Latin American Capital Markets

254 ANDREW HOOKBrazil and MexicoLarge numbers of participants, diverse groups of financial institutions, complex legaland regulatory histories, and relatively large market capitalization and trading volumescharacterize capital market infrastructure in Brazil and Mexico. Strategies for modernizationand reform of the infrastructure are strongly influenced by unique factorsin each country and not easily transferred to other markets. One common featurethat will be relevant in other markets is the close cooperation between market participants,private sector institutions, and regulatory bodies, including the central bankIn these complex and diverse markets, coordination and cooperation between marketparticipants and relevant public sector bodies are essential to carry out significantreforms and improvements of capital market infrastructure. At the same time, issuesof risks and risk management, IT telecommunications, and international standards willhave direct relevance to reforms in other countries.In the case of Brazil, capital market infrastructure is complex and sophisticated,reflecting its institutional evolution and development of underlying capital markets.Initially, market participants emphasized technical efficiency, reducing error rates,and automating the transaction cycle. In most cases, securities are dematerialized, withthe remainder being immobilized." Four areas concerning the infrastructure meritfurther attention:• Institutionalized cooperation within groups of financial institutions and acrossgroups• Consolidation of entities providing services and support to the market• Sophisticated IT platforms and solutions for securities processing• Current introduction of an RTGS payment system and a set of changes sothat the securities processing systems will meet current and evolving internationalstandards and best practices.In Brazil, the five major financial trade associations have been an essential partof the development of capital market infrastructure. In part this reflects a concertedeffort by financial institutions in the past to survive and even flourish during periodsof extremely high inflation.These associations have established key clearing and settlementinstitutions—the Brazilian Clearing and Depository Corporation (CBLC), forequities; the Center for Custody and Financial Settlement of Securities (CETIP), forCopyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub1tttttttttttttttuance of betttarer securities was prohibited in Brazil in 1990.