Secondary Strangled by Regulation
Colombia's institutional investors say their business is being killed by outdated regulation. Some hope forthcoming changes will break the local capital markets gridlock.
Colombia's capital markets may be flavor of the month for
bankers, but local investors say outdated regulation does as
much to inhibit growth particularly in trading as
it does to feed it. The country's six pension funds
Colfondos, BBVA Horizonte, Porvenir, Protección,
Santander and Skandia manage $27 billion in
contributions, close to 20% of the country's GDP in 2006. As
such, they are the most relevant group of institutional
investors, and bring the liquidity and demand domestic capital
markets need to evolve.
But as in even the region's most developed domestic markets,
like Mexico, among the most disheartening issues for Colombian
investors is a lack of secondary liquidity. With portfolios
largely composed of government bonds and other fixed income
instruments, one would expect a deep and active flow. That
might have been the case today were it not for a sudden
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