(Xinhua)
Updated: 2008-03-27 10:45

RIO DE JANEIRO - The holding companies of the Sao Paulo Stock Exchange, or Bovespa, and the Brazilian Mercantile and Futures Exchange, or BM&F, have confirmed their merger, local reports said Wednesday.

The move will create the world's third largest exchange with a market value of 18 billion US dollars, led only by the Deutsche Borse with a value of 30 billion dollars and the Chicago Mercantile Exchange (CME), with 25 billion dollars.

According to their holding companies, the new exchange will be called Nova Bolsa, and stocks will be divided equally between Bovespa and BM&F.

As Bovespa's market value exceeds that of BM&F, its shareholders will get an additional 1.24 billion reais (721 million US dollars) in cash.

The merger will lead to a 25 percent cut in operational costs by 2010, according to the exchanges. A special committee comprised of presidents and senior directors of Bovespa and BM&F is expected to work out the organizational structure of the new exchange in six months.

Bovespa and BM&F said in a statement they expect their shareholders to approve the merger by the end of April.

The merger has to be approved by the Brazilian Central Bank and the government's Administrative Council of Economic Defense to be effective.