Latin American Capital Markets

PROMOTING REGIONAL CAPITAL MARKET INTEGRATION 185precisely when new technology can disintermediate such intermediaries. 37 Two commoncriticisms of cooperative, as opposed to privately established, order-routing systemsare that there is little demand for them and that market participants themselveshave the best incentive to deliver good order-routing systems because they can attractmore business by doing so.TradingA trading system or order execution mechanism lies at the heart of any marketThereare many ways in which operators of trading systems in different countries might cooperateto promote regional market integration. Four cooperative ventures that havebeen attempted are NOREX in Scandinavia; BRVM in West Africa; Euronext in France,Italy, and the Netherlands; and iX in Germany and the United Kingdom.NOREXThe Nordic Exchange (NOREX) Alliance is a cooperative venture between independentexchanges to form a common marketplace for trading in financial instruments.38 The objective is to create a single market covering a wide range of productswith participation from exchanges and other stakeholders from countries in theNordic and Baltic area. NOREX was initiated with a letter of intent between theStockholm and Copenhagen stock exchanges signed in June 1997. In January 1998,final cooperation agreements were signed between the two exchanges, and on June21,1999, Danish stocks listed on the Copenhagen Stock Exchange began trading onthe Swedish technology platform. On October 17, 2000, the Oslo Stock ExchangeBoard approved the agreements to form the basis for it to join NOREX.There is anopen invitation to the Helsinki Stock Exchange to become a partner in the NOREXalliance, and discussions have also been held with the Baltic exchanges.The central elements of the alliance are as follows. Participating exchangesuse one trading system: the OM Technology SAXESS platform. The regulatory functionsof listing companies and supervision of trading and membership are retained byeach national exchange; however; the general rules and regulations have been harmonized.Thealliance is based on cross-membership of the exchanges for intermedi-37 Joel Seligman, quoted in Cox and Michael (1987, p. 848).38 This section draws on Copenhagen Stock Exchange, http://www.xcse.dk/uk/nyt/norex/1 Omarketeff.asp?n=6; OsloStock Exchange, http://www.ose.no/; and NOREX, http^/www.nordic exchanges.com/index.asp.Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub