Latin American Capital Markets

258 ANDREW HOOKday finality depends, at least indirectly, on the central bank's guarantee of a certaintype of check This system has worked smoothly, but in light of the emerging importanceof real-time gross settlement systems, the central bank is currently moving towardthe establishment of such a system.On the securities side, the Deposito Central deValores (DCV) is the only depositoryin Chile and administers all forms of securities. 16 All stock exchange transactionsfor fixed-income instruments and stocks are cleared and settled through thedepository.The settlement periods areT+3 for equities,T+2 for fixed-income instruments,andT for money market instruments. A little over one-third of securities heldin DCV at the end of 2000 (a total of $67 billion) were in dematerialized form.Thereare two types of settlement, bilateral and multilateral (among brokers only). Bilateralsettlement is on a DVP basis using certified checks, while multilateral settlement is noton a DVP basis. Multilateral settlement only covers equity trades among brokers andis relatively small compared with overall trading volume, but contains counterpart riskPeruIn Peru, the private and public sectors have taken a number of steps in recent yearsto improve market infrastructure. In 1998, the central bank established the PaymentSystem Inter-bank Commission (CISPA) to spearhead change in payment systems.CISPA has provided a forum for developing a consensus on payment system reform.The central bank has recently introduced an RTGS system and is working with CISPAto introduce an electronic clearinghouse to streamline the large number of checkscurrently being used.During the 1990s, capital markets in Peru underwent significant development,with the passage and implementation of securities market legislation. The SecuritiesMarket Law of 1996 presents the principles that govern the functions of securitiesmarkets in Peru. The country has passed legislation for a CSD and an independentprivate company, CAVALI. l7 This company started providing depository services in1997, and the securities commission approved internal regulations in 2000.Andean CountriesAmong the Andean countries, Colombia has done the most to improve market infrastructure,although other countries are developing initiatives. Ecuador is working on16 DCV's website is www.dcv.cl.17 Further information on CAVALI can be found at www.cavali.com.pe.Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub