The Latin American Integrated Market (MILA)
could be a huge opportunity for companies in the region, but it
will rely on regulators’ determination to
cooperate. The president of Colombia’s securities
exchange discusses its progress
Over the last decade Colombia has seen an immense
transformation. The country's economy has grown, investment in
infrastructure and power have taken off and foreign investors
are excited about the opportunities the jurisdiction offers.
Regional integration has been a clear part of the success.
Colombia is working closely with its neighbours to increase
regional cross border deals.
The creation of the integrated stock exchange between
Colombia, Chile, Mexico and Peru, MILA has pushed this
collaboration further. As these programs grow, opportunities
for investors and companies are expected to go further still.
IFLR spoke with Juan Pablo Córdoba Garcés, the
CEO of Bolsa de Valores de Colombia (BVC) about the progres
made so far.
How do you see the relationship between BVC and the other
MILA exchanges developing?
We share the same objective of making MILA the Pacific
Alliance's financial integration platform. That is why we work
together to eliminate the imaginary boundaries that still exist
and to continue to take advantage of the similarities of our
economies. We thus maintain a continuing conversation to
identify the best way to promote the changes that we still need
for the integration to have greater reach and to offer more
opportunities for all market stakeholders.
MILA plans to add a debt and index offering in 2016. How do
you expect this to impact cross-border trading? What will be
the major challenges in synchronising these offerings?
The more products that investors have available through
MILA, the greater the interest that we generate among them will
be. We hope that once the fixed income becomes available, there
will be higher participation from institutional investors, who
are generally the market participants with greater appetite for
this type of product.
As for the greatest challenge, we definitely need to
harmonise the pending regulatory aspects so that countries
consider investments in MILA to be local investments. This is
not the case in prevailing conditions, which limits funds'
ability to purchase securities registered in other integrated
countries. We are working on this with the governments and we
hope that there will soon be a change that makes this a
Why do you think cross border volume has been slow to
materialise with MILA? What more can you do?
The first thing is to clarify that MILA has already proven
that it is possible to take the objective of integrating Latin
American stock markets from dialogue to action. This was our
initial goal, and we have achieved and exceeded it. Regarding
the trading volume, I am sure that the wider range of products
on offer, including exchange-traded funds (ETFs), derivatives
and fixed income securities, in addition to stocks, will
motivate investors to use the platform to buy and sell these
assets. Additionally, we need brokers to perform more intense
commercial work and investors to learn about these products so
that they trade with them as they do with local securities.
What are the biggest regulatory hurdles Colombia's
exchanges must face in the next five years?
Capital market development necessarily goes hand in hand
with regulatory reforms. In Colombia, that cooperation between
the government and the securities industry has flowed very well
in the past decade.
Thanks to this cooperation, the market today has multiple
products of wide international use, which did not previously
exist in the country and which are now available to all
The main challenge continues to be attracting new issuers to
the market and improving product liquidity.
What are you doing to support small and mid-size firms in
The BVC has a program called Colombia Capital, which helps
businesses to learn about the market entry process, whether
through debt issuance or through share placement.
"We need to harmonise the
pending regulatory aspects so that countries consider
investments in MILA to be local investments"
This initiative has various components, one of which is the
preparation and publication of information documents regarding
the securities market. Further, we have already published
digital-format guides to which all companies can have access.
These documents seek to generate greater interest regarding
topics such as the composition of boards of directors and the
management of corporate governance policies, aspects that are
important in creating market confidence.
Colombia Capital also assists companies that decide to
venture into the market for the first time on a personalised
basis. Additionally, it carries out joint work with the
chambers of commerce and with other stakeholders to develop
better financial education and entrepreneurial training at a
Furthermore, Colombia and its market have moved forward with
the objective of supporting small- and medium-sized enterprises
so that they can enter the market. Last year, for example, the
government issued decree 1019 of May 28 2014, which seeks to
encourage these types of companies' access to new financing
sources and which is characterised by lowering the requirements
for businesses to register in the National Securities and
Issuers Registry (RNVE in its Spanish acronym) of the Financial
Superintendence of Colombia, as well reducing the amount of
paperwork and requirements for this process. Thanks to the new
regulation, Banco Bancamía already made its first bond
issuance, for more than $40 million.
How are Colombia's infrastructure goals impacting the
development of its capital markets?
Colombia has designed an ambitious investment plan to
modernise its infrastructure and make the country more
competitive. According to the Colombian government, around $20
billion will be needed over the next five years to execute this
plan. The entities carrying out the plan will have to seek out
this funding through various mechanisms. We hope that the local
securities market will be one of the channels through which
these businesses access the capital they need, whether through
debt issuance or the sale of stocks.
We believe that the market is ready, given that during the
last five years resources worth more than $32 billion have been
channelled towards businesses that have sought this money out.
This demonstrates that there is sufficient space for these
resources, or part of these resources, to come from the local
Do you expect to see the introduction of new structured
products or the growth of existing ones anytime soon? Given the
popularity of products like FIBRAS in Mexico, will Colombia
need its own product to compete?
Our market has shown important evolution in the last 10
years and, as a consequence, new products have emerged. This is
the case for standardised derivatives, which have now been in
operation for six years, and for ETFs, which arrived in
Colombia just a few years ago. These types of instruments have
been welcomed by investors and local brokers but, as is normal,
it has taken time for people to understand and to learn to use
Accordingly, the BVC is working on creating a fixed income
ETF, a market that in Colombia represents close to 90% of the
trades carried out on the stock exchange. Likewise, in 2015 we
hope to introduce options to the derivatives market, which will
complement the wide offering of futures that we have available
in the country. On the other hand, the objective of MILA for
this year is to include the fixed income and derivatives
instruments in the product offering, as well as to create a
framework for regional investment funds. This would place
within the reach of investors products such as FIBRAS
(infrastructure and real estate trusts), which already have
wide recognition in their market of origin.
How are you balancing the need to incorporate new
technologies with the desire to keep the market safe? Are
high-frequency traders or cyber security a concern in Colombia?
Should they be?
BVC is updating the technology necessary to modernise the
access channels that make E-trading possible, and which in the
near future will allow for the participation of foreigners to
be expanded using direct market access (DMA) suppliers. The
supplier of our main platform, NASDAQ OMX, has collaborated in
this process, and our objective with this, of course, is to
offer the best quality of services to our users, while
maintaining the highest level of operational security.
Juan Pablo Córdoba
Bolsa de Valores de Colombia
T: +57 1 3139800
Juan Pablo Córdoba Garcés is the CEO
of Bolsa de Valores de Colombia (BVC), the president of
Federación Iberoamericana de Bolsas (FIAB) and
chairman of the board of the World Federation of
He previously served as director of the Fondo de
Garantías de Instituciones Financieras de
Colombia (FOGAFIN). Between 1999 and 2002
Córdoba worked for the IMF as an economist in
the western hemisphere department. He was general
director of public credit and CONFIS adviser at the
Ministry of Finance and Public Credit of Colombia from
1996 to 1999. Before that he worked as an economist in
the tax division of the Inter-American Development
Córdoba holds a masters degree and PhD in
economy from the University of Pennsylvania in the US,
attained in 1991 and 1996, respectively. He studied
economics at the Universidad de los Andes in