Latin American Capital Markets

GLOBALIZATION.TECHNOLOGY AND REGULATION IN CAPITAL MARKETS 61Should there be a regional exchange or formal market linkage? If there is aregional exchange, does each country need its own stock exchange?TechnologyHow will technology change the capital-raising process? Technology has resulted inseveral changes in the marketplace. Issuers have started using the Internet to raisecapital, investors are able to access the markets much more easily information is readilyavailable to both institutional and retail investors, e-brokers have emerged, and theregistration and filing process with the securities commission and the exchanges is becomingelectronic.The region has to make sure the technological infrastructure existsin the capital markets to allow these changes to take place, so that capital markets willcontinue to be competitive.How can technology in the areas of clearance and settlement and risk managementbe improved? The exchanges have made significant progress in updating thetechnology of trading systems, but clearance and settlement are the backbone of awell-functioning market, and the concerns expressed by foreign investors in this regardneed to be addressed. Similarly, many markets do not have risk management systemsin place and should identify and implement best practices in this area.Will other trading systems create competition for exchanges? It is quite realisticto expect ATSs to enter some of the markets.They bring innovative technologyin addition to adding value in other ways. ATSs and ECNs pose a number of issuesthat will need to be addressed.RegulationWhat international regulatory standards need to be adopted? IOSCO has alreadydone a great deal of work to lay the framework for a global regulatory structure. Capitalmarket regulators in Latin America and the Caribbean should take the necessarysteps to implement these best practices. Securities commissions will need adequatehuman and financial resources to carry out their role. In many countries, the staff doesnot have sufficient training and is not familiar with global trends. It is necessary to recruitcompetent staff and to train current staff to carry out its responsibilities.How should the exchanges and regulators deal with cross-border trading issues?Thischapter has addressed a number of issues with regard to cross-border trading.It is important for the markets in the region to engage in the discussions takingplace about these issues and make sure their viewpoint is heard. Regulators have tomake cross-border trading easy and at the same time protect local investors.Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub