Latin American Capital Markets

78 GEORG WITTICH, ETHIOPIS TAFARA, AND ROBERT J. PETERSONternet communications. In particular; issuers and intermediaries have asked about thescope of their liability for hyperlinks to websites containing third-party informationand their liability for maintaining websites during registered offerings. Likewise, dependingon the legal regime, an opinion concerning a security given via an Internetdiscussion site (IDS) could qualify as "investment advice" and thus subject the site toregulation as an investment adviser; generating understandable consternation amongcompanies providing IDS facilities. Finally, ISPs frequently are unaware of the nature ofInternet-related securities fraud or the types of information securities regulators seekfrom them when prosecuting such fraud.The following sections, which summarize lOSCO's findings, are illustrative ofthe interaction among the Internet, the securities industry, and regulation.System Capacity, Resilience, and SecurityThe Internet's ability to instantaneously reach a large number of market participantshas reduced costs for the securities industry. As a consequence of these advantages,broker-dealers now encourage investors to trade online (box 3-1 ).This developmenthas led to significant growth in the number of online securities accounts. However;Box 3-1 I Progress in the Use of the InternetIn the United States in 2000, there were I 1.7 million online investors, nearly double the numberof online investors in 1999. In 2000, these investors made more than I million trades per day andheld $ 1.08 trillion in assets in online brokerage accounts.In Canada, a study conducted by the Toronto Stock Exchange in the spring of 2000 found thatfour in 10 Canadian investors spend more than 10 hours per month reviewing investment materialonline, while checking stock and mutual fund prices on the Internet every day.IDC, a technology consulting firm, estimates that Latin America will have 75 million Internetusers by 2005, with the number of individuals in Latin America accessing the Internet increasingby 40 percent per year between 2000 and 2005. Online trade in Latin America is expected tobe worth $72 billion by this time.Several Latin American nations recently have enlisted the Internet as a tool against corruption.Mexico, Argentina, and the Dominican Republic post information about public officials' personalassets on the Internet to encourage honesty, while Mexico and Chile have started processing governmentcontracts online to encourage transparency and discourage bribery.The number of online securities accounts in Europe is projected to grow to 10.5 million by2003, from 3.74 million during the beginning of 2001.Source:Toronto Stock Exchange and World Investor Link (2000).Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub