Market view | Emerging markets
vertical integration of market infrastructure. Carré also points out that Colombia, Peru, Chile and Argentina have all come a long way in improving their infrastructures and thus their links – both electronically and culturally – to the global investment community. Challenges remain – in Peru, for example, the Bolsa de Valores de Lima (BVL) exchange owns 40% of Cavali, a private group responsible for clearing and settlement of securities, but cannot raise its stake any higher because doing so is prohibited under law. For BT, which supports the largest secure network for the financial community in the world including its Radianz Services available to more than 400 financial institutions in 63 countries, offering economies of scale is the key. Chris Pickles, head of industry initiatives in global banking and financial markets notes, “In countries like Brazil, more brokers want to gain access to other brokers – the ones who are members of the BM&F Bovespa – while the biggest banks will connect directly.”
Beyond connectivity, best execution issues are complicated, but there are signs that change is afoot – Comissão de Valores Mobiliários (CVM), the securities and exchange commission of Brazil, recently instructed the UK economic consultancy Oxera to assess the potential costs and benefits of introducing more competition into the market for trading and post-trading services in Brazil.
“We recognise that our client base wish to execute arbitrage strategies between key data centres”
Emmanuel Carjat, TMX Atrium
According to its report, “As Bovespa is the only infrastructure provider of trading and post-trading services for transactions in equities in Brazil and competitive pressure from American Depository Receipts (ADRs) may be limited, the fees charged for trading and post-trading services could be higher than they would be in a competitive market.” Interest in Brazil is unlikely to diminish. In fact, former US President Bill Clinton at a conference in São Paulo in late August put his money on the country over China and India. However, companies like MarketPrizm, which offer global trading infrastructure, are focusing its gaze more intently on Russia and Eastern Europe as well as Asia although Brazil is still very much in the picture. The main drivers are client demand and market fragmentation. As CEO Tanuja Randery says, “Our customers are largely primarily prop funds, and quant driven groups, funds, prime brokers and investment banks. The equities market is very sluggish, so the real activity is in commodities and
“There is a big story on the margins of Europe from the Baltics all the way to Turkey. Russia has highly developed infrastructure and is an emerged market wearing the cloak of an emerging one and might be on the verge of cleaning up its political act.” Philippe Carré, SunGard
Best Execution | Autumn 2012 53
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