Latin American Capital Markets

PROMOTING REGIONAL CAPITAL MARKET INTEGRATION 187Trading on the BRVM is computerized, with satellite links, which allow brokersto transmit orders from any of the member countries to the central site in Abidjan,to check and interact with the order book, and to see information about the marketand the central depository. The exchange has 15 brokerage firms. Trading takesplace on three days of the week, and all orders are filled at a price set at a fixing oncea day.Trades are cleared and settled at the Depositaire Central/Banque de ReglementS.A. Initially, 35 companies were quoted on the BRVM. Current capitalization is justover 827 billion CFA ($1.13 billion). 40 The average value of all transactions at eachtrading session of the exchange from October to December 2000 was 215 millionCFA ($295,000). If this level of transactions were continued for the whole year,the amount turned over would be 33.54 billion CFA ($45.6 million) a year Thiswould represent about 4 percent of the total capitalization of the exchange, a relativelylow amount of turnover.Three lessons may be learned from the experience of the development ofthe BRVM. First, it can take a very long time to build a regionally integrated exchange.Second, the fact that a regionally integrated exchange is built does not mean that itwill be used or that it will integrate the markets.Third.the sustainability of any regionalproject must be carefully assessed before the project is undertaken. Private sectormarket participants, as opposed to regulators, central banks, or other public institutions,normally have the best incentive to determine whether the expenditure on aparticular integration scheme for market infrastructure is worthwhile, especially whenthey are spending their own money.EuronextOn September 22,2000, Euronext was created from a merger of the Amsterdam Exchanges,Brussels Exchanges, and Paris Bourse. 41 The three exchanges agreed to takethe following stakes in Euronext: Paris Bourse, 60 percent; Amsterdam Exchanges, 32percent; and Brussels Exchanges, 8 percent Euronext will continue to operate threesubsidiary holding companies in its three member countries, each of which will continueto hold an exchange license for the local capital market. Euronext is providing aunified order-driven trading platform based on the French system, NSC, and a singleset of trading rules; a central counterpart, netting, and clearinghouse for all trades'The exchange rate for December 1999 was US$ I = CFA 735.28. See Mbendi, http://www.mbendi.co.za/ cyexch. htm.41 This section draws on Euronext, http://www.euronext.com/en/, and Euronext (2000).Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub