28 October 2009


Justin Schack

VP Market Structure Analysis

Joe Gawronski


Rosenblatt Securities Inc.
New York +1 212 607 3100
Dublin +353 1 855 9125

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The Impact of Brazil’s New IOF Tax on BM&F Bovespa 


What Happened: On Tuesday, October 20, Brazilian president LuizInacio Lula da Silva issued a decree imposing a 2% tax on the inflow of foreign currency into Brazil for the purpose of making portfolio investments in fixed-income and equity securities. Shares in BM&F Bovespa declined by 2% on the news, rebounded later in the week and are once again trading near last Tuesday’s closing level, as investors fear that the tax would have a significant negative impact on trading volumes.

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