Latin American countries must create a system for foreign exchange portability before working on integrating its financial exchanges, Roberto Belchior, managing director of Brazil’s financial exchange operator B3 SA Brasil Bolsa Balcão said.
“It would be very hard for us to work on integration before we can have active commercial trade happening across the multiple currencies in the region,’’ Belchior said, speaking with LatinFinance during the SWIFT Latin America conference in Miami.
“An investor may buy in Brazil today and then decide to sell and go to Peru or Argentina, so he will have to convert reais into dollars and then into soles or pesos,” he said. “That creates costs and tangles that work against us as we try to attract investment to the region.”
Brazil and Argentina have strengthened a dialogue on financial integration in the last few years while the four nations of the Pacific Alliance, one of the region’s largest trading blocs made up of Chile, Colombia, Mexico and Peru, have taken steps to deepen financial ties.
The Latin American Integrated Market, or MILA, struggled to attract capital flows in the first few years after its launch in 2011, but new and planned cross-border financing instruments will likely increase trading volume.
“What’s missing is a connection between the Pacific and the Atlantic, so we can really have a Latin American regional market,” Belchior said.
B3, the result of the 2017 merger between Brazilian bourse BM&F Bovespa and clearing house Cetip, has crossed borders in the region by investing in stock markets in Chile, Colombia, Mexico and Peru. It also has an operational agreement with the Argentine exchange, the executive added.
“First we organized ourselves at home, in Brazil, so we could start looking at the region but with a collaborative perspective; we are not looking to take control of anyone, or interfere beyond a collaboration to bring all markets to a level that allows us to be seen as a region and not as isolated countries,” Belchior said.