The growth of the Colombia derivatives market
Colombia was the third country after Brazil and Mexico in Latin America that began trade derivatives with an aim to increase trading volumes and overcome its competitors. Furthermore Colombia’s exchange – BVC has far-reaching intentions to start also stock and foreign exchanges derivatives trading until the end of the 2008. Due to Cesar Prado – a chief securities regulator these actions will improve the situation with the risk distribution in the economy of the country.
The exchanges of the whole Latin America apply derivatives trading with the aim to provide risks hedging for the investors or speculating on the underlying asset.
For instance, an agreement between BVC and XM Co. de Expertos en Mercados SA ESP was signed in May with the intention to establish first electricity derivatives market in Latin America. As for the first derivatives instrument of Colombia, it is a futures contract for the five years that comes from the peso bond – TES.
The technology platform for this new market was delivered by the Nasdaq OMX Group Inc.
The volumes of the equity trade in the Latin America are as follows: $46 million a day for the last 3 month in Colombia, $38 million for the same period of time in Peru, $3.4 billion on Brazil and $144 – in Chile. Easing of the foreign investments terms in the country’s equity market lead to the growth of the main stock index of Colombia throughout the last 6 months.
