One initiative to promote the Regional Integration is the Pilot Project between Sao Paulo Stock Exchange (BOVESPA) and the Mexican Stock Exchange (BMV). In order to further the Integration of the Brazilian and Mexican stock markets, both exchanges signed a Memorandum of Understanding on September 6th.
The Pilot Project intends to enable investors from both countries to trade stocks of listed companies on BOVESPA and BMV, using their local intermediaries. Broadly speaking, it aims at standardizing rules for public offerings and promoting mutual recognition of securities traded on exchanges of the region’s countries. The core issue for the integration is an agreement between Mexican and Brazilian brokerage houses, the Correspondent Brokers, which will allow investors from both countries to access stocks listed on the other stock exchange.
Additionally, BOVESPA and BMV are developing several initiatives to increase the awareness of Brazilian and Mexican investors. BOVESPA, in its turn, launched the first stage of the Spanish website, providing general information on the Brazilian stock market and its structure. On the second phase, both exchanges will disseminate corporate information on the stocks available for the Integration, as well as quotes and additional operative information aiming at fostering trading.
Both exchanges announced that the fist quarter of 2006 is the goal to start trading under the new scheme. As soon as legal and operative details are solved, the model will be used also by the other LatinAmerican stock exchanges comprising the integration, as Argentina, Bolivia, Colombia, Costa Rica, El Salvador, Equator, Panama, Peru, Uruguay and Venezuela.
The Inter-American Development Bank is also supporting the Regional Integration of the Capital Markets. Further a MoU signed between the IADB and the FIAB during the previous General Assembly of the Federation, in July 2004, the Bank approved a non-reimbursable loan of US$ 200,000 within the Regional Public Good initiative, that with financial and technical support of the FIAB and its member exchanges, aims at implementing important concepts for the mutual recognition of securities listed among the exchanges in the region by the regulators and the standardization of information disclosed by listed companies in the Exchanges of the region.
During the last FIAB Annual meeting, BOVESPA’s chairman, Raymundo Magliano Filho, and Patrccio Pena, current chairman of the Quito Stock Exchange (Equator) were also elected respectively the chairman and vice-chairman of the Federation, both stating as the main goal of FIAB’s administration to carry on the stock market integration process in Latin America. Besides considering the regional integration extremely important to channel domestic savings towards the local economies, thus reducing the emerging countries’ typical dependence on foreign savings, Magliano highlighted that developing local markets would also contribute to generate new investments and job positions.
