Latin American Capital Markets

286 ROBERTA S. KARMELcial interests—political parties, labor unions, members, issuers, and investors.The newboard had nine members elected by the shareholders. Transparency and free accessto the market, including remote memberships, were part of an international strategy.Since OM was a listed company, it was entitled to be an initial subscriber toshares in the Stockholm Stock Exchange and took advantage of this opportunity.Thereafter, OM increased its share ownership to 20 percent and in 1998 proposed amerger between OM and the Stockholm Stock Exchange. This was a controversialproposal that succeeded because the Ministry of Finance believed a merger of thecash and derivatives markets would be beneficial to the Swedish capital market. Inorder to satisfy opponents of the merger, the Swedish government became a shareholderof both the Stockholm Stock Exchange and OM. At the time the merger wascompleted, in January 1998, the Swedish government owned 6.3 percent of shares inthe combined entities and had announced an expectation of becoming a 10 percentowner, allowing it to block measures. 32 In addition, new legislation was passed increasingthe supervision of exchanges by the Financial Supervisory Authority.This new law gave the Financial Supervisory Authority the power to vet owners(more than 10 percent stockholders) and managers of exchanges, similar to thelicensing of persons associated with banks and brokerages. The authority was givendirect supervision of public disclosure by OM and the Stockholm Stock Exchange.TheFinancial Supervisory Authority was given the right to initiate disciplinary proceedingsin cases concerning companies with a qualified holding in an exchange.Equity markets are important in Sweden. In the late 1990s, one of every twoSwedes owned shares, either directly or indirectly (Stockholm Stock Exchange 1997).At the end of 1997, Stockholm had the eighth-largest market capitalization in Europe,which was 127 percent of gross national product. 33 The merger of the StockholmStock Exchange and OM consolidated equities and derivatives exchanges in a singlebusiness, including foreign exchange commodities, bonds, and derivatives instrumentsbased on them, now called the Stockholm Exchanges (OM Gruppen 1997).The combinedexchanges also have been consolidating internationally, especially in the Nordicregion. In 1997, a clearing link was established between OM and the Finnish derivativesexchange. On February 14, 1997, the Swedish and Norwegian derivatives marketswere united via the world's first electronic trading and clearing link between independentexchanges. On June 21,1999, Sweden and Denmark launched the first32 OM and Stockholms Fondborse, Information Relating to the Merger of OM Gruppen and Stockholms Fondborse12 (translation of excerpts from the Swedish prospectus, dated December 19, 1997).33 Stockholm Stock Exchange (1997); http://www.fese.be/allmarkets/htm.Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub