The Colombian Stock Exchange (Bolsa de Valores de Colombia, BVC) has promoted the internationalisation of the stock exchange through different programmes. Firstly, it has endorsed the placement of Colombian stocks in international markets through American depositary receipts. As of January 2014, nine Colombian stocks trade on US markets. The companies that trade internationally through this mechanism are large corporate groups such as Bancolombia, Ecopetrol, Avianca and Grupo de Inversiones Suramericana.
To promote further investment opportunities for local investors, the BVC developed an initiative called the Global Colombian Market (Mercado Global Colombiano, MGC), which facilitates the purchase of a certain number of international stocks. The initiative allows the trading and settlement of these operations through the BVC’s platform. The MGC provides Colombian investors with the opportunity to diversify their risks and gain access to leading global equities without the need to open a trading and custody account abroad.
Together, with the Integrated Latin American Market with Chile and Perú, Colombian investors now have access to a greater number of investment options.
Regulation
The legal framework that controls the MGC is based on Decree 2555 of 2010, which regulates the listing of foreign securities in the trading platforms and authorises individual and professional investors to participate in this market.
Foreign equities are traded, cleared and settled through the administrative systems of the BVC and all transactions are done in Colombian pesos. Trading of listed foreign equities is done under the trading rules and schedules of the local market. Custody and management of foreign equities is centralised in Deceval, which is a subsidiary of the BVC, while Deutsche Bank acts as an international guardian on behalf of Deceval. During 2013, Deceval had custody of securities with a total value of COP387trn ($193.5bn).
The offering of the foreign securities is done through brokerage firms, which act as “sponsors” and include the stocks within their product portfolio. The brokerage firms that wish to offer one or several securities from the MGC must request to do so from the BVC.
Listed Shares
The MGC was created in 2010 and so far comprises 22 listed stocks from international exchanges and three global exchange-traded funds (ETFs). The MGC began with 17 listed stocks, and added four more in 2011 and another in 2013.
Of the international listed stocks, five are technological companies (Apple, Facebook, Google, Intel, Microsoft); four are financial groups (Bank of America, Citigroup, JP Morgan Chase, Goldman Sachs); four are energy companies (Anadarko Petroleum, Chevron, ExxonMobil, Murphy Oil); three provide consumer products (Johnson & Johnson, McDonald’s, Procter & Gamble); two are retailers (Amazon, Walmart); two are large industrial groups (General Electric, Caterpillar); and there is also a telecom firm (AT&T) and a pharmaceutical company (Pfizer).
Performance
During 2013, $2.19bn was traded through the MGC. The dynamic increased during the year, reaching its peak in the month of December, when a volume of $1.08bn was traded, roughly 49% of the year’s total. Growth continued during January of 2014, reaching a historical high of $1.88bn traded volume. This represents a 74.6% increase compared to December 2013, and what is more striking, in just one month, trading volume reached the equivalent of 85.7% of the total volume traded in all of 2013.
Foreign ETFs
The promotion of ETFs as an investment instrument began in 2010 with Decree 2555; however, the three ETFs listed in the MGC didn’t make their debut until 2013. Listed ETFs include Global X FTSE Colombia 20 ETF, Global X Guru Index ETF and Global X SuperDividend ETF.
These three options allow investors to diversify their portfolios with more international stocks. Even though these ETFs have demonstrated good returns, their use is still low. The total volume traded through the MGC is less than 0.5% of the total traded volume in the BVC.
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