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Automated Trader talks to Bruno Trigo, head of electronic trading at XP Investimentos

Published in Automated Trader Magazine Issue 36 Spring 2015

Automated Trader talks to head of electronic trading, Bruno Trigo, at XP Investimentos, a broker and market maker on the Brazilian exchange.

Bruno Trigo

Bruno Trigo, Head of Trading, XP Investimentos

AT: How does XP fit in the market?

BT: XP is the biggest independent broker in Brazil, we are not attached to any banks. In 2015 we are ranked third in terms of volume in equities and options, and second in terms of number of contracts in futures on the exchange. We have a broker dealer in the US, XP Securities, with two offices: New York is focused on the north-south flow - so foreign clients trading LatAm - and the Miami office is the opposite - Brazilian investors trading US and Europe markets.

We trade equities, options and futures. We also have desks for fixed income, security lending, commodities and we are also market makers. We offer all services the institutional and retail clients need.

We have an electronic trading desk with two main focus. Connectivity and OMS integrations, trading platforms, colocation and all of the high frequency traders' specific demands. Also algo trading strategies that are developed internally by XP. These execution algos are offered to our clients and used by our trading desks.

AT: BVMF was actively welcoming HFT. How has that worked out?

BT: They did many improvements on their technology, in the trading and post-trading environment, along with new policies for HFT discounts. Their partnership with CME brought the new matching engine PUMA and new market data was established - the Unified Market Data Feed. The integration of clearings is an important project on the post-trading aspect.

For sure a second exchange would be beneficial to the Brazilian financial market. It would bring more arbitrage opportunities and liquidity to the market, one of the major problems today. It would eliminate the monopoly we have today, creating a competition for best services and lower rates - one of the biggest barriers for investors. Efforts are being done by the ATS group (and it) has a formal request open at (Brazilian markets regulator) CVM.Even with those changes, I feel that more could be done to foment this market.

Total and institutional AUM for the currently active strategies with Brazil exposure

Source: eVestment

Cumulative returns for strategies with exposure to Brazil by universe and exposure level for currently active funds

Source: eVestment

Cumulative returns for strategies with exposure to Brazil by universe and AUM size for currently active funds

Source: eVestment

AT: How are quant funds faring in the current economic scenario?

BT: Money under management of local quant funds in Brazil decreased recently, but their performance in 2014 compared to other multimarket funds in the industry was very good. I see that education for investors is still a very important barrier that the quant industry has.

XP started as an education house, XP Educação, and after six years became an asset management firm, XP Gestao, and a broker dealer. On the retail side, education is really important to avoid our investors to be afraid or get out of financial market. It also helps them to understand other products and best opportunities instead of savings accounts.

AT: Are the BRICS relevant for you?

BT: BRICS are very important to XP. Brazil is where XP started and it's our main market, and the other countries bring new clients to us. I see some clients commenting a lot about the India market and how it is growing, that there are many opportunities there.

And we have clients from the BRICS countries trading Brazil. Specifically, India and China clients - they are both fairly equal and active.