Colombia

CACEIS Colombia explains that the three stock exchanges agreed to create a new holding company, incorporated in Chile, in which the Chilean entity will hold 40%, the Colombian entity another 40% and the Peruvian entity the remaining 20%.

This combination will not only include the stock exchanges, though. The CSDs of Colombia and Peru will also be integrated, as well as the CCPs of Colombia and Chile and price vendors from Colombia and Peru. However, the Chilean CSD (DCV) and the Colombian Stated-owned CSD will not be included at this stage.

Fourteen years after a multidisciplinary team was created to assess the possibility of integrating the stock exchange markets of Colombia, Peru and Chile, their shareholders finally approved the integration, which is expected to be operational in the third quarter of 2023.

The main objectives of the new Andean market are:

• The development of a regional marketplace through the creation of a standardised business model, leveraged on the synergies brought by new technologies and operational flows

• Granting access to more than one thousand issuers, offering access to three stock indexes

• Enlarging the number of counterparties, since all the stock members of those three countries will be able to access the same platform

Manuel Suaza, head of clients at Santander

Improved market capitalisation is expected for the new Andean stock exchange because of cost-efficiencies achieved in products and market developments, based on the fact that these efforts will be made following unified corporate governance. Market participants should also benefit from higher diversification, based on new asset classes and investment opportunities.

The World Bank notes that Colombia has a track record of prudent macroeconomic and fiscal management, anchored on an inflation targeting regime, a flexible exchange rate, and an upgraded rule-based fiscal framework, which provide a good foundation to secure macroeconomic stability.

GDP strongly grew at 7.3% in 2022, but the economy overheated with activity above the potential, accelerated inflation, and a high current account deficit. GDP is projected to grow by only 1.7% in 2023.

Growth is projected to steadily increase to 2% in 2024 and 3.2% in 2025, as external demand resumes, and inflation and interest rates come down.

The Mexican securities lending market had just over $878mn (£687mn) of lendable equities at the end of 2022 according to S&P Global Market Intelligence, a significant increase from the $673mn recorded in 2021.

In terms of value on loan, the 2022 total of almost $36bn was $2.8bn higher than in the previous 12 month period. Lending revenues more than doubled last year to $5.7mn.

IHS Markit’s securities finance H2 2022 review reports that revenues in Mexico increased significantly over the six month period on the back of increases in balances, fees and

Utilisation

On 29 April 2023, the Mexican Senate approved a Bill to Amend, Repeal and Supplement Certain Provisions of the Securities Market Law and the Investment Funds Law.

If approved in its terms by the Mexican House of Representatives, law firm White & Case suggests that it would constitute the most relevant reform to securities market law since the financial reform enacted in 2014.

This observation is based on the lack of depth of the Mexican stock market, the need to make certain processes for the offering of securities more flexible, as well as the generation of incentives for small and mediumsized companies to use the Mexican stock market as a source of financing.

The bill focuses on the incorporation of a new simplified procedure for the registration of securities in the National Securities Registry (RNV) to allow small and medium-sized companies to participate in the Mexican stock market through the public offering of debt or equity securities.

The requirements for companies to participate in the simplified securities registration procedure will be determined by the National Banking and Securities Commission (CNBV) by means of general provisions. Issuers that currently maintain securities registered with the RNV may not participate in the simplified registration of securities.

The bill provides that companies intending to become simplified issuers must apply to the CNBV, jointly with the stock exchange on which they intend to be listed. In order for the CNBV to proceed with the simplified registration in the RNV, it will suffice that the corresponding stock exchange grants its favourable opinion to the CNBV, releasing the CNBV of its obligation to review and authorise the offering.

The CNBV will also be released of the obligation to supervise simplified issuers, since it will lack the necessary documentation and information to do so. Therefore, reviewing the registration documentation will be the responsibility of the broker-dealers that participate as underwriters, and of the securities exchanges, in accordance with a self-regulation principle.

The broker-dealers that participate as underwriters must include in their manuals the processes for the review of the information and documentation of simplified issuers under the principle of self-regulation, in accordance with the general provisions to be issued by the CNBV.

Securities subject to simplified offerings may only be purchased by institutional or qualified investors.

Mexico equities 2022 (US$)

The stock exchanges on which the securities subject to simplified offering will be listed must set the rules for the disclosure of periodic information to investors with respect to this type of issuers.

The bill intends to enable securities rating agencies to adopt specific valuation methodologies for this type of instruments, in accordance with the general provisions to be issued by the CNBV for such purposes.

The bill proposes to set limits - to be defined by the CNBV - for issuances by simplified issuers.

Simplified issuers may not request from the CNBV the preventive registration of securities issued under simplified offerings, which means that shelf programmes for this type of securities may not be established.

Under the bill, investors of simplified issuers will have the right to report conducts attributable to simplified issuers that they consider to be unlawful without the need for an opinion of a crime by the CNBV.