

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

14

Provisions and liabilities e contingent assets

a. Contingent assets
BM&FBOVESPA has no contingent assets recognized in its balance sheet, and at present no lawsuits which are expected to give rise to future gains.

b. Contingent liabilities
BM&FBOVESPA and its subsidiaries are defendants in a number of labor, tax and civil lawsuits which have arisen during their normal operating activities. The lawsuits are classified by their probability of loss (probable, possible or remote), based on an evaluation by the Company and its legal advisors, using parameters such as previous judgments and the history of loss in similar suits. The lawsuits in which the loss is evaluated as probable mainly comprise the following:  Labor claims mainly filed by employees of outsourced service providers, on account of alleged noncompliance with labor legislation. There are also claims filed by former BVRJ employees, specifically as regards to noncompliance with rules related to collective bargaining agreements; Civil proceedings, mainly consisting of matters pertaining to civil liability for losses and damages. Tax claims are mainly related to the incidence of PIS and Cofins on (i) the Company's revenues and (ii) receipt of interest on equity.

 

c. Legal obligations
These are almost entirely proceedings in which BM&FBOVESPA seeks exemption from social security additional contributions on payroll and payments to self-employed professionals, as well as discussions over the legality of Labor Accident Insurance (SAT). A provision for the amounts related to legal obligations is recorded in full.

47

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

d. Changes in balances
The activity in provisions for contingencies and legal obligations may be summarized as follows:
BM&FBOVESPA Civil 3,333 (9) (4) 351 3,671 64 (25) 51 441 4,202 Labor 3,802 502 (100) (379) (160) 443 4,108 1,428 (463) 160 562 5,795 Legal obligations 25,635 2,802 (76) 247 28,608 3,163 1,252 33,023 Tax 10,887 (43) 979 11,823 957 12,780 Total 43,657 3,304 (109) (379) (283) 2,020 48,210 4,655 (488) 211 3,212 55,800

At January 1, 2009 New provisions Use of provisions Reversals Reassessment of contingent risks Price-level restatement At December 31, 2009 New provisions Reversals Reassessment of contingent risks Price-level restatement AtDecember31,2010

Consolidated Civil 3,900 (140) 56 411 4,227 105 (36) (500) 449 4,245 Labor 5,421 552 (76) (379) (1,542) 482 4,458 1,538 (490) 80 610 6,196 Legalobligations 25,635 2,802 (76) 247 28,608 3,163 1,252 33,023 Tax 11,204 (43) 993 12,154 972 13,126 Total 46,160 3,354 (216) (379) (1,605) 2,133 49,447 4,806 (526) (420) 3,283 56,590

At January 1, 2009 New provisions Use of provisions Reversals Reassessment of contingent risks Price-level restatement At December 31, 2009 New provisions Reversals Reassessment of contingent risks Price-level restatement At December 31 ,2010

According to the characteristic of provisions there is no cash disbursement forecast.

48

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

e. Possible losses
The proceedings classified as a “possible loss” are so classified as a result of uncertainties surrounding their outcome. They are lawsuits for which jurisprudence has not yet been defined or which still depend on verification and analysis of the facts, or even involve specific aspects that reduce the chances of loss. BM&FBOVESPA and its subsidiaries have tax, civil and labor lawsuits involving risks of loss classified by management as possible, based on the evaluation of their legal advisors, for which no provision has been recorded. These proceedings comprise mainly the following:  Labor proceedings, mainly claims filed by employees of outsourced service providers, on account of alleged noncompliance with labor legislation. The amounts related to the lawsuits classified as possible at December 31,2010 are R$32,749 in the parent company (R$ 21,534 at December 31, 2009; R$ 6,926 at January 1, 2009) and R$34,609 on a consolidated basis (R$ 23,047 at December 31, 2009; R$ 8,065 at January 1, 2009); Civil proceedings mainly consist of matters pertaining to civil liability for losses and damages. The total amount involved in the lawsuits classified as possible at December 31, 2010 is R$74,386 in the parent company and on a consolidated basis (R$ 64,474 at December 31, 2009; R$ 1,341 at January 1, 2009). The majority of this amount is related to a possibility of the Company being required to deliver shares of BM&FBOVESPA (surviving company of the merger with BM&F S.A.), in an amount corresponding to the shares resulting from the conversion of the shares of a commodities broker in the former BM&F, or indemnify the corresponding amount, if the cancellation of the shares in the former BM&F is found to be illegal, as alleged by a commodities broker in bankruptcy;  The tax proceedings of BM&FBOVESPA and its subsidiaries mainly involve a dispute over the classification of exchanges as subject to the payment of social contributions. Most of these amounts are related to two lawsuits filed by BM&FBOVESPA against the Federal Government arguing that the Company was not subject to the payment of social contributions prior to the 1999 fiscal year. The amount involved in the aforementioned proceedings as of December 31, 2010 is R$ 45,085 (R$42,393 at December 31, 2009; R$55,797 at January 1, 2009). The total amount involved in tax proceedings classified as possible is R$70,141 in the parent company and on a consolidated basis (R$65,388 at December 31, 2009; R$77,170 at January 1, 2009).



49

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

f. Remote losses
BM&FBOVESPA, as successor of the former BOVESPA, and the subsidiary BVRJ are defendants in an action for material damages and pain and suffering filed by Mr. Naji Robert Nahas, Selecta Participações e Serviços SC Ltda. and Cobrasol - Companhia Brasileira de Óleos e Derivados, on the grounds of alleged losses in the stock market sustained in June 1989. The amount attributed to the cause by the plaintiffs is R$10 billion. In relation to the material damages and pain and suffering claimed, the plaintiffs ask that BVRJ and BM&FBOVESPA be sentenced in proportion to their responsibilities. On December 18, 2009, a sentence was published in which the claims made by the plaintiffs were considered completely unfounded. The Company and its legal advisors consider that the chances of loss in this lawsuit are remote. BM&FBOVESPA received on November 29, 2010, an assessment notice from the Internal Revenue Service of Brazil ("RFB"), demanding the payment of income tax (R$301,686 of principal, plus fines and interest) and social contribution (R$108,525 of principal, plus fines and interest) representing the amount of those taxes that, in the view of the RFB, BM&FBOVESPA would have stopped collecting in the years 2008 and 2009 with respect to the amortization for tax purposes of the goodwill generated upon the merger into the company of Bovespa Holding SA, adopted at the General Assembly of May 8, 2008. BM&FBOVESPA had questioned the assessment notice within the statutory period, and is awaiting judgment in the administrative level. Based on the advice of his lawyers, BM&FBOVESPA considers that the risk of loss associated with this procedure is remote and will continue to amortize, for tax purposes, this goodwill, as provided by law.

g. Judicial deposits
BM&FBOVESPA 01/01/2009 Consolidated 01/01/2009

Details Legal obligations Tax Civil Labor Total

12/31/2010

12/31/2009

12/31/2010

12/31/2009

33,023 54,103 2,096 2,667 91,889

28,563 50,673 1,949 2,304 83,489

25,635 62,854 1,872 2,152 92,513

33,370 54,103 2,095 2,810 92,378

28,563 51,005 1,949 3,378 84,895

25,635 63,171 1,872 3,207 93,885

Of the total judicial deposits, R$33,099 (R$ 30,731 at December 31, 2009; R$ 44,485 at January 1, 2009) relates to one of the processes involving a dispute over the classification of exchanges as subject to the payment of social contributions, classified as possible by management, as described in “e” above. Given the existence of judicial deposits related to tax processes classified as of

50

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

possible loss, the amount of tax contingencies and legal obligations is lower than the total deposits related to tax claims.

h. Law 11,941/09
In November 2009, the Company enrolled in the Tax Recovery Program, instituted by Law 11,941/09 and Provisional Measure (MP) 470/09, aimed at cash payment of the amount of R$ 2,365, related to a portion of the amount disputed in the COFINS court case, and the amount is deposited in escrow and constituted as probable liability contingency. The value of R$ 2,151 will be converted to government revenue and R$214 will be recorded in favor of the Company, representing a discount of 45% of arrears interest, as permitted by those laws. The provision remains in effect until the approval of the request to cancel part of the application of the lawsuit, because it is a condition for further discharge of the debt pursuant to the Tax Recovery Program.

15

Shareholders’ equity

a. Capital
BM&FBOVESPA’s capital is R$2,540,239, comprising 2,044,014,295 nominative common shares with voting rights and no par value, of which 1,979,921,193 outstanding ordinary shares at December 31, 2010 (2,004,766,312 at December 31, 2009.) The Company is authorized to increase its capital up to the limit of 2,500,000,000 (two billion, five hundred million) common shares, through a resolution of the Board, regardless statutory amendment.

b. Treasury Shares
Share buyback program In a meeting held on August 12, 2010, the Board of Directors approved a new Share Buyback Program, aiming to maximize value creation for shareholders through an efficient management of the capital structure. On December 16, 2010, the Board approved the extension of the Repurchase Program, which now has the final date of June 30, 2011. The maximum amount of shares to be purchased is 60,000,000 common shares, representing 3.03% of total shares outstanding.

51

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

The shares acquired under the Share Buyback Program will be canceled or used to fulfill the exercise of the stock options by the beneficiaries of the Stock Option Plan of the BM&FBOVESPA.. BM&FBOVESPA purchased shares between August 18, 2010 and February 1, 2011 respecting the period of restrictions on trading as determined by CVM Instruction 358. During this period the Company repurchased 48,520,000 shares, 31,950,000 in 2010 and 16,570,000 in 2011, representing 80.87 % of the total in the program. We present below the activity of treasury shares during the year:
12/31/2010
Opening balance

12/31/2009 33,024,204 11,494,800 (5,271,021) 39,247,983 5,863 230,102 480,788

01/01/2009 4 34,191,200 (1,167,000) 33,024,204 5,628 185,880 198,806

39,247,983

Shares acquired from dissident shareholders Acquisition of Shares - Share Buyback Program 31,950,000 Sold shares – stock options(Note19)
Ending balance

(7,104,881) 64,093,102 9,578 613,903 841,542

Average cost of treasury shares (R$) Value of treasury shares Market value of treasury shares

c. Revaluation reserves
Revaluation reserves were established as a result of the revaluation of works of art in BM&FBOVESPA and of the property of the subsidiary BVRJ on August 31, 2007, based on independent experts’ appraisal reports.

d. Statutory reserves
Their purpose is to form funds and safeguard mechanisms required for the adequate development of the activities of BM&FBOVESPA, assuring the proper settlement and reimbursement of losses arising from the intermediation of transactions carried out in its auction systems and/or registered in any of its trading, registration, clearing and settlement systems, and from custody services.

52

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

e. Valuation adjustments
Have the purpose of recording the effects of (i) currency translation adjustments of the investment in the CME Group, (ii) hedge accounting on net foreign investment, (iii) equity in other comprehensive income of an affiliate and (iv) until June 30, 2010, effects of mark-tomarket adjustments of the shares of CME Group (Note 2b).

f. Dividends and interest on own capital
Pursuant to the bylaws, the shareholders are guaranteed interest on own capital or dividends, based on the net income of the Company, adjusted under the terms of corporate law, at a minimum percentage of 25%.
2010 Net income Legal Reserve(1) Dividends calculation 1,144,561 1,144,561 2009 881,050 881,050

Dividends Interest on own capital Deliberated during the year Percentage of net income 1.

434,475 304,000 738,475 64.5%

431,500 273,500 705,000 80.0%

Legal reserve not required on the basis of the aggregate value of capital reserves exceeds 30% of the capital.

53

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Interest on own capital and dividends distributed are detailed below:

Description Interest on own capital Interest on own capital Dividends Dividends Interest on own capital (1) Dividends (2)

Deliberation RCABVMF - 05/12/2009 RCABVMF - 08/11/2009 RCABVMF - 08/11/2009 RCABVMF - 11/10/2009 RCABVMF - 12/17/2009 RCABVMF - 02/23/2010

pershare(gross) (R$) 0.055931 0.070653 0.016727 0.074888 0.009976 0.123516

Totalamount (gross) 112,000 141,500 33,500 150,000 20,000 248,000

Total proposed/ deliberated during 2009 Interest on own capital Interest on own capital Interest on own capital Interest on own capital Dividends Dividends Interest on own capital (1) RCABVMF - 02/23/2010 RCABVMF - 03/25/2010 RCABVMF - 05/11/2010 RCABVMF - 08/12/2010 RCABVMF - 08/12/2010 RCABVMF - 11/09/2010 RCABVMF - 12/16/2010 0.014951 0.029890 0.068231 0.022422 0.098957 0.119101 0.016156

705,000 30,000 60,000 137,000 45,000 198,600 235,875 32,000

Total proposed/ deliberated during 2010

738.475

1.

In December 2010, the BM&FBOVESPA deliberated R$32,000 as interest on capital in excess of the minimum required, which was paid on January 19, 2011 (December 2009 - $ 20,000 paid on January 8, 2010). At the Annual General Assembly held on April 20, 2010, the shareholders approved the proposal for payment in the amount of R$248,000, as a supplement to dividends for the year ended December 31, 2009.

2.

54

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

g. Earnings per share

Basic Numerator Net income available to shareholders Denominator Weighted average of shares in circulation

2010 1,144,561

BM&FBOVESPA 2009 881,050

2,000,777,767

2,002,462,000

Basic weighted earnings per share (in R$)

0.572058

0.439983 Consolidated 2009 881,050

Diluted Numerator Net income available to shareholders Denominator Weighted average of shares in circulation adjusted for the effects of stock option plans Diluted weighted earnings per share (in R$)

2010 1,144,561

2,014,463,310 0.568172

2,019,853,324 0.436195

55

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

16
a.

Related Party Transactions
Transactions and balances with related parties
Assets/ (Liabilities) Descrição 12/31/2010 (2,315) (1,839) (1,361) (475) (475) 12/31/2009 01/01/2009 2010 Revenue/ (Expenses) 2009

Bolsa de Valores do Rio de Janeiro - BVRJ Accounts payable Contribution on membership certificates Banco BM&F de Serviços de Liquidação e Custódia S,A, Cash and cash equivalents Accounts receivable Foreign exchange operations Recovery of expenses Bolsa Brasileira de Mercadorias Accounts receivable Accounts payable Minimum contribution on membership certificates Recovery of expenses BM&FBOVESPA Supervisão de Mercados Accounts receivable Recovery of expenses CME Group Expenditure operations

17 527 153

9 543 3,549

2,760 457 (831) 5,402 5,898

5 (337)

88 (157)

(70) (1,319) 115 (669) 295

452

1,257

2,570 106 2,419

56

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

(Continnuing) Assets/ (Liabilities) BM&FBOVESPA Mechanism of reimbursment of losses Accounts receivable Accounts payable Instituto BM&FBOVESPA Accounts receivable Accounts payable Associação BM&F Accounts receivable Accounts payable Other companies Accounts receivable Accounts payable 25 11 (25) 6,947 6,901 (9) 4,295 1 1,501 (9) 23 9 (2,907) 12/31/2010 12/31/2009 01/01/2009 2010 Revenue/ (Expenses) 2009

The main transactions with related parties are listed below and were carried out under the following conditions: BM&FBOVESPA pays a minimum fee to BVRJ and Bolsa Brasileira de Mercadorias as a member of these associations. BM&FBOVESPA, by request of Banco BM&F, Bolsa Brasileira de Mercadorias and Associação BM&F, contracts companies specialized in providing information technology services designed to support the activities of these entities and transfers the respective costs incurred, in full, to the first two entities. Banco BM&F entered into an agreement with BM&FBOVESPA which, in addition to granting occupancy of a building owned by the latter, also establishes the utilization of its technology infrastructure and also its personnel, with transfer of the corresponding costs. BSM has entered into an agreement with BM&FBOVESPA for the transfer and recovery of costs which establishes the reimbursement to BM&FBOVESPA of the net amount paid monthly for expenses incurred in contracting resources and for the infrastructure made available to BSM to assist in the performance of its supervisory activities.

57

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

b.

Remuneration of key management personnel
Key management personnel include Members of the Board, Executive Officers, the Head of Internal Audit, the Director of Banco BM&F and the Director of Human Resources.
2010 Management benefits Short-term benefits (salaries, participation in results, etc,) Post-employment benefits Employment contract rescission benefits Sharebased remuneration (1) 25,211 12 614 8,307 15,808 49 10,228 14,878 2009

(1) Represents the expense calculated for the period in relation to the stock options granted to key management personnel, which was recognized in accordance with the criteria described in Note 18.

17

Safeguard Structure

a. Risk management
Credit risk - Performance of BM&FBOVESPA as a central counterparty (CCP) guarantor of markets (Clearing) BM&FBOVESPA manages four clearinghouses considered systematically important by the Central Bank of Brazil, i.e. the Derivatives, Foreign Exchange and Securities Clearinghouses and the Equity and Corporate Debt Clearinghouse (CBLC). The activities carried out by the clearinghouses of BM&FBOVESPA are governed by Law 10,214, of March 27, 2001, which authorizes the multilateral clearing of obligations, establishes the central counterparty role of the systemically important clearinghouses and permits the utilization of the collateral obtained from the defaulting participants to settle their obligations in the clearinghouse environment, including in cases of civil insolvency, composition with creditors, intervention, bankruptcy and out-of-court liquidation. Through these Clearinghouses, BM&FBOVESPA acts as a CCP in the derivatives market (futures, forwards, options and swaps), in the equity market (spot, forwards, options, futures and securities loans), the foreign exchange market (spot US dollar), the federal government bond market (spot and forward transactions and securities loans) and private debt securities (spot and securities loans). In other words, by assuming the role of a central counterparty, BM&FBOVESPA becomes responsible for the proper settlement of trades carried out and/or registered in its systems, as established in the regulations in force.

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

The performance of BM&FBOVESPA as a central counterparty exposes it to the credit risk of the participants that utilize its settlement systems. If a participant fails to make the payments due, or to deliver the assets, securities and/or commodities due, it will be incumbent upon BM&FBOVESPA to resort to its safeguard mechanisms, in order to ensure the proper settlement of the transactions in the established time frame and manner. In the event of a failure or insufficiency of the safeguard mechanisms of its Clearinghouses, BM&F BOVESPA might have to use its own equity, as a last resort, to ensure the proper settlement of trades. The BM&FBOVESPA Clearinghouses are not directly exposed to market risk, as they do not hold net long or net short positions in the various contracts traded. However, the increase of price volatility can affect the magnitude of amounts settled by the various market participants, and can also heighten the probability of default by these participants. Furthermore, as already emphasized, the Clearinghouses are responsible for the settlement of the trades of a defaulting participant, which could result in losses for BM&FBOVESPA if the amounts due surpass the amount of collateral available. Accordingly, despite the fact that there is no direct exposure to market risk, this risk can impact and increase the credit risks assumed. To mitigate the risks assumed, each BM&FBOVESPA Clearinghouse has its own risk management system and safeguard structure. The safeguard structure of a Clearinghouse represents the set of resources and mechanisms that it can utilize to cover losses relating to the settlement failure of one or more participants. These systems and structures are described in detail in the regulations and manuals of each Clearinghouse, and have been tested and ratified by the Central Bank of Brazil, in accordance with National Monetary Council (CMN) Resolution 2,882/01 and BACEN Circular 3,057/01. The main components of the safeguard structure of the Derivatives Clearinghouse are described below:    Collateral deposited by derivatives market participants; Joint responsibility for trade settlement by the brokerage house and clearing member which acted as intermediaries, as well as the collateral deposited by these participants; Operational Performance Fund, in the amount of R$1,162,122 (R$1,126,126 at December 31, 2009; R$1,145,908 at January 1th, 2009), formed by resources transferred by holders of settlement rights at the Derivatives Clearinghouse (clearing members) and holders of full trading rights, for the exclusive purpose of guaranteeing the operations; Agricultural Market Trading Fund, in the amount of R$50,000 at December 31, 2010 and 2009, intended to hold resources of BM&FBOVESPA allocated to guarantee the proper settlement of transactions involving agricultural commodity contracts;



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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)



Special Clearing Member Fund, in the amount of R$40,000 at December 31, 2010 and 2009, formed by a capital transfer from BM&FBOVESPA., intended to hold BM&FBOVESPA resources allocated to guarantee the proper settlement of transactions, regardless of the type of contract; Clearing Fund, in the amount of R$408,509 (R$378,113 at December 31, 2009; R$387,235at January 1th, 2009), formed by collateral transferred by clearing members, intended to guarantee the proper settlement of transactions after the resources of the two previous funds have been used; Special equity, in the amount of R$34,807 (R$31,678 at December 31, 2009; R$28.808 January 1th, 2009), in compliance with the provisions of Article 5 of Law 10,214, of March 27, 2001 and of Article 19 of Circular 3,057 of the Brazilian Central Bank, of August 31, 2001.





The main components of the safeguard structure of the Foreign Exchange Clearinghouse are described below:   Collateral pledged by foreign exchange market participants; Participation fund, in the amount of R$162,235 (R$154,056 at December 31, 2009; R$140.584 January 1th, 2009), formed by collateral transferred by Clearinghouse participants, intended to guarantee the proper settlement of transactions; Operational Fund of the Foreign Exchange Clearinghouse, in the amount of R$50,000 at December 31, 2010 and 2009, with the purpose of maintaining funds of BM&FBOVESPA to cover losses resulting from operating or administrative failures; Special equity, in the amount of R$34,848 (R$31,714 at December 31, 2009; R$28,808 January 1th, 2009), in compliance with the provisions of Article 5 of Law 10,214, of March 27, 2001 and of Article 19 of Circular 3,057 of the Brazilian Central Bank, of August 31, 2001.





The main components of the safeguard structure of the Securities Clearinghouse are described below:   Collateral deposited by federal government bond market participants; Operational Fund of the Securities Clearinghouse, in the amount of R$40,000 at December 31, 2010 and 2009, with the purpose of maintaining funds of BM&FBOVESPA to cover losses resulting from operating or administrative failures of participants;

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais) 

Special equity, in the amount of R$24,536 (R$22,373 at December 31, 2009; R$20,277 January 1th, 2009), in compliance with the provisions of Article 5 of Law 10,214, of March 27, 2001 and of Article 19 of Circular 3,057 of the Brazilian Central Bank, of August 31, 2001.

The main components of the safeguard structure of the Equity and Corporate Debt Clearinghouse (CBLC) are described below:    Collateral deposited by CBLC’s market participants; Joint responsibility for trade settlement by the brokerage house and clearing member that acted as intermediaries, as well as the collateral deposited by these participants; Settlement Fund, in the amount of R$485,409 (R$322,268 at December 31, 2009; R$350.210 at January 1th, 2009), formed by collateral transferred by clearing members, intended to guarantee the proper settlement of transactions; Special equity, in the amount of R$37,210 (R$33.877 at December 31, 2009; R$30.374 at January 1th, 2009), in compliance with the provisions of Article 5 of Law 10,214, of March 27, 2001 and of Article 19 of Circular 3,057 of the Brazilian Central Bank, of August 31, 2001.



The risk management policy adopted by the Clearinghouses is established by the BM&FBOVESPA Market Risk Committee, in which BM&FBOVESPA officers participate, including the Clearinghouses’ Chief Officers, the Depositary Chief Officer and the Risk Chief Officer, the Operations and IT Chief Officers, the Products Chief Officer, as well as the Risk Management Officer and the Settlement Officer, among others. The main duties of the Committee are (i) the evaluation of the macroeconomic and political environment and of its impacts on the markets managed by BM&FBOVESPA. (ii) the determination of the models utilized for calculation of collateral and for control of the intraday risk of the transactions performed, (iii) the definition of parameters utilized by these models, especially the stress scenarios referring to each type of risk factor, (iv) the assets accepted as collateral, their form of valuation, maximum limits of use and applicable haircut factors, and (v) other studies and analyses. In view of the amounts involved, the collateral pledged by the participants who carry out the transactions represents the most significant component of the Clearinghouse’s safeguard structures. For most of the contracts, the amount required as collateral is calculated so as to cover the market risk of the transaction, i.e. its price volatility, during the time frame of two days, which is the

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

maximum time expected for the settlement of the positions of a defaulting participant. This time frame may vary depending on the nature of the contracts and assets negotiated. The models utilized in the margin requirement calculation are based on stress testing, a methodology that seeks to gauge market risk considering not only the recent historical price volatility, but also the possibility of unexpected events that could modify the historical patterns of prices and of the market in general. The main parameters utilized by the margin calculation models are the stress scenarios, defined by the Risk Committee for the risk factors that affect the prices of contracts and securities traded at BM&FBOVESPA. Among the main risk factors are the Brazilian real/US dollar exchange rate, the term structure of the local fixed interest rate, the term structure of the US dollar interest rate, the Bovespa Index and the cash prices of shares, among others. In the definition of stress scenarios, the Risk Committee utilizes a combination of quantitative and qualitative analyses. The quantitative analysis is conducted with the support of statistical models of risk estimation, such as the Extreme Value Theory (EVT), estimation of implied volatilities, and GARCH family models, besides historical simulations. The qualitative analysis, in turn, considers aspects related to the domestic and international economic and political environments, and their possible impacts on the markets managed by BM&FBOVESPA. Market risk - Investment of cash funds Considering the importance of BM&FBOVESPA’s equity as a last resource available in the safeguard structure of its Clearinghouses, its investment policy emphasizes low risk cash alternatives, normally federal government bonds, including exposure through exclusive and retail investment funds. As a result, in general, there is a significant proportion of federal securities in the portfolio of applications of BM&FBOVESPA, being purchased directly, via repurchase agreements backed by government bonds and also through exclusive and non-exclusive investment funds. Thus, in general, the BM&FBOVESPA has on principle directing most of its applications in conservative financial assets, high liquidity and with sovereign risk, whose overall performance is tied to the Selic rate / CDI

b. Collateral for transactions
Transactions performed in the BM&FBOVESPA markets are backed by cash margin deposits, government bonds and corporate securities, letters of credit and other financial instruments. At December 31, 2010, the pledged collateral totaled R$143,087,657 (R$101,640,805 at December 31, 2009; R$125.676.805 at January 1th, 2009), as follows:

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

12/31/2010 Derivatives Clearinghouse Federal government bonds Letters of credit Equities Bank certificates of deposit (CDBs) Gold Cash(1) Other Subtotal Foreign Exchange Clearinghouse Federal government bonds Cash (1) Subtotal Securities Clearinghouse Federal government bonds Equity and Corporate Debt ClearinghouseCBLC Federal government bonds Equities International bonds (2) Bank certificates of deposit(CDBs) Letters of credit Cash (1) Other Subtotal Total

12/31/2009

01/01/2009

76,979,261 3,538,492 4,934,328 1,150,998 105,958 652,290 173,340 87,534,667

53,754,858 1,479,341 3,351,593 1,307,762 60,865 555,106 95,938 60,605,463

89,760,722 3,690,835 2,678,991 2,161,736 319,831 327,644 108,008 99,047,767

3,855,147 66,520 3,921,667

3,766,090 3,766,090

3,550,223 174,060 3,724,283

928,786

832,125

1,423,484

22,749,941 25,809,847 736,905 580,066 448,054 235,806 141,918 50,702,537 143,087,657

15,665,732 17,208,344 1,944,896 997,944 296,442 247,230 76,539 36,437,127 101,640,805

10,185,946 9,101,835 1,219,499 467,649 239,625 101,927 164,790 21,481,271 125,676,805

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

(1) The balance of collateral recorded in current liabilities refers to deposits in currency. The availability of these funds is managed, and their utilization is dependent on the fluctuation of the required margin balance. (2) US and German federal government bonds, as well as ADRs (American Depositary Receipt).

c.

Other information - Clearing Fund (Derivatives Clearinghouse)
This is formed by funds invested by the clearing members, with the exclusive purpose of guaranteeing transactions, and may include bank letters of credit, government bonds and corporate securities, cash, gold and other assets, at the sole discretion of BM&FBOVESPA. Collateral represented by securities and other assets depends on prior approval from BM&FBOVESPA. The liability of each clearing member is joint and limited, individually. The Clearing Fund was comprised as follows:
Composition Federal government bonds Letters of credit Bank certificates of deposit (CDBs) Equities Gold Cash(1) Amounts deposited Amounts that ensure clearing member/trader participation Excess collateral 12/31/2010 354,256 35,012 14,700 4,541 408,509 12/31/2009 314,304 33,000 20,200 6,634 2,925 1,050 378,113 01/01/2009 324,980 30,000 18,560 7,763 1,928 4,005 387,236

(313,000) 95,509

(319,500) 58,613

(333,500) 53,736

(1) The balance of collateral recorded in current liabilities refers to deposits in currency. The availability of these funds is managed, and their utilization is dependent on the fluctuation of the required margin balance.

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

The minimum contribution for each clearing member is R$2,000, R$3,000 and R$4,000, depending on whether this member is the holder of a type 1, type 2 or type 3 settlement right, respectively, in the Derivatives Clearinghouse. In addition, each clearing member must contribute R$500 per participant entitled to trade under their responsibility. The total amount deposited in the Clearing Fund is R$408,509 (R$378,113 at December 31, 2009; R$387,236 at 1th January, 2009), while the remainder refers to the surplus of non-enforceable deposited collateral.

d. Operational Performance Fund (Derivatives Clearinghouse)
This fund is formed by resources transferred by holders of settlement rights in the Derivatives Clearinghouse (clearing members) and holders of full trading rights, with the exclusive purpose of guaranteeing transactions. These resources can take the form of bank letters of credit, government bonds and corporate securities, cash, gold and other assets, at the sole discretion of BM&FBOVESPA. Collateral represented by securities and other assets depend on prior approval from BM&FBOVESPA. The Operational Performance Fund presents the following position:
Composition Federal government bonds Letters of credit Bank certificates of deposit (CDBs) Equities FICBancoBM&F Other Cash (1) Amounts deposited 12/31/2010 921,678 172,210 52,801 15,358 75 1,162,122 (989,200) Excess collateral 172,922 12/31/2009 859,804 156,200 81,310 20,098 1,781 582 6,351 1,126,126 (1,009,500) 116,626 01/01/2009 863,451 160,730 98,683 17,647 4,177 1,220 1,145,908 (1,026,700) 119,208

(1) The balance of collateral recorded in current liabilities refers to deposits in currency. The availability of these funds is managed and their utilization is dependent on the fluctuation of the required margin balance.

The minimum contribution for each clearing member is R$5,500, R$6,500 and R$7,500, depending on whether this member is the holder of a type 1, type 2 or type 3 settlement right, respectively, in the Derivatives Clearinghouse.

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

The minimum contribution for each commodities broker is R$6,000 for holders of full trading rights. The minimum contribution of the holders of full trading rights of interest rates, exchange rates and Ibovespa is R$4,000. The minimum contribution for the holders of the trading rights of other contracts settled in the Derivatives Clearinghouse is R$3,000. The minimum contribution for each special operator is R$1,600 for the holders of full trading rights and restricted trading rights of interest rates, exchange rates and Ibovespa. For the holders of trading rights of other contracts settled in the Derivatives Clearinghouse, the minimum required contribution is R$1,000.

e. Participation fund (Foreign Exchange Clearinghouse)
Formed by deposits, in assets and currencies, required for the authorization of participants in the Foreign Exchange Clearinghouse. Their purpose is to guarantee performance of the obligations assumed by them. The Participation Fund presents the following position:
Composition 12/31/2010 12/31/2009 01/01/2009

Federal Government Bonds

162,235

154,056

140,584

f. Liquidation Fund of the of the clearing of stocks and fixed income (CBLC)
It consists of funds provided by the clearing agents CBLC, with the sole purpose of covering losses arising from any default by the participants.

The Guarantor Fund presented the following position:
Composition Federal government bonds Investments in exclusive funds, bonds and repo transactions Cash (1) Amounts deposited 12/31/2010 485,409 485,409 12/31/2009 322,261 7 322,268 01/01/2009 190,629 159,580 350,209

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

(1) The balance of collateral recorded in current liabilities refers to deposits in currency. The availability of these funds is managed and their utilization is dependent on the fluctuation of the required margin balance.

g. Guarantee funds and Mechanism for reimbursement
BM&FBOVESPA maintains a Guarantee Fund, in the form of a statutory reserve, in the amount of R$92,342 for the sole purpose of assuring its clients that hold trading and settlement rights the reimbursement of certain losses provided for in the regulations. The subsidiaries Bolsa Brasileira de Mercadorias and Bolsa de Valores do Rio de Janeiro (BVRJ) also maintain Guarantee Funds, special purpose entities without a legal status. The maximum liability of these Guarantee Funds is limited to the sum of their net assets. BSM also manages a Mechanism for Reimbursement of Losses, the sole purpose of which is to assure reimbursement of loss to clients of brokerage firms that trade in BM&FBOVESPA upon the occurrence of events determined in the regulation. The purpose of these funds is to assure that their members’ clients are refunded for losses resulting from errors in the execution of orders accepted and from inadequate or irregular use of funds belonging to clients, under the terms of CVM Instruction 461/07. We present below a summary of the main accounting balances of these mechanisms:
12/31/2010 Guarantee Fund – Bolsa Brasileira de Mercadorias Guarantee Fund – Bolsa de Valores do Rio de Janeiro Mechanism for Reimbursement of Losses 792 (2,468) 280,447 12/31/2009 735 (1,358) 255,700 01/01/2009 681 (2,276) 176,875

18

Employee Benefits

Stock options – BM&F S.A. (Transferred to BM&FBOVESPA)
At the AGE held on September 20, 2007, approval was given for an option plan for shares issued by BM&F S.A. for the purpose of “granting purchase rights on a number of shares, for recognition and retention of the employees of BM&F S.A. and, subsequently, of the Company, after May 8, 2008, up to a limit of 3% of the Company’s capital stock”.

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

The stock options granted under the stock option purchase plan of the extinct BM&F were assumed by BM&FBOVESPA, as decided at the AGE of May 8, 2008. On December 18, 2007, 27,056,316 stock options were granted under the plan with a fixed exercise price of R$1.00 per share. Subsequent to this date, no further stock options were granted or vesting conditions changed under this plan. During the period, some employees acquired the rights to exercise their options as a result of their dismissal. The number of stock options that have not yet vested at December 31, 2010 totaled 3,670,546 options which did not acquire the condition of vesting yet. The Plan was mainly devised to provide managers and employees of the former BM&F (i) with consideration for services carried out by the beneficiaries during the period prior to the demutualization process and also (ii) to retain professionals for a period of four years subsequent to the approval of the Plan and IPO. The main items used as a basis for acknowledging these services and for allocating the options granted were: (i) (ii) (iii) (iv) Exercise price fixed at R$1.00; Right to exercise options even if the beneficiary is dismissed by the Company, as well as on retirement, dismissal as a result of disability or death of the beneficiary; Number of years of service of each beneficiary; Different period for each exercise of options.

The Company recognized the expenses related to the stock options of employees that have not yet vested, recognizing a total expense of R$19,843 during the period (R$35.134 at 2009). The Company considered in this calculation an estimated turnover of 5%, i.e. the estimated number of options which will not vest due to employees who opt to leave the Company. Stock options – BM&FBOVESPA’s Plan On May 8, 2008, at the AGE of BM&FBOVESPA, approval was given to institute a stock option plan within the authorized limit of 2.5% of the Company’s capital, having as its main objective to align the interests of shareholders with those of directors, managers, employees and service providers who are considered strategic, and employees considered as talents of BM&FBOVESPA and its subsidiaries. On December 19, 2008, the first series of options was granted at an exercise price of R$5.174 per share, corresponding to the average closing price of trading in the 20 days that preceded the date on which the options were granted, observing the vesting periods for exercising the options. 4,531,850 stock options were granted, distributed equally on four vesting dates over a four-year period.

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Some employees that had stock options related to the series granted in 2008, acquired the rights to exercise their options as a result of their dismissal. As a result of the acceleration of vesting in the cases of dismissal, the Company recognized, during the period, the total expenses related to 962,050 stock options of the employees dismissed that otherwise would have been recognized in future periods. At December 31, 2010, there are 1,618,694 stock options granted in 2008 that have not yet vested. On January 20, 2009, the Board of Directors approved the 2009 stock option program ("2009 Program"), which set the date of grant on March 1, 2009. The exercise price of $ 6.60 per share corresponds to the average closing price of 20 trading days preceding the date of the grant program in 2009, as established in the plan approved in the shareholders General Assembly on 8 May 2008. The 2009 program refers to the period from January 1, 2009 to December 31, 2009, the base period for the performance assessments of the program beneficiaries. At the meeting on December 17, 2009, the Board confirmed the allocation of individual stock options within the 2009 program, according to the performance assessment of the Company and the beneficiaries, in the total amount of 9,947,000 stock options, divided into four qualifying dates (vesting). Some employees who had stock options related to the series granted in 2009 had the right to exercise their options at the time of their dismissal. As a result of the acceleration of the vesting period in the cases of dismissal, BM&FBOVESPA recognized in the period all the costs related to 117,500 stock options of terminated employees that would have been recognized in future periods. On December 31, 2010 there are 4,644,000 stock options granted in 2009 that have not yet vested. As a result, the Company recognized expenses in the statement of income related to both grants of this plan in the total amount of R$11,078 during the period (R$24,502 at 2009), with a counter-entry to capital reserves in shareholders’ equity. The Company considered in this calculation an estimated turnover of 5%, i.e. the estimated number of options which will not vest due to employees who opt to leave the Company or whose employment is terminated by the Company before achieving vested rights to exercise the options. Considering both programs, the Company has granted stock options corresponding to 0.67% of the Company’s capital (0.22% and 0.45%, respectively). The remainder 1.83% of the authorized limit will be used to grant new series of stock options for the following years. As the options are exercised by the employees, the Company will issue new shares, increasing its capital, or use treasury shares.

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Granted Options
Exercised during previous periods (4,077,396) (2,216,750) (2,216,750) (8,510,896) (540,500) (233,675) (233,675) (233,675) (1,241,525) (9,752,421) Fair value of options on grant date (in reais) 21,81 21,54 21,32

Plan BM&F S.A. BM&F S.A. BM&F S.A.

Grant date 12/18/2007 12/18/2007 12/18/2007

Vesting period up to 12/18/2009 12/18/2010 12/18/2011

Exercise price (in reais) 1.00 1.00 1.00

Granted 6,652,596 6,329,396 6,244,396 19,226,388

Canceled (28,225) (40,237) (40,237) (108,699) (79,500) (167,000) (182,000) (428,500) (537,199)

Exercised during 2010 (2,506,200) (2,390,646) (357,100) (5,253,946) (291,428) (441,887) (13,950) (13,950) (761,215) (1,044,720) (30,000) (15,000) (1,089,720) (7,104,881)

Ongoing contracts in 12/31/2010 69,000 1,722,000 3,670,546 5,461,546 301,038 429,179 845,097 845,097 2,420,411 1,442,030 2,377,250 2,304,750 2,304,750 8,428,780 16,310,737

BM&FBOVESPA 12/19/2008 BM&FBOVESPA 12/19/2008 BM&FBOVESPA 12/19/2008 BM&FBOVESPA 12/19/2008

6/30/2009 6/30/2010 6/30/2011 6/30/2012

5.174 5.174 5.174 5.174

1,132,966 1,132,966 1,132,959 1,132,959 4,531,850

3,71 3,71 3,71 3,71

BM&FBOVESPA BM&FBOVESPA BM&FBOVESPA BM&FBOVESPA

3/1/2009 3/1/2009 3/1/2009 3/1/2009

12/31/2009 12/31/2010 12/31/2011 12/31/2012

6.60 6.60 6.60 6.60

2,486,750 2,486,750 2,486,750 2,486,750 9,947,000

2,93 2,93 2,93 2,93

Total

33,705,238

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Total options exercised during the period As regards the plan transferred to BM&FBOVESPA, 5,253,946 options were exercised during the period as follows:
Average Market Price (R$) 13.17 12.51 11.84 11.78 11.55 11.85 11.76 13.18 14.13 14.14 12.80

BMF

Exercise Month January February March April May June July August September October November December

Quantity carried 1,168,600 424,600 680,500 261,300 211,000 1,500 7,500 306,900 24,000 131,500 2,036,546 5,253,946 4,127,596

Options exercised 2010 Options exercised 2009

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

As regards BM&FBOVESPA’s plan, 1,850,935 options were exercised during the period as follows:
Average Market Price (R$) 13,07 12,51 11,76 11,82 11,55 11,97 11,94 12,99 13,84 14,37 13,65 12,90

BM&FBOVESPA

Exercise Month January February March April May June July August September October November December Options exercised 2010 Options exercised 2009

Quantity carried 90,213 108,252 122,748 213,195 143,750 80,000 245,119 207,101 323,205 176,026 29,376 111,950 1,850,935 1,143,425

Consolidated activity during the year
12/31/2010 Opening balance Granted Options Exercised Options Canceled Optons Ending balance 23,952,817 (7,104,881) (537,199) 16,310,737 12/31/2009 19,374,938 9,947,000 (5,271,021) (98,100) 23,952,817 01/01/2009 19,226,388 4,531,850 (4,383,300) 19,374,938

The percentage of capital dilution to which the current shareholders could be subject in the event that all the options outstanding at December 31, 2010 are exercised is near to 0.82% (2009 – 1.16%).

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BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Effects arising from the exercise of the options
Descripion Amount received on share sales-Exercised Options (-)Cost of treasury shares old Effect on disposal of shares 2010 16,384 (51,314) (34,930) 2009 10,044 (30,903) (20,859)

Option Pricing Model To determine the fair value of the options granted, the Company has taken into account the following aspects: a) The stock options that were granted by the Company allow the exercise in advance as from a specific future date (vesting date) which is situated between the grant date and the option expiry date; b) The shares pay dividends between the grant date and the option expiry date. Accordingly, these options present characteristics from the European model (exercise in advance is not allowed) until the vesting date and characteristics from the American model (possibility of exercise in advance) between the vesting date and the option expiry date. These options are known as Bermuda or Mid-Atlantic type and their price must be between the price of a European option and the price of an American option with similar characteristics. In relation to the dividend payment, there are two impacts on the price of the option that should be taken into account: (i) the fall in share prices after the dates on which they become ex-dividend and (ii) the influence of such payments on the decision to exercise the option in advance. Considering the aspects above, the Binomial method was used to determine the fair value of the options granted. This method produces results which are equivalent to the results of the Black & Scholes model for non-complex European options, having the advantage of being able to incorporate the characteristics of an exercise in advance and the payment of dividends in relation to the stock options considered. The main assumptions considered in the options’ fair value determination were: a) The options were evaluated based on the market parameters effective on each of the grant dates of the different plans; b) To estimate the risk-free interest rate, the Company used the future interest contracts negotiated for the maximum exercise period of each option;

73

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

c) The liquidity of the stock options, comprising the respective programs, was low on the grant dates and accordingly the implied volatilities in these contracts are atypical and it would not be feasible to use them for estimating volatility. In addition, since the Company was a recently listed entity at the time the plans were granted, historical volatility does not provide sufficient information on share volatility, considering the contractual term for exercising the options. As a result, the Company used as a basis for estimating the volatility of its shares the implied volatility of similar entities (international stock exchanges) over periods in which liquidity was sufficient to guarantee the quality of the data gathered; d) The share prices were adjusted in order to take into account the impact of dividend payments; and e) The maximum period for exercising the options granted was used to determine the maturity of the options. The remaining usual assumptions related to option pricing models, such as inexistence of arbitrage opportunities and constant volatility over the period, were also considered in the calculation.

Pension plan
The private pension fund “Fundo de Pensão Multipatrocinado das Instituições do Mercado Financeiro e de Capitais (MERCAPREV)” is structured as a defined contribution retirement plan and is sponsored by the following entities: Adeval, Ancor, BM&FBOVESPA, Sindival and the brokerage firms Theca, Souza Barros and Talarico. Contributions to the pension plan for the period ended December 31, 2010 amounted to R$3,166 (2009 - R$2,830) by BM&FBOVESPA and for the consolidated.

74

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

19
(a)

Income Tax and Social contribution on Net Income
Deferred income tax and social contribution

The balance of deferred tax assets and liabilities is as follows:
BM&FBOVESPA and Consolidated Details Tax ,labor and civil contingencies Tax loss carryforwards Reduction in recoverable value of investment shares in CMEGroup (2) Goodwill amortisation(1) Other Temporary differences Total deferred tax assets 12/31/2010 5,795 34,125 14,767 54,687 12/31/2009 4,742 35,285 237,283 6,514 283,824 01/01/2009 4,177 35,036 237,283 76,702 6,156 359,354

Goodwill amortization(1) Exchange variation on foreign debt issuance Mark to Market on available for sale Other Total deferred tax liabilities

(702,371) (20,246) (9,457) (732,074)

(257,216) (39,870) (3,844) (300,930)

-

(1) Deferred tax assets recorded in December 2008 related to the impairment loss (R$ 697,893) derived from the shares of CME Group classified as available for sale, as described in Note 26(a). After the acquisition of an additional interest in the CME Group in July 2010, the impairment loss and its related deferred charges were fully reversed against retained earnings, considering the reclassification to non current assets (investment in associated company). (2) Deferred income tax and social contribution liabilities arising from temporary differences between the tax basis of goodwill and its carrying value on the balance sheet, considering that goodwill is still amortized for tax purposes, but is no longer amortized as from January 1, 2009 in the accounting records, resulting in a tax base smaller than the carrying value of goodwill. This temporary difference may result in amounts to be added when calculating the taxable income of future periods, when the carrying amount of the asset will be reduced or liquidated, thereby requiring the establishment of a deferred tax liability

75

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

BM&FBOVESPA and Consolidated Temporary differences Deferred tax assets At January 1, 2009 Transfer to liability Debit(credit) on statement of Income At December 31, 2009 Debit(credit) on statement of Income Debit(credit) on statement of Changes in Shareholders’ Equity At December 31, 2010 (6,156) (358) (6,514) (8,253) (14,767) (35,036) (249) (35,285) 1,160 (34,125) Tax loss Reduction in recoverable value - CME Group Goodwill amortization and contingencies (80,879) 76,702 (565) (4,742) (1,053) (5,795) Total

(237,283) (237,283) 237,283 -

(359,354) 76,702 (1,172) (283,824) (8,146) 237,283 (54,687)

BM&FBOVESPA and Consolidated Goodwill amortization Deferred tax liability At January 1, 2009 Transfer from asset Debit(credit) on statement of Income Debit(credit) on statement of comprehensive income Debit(credit) on statement of Changes in Shareholders’ Equity At December 31, 2009 Debit(credit) on statement of Income Debit(credit) on statement of comprehensive income Debit(credit) on statement of Changes in Shareholders’ Equity At December 31, 2010 (76,702) 333,918 257,216 445,155 702,371 Exchange variation on foreign debt issuance Mark to Market on available for sale assets

Other

Total

-

-

(76,702) 337,762

20,246 20,246

39,870 39,870 (39,870) -

3,844 3,844 5,613 9,457

39,870 300,930 450,768 (19,624) 732,074

76

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

(b)

Estimated realization period

The deferred income tax and social contribution assets arising from temporary differences are recorded in the books taking into consideration the probable realization of these tax assets, based on projections of future results prepared in accordance with and supported by internal assumptions and future economic scenarios that may, accordingly, undergo change. It is expected that deferred tax assets will be realized as follows: R$31,648 (2011), R$ 2,477 (2012) e R$20,563 (2015). At December 31, 2010, the present value of the deferred tax assets amounts to R$43,027. As the income tax and social contribution taxable bases arise not only from the profit that may be generated, but also from the existence of non-taxable income, non-deductible expenses, tax incentives and other variables, there is no immediate correlation between the Company's net income and the income subject to income tax and social contribution. Therefore, the expectation of the use of deferred tax assets should not be used as the only indicator of future income of the Company. The goodwill amount deductible in the income tax and social contribution calculation for tax purposes amounts to R$11,092,942 at December 31, 2010. The realization of the deferred tax liability will occur as the difference between the tax base of goodwill and its carrying amount is reversed, that is, once the carrying value of goodwill in the balance sheet is either reduced or liquidated.

77

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

(c)

Reconciliation of the income tax and social contribution expense

The income tax and social contribution amounts presented in the parent company and consolidated statements of income at nominal rates are reconciled as follows:
BM&FBOVESPA 2010 Net income before income tax and social contribution Income tax and social contribution before additions and exclusions Additions: Adjustments from Law 11,638/07 Non-deductible expenses Exclusions: Equity Interest on own capital Other(1) Income tax and social contribution 1,589,768 (540,521) (21,652) (10,513) (11,139) 116,846 13,486 103,360 120 (445,207) 2009 1,183,023 (402,228) (30,445) (20,276) (10,169) 95,157 2,167 92,990 35,543 (301,973)

Consolidated 2010 Net income before income tax and social contribution Income tax and social contribution before additions and exclusions Additions: Adjustments from Law 11,638/07 Non-deductible expenses Exclusions: Equity Interest on onwn capital Other(1) 1,592,515 (541,455) (22,087) (10,513) (11,574) 116,361 13,001 103,360 (848) 2009 1,186,574 (403,436) (30,852) (20,276) (10,576) 92,990 92,990 36,793

78

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Income tax and social contribution

(448,029)

(304,505)

(1) During the second quarter of 2009 there were recognized tax credits for income tax and social contribution of R$35,503 relating to tax losses and negative basis of social contribution of the former Bovespa Holding, untapped at the time of the merger on grounds of alleged limitation to use only 30% of net income, The Company has reassessed this procedure during the second quarter of 2009 along with its legal counsel, based on the understanding that this limitation would not apply to cases of incorporation of the legal entity, because in these cases there is no continuity of the Company and therefore does not exist limitations for the entire existing tax loss, Accordingly, the Company made the recording of tax credits,

(d)

Transitional Tax System

Provisional Measure 449/08, converted into Law 11,941/09, introduced the Transitional Tax System (RTT) for taxable income determination purposes, addressing the tax adjustments arising from the new methods and accounting criteria introduced by Law 11,638/07, The Company declared its option for the RTT when filing the Corporate Income Tax Return (DIPJ) for 2008, As a result of the option to use the RTT, the income tax (IRPJ) and social contribution on net income (CSLL) payable for the two-year period 2008-2009 will continue to be determined based on the provisions of Brazilian Corporation Law in force at December 31, 2007, From 2010, the RTT is now mandatory and consistent with the practices adopted in 2008 and 2009

20

Other income - Trading system and/or settlement - Bovespa

Refers mainly to revenues from settlement fees on public offerings.

21

Other operating revenues
Details
2010

BM&FBOVESPA
2009

Dividends from equity interests Other recoveries Profit on sale of assets Sundry

4,920 1,482 2,723

12,592 892 4,383 1,910

79

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Total

9,125

19,777

Consolidated Details
2010 2009

Dividends from equity interests Property rents Other recoveries Subscriptions Congress-Capital Markets Sundry Total

4,920 6,174 1,702 2,822 15,618

12,592 5,446 779 4,383 3,033 26,233

22

Sundry Expenses
Details Contributions and donations Electricity, water and sewage Travel Sundry provisions Intangible loss Insurance Legal and Judicial expenses Other Total 2010 7,135 7,664 5,209 2,095 4,802 1,113 532 4,237 32,787 BM&FBOVESPA 2009 2,958 7,022 3,190 3,778 677 430 3,072 21,127

80

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Details Contributions and donations Electricity, water and sewage Travel Sundry provisions Intangible loss Insurance Legal and Judicial expenses Other Total

2010 7,420 7,859 5,745 6,186 4,864 1,115 548 2,568 36,305

Consolidated 2009 2,953 7,238 3,596 4,052 678 445 3,470 22,432

23

Financial results
BM&FBOVESPA Financial income Revenue from financial assets measured at fair value Exchange variation Other financial income Total financial income Financial expenses Interest on overseas debt and loans Exchange variation Other financial expenses Total financial expenses 32,750 3,266 2,635 38,651 562 10,819 3,654 15,035 2010 314,935 2,808 8,314 326,057 2009 249,468 270 10,513 260,251

81

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Consolidado Financial income Revenue from financial assets measured at fair value Exchange variation Other financial income Total financial income Financial expenses Interest on overseas debt and loans Settlement and custody expenses (1) Exchange variation Other financial expenses Total financial expenses (1) Amounts related to Banco BM&F 32,750 15,612 4,395 4,025 56,782 562 18,289 11,833 5,140 35,824 2010 341,068 2,808 10,930 354,806 2009 276,253 270 13,163 289,686

24

Information about business segments
We present below consolidated information based on reports used by management for making decisions, with the segments comprising Bovespa, BM&F, Corporate products and Institutional. Bovespa Segment Offers various mechanisms and tools for trading of fixed and variable income securities, on stock markets and Over the Counter (OTC), It is responsible for managing the only national stock market and OTC market for trading of variable income securities, including stocks, stock receipts, Brazilian Depository Receipts, stock derivatives, subscription bonuses, various types of closed investment funds, shares representing audiovisual investment certificates,

82

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

non-standard options (warrants) to purchase and sell securities and other securities authorized by the CVM,

BM&F Segment The BM&F Segment covers the main steps of the cycles of trading and settlement of securities and contracts, i,e,: (i) trading systems in an environment of electronic trading and trading via internet (WebTrading), (ii) recording, clearing and settlement systems, integrated with a robust and sophisticated risk management system to ensure the proper settlement of the transactions recorded, and (iii) custodian systems for agribusiness securities, gold and other assets In addition, this segment includes the trading of commodities, foreign exchange, and public debt, and services provided by Banco BM&F and the Brazilian Commodities Exchange, Corporate products Refer basically to services provided as depository of securities, as well as loans and listing of securities (registration of issuers of trading securities on our systems), data services and classification of commodities, Currently there is no segment allocation for operating expenses and other results, which are therefore shown in the “Other” column, below, Others

It refers, basically, the revenues generated by the businesses of its subsidiaries and dividends from shares.
Institutional

Currently there is no allocation for operating expenses by segment, net interest income and income tax and social contribution, and then presented in column institutional.

83

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Information by segment Bovespa Segment Gross operating revenue Deductions from revenue Net operating revenue Operating expense Depreciation and Amortization Administrative expenses Operatingin come Equity Financial income Taxes Net income 947,405 645,717 270,973 25,662 1,049,300 (101,895) 947,405 BM&F Segment 722,065 (76,348) 645,717 Enterprise Products 300,314 (29,341) 270,973 Other 30,875 (5,213) 25,662

Consolidado Institutional

2010 Total 2,102,554 (212,797) 1,889,757

(633,504) (54,818) (578,686) (633,504) 38,238 298,024 (448,029) (745,271)

(633,504) (54,818) (578,686) 1,256,253 38,238 298,024 (448,029) 1,144,486

Information by segment Bovespa Segment Gross operating revenue Deductions from revenue Net operating revenue Operating expense Depreciation and Amortization Administrative expenses Operating income Financial income Taxes 837,326 (84,086) 753,240 BM&F Segment 534,189 (56,078) 478,111 Enterprise Products 259,710 (23,900) 235,810 Other 41,669 (6,286) 35,383

Consolidado Institutional

2009 Total 1,672,894 (170,350) 1,502,544

(569,832) (42,396) (527,436) (569,832) 253,862 (304,505)

(569,832) (42,396) (527,436) 932,712 253,862 (304,505)

84

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

Netincome

753,240

478,111

235,810

35,383

(620,475)

882,069

25

Insurance

The Company searches in the market for insurance consultant support to establish coverage compatible with its size and operations, The main coverage, at December 30, 2010, was contracted at the amounts indicated below, according to the insurance policies: Amounts insured 272,590 60,486 16,133

Insurance lines Amounts at risk, material damages, property and equipment Civil liability Works of art

26
i)

First time adoption of IFRS and CPCs
Application of CPCs 37 and 43 and IFRS 1 The consolidated financial statements for the year ended December 31, 2010 are the first annual consolidated financial statements in accordance with IFRSs and CPCs, and BM&FBOVESPA has applied CPCs 37 and 43 and IFRS 1 in preparing these consolidated financial statements. The financial statements of the Company for the year ended December 31, 2010 are the first annual individual financial statements in accordance with the CPCs. BM&FBOVESPA has applied CPCs 37 and 43 in the preparation of these financial statements. The transition date is January 1, 2009. Management has prepared the opening balance sheets under the CPCs and the IFRS at that date. In preparing those financial statements, BM&FBOVESPA has applied the relevant mandatory exceptions and certain optional exemptions in relation to the full retrospective application.

85

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

ii)

Reconciliation of shareholders' equity and net income between the accounting practices adopted in Brazil prior to IFRS:
BM&FBOVESPA and Consolidated 12/31/2009 01/01/2009

Equity reconciliation Equity disclosed in accordance with previous accounting practices adopted in Brazil Loss in recoverable value of investment in CME Group (a) Mark to market adjustment of shares of CME Group classified as available for sale (b) Dividend above the minimum required at the balance sheet date Contribution to establishment of the BSM previously treated as investment

19,709,749 (460,610) 77,396 20,000 (20,000) 19,326,535

19,291,724 (460,610) 200,001 (20,000) 19.011.115 15,339 19.026.454

Non-controlling shareholders participation (d) Equity disclosed in accordance with IFRS

16,358 19,342,893

Net Income reconciliation Net income disclosed in accordance with previous accounting practices adopted in Brazil Non-controlling shareholders participation (d) Net income disclosed in accordance with IFRS

Consolidated 12/31/2009

881,050 1,019 882,069

(a) Under the accounting standards previously adopted in Brazil until December 31, 2009, the investment in CME was recorded at historical cost in non-current assets, in accordance with CPC 14, and the

86

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

value of the investment was subject to impairment analysis considering the criteria for evaluating the discounted cash flow (Value in use) as determined by CPC 01/IAS 36 for investments valued at cost. Upon the effectiveness of CPC 38/IAS 39 in 2010, the investment was reclassified to the group of financial instruments in the category of Financial Assets Available for Sale and adjusted to fair value. Thus, the price of the asset being used to determine the fair value has become the stock price in an active market (Stock Exchange). Upon the classification of the investment in the category of Financial Assets Available for Sale, the impairment analysis shoud be made by the comparison of the market value of the shares on the data base date of assessment with its acquisition cost (CPC 38/IAS 39), and the loss indicator is the significant or prolonged decline in the price of the shares. As a result, BM&FBOVESPA recognized an adjustment to the recoverable value of the investment in shares of CME Group in the amount of R$697,893, with a deferred tax asset corresponding to R$237,283, and an impact net of tax in the amount of R$460,610 in equity in 2008, given the significant decline in the price of the shares of CME Group in the fourth quarter of 2008. This procedure established a new cost basis, according to CPC 38/IAS 39, of R$578,306 at December 31, 2008 With the acquisition of an additional equity stake in the CME Group, in july 2010, the investment is now valued by the equity method and the portion relating to the impairment, net of tax, amounting to R$460,610 was reversed against equity, establishing a new cost basis for investments classified according to CPC 18/IAS 28. (b) During the year 2009, based on the new level of cost of the investment, CME Group shares, as a result of the change in fair value, generated a positive effect of marking to market in the amount of R$77,396, net of tax. As from July 2010, concomitantly with the increase in participation in CME Group from 1.78% to 5%, the investment is valued on the equity method.

(c) According to the Technical Interpretation ICPC 08 - Accounting for Proposed Dividend, the portion that exceeds the mandatory minimum dividend (including interest on capital) must be maintained in equity, in a specific account, until final determination of the shareholders. According to CPC 25/IAS 37, a liability should be recognized only when there is a legal obligation. (c) Presentation of Financial Statements (CPC 26/IAS 1) The participation of minority shareholders was reclassified to equity.

87

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

(d) CPCs / IFRS implemented that did not generate effects on the company: i. Segment Information (CPC 22/IFRS 8) - BM&F BOVESPA is publishing the consolidated financial statements by operating segment (Note 24) Earnings per share (CPC 41/IAS 33) - Earnings per share is now presented based on the net income of the period and the weighted average shares outstanding during the year, excluding treasury shares. The diluted earnings per share is also became presented, taking into account the potential impact arising from stock options that may dilute the result by increasing the number of shares.

ii.

(e) Exemptions from full retrospective application In preparing those financial information in accordance with new accounting practices adopted in Brazil, BM&FBOVESPA applied the mandatory exceptions and certain optional exemptions in relation to the full retrospective application of the new accounting practices outlined below, following the prerogatives of the CPC 37/IFRS 1. The main exemptions listed in the CPC 37/IFRS 1 do not apply to the BM&FBOVESPA ibecause of the reasons listed below: (i) Business combinations - BM&FBOVESPA has applied the business combinations exemption described in IFRS 1 and CPC 37 and therefore did not restate the business combinations that occurred before January 1, 2009, the transition date; (ii) Deemed cost of fixed assets - BM&FBOVESPA has opted to use the values recorded under previous accounting practices and did not use the exemption of deemed cost on the transition date; (iii) Leases - BM&FBOVESPA chose to reassess the contracts within the scope of IFRIC 4, considering the facts and circumstances of the transition date. No impacts were identified as the previously adopted practices were already aligned; (iv) Share-Based Payment - The Brazilian accounting practices are already aligned (v) Assets and liabilities of subsidiaries - The initial adoption of new practices were implemented concurrently and consistently in all subsidiaries.

(f) Exceptions to retrospective application

88

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

The estimates adopted in preparation of these financial statements as of January 1st , 2009 and December 31, 2009 are consistent with estimates on the same dates in accordance with the accounting practices previously adopted in Brazil. The other mandatory exceptions did not apply because there were no significant differences with regard to accounting practices previously adopted in Brazil.

27

Interpretations and amendments to existing standards that are not yet in force
Topic Key-requirements The IASB has amended IAS 32 to allow that rights, options or warrants to purchase a fixed number of equity instruments of the entity for a fixed amount in any currency are classified as equity instruments, provided that the entity provide rights, options or warrants proportionally to all owners of the same class of its own equity instruments, not derivatives. Clarifies the requirements of IFRS when an entity renegotiates terms of a financial liability with its lender, and it agrees to accept the entity's shares or other equity instruments to settle the financial liability in whole or in part. Offers to those entities that adopt IFRS for the first time the same options that were given to current users of IFRS in the adoption of amendments to IFRS 7. It also Effective date Applicable to financial years beginning from February 1, 2010.

Amendment to IAS 32, Financial Instruments: Presentation - Classification of Rights Issues "

IFRIC 19 - "Extinguishment of Financial Liabilities with Equity Instruments"

Applicable to financial years beginning from July 1, 2010.

Amendment to IFRS 1 "First-time Adoption of IFRS - Limited Exemption From Disclosure of Comparative IFRS 7 for Entities That Make the First Time Adoption"

Applicable to financial years beginning from July 1, 2010.

89

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

clarifies the rules for the transition of the amendments to IFRS 7. IAS 24 - "Related Party Changes the definition of a Disclosures" (revised 2009) related party and modifies certain disclosure requirements for related party entities related to the government. Amendment to IFRIC 14, IAS 19 - "Asset Limit for Defined Benefit, Minimum Funding Requirements and their Interaction" Removes the unintended consequences that arise from the treatment of prepayments, in which there is a minimum requirement of providing resources. The results of advance payments of contributions in certain circumstances are recognized as assets rather than expense. IFRS 9 is the first standard issued as part of a larger project to replace IAS 39. IFRS 9 retains and simplifies the measurement model and establishes two main categories of measurement for financial assets, amortized cost and fair value. The basis of classification depends on the business model and the characteristics of the entity's contractual cash flows of financial assets. The guidance included in IAS 39 on impairment of financial assets and hedge accounting continues to be applied. Prior periods need not be January 1, 2011

January 1, 2011

IFRS 9 “Financial Instruments "

January 1, 2013

90

(A free translation of the original in Portuguese)

BM&FBOVESPA S.A. – Bolsa de Valores, Mercadorias e Futuros Notes to the Financial Statements at December 31, 2010
(All amounts in thousands of reais)

resubmitted if an entity to adopts the standard for periods beginning on or before of January 1, 2012.

28

Subsequent events

On February 17, 2011, the Board of Directors proposed the distribution of R$ 406,086 as additional dividends for the year ended December 31, 2010, which is subject to the approval by the shareholders in the next General Ordinary Meeting..

91

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