Central America: IADB pushes stock exchange merger
President of Panama’s Bolsa de Valores expects new exchange to be created next year.
The Inter-American Development Bank is working with the stock exchanges in El Salvador, Costa Rica and Panama to try to define a convergence strategy with the long-term objective of a single stock exchange.
"There is consensus among the stock exchanges on how the [convergence] process will begin," says Juan Ketterer, a senior financial specialist at the IADB. "It will be done by progressively sharing certain market facilities, such as trading platforms, IT, clearing and settlement facilities, and adhering to the same international standards, easing the information flows and promoting the cross-membership of brokerage houses." The development bank was one of the initial forces behind the idea of a single merged exchange in the region.
Initially the bank granted non-reimbursable technical assistance to the stock exchanges by hiring consultants to advise on the general strategy and a time line for the process. The IADB expects to continue to offer technical assistance for the project.
The IADB, as well as bankers and stock exchange officials, is confident this is an important project. At the moment investors in El Salvador have to place orders with their local brokers that then go to Panama to complete the order – a new, merged exchange would ease the flow of these transactions.