MercoPress. South Atlantic News Agency

Chile, Peru and Colombia launch second largest regional stock market

Juan Pablo Córdoba, president of the Stock Exchange of Colombia

Chile, Peru and Colombia formally combined operations of their stock markets on Monday to form the Latin American Integrated Market (Mercado Integrado Latinoamericano, or Mila).

Authorities celebrated the integration of Mila, which will allow for greater access and investment in each country’s stock exchange.

“With the Mila, we are making concrete contributions to the growth of the capital markets, incorporating important benefits for investors, where they emphasize an issuers' major diversification,” said Pablo Yrarrázaval, president of the Stock Exchange of Santiago.

Talks surrounding Mila began nearly two years ago as a way to compete with Brazil and Mexico, the larger markets of Latin America.

In the deal, Chileans will be able to buy stocks from Peru and Colombia through local brokers who will have counterparts in those countries. At the same time, foreign investors will have greater and simpler access to the Chilean market.

Marcos Alvarez, a treasury credit associate with TD Securities, said the integration will provide a “cross listing” of stocks that will help the three individual markets grow.

“This is a good way to have larger scale to reduce costs and also give Colombian access to Peruvian and Chilean stock markets. This is good for the companies because they have more access to capital,” Alvarez said.

Alvarez added that Mila would lead to a more “harmonized relationship” between the three countries and increase the amount of international investment.

Mila will be the first market of the region with potentially 565 companies and the second market in stock exchange capitalization after Brazil with more than 691 billion. Until now, 20 Colombian and 14 Peruvian shares have registered in Chile, representing next to 80% of the deals in these countries.

The first operations of Mila in the Stock Exchange of Santiago were purchases of shares of Endesa Chile and Lan for Colombian brokers.

Juan Pablo Córdoba, president of the Stock Exchange of Colombia, said that Mila points toward “a much wider, completely transparent and simple market.”

“With Mila, these benefits will multiply by three, opening borders so that investors of the three countries can look beyond just what is local,” Córdoba told El Colombiano.com.

The general manager of the Commodity Exchange of Santiago, José Antonio Martínez, also emphasized that “the markets are quite complementary.”

In the Peruvian Stock Exchange, they emphasize the qualifications of its mining industry, which has a strong presence in Chile, whereas Colombia has a strong energy sector with the petroleum company Ecopetrol.

Fernando Colomba, head of Chile’s Superintendencia de Valores y Seguros, a regulatory agency that monitors Chile’s stock market, said that in the next few days they will create a Supervisory Committee composed of regulators from the three countries. The committee will meet periodically and monitor all aspects that arise from the activities associated with the initiative.

Alvarez calls it the first major step in integration.

“This will increase liquidity. It’s going to make the market more efficient eventually because there are going to be more players in the market, more traders, more buyers, and three regulators instead of one, so I think it’s a positive step.”

By Nathan Frandino - The Santiago Times