Latin American Capital Markets

PROMOTING REGIONAL CAPITAL MARKET INTEGRATION 177dermine the standing of the court; ambiguities in some of the legislation; lack of commissionresources; and a low number of complaints.Ambiguity, rigidity, and slowness. The necessity of obtaining a political consensus in thevoting structure of the European Council of Ministers when negotiating new legislationcan lead to the adoption of ambiguous texts or texts with a level of harmonization sominimal that no real integration is achieved. Reasons for this may be the lack of transparencyin the procedure by which negotiations are conducted and the arbitrariness ofthe political process.The ISD, for example, does not give sufficient clarity about whoseconduct of business rules should apply to wholesale business.The same provisions areoften interpreted and applied by member states in a different manner Without legalclarity, efficient delivery mechanisms cannot guarantee equivalent implementation.European Union legislation is time-consuming, difficult to achieve, and, onceobtained, difficult to change. Even when political problems do not arise, it takes threeyears on average to agree to a directive. Such a timescale means that legislation cannotkeep pace with the capital markets, given their complexity and the speed at whichthey are developing. There is no rapid mechanism in place to update community directivesto new market developments, and, importantly, the Single Market programrelies too much on legislation for determining detailed rules.Cooperative Initiatives in Market InfrastructureThis section describes and assesses key types of cooperative initiatives in the provisionof market infrastructure that can be used to promote regional capital market integration.Attention is focused on examining and evaluating projects between organizationsthat deliver the following seven market infrastructure functions: listing, informationdissemination, order routing, trading, clearing via a central counterparty, settlement,and marketing. In addition, the section provides some general comments on the successand failure of linkages and cooperative efforts at regional market integration.The discussion concentrates on cooperative projects between market infrastructureproviders because these are frequently projects that affect the public interest,that are large in nature, and that governments and regulators seek both to instigateand supervise. However; competition, rather than cooperation, between all typesof market participants, including infrastructure providers, is one of the most powerfuldrivers toward regional capital market integration. Private self-interest is normally sufficientto promote such competition, as long as there are no regulatory barriers impedingitCopyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub