Latin American Capital Markets

70 GEORG WITTICH, ETHIOPIS TAFARA, AND ROBERT j. PETERSONHyperlinksThe Internet allows website sponsors to establish electronic links, known as "hypertext"or "hyperlinks," which allow for the interconnection of information and materialswithin (internal hyperlinks) and between (external hyperlinks) websites (Gavis1998). Hyperlinks allow viewers to move quickly and easily through documents to findthe desired information, creating proximity between information sources that is notavailable in the paper context.This rapid, cross-referencing mechanism provides readerswith a unique and valuable information-gathering tool.DecentralizationThe Internet is an "open" network without a central location from which it emanatesor from which it can be controlled. It is a highly decentralized system, comprised ofmillions of computers and subsystems.This is in contrast to more costly and less accessibleproprietary networks and commercial online networks, which are "closed"systems owned and operated by an entity responsible for maintaining and controllingits network 2FlexibilityThe Internet is a flexible medium that gives the industry control over the content ofits websites. Unlike television and newspaper advertisements, information on websitescan be easily and inexpensively erased or updated within minutes. New functions andservices can be added easily.The Internet and Its Impact on Capital MarketsRapid advances in Internet-related technologies are changing the structure and natureof securities business, as investors and securities industry professionals both come torely on the Internet in their daily business (see table 3-2).This section discusses thecurrent uses of the Internet being made by the various market participants.2 In proprietary and commercial online networks, members typically pay a monthly fee to access the network France'sMinitel and America Online in the United States are examples of commercial, proprietary networks. Although thesenetworks are extremely large (each with millions of members), they are distinguished from the Internet because theyare centrally managed and controlled. Certain Internet networks that restrict access through the use of encryptiontechnology or passwords are, in effect, "closed" networks.Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub