Colombia Stock Exchange Wants to Be a Latin American Alternative
CEO Cordoba discusses efforts to bring 'new energy' to country's capital markets
July 28, 2008
The Colombia Stock Exchange (BVC), the country's sole marketplace for equities and fixed income, in September will ramp up its derivatives offerings with a new trading platform from Nasdaq OMX Group.
The move is part of the exchange's efforts to become an alternative to the recently formed BM&F Bovespa and the Mexican Stock Exchange-Latin America's largest market centers-for international investors. "We are building momentum now," says Juan Pablo Cordoba, chief executive of BVC, which was created through a 2001 merger of the Bogota, Cali and Medellin exchanges. "We are developing our business to meet international standards and to be more competitive."
The Colombia exchange is "investing substantial amounts of money in consolidating our technology" across asset classes, explains Cordoba, adding that in 2005 it replaced its fixed-income trading platform with technology from Argentina's Mercado Abierto Electronico. Once Nasdaq OMX's X-stream system is in place for derivatives, BVC will extend the platform to equities by year-end.
In October, BVC tapped Palo Alto, Calif.-based Tibco Software to provide messaging, integration and service-oriented architecture technology, which "will help us quickly scale our trading operations in rapidly growing markets," said Jitendra Puri, VP of information technology at BVC, at the time. "Efficient integration between all of our distributed IT assets with local and international capital market participants is a key goal."
The exchange, which has 160 employees and is the world's fourth-largest fixed-income market, is Nasdaq's first technology customer in South America. "Colombia has made tremendous progress in the last few years," says Markus Gerdien, EVP of market technology at Nasdaq OMX, which "has resulted in heightened interest in the Colombian marketplace from international institutional investors."
The partnership was announced in September 2007, but the former OMX Group has been in contact with BVC for some time, seeking "to better understand their operation and further our knowledge of the Latin American region," according to Gerdien. "The introduction of derivatives is a major step in the development of their marketplace," he adds.
The Colombia exchange typically trades between $50 million and $60 million a day, according to Bulltick Capital Markets, a Miami-based investment bank that specializes in Latin America. Philippe Buhannic, CEO of TradingScreen, a New York-based execution management systems provider that has an office in Sao Paulo, notes that Colombia, along with the rest of the region, has grown significantly and is looking to catch up with more advanced global markets. The rules for local investment in foreign stocks and "the regulatory environment for foreign investments will play a big role in this development," says Buhannic.
Before joining BVC in March 2005, Cordoba was director of Fogafin, Colombia's deposit insurance fund. From 1999 to 2002, he was a Washington, D.C.-based senior economist for the International Monetary Fund. In a recent interview with Securities Industry News, Cordoba, who has a PhD in economics from the University of Pennsylvania, discussed the exchange's infrastructure initiatives and its plans to attract new investors, both locally and abroad.
How are you positioning the Colombian Stock Exchange to compete on an international stage? We have carefully checked what's going on with the exchanges around the world in terms of demutualization, IPOs and the turning of exchanges into for-profit companies. Also, we're aware of the competitive scenario and technological trends. BVC wants to be a relevant player in the region and has been investing in positioning itself to do so over the next few years. ... BVC was created in 2001 as a fully demutualized organization and as a for-profit company. We listed our shares in June 2007 with 100 stockholders-today, we have over 1,000 stockholders and have become a highly liquid company in the Colombian market.
