Latin American Capital Markets

256 ANDREW HOOKThe market capitalization of securities held in S.D. Indeval was $321 billion atthe end of 2000, with the equity market making up $ 179 billion; government securities,$ I I I billion; and bank securities, $31 billion. Daily turnover in 2000 was $63 million on average.The bulk of the turnover was for bank and government securities, thatis, $39 million and $24 million, respectively, while daily equities turnover was only$324,000. Institutional trading drives the transactions in fixed-rate instruments, in contrastto equities where institutions do not play a large direct role.All Mexican securities are held in registered form since S.D. Indeval acts asa central registrar, with assets held under the participant's name in a segregated accountdesignated as belonging to third parties. 14 Registration of securities is executedsimultaneously with settlement in S.D. Indeval. Securities are centrally immobilized inthe depository. S.D. Indeval is promoting dematerialization for all securities. At present,government securities are dematerialized and held by Banco de Mexico and settledthrough S.D. Indeval.S.D. Indeval keeps abreast of international developments in capital market infrastructurethrough participation in international initiatives and national projects.Thedepository is a member of the Global Equity Market (GEM), a project to connecteight stock markets in 10 different countries, with the goal of performing settlementon a global basis.The depository is working with the Mexican Stock Exchange to developthis strategic project for the market. S.D. Indeval has also joined the CCP-12group of central counterparts that is focusing on settlement issues.S.D. Indeval is developing central counterpart capabilities as a way to reducethe use of credit and funding for settlement, increase liquidity, reduce default rates, andcreate a more robust guarantee fund to back settlements. Before the capabilities canbe activated, however; the governing laws must be modified, and the depository isworking to encourage the necessary changes. Finally, S.D. Indeval has launched a projectaimed at encouraging STR which is seen as essential for shifting to a shorter settlementperiod and maintaining consistent practices internationally.Developments in Other Countries in Latin America and the CaribbeanArgentinaIn the Southern Cone, large-scale modernization of payments and securities systemshas been achieved in Argentina, while market infrastructure in Chile, although wellfunctioning, has several areas that could be strengthened, relating to payment systemsCopyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub14 Bearer securities were prohibited in Mexico in 1984.