LSE to supply new Argentine B&MA exchange technology
Argentina’s Caja de Valores central securities depository has chosen the London Stock Exchange to be its technology provider, as the depository gears up to support the country’s new Bolsa & Mercados Argentinos exchange.
The new B&MA exchange is a partnership between the Buenos Aires Stock Exchange and Merval, the association of Argentine brokers responsible for market operation in Buenos Aires. MillenniumIT, the LSE’s technology arm, will provide the capital markets technology to the Argentine Caja de Valores, which will then pass it on to the exchange.
The technology will consist primarily of the LSE’s Millennium Exchange trading engine, which will be used by the B&MA. It will also be accompanied by other tools, such as market surveillance and smart order routing technology.
The LSE has sold its technology in Latin America before. In January, Peru’s Lima Exchange installed a market surveillance system it bought from the LSE, together with order routing tools. However, the deal with Caja de Valores is its first venture into Argentina.
Argentina currently has several regional exchanges, including the Rosario Stock Exchange, located in the city of Rosario 175 miles to the northwest of Buenos Aires. However, Rosario is more known for the Rosario Futures Exchange, which carries much of the derivatives traffic of the country, while Buenos Aires dominates shares trading.
Despite the promise of a new exchange, Argentina has suffered from a negative reputation as an investment destination in recent years. While neighbouring states Colombia, Chile and Peru have gained international praise for their MILA joint stock exchange and order routing initiative, Argentina’s government has drawn fire for its nationalisation of $30 billion worth of private pensions in 2008. Government decisions to control exchange rates and bank lending have also hurt the country’s economic potential, according to Salvador Palma, managing director at XP Securities in New York, formerly president at Latin America capital markets specialist Alyar.
“Argentina’s success depends entirely on open government, but unfortunately under Christina Kirchner it’s going the other way,” he said.
The country is also still embroiled in legal battles with the US Supreme Court over repayments on defaulted debt relating to the country’s $100 billion default in 2001. In June, Argentina asked for a review of the court’s decision that it must pay $1.3 billion to hedge funds over defaulted bonds.
Meanwhile on 30 July, Argentina’s justice department announced it was investigating charges that government officials illegally diverted $1.4 billion earmarked for social services to pay Venezuela for fuel. Argentina suffers from severe energy shortages and power cuts have become a political issue in the country.
Despite the difficulties, Buenos Aires was one of the star performers of the Long Finance Global Financial Centres Index compiled in March, which ranks various cities around the world for their attractiveness as an international financial centre. In the study, Buenos Aires jumped 15 places to number 53, a dramatic improvement on its position a year earlier.