Latin American Capital Markets

252 ANDREW HOOKIn addition to the establishment of Euronext, which illustrates an incrementalapproach to consolidation or integration of market infrastructure, institutions inScandinavia are exploring regional solutions for market infrastructure. Swedish andDanish institutions are leading a collaboration of Scandinavian stock exchanges andcentral securities depositories to develop common platforms and linkages amongthe markets. 9 Political, regulatory, and technology differences persist, however; and itwill take some time for the four markets to become fully integrated. A key elementof the effort in Scandinavia is the formation of national securities associations andsimilar organizations to develop and lobby for necessary changes in legislation andregulation.In Asia and other areas of the world, the focus in market infrastructure continuesto be primarily at the national or country level. Institutions are focusing on theimplementation of the Group of 30 recommendations on securities clearing and settlementincluding delivery versus payment, T+3 as a settlement period, same-dayfunds, and a central securities depository. Malaysia is an example of a pro-active strategywhere a major set of reforms for the securities market as a whole has been implemented.Theoverarching goal is to strengthen investor confidence in the market'soperation, drawing heavily on best practices internationally and in other countries.TheKuala Lumpur Stock Exchange is to offer institutional settlement service for clearingand settlement. Clearing membership is being extended to include resident custodianbanks and institutional investors, and DVP has been introduced.Capital Market Infrastructure in Latin America and the CaribbeanNational goals of encouraging foreign investment and maintaining or increasing liquidityand market size in the face of strong international competition drive the developmentof capital market infrastructure in Latin America and the Caribbean. Forinstance, in Brazil, both the private and public sectors are moving along these lines.Capital markets in developed countries increasingly attract large companiesbased in Latin America and the Caribbean that are seeking to raise funds. AmericanDepository Receipts, for example, are siphoning liquidity from the region. Furthermore,mergers and acquisitions of companies making up a large part of the float (ac-9 Information on the Norex alliance (Copenhagen Stock Exchange, Iceland Stock Exchange, Stockholmsborsen, andOslo Bors) can be found at www.norex.com. Finland is currently taking a different approach, seeking linkages with systemswithin the European Union.Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub