Key Charts - Size and Structure
Latin America: Focusing on the Capital Market Infrastructure Can Widen the Flow of Investments
- Due to excessive restrictions, capital markets across Latin America remain underdeveloped in comparison to emerging markets in Asia.
- Short selling is infeasible as a result of rules that allow short selling of only the most liquid securities and prevent the non-delivery of stocks at settlement. Domestic derivative markets are underdeveloped, and securities lending is restricted, sometimes leading to the creation of synthetic derivatives.
- If the countries can focus on fixing these weaknesses, the plausible gains would include improved exchange infrastructure and lower transaction costs, which could widen the flow of funding and investment.
Source: FTSE Quality of Markets Criteria (Americas, March 2014)