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By Juan Pablo Córdoba, CEO, nuam
Latin America is a diverse continent that offers unparalleled richness in terms of climates, geographies, natural resources and cultures. Beyond this diversity, common potential unites the region, and it is precisely this potential that nuam seeks to foster.
The nuam initiative began in August 2023, thanks to the joint effort of the Colombia Stock Exchange, Lima Stock Exchange (Peru) and Santiago Stock Exchange (Chile). We embarked on a unique and ambitious project: integrating three stock exchanges from three different countries into a single capital market.
As stock exchanges and providers of market infrastructure, we share the common experience of being key players in our individual markets—not just providing access to financing for projects and companies but also essential services to financial markets, such as trading and clearing securities, currencies, derivatives and market-data distribution and settlement services. We also share the view that providing efficient access to capital is key to boosting economic growth, improving our citizens’ quality of life and contributing to our countries’ sustainable developments.
Our goal is to create a much more attractive and visible capital market that becomes a reference point for both global and local investors. Adopting international best practices and state-of-the-art technologies, creating economies of scale, simplifying access, operating through a single rule book and reducing costs are all aligned with building greater liquidity and business opportunities.
This has become our main motivation at nuam: Issuers, intermediaries and institutional and retail investors can uncover the investment potential not just in each country separately but united as a region.
In practical terms, this means facilitating trading among three different markets and offering cross-access through a common platform so that investors can buy and sell securities listed on all three exchanges following a unified set of rules. As a result, this will allow both issuers and investors to maximize benefits while reducing costs.
Of course, getting there presents various challenges. To ensure the journey is as smooth as possible, we have partnered with leading technology experts in the industry. nuam will run on Nasdaq’s MME platform with internationally accepted communications protocols, such as FIX 5.0 and a binary protocol for market makers and high-frequency traders. Trades will be cleared through our wholly owned, interoperable central counterparty clearing houses (CCPs) using VeriClear from Vermiculus. By employing a single technology suite to run the three markets within the same risk model, we will ensure that the user experience, margin and clearing and settlement rules are those of a single market: the nuam single market.
By using technology from well-known industry experts, we seek to attract more international players to the market and signal to both local and global participants our long-term commitment to providing best-in-class technologies and services to develop and grow our market. Trading and settlement will be available in four different currencies (US dollars, Chilean pesos, Colombian pesos and Peruvian soles), providing flexibility to all participants and arbitrage and business opportunities to market makers and other specialized players.
nuam is working closely with market participants to build an operating model that meets their needs and with regulators in the three countries to ensure that we share a common objective. It is expected that the necessary regulatory adjustments will be incorporated into the regulation and that a single rule book will be achieved and approved by the three regulators before the single market is launched. Market participants will access the single market from their own jurisdictions and will be able to trade, clear and settle all securities listed in the three countries with a single process, taking advantage of the interoperability of the CCPs and the interconnection of the central securities depositories (CSDs). Similarly, participants from outside of the region will be able to access the single market via their preferred market participant in a specific country without having to establish relationships or register in the three countries.
The single market will be implemented in phases, with the first phase of the equities single market expected for mid-2025. However, by instituting the equity market, we will have laid the foundation of the full value chain of market infrastructure, allowing nuam to deploy services in other markets, such as fixed income, derivatives and even currencies.
All these objectives are being pursued with an open-minded approach, recognizing that as markets evolve and participants’ needs change, nuam must adapt. This is why, from the start, we are co-creating the single market alongside market participants, as we believe that the success of the market will be the success of the whole ecosystem of issuers, investors, brokers, banks and other participants.
With a market capitalization of close to US$350 billion and more than 450 issuers, we were born with great ambitions that go beyond technical aspects. The three countries are rich in minerals and resources, such as copper, lithium and nickel, that are key to the transition to clean energy. It is expected that investments not only in mining but also in expanding industrial capacity will grow over the coming decades, and all of these projects require capital. Also, the region has significant opportunities in the green and blue economies, launching projects that can reduce carbon emissions.
nuam is also committed to providing a conducive environment for innovation and business expansion in Latin America. We have ambitious goals for this company, and through products such as ScaleX and a2censo, we are already implementing mechanisms to bring small and medium-sized enterprises (SMEs) into the capital market—a realm previously unfamiliar to them. Within nuam, there is a willingness to create a collaborative ecosystem, building bridges with various market and industry participants to enhance the development of our capital markets.
While traditionally, stock exchanges have been organizations in which large companies seek opportunities to raise capital to finance their growth, at nuam, we believe that creating prosperity opportunities in the region also involves ensuring that SMEs, startups, financial-technology firms (fintechs) and entrepreneurs can access funding solutions in the market to allow them to consolidate and expand their businesses, thus becoming value creators in their respective environments.
To date, we are proud to have successful examples of startups and SMEs that are already part of the ecosystem we are building for the region. For instance, in ScaleX, the alternative market launched by the Santiago Stock Exchange in which companies with high growth potential can access financing from qualified investors through equity offerings, a total of US$12.7 million in capital has been raised in five successful placements of startups and medium-sized businesses in the last two years.
In Peru, through Cavali (the central securities and clearing registry in the Peruvian market and a nuamsubsidiary), we provide factoring services so that companies can obtain financing through liquidity obtained from the capital market. Meanwhile, in Colombia, the a2censo crowdfunding platform—managed by the Colombia Stock Exchange—has raised more than US$22 million in more than 180 issues from startups and SMEs. a2censo allows small businesses to issue bonds for one to five years in the capital market, where retail investors can invest from US$50.
Creating a single market for Chile, Peru and Colombia is our immediate goal. Looking to the future after the formation of this unique marketplace, we are also focusing on facilitating public issuances of corporate bonds with regional distribution and unified standards, attracting American depositary receipts (ADRs) back onshore, increasing investment flows from global institutional investors and deepening the derivatives market. Thus, achieving greater liquidity, depth and scope in financial markets should provide sources of economic development and growth for our countries, leading to fulfilling our primary purpose: creating opportunities for prosperity for all.
ABOUT THE AUTHOR
Juan Pablo Córdoba is the CEO at nuam exchange. He served as the Chairman of the Colombia Securities Exchange for 18 years after he arrived in 2005. He also worked at the Financial Institutions Guarantee Fund, the International Monetary Fund, the Colombian Ministry of Finance and Public Credit, the Inter-American Development Bank and the Colombian National Planning Department.
Source link : https://internationalbanker.com/brokerage/nuam-a-new-capital-market-for-south-america/
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Publish date : 2024-06-14 02:01:23
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