Mexico has confirmed that it plans to join the Mercado Integrado Latino Americano (MILA), the trading alliance launched that links a group of Latin American exchanges.
The Mexican Stock Exchange, a subsidiary of Bolsa Mexicana de Valores (BMV), has signed an agreement of intent with the exchanges of Colombia, Peru and Chile to join the alliance.
Announced in June 2010, the MILA initiative is a trading link between Chiles Bolsa de Comercio de Santiago, Bolsa de Valores de Colombia and Perus Bolsa de Valores de Lima. It aims to provide domestic brokers with access across the three equity markets through a system of intermediated order routers.
The success of the MILA exchange will depend on whether the brokerage community supports it, Dirk Reinicke, Deutsche Bank’s regional head for Latin American Direct Securities Services, told Global Custodian in Integrating with MILA, Summer Plus 2011. “The success of this joint venture will rely a lot on the brokerage community and if they embrace it,” he says. “Their support of the joint exchange is critical to it getting off the ground.”
Brokers in each country can send orders to participating exchanges via the network of local brokers in the other countries in the alliance. Trading and post-trade procedures will be conducted according to the rules of the exchange that lists the instrument in question.
The BMV will explore the operational and technology requirements of the partnership under the agreement signed by Luis Tllez, president of BMV Group, and representatives of the other three exchanges.
The partnership is subject to the authorization of regulators and legal adjustments. The goal of the agreement is to integrate BMV with MILA to increase listings and bring further technological and operational benefits to participants in the region.
The second largest stock exchange in Latin America with a total market capitalization of more than $453.8 billion, BMV operates cash, listed derivatives and OTC markets for multiple asset classes, including equities, fixed income and exchange traded funds, as well as custody, clearing and settlement facilities and data products for the local and international financial community.
Aite Group has warned brokers active in the participating markets that they may begin to face increased competition as investors can access all three markets from a single broker in any one of Chile, Colombia, Peru or, if it does join, Mexico. The regulatory structure, on the other hand, is less than standardized. Companies listed on the exchange, as well as brokers and clearing agents, are supervised by their respective domestic regulators, along with the accompanying independent taxation and regulatory requirements.
– Bruce Love, The Tradebruce.love@thetrade.ltd.uk
(CG)