By Eduardo Thomson
Chile, Colombia and Peru plan to begin an integrated stock trading arrangement this year in a bid to increase volume and lure more foreign investors.
The Santiago, Lima and Bogota stock markets will connect their trading platforms in November to enable cross-border transactions in stocks such as Cencosud SA, Southern Copper Corp. and Ecopetrol SA, said Jose Antonio Martinez, chief executive officer of the Santiago bourse.
In a second phase the three countries may establish a common exchange, which would surpass Mexico in terms of combined market value and narrow the gap with Brazil, as well as incorporating other securities such as bonds.
“By broadening the structures and facilitating market access we are going to see greater participation,” Martinez said in an interview at the exchange today before traveling to Colombia next week to continue talks.
The three sets of regulatory agencies began working on rules for clearing, safekeeping and supervising of cross-border transactions in October after the exchanges signed an agreement Sept. 8 formalizing their intention to integrate.
“Fund managers are uneasy about markets where they may have trouble getting in and out,” said Greg Lesko, who helps manage $800 million at Deltec Asset Management in New York. “From a foreign fund manager’s perspective anything that increases trading volumes would be a very positive move.”
Chile and Mexico probably will begin an agreement next month to boost cross trading via agreements between brokerages in each country, Martinez said. Chile and Brazil may sign an accord in the coming weeks laying out terms of a similar arrangement, he said.
The combined market value of publicly traded companies in Chile, Colombia and Peru is $438 billion, exceeding Mexico’s $358 billion, according to Bloomberg data. Brazil’s combined value is $1.06 trillion.