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Clearing the Way

Sep 1, 2011

The easing of cross-border clearing and settlement in LatAm has gone hand in hand with regional integration. Is a centralized system the next step?

By Janice Fioravante

Cross-border clearing and settlement in Latin America took a giant step forward in spring when Chile, Colombia and Peru technologically integrated their stock exchanges to create, the Integrated Latin American Market (MILA). Lauded for resulting in more liquidity, slightly higher valuations and reductions in the costs of cross-border trading, it may be the start of a pan-Latin America market for trading, clearing and settling securities. But today, it's only a part of the story.

When a bank like BNP Paribas (Brazil) wants to move capital for its clients, it must contend with various currencies. "By contrast, in the United States, dollars are universally accepted, and in Europe, euros, but our nations must deal with the real and pesos, as well as central bank regulations," says Louis Bazire, CEO and regional head in Latin America. Moves like MILA help mitigate inefficiencies.

The integration that's occurring overlooks...

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