Latin American Capital Markets

ENHANCING MARKET INFRASTRUCTURE IN EMERGING ECONOMIES 255other private sector and some government securities; and the Special System forSettlement and Custody (SELIC), for government securities—that play a role in theongoing operation of the systems. 12 For example, the National Association of OpenMarket Institutions (ANDIMA) is responsible for furnishing hardware computer systemsand skilled personnel for the SELIC system, which is owned by the central bankWith the high degree of diversity, competition, and business in Brazilian capital markets,this institutionalization of a cooperative approach to clearing and settlement hascontributed to the streamlining of market infrastructure.The past 10 years have seen considerable consolidation in market infrastructurein Brazil.Ten years ago, there were eight stock exchanges in the country, but themerger of the Sao Paulo Stock Exchange (Bovespa) with the Rio de Janeiro StockExchange at the beginning of 2000 leaves Bovespa as the only stock exchange inthe country. Bovespa is a nonprofit organization owned by its members and is a keyowner of the CBLC. Furthermore, the vast majority of derivatives transactions in Brazilare cleared and settled through the Commodities and Futures Exchange (BM&F).This exchange uses CETIP for financial settlements and provides its own clearing andcustodian functions.In spite of highly efficient technical securities processing, the lack of a paymensystem with same-day finality made the introduction of DVP difficult and did not supportsame-day finality for payments, as recommended by the Group of 30. In 2001the country began introducing new arrangements for securities clearing and settlementand for payment systems, which are due to be completed in 2002.The centralbank's launching of an RTGS system will support DVP for equities and other securitiesand will introduce same-day finality for payments.The new RTGS systems will supportCBLC and CETIP settlement directly in accounts at the central bank CETIP willestablish a clearinghouse and will join CBLC in becoming a central counterpart for alltrades that it clears and settles.These new systems will include a range of risk controlmeasures in line with international standards and best practices.The private and public sectors in Mexico are actively modernizing capitalmarket structure in terms of risk management, efficiency, and liquidity. As in the caseof Canadian markets, close attention is focused on developments in the United States,in particular on the shift to a T+1 settlement period. S.D. Indeval is the only companyin Mexico authorized to operate as a securities depository. 13 It was incorporated asa private corporation in 1987 and provides custody, administration, and transfer of securities,as well as clearing and settlement.12 See www.cblc.com.br.www.cetip.com.bn bacen.gov.br, and bcb.gov.br13 Indeval's annual report and other information are available at indeval.com.mx.Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub