GLG News Analysis
The Challenges of the Chilean Capital Market
November 02, 2010 Analysis of: Los Desafíos del Mercado de Capitales Chileno | www.estrategia.clSummary
According to Eduardo Muñoz, ALVARO CLARKE, MANUEL ZARATE experts in the issue. In times of reform, given the constant developments throws Agenda Bicentennial Capital Markets, also known as MKB, three actors from different areas from the Diario Estrategia detailed for what, from their point of view, are the challenges of Chile in this area.
Analysis
EDUARDO MUÑOZ
Developing and Emerging Market Business Minor
"Firstly, I believe a major challenge is to globalize the local market, creating opportunities for trading foreign securities with the same conditions as local (fixed income, equities and derivatives), so that prices and opportunities that exist in other countries can be captured by Chilean investors through a wide shelf called Santiago Stock Exchange.
Market integration between Chile, Peru and Colombia is an important step. In December, and we should be heading to these countries available to local investors. However, they must arrive in the same tax, institutional advertising and national actions, because otherwise there can be a negative discrimination. This, through a common regulatory framework for custody counterparts, in which we work, "to make them secure and transparent. We must also develop the market for emerging or smaller companies, especially mining, technology, energy-including NCRE (URE) - and natural resources. And to follow closely what happens with the Toronto or London. These models are important for small businesses to reach the capital stock and raise cash. Today there is talk of developing a mining stock, but other industries. The government has said it aims to have 20% of electricity supply with clean energy, but how we are going to do this?
This results in the need to develop the venture capital market. CORFO has taken a role as a promoter of industry, but this still falls into the hands of private investment, since there are no incentives. Finally, I consider necessary to improve the regulatory institutions (environmental, labor and tax) to encourage investment. Although not a stock item, it is essential that push the cart on this line. Institutional rigidity prevents processes are agile "
ALVARO CLARKE, president of ICR and former Superintendent of Securities and Insurance Regulator More Independence
"The growth and poverty reduction depends in part on significant financial systems. The development of capital markets helps to create wealth and prosperity. In general, countries that create a safe institutional environment and efficient markets also benefit from a greater amount of investment. In this sector there are two important factors: the efficiency in providing services, which means innovation and product development and regulatory environment of high trust. It is a difficult balance: over-regulation involves an underdeveloped market and the lack of it can cause enormous crisis. In this framework there are some initiatives that should be emphasized especially. First, strengthening the independence and authority of the regulatory authority, which is essential to have a more dynamic set of regulations that can adapt quickly to market, so as to enhance its growth and protect its integrity. Second, we need to think and design the public policies of the capital market-oriented world, this implies efficiency in its processes, especially those dependent on public apparatus, tax equity, ie the tax system in Chile is prepared to deal fairly with investors or local and foreign companies, and meet high standards of regulatory requirement. These three aspects are central to strengthening our country as an export platform of services. Finally, the agenda mining and capital markets, the benefits far outweigh those related to finance mining, which are very significant, also implies a greater formalization of the sector, which will translate into better job security, as it is very difficult a project to get resources in the capital market, if not properly solve such a sensitive issue like this. "
MANUEL ZARATE, Deputy Director of Economic Crimes Unit of the Attorney General Crime Prevention
"The development of increasingly complex in recent years has seen the capital market, have led the Public Prosecutor has sophisticated the traditional approach to the pursuit of economic crime, taking on the challenge of initiating and conducting research which can approach of criminal issues traditionally ignored so far by our criminal justice system, such as crimes under Law 18,045, Stock Market. Whether because of the complexity of economic regulation parole involved, for the supremacy of the traditional dogmatic looked askance at the possibility of invoking penal protection of collective legal goods, or simply because of ignorance prevailed among the criminal justice system in relation to the functioning and dynamics of the different areas of the economy which usually result in serious attacks to the economy, the fact is that prior to the establishment of the criminal procedure reform, such attacks were exceptionally investigated and punished accordingly. But today the picture began to change. The systematic and responsible for specialized prosecutors in charge of the investigation of crimes related to economic crime in recent years has been a particular result. The sentence handed down by the 4 th Oral Criminal Court of Santiago put an end to a complex legal research undertaken by the North Central Office, directed against the former general manager of the company Schwager (SCL:SCHWAGER) SA (Jacobo Kravetz), condemning as perpetrator of the crime of stock manipulation and insider trading. Jurisprudential pronouncements as above contribute to the function of general deterrence that is attributed to criminal laws, to send a clear message to society and market operators to encourage them to respect the rules governing the operation of it. "
This is helping enormously business ethics in Chile.
Bernardo Javalquinto
Developing and Emerging Market Business Minor
"Firstly, I believe a major challenge is to globalize the local market, creating opportunities for trading foreign securities with the same conditions as local (fixed income, equities and derivatives), so that prices and opportunities that exist in other countries can be captured by Chilean investors through a wide shelf called Santiago Stock Exchange.
Market integration between Chile, Peru and Colombia is an important step. In December, and we should be heading to these countries available to local investors. However, they must arrive in the same tax, institutional advertising and national actions, because otherwise there can be a negative discrimination. This, through a common regulatory framework for custody counterparts, in which we work, "to make them secure and transparent. We must also develop the market for emerging or smaller companies, especially mining, technology, energy-including NCRE (URE) - and natural resources. And to follow closely what happens with the Toronto or London. These models are important for small businesses to reach the capital stock and raise cash. Today there is talk of developing a mining stock, but other industries. The government has said it aims to have 20% of electricity supply with clean energy, but how we are going to do this?
This results in the need to develop the venture capital market. CORFO has taken a role as a promoter of industry, but this still falls into the hands of private investment, since there are no incentives. Finally, I consider necessary to improve the regulatory institutions (environmental, labor and tax) to encourage investment. Although not a stock item, it is essential that push the cart on this line. Institutional rigidity prevents processes are agile "
ALVARO CLARKE, president of ICR and former Superintendent of Securities and Insurance Regulator More Independence
"The growth and poverty reduction depends in part on significant financial systems. The development of capital markets helps to create wealth and prosperity. In general, countries that create a safe institutional environment and efficient markets also benefit from a greater amount of investment. In this sector there are two important factors: the efficiency in providing services, which means innovation and product development and regulatory environment of high trust. It is a difficult balance: over-regulation involves an underdeveloped market and the lack of it can cause enormous crisis. In this framework there are some initiatives that should be emphasized especially. First, strengthening the independence and authority of the regulatory authority, which is essential to have a more dynamic set of regulations that can adapt quickly to market, so as to enhance its growth and protect its integrity. Second, we need to think and design the public policies of the capital market-oriented world, this implies efficiency in its processes, especially those dependent on public apparatus, tax equity, ie the tax system in Chile is prepared to deal fairly with investors or local and foreign companies, and meet high standards of regulatory requirement. These three aspects are central to strengthening our country as an export platform of services. Finally, the agenda mining and capital markets, the benefits far outweigh those related to finance mining, which are very significant, also implies a greater formalization of the sector, which will translate into better job security, as it is very difficult a project to get resources in the capital market, if not properly solve such a sensitive issue like this. "
MANUEL ZARATE, Deputy Director of Economic Crimes Unit of the Attorney General Crime Prevention
"The development of increasingly complex in recent years has seen the capital market, have led the Public Prosecutor has sophisticated the traditional approach to the pursuit of economic crime, taking on the challenge of initiating and conducting research which can approach of criminal issues traditionally ignored so far by our criminal justice system, such as crimes under Law 18,045, Stock Market. Whether because of the complexity of economic regulation parole involved, for the supremacy of the traditional dogmatic looked askance at the possibility of invoking penal protection of collective legal goods, or simply because of ignorance prevailed among the criminal justice system in relation to the functioning and dynamics of the different areas of the economy which usually result in serious attacks to the economy, the fact is that prior to the establishment of the criminal procedure reform, such attacks were exceptionally investigated and punished accordingly. But today the picture began to change. The systematic and responsible for specialized prosecutors in charge of the investigation of crimes related to economic crime in recent years has been a particular result. The sentence handed down by the 4 th Oral Criminal Court of Santiago put an end to a complex legal research undertaken by the North Central Office, directed against the former general manager of the company Schwager (SCL:SCHWAGER) SA (Jacobo Kravetz), condemning as perpetrator of the crime of stock manipulation and insider trading. Jurisprudential pronouncements as above contribute to the function of general deterrence that is attributed to criminal laws, to send a clear message to society and market operators to encourage them to respect the rules governing the operation of it. "
This is helping enormously business ethics in Chile.
Bernardo Javalquinto
Economist
University of Maryland
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