Latin American Capital Markets

INSTITUTIONAL INVESTORS AND CAPITAL MARKET DEVELOPMENT 151investor base and healthy capital markets. To facilitate the movement of savings intothe capital markets, a balanced regulatory framework must provide investor protectionsto increase demand for investment products. As liquidity and transparency increase,some regulations may be slowly relaxed to allow innovation and competition.It will be crucial to implement high standards of disclosure, fiduciary obligations, andinvestor protections provided through a strong corporate governance frameworkand investor education.Although each of the factors discussed can play a role in the development ofinstitutional investors and capital markets, ultimately, their development is a dynamicprocess. Policymakers must be committed to continually seeking to modernize theregulatory framework to address the needs of investors and the industry.BibliographyAsociacion de Supervisores de Seguros de America Latina (ASSAL). 2001. Annual StatisticalYearbook. Santiago, Chile, http://www.assalweb.org/english/html/anuario/fr_anuario.html.Associacion de Fondos Mutuos (AFM). 2002. Country Report: Peru. http://www.fefsi.org/.Black, Bernard S. 2001 .The Legal and Institutional Preconditions for Strong SecuritiesMarkets. UCLA Law Review 48:781.Blommestein, Hans J. 1997. Institutional Investors, Pension Reform, and EmergingSecurities Markets. Paper for presentation at the IDB Conference on the Developmentof Securities Markets in Emerging Markets: Obstacles and Preconditionsfor Success. Office of the Chief Economist, Working Paper 359.Inter-American Development Bank, Washington, DC.Bolsa de Santiago. 2001. Data presented at the U.S. Securities and Exchange Commission.International Institute for Securities Market Development. Washington, DC.,April 23-May 4.Canute, James. 2002. New Market Aims to Deliver Island Vision: Caribbean SecuritiesExchange Opens with Two Stocks, but Has High Hopes. Financial Times (London),January 2, p. 17.Coffee, John. 1991. Liquidity versus Control: The Institutional Investor as CorporateMonitor Columbia Law Review 91:1277.Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub