What role does the BVC play in the overall development of Colombia’s capital markets?

CORDOBA: We like to believe that BVC is at the center of Colombia’s capital markets. We have great relations with the government. As a result, we promote improvements in regulations and the regulatory environment. We work together with intermediaries in order to develop the market, and create new products and strategies for our clients. We also work with issuers and investors to make our market bigger everyday. The BVC is fostering improvement in the quality of the market and its institutions. We are doing this all while abiding with international standards. While a capital market is more than just an exchange, we like to think of ourselves as being at the center of this and trying to coordinate actions from all participants. We want to make ourselves bigger and better everyday.

MILA (Integrated Market of Latin America) is the second largest market in the region in terms of market capitalization and number for quoted stocks. At the end of 2012, MILA consisted of a total market capitalization of $678bn. What is Colombia’s overall contribution to the MILA market? How do you see Colombia’s presence in MILA evolving over the long term?

CORDOBA: I think Colombia has been the big champion of MILA. We have been successful in the private sector, intermediaries, the exchange, with our issuers, and the regulators. Our regulators were able to join forces with the regulators of the other three countries and that has been a big part of the MILA’s success. Regulators can support MILA’s initiative. Three of the largest companies in MILA’s product offering are Colombian. These three companies are the largest and most liquid in MILA. More importantly, by joining forces we are actually offering both issuers and investors a better market to participate in. In particular, sector diversification between the three countries is being made possible through MILA. It would be very difficult otherwise for individual countries to have a sector index. For example, it would be challenging for the financial sector or the energy sector to have its own index but the MILA proposition makes it a possibility. 2013 has been a strange year due to a lack of activity in American markets and in Colombia in particular. The economy slowed down in the second half of last year and this has continued during the first quarter of this year. Moving forward, things are looking much better. The Central Bank has reduced interest rates, FDI continues to be strong, and there are other elements that are showing signs of the economy picking up for the rest of the year. We hope that the market situation will also improve in the second half of the year.

What are the latest updates with regard to Mexico joining MILA? What impact will Mexico’s entrance into MILA have on Colombia’s capital markets?

CORDOBA: Mexico recently confirmed through its Minister of Finance its commitment to join MILA. They have made it public and this is very exciting for MILA. With the addition of Mexico, MILA will be the second largest market in the region. The integration of the four countries will have a market capitalization in excess of $1 trillion and daily trading in excess of $1bn. It is big news and we are definitely very excited. The issue at stake here is that, next year, legislative reforms will have to be introduced. They need to go to congress to change the law so they can better adapt their regulations to the requirements of MILA. We were hoping that it happens in the first half of this year but of course you have to respect the legislative process in Mexico. Chile, Colombia, and Peru, are prepared to start working with Mexico as soon as they become ready from a legislative point of view. We are hoping that by 2014 Mexico will be a full member of MILA.

How would you describe the current competitive landscape among capital markets throughout the region? What are the BVC’s competitive advantages over other exchanges throughout the region such as the Bovespa in Brazil and the Bolsa de Mexico?

CORDOBA: I believe that Latin America is in a very nice position. The emerging world in general is showing positive signs but I think the countries in Latin America are doing things the right way. Countries like Colombia are definitely in the right spot. The other thing is that we have not been a part of the compulsory investment mechanisms. There are a lot of people that like Colombia’s story and want to be a part of it but they have not been exposed and invested in it yet. I think that getting to know Colombia better will definitely attract more investments and that is what we are trying to do. We are reaching out to investors and telling them about the country’s story and how to make investments in Colombia. Over the last few years, we have made it very easy for investors to come to Colombia. We have been very competitive from a tax perspective. We have no capital gains tax in the equity market and no dividends tax on corporations. In the end, an exchange or an index in a country, is just a reflection of what is going on in the economy. So, if you look at Colombia you can see that there are a lot of opportunities moving forward. There will be a lot of potential in the next 5-10 years as a result of the investments being made towards the development of the country’s infrastructure. The oil and gas and mining sectors are doing very well and will probably drive a lot of investment over the next few years. The housing industry has become an important domestic sector and is being supported by the government with low interest rates. Colombia as a country has not been used to having these low interest rates. This is going to be a big opportunity for the country moving forward. I think that Colombia is offering much more than many other countries in the region so there are a lot of opportunities for investment. The state of the economy will have an impact on the performance of the exchange and the country’s economy. If the economy is doing well then so is the exchange and our companies.

Which sectors on the exchange are showing the most positive trends and which are proving to have the most challenges? How do you see this evolving over the next 2-5 years?

CORDOBA: We have had big challenges in the oil and gas sector because of the international economic environment and the commodity crisis. Those companies have been undergoing a bit of stress over the last few months. However, all companies that are tied to the domestic economy are doing much better. The financial sector is growing and making investments overseas. They are buying banks and taking advantage of the opportunity in South America. Companies in the retail sector are also doing very well. Furthermore, construction companies and companies tied to the sector are showing positive growth. We do not have that many listed companies from the construction sector but they are in the process of looking into the market. We have had three listings over the last few years. These are companies that are probably going to grow into very large corporations.

Industry insiders have stated that given the fact that Colombia’s fixed income markets are already relatively mature, the main priority is developing its derivative and equity markets. What initiatives are currently being taken in order to carry out this objective? How is success being met to date and how do you see this progressing over the long term?

CORDOBA: Our two growth anchors have been the equity and derivatives market. In the derivatives market, we are doing a lot of things, from education, to the investment community, and to the intermediaries, which is very important. We are working with the CCP and the clearinghouse on helping banks to become clearing members. They need to streamline all of their processes of being a clearing member, which is very important for launching new products and options. So, there is a lot of activity going on there and I think the volumes are picking up this year. We have been working at this for the last 4 years and we are seeing incremental volumes this year, which is very encouraging and exciting. In the equity market, we are continuing to promote our local market. We have a high quality market that is more linked to the international investor community. We have had a very nice track record in the equity market over the last 8 years. We have had a growth and a market capitalization rate of roughly 39% on average over the last few years. We have had a 50% growth in daily trading volumes. We need to continue on the same path. Hopefully, we will keep these growth rates. The derivatives market has evolved since we first started. It has become a newer market. The growth rates are probably going to be very large. It is very important that the market learns to operate with all markets. The interaction of all markets within our derivatives market is important. Interest rate products are a big challenge.