Latin American Capital Markets

ENHANCING MARKET INFRASTRUCTURE IN EMERGING ECONOMIES 265pany issues equity or other securities in its own country and that there is a legal basisfor holding the securities in the country it may make sense to continue to have depositoriesin each country, but with functions limited largely to custody. However; thisis by no means the only possible outcome, as depositories could take on a widerrange of functions, possibly cutting into the business of custodian banks. The pointhere is not to predict necessary outcomes, but to highlight the importance of monitoringdevelopments in areas such as regional integration and ITVision should be built on good, timely, relevant, and accurate information ona range of activities in IT regulation, and institutional development Strategic partnerscan be essential. In this context, international and regional institutions and associationscan play an essential role by streamlining the flows of information and assuring moretargeted dissemination. Activities in these areas can also help raise awareness of problems and issues for key parties that are not direct stakeholders in the market infrastructure.Some of the public sector institutions and organizations are IOSCO, CPSSof the BIS, the IMF, the World Bank, and the Inter-American Development Bank At aregional level, COSRA and CEMLA have an important role to play, particularly in theimplementation of best practices within the region.Various private sector associationssuch as the American Association of Central Securities Depositories, also can play animportant role in this process.ManagementGood management is essential for successful modernization of market infrastructureto translate the vision into strategies and action and to achieve concrete results.Thelarge number of institutions involved, the multidisciplinary nature of market infrastructure,the importance to financial institutions active in clearing and settlement, thepotentially high costs of investment, and the difficulty in visualizing opportunity costsmake good management absolutely essential for successful modernization initiatives.The indispensable characteristics for management in this area are not different fromthose needed in any other large-scale business, although the diversity of stakeholdersis probably wider than in other cases.One of the challenges for management is to obtain the participation andcommitment of all relevant stakeholders. Failure to reach a consensus among variousstakeholders can jeopardize the initiative, even after considerable investment andwork It is also essential to have the active participation of financial sector supervisorsincluding the central bank and securities commissions.The safety and soundness of financialmarkets are a central objective of regulators, and the infrastructure needs toCopyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub