CENTER STAGE

Colombia 2013 | FINANCE | INTERVIEW

TBY talks to Juan Pablo Córdoba Garcés, President of the Colombian Securities Exchange (BVC), on the contributions of the exchange to the overall economy and the participation of foreign investors.

Juan Pablo Córdoba Garcés
BIOGRAPHY
to February 2005. He also served as an Economist at the Western Hemisphere Department of the IMF during 1999-2002. In addition, he held the position of General Director of Public Credit and CONFIS Adviser of the Ministry of Finance and Public Credit from 1996 to 1999. He obtained a Master’s and a PhD in Economy from the University of Pennsylvania in 1991 and 1996, respectively. He has been working with the Colombian Securities Exchange since March 2005.

How has the Colombian Securities Exchange (BVC) contributed to the domestic economy over the past seven years?

We are convinced that the capital markets and the stock exchange at the center of the capital markets have a very important role to play. They provide the right environment for companies to raise capital, be it through actual capital or funding in the bond market. They can also provide diversified investment alternatives to individual investors, both institutional investors and retail investors. Retail investors are very important, and we are tailoring the development of new products for all investors. We are convinced that a well functioning capital market will contribute to the competitiveness of the Colombian economy by reducing the cost of capital to Colombian corporations and making available not only liquidity, but also risk management instruments for Colombian corporations. What we have been doing over the last seven years is completing the infrastructure of the market, such as setting up clearing houses and central counterparties (CCP) and creating a derivatives market so companies can hedge their financial risks and promote retail distribution products like an electronic trading system (ETS) for investors. The Colombian Securities Exchange has promoted internet trading so that retail investors can access the market. We have promoted the creation of private equity funds in Colombia. We have a global outreach program to inform companies and make them aware of the benefits the capital markets have to offer.

What are you doing to attract more local companies to list?

We have an outreach program called Colombia Capital. It is an initiative in partnership with many other players that are interested in directing the capital markets such as the Association of Pension Funds, the Association of Entrepreneurs, the Chambers of Commerce, and many other groups that are interested in the capital markets. The idea of this initiative is to reach out to companies all over the country. Colombia has seven cities that are medium or large in size, and that have very large, consolidated corporate sectors. They have the size and the sophistication to be participants in the capital markets. They just need us to disseminate knowledge, let everybody know what the benefits are, what the costs are, what it entails to be an issuer in the market, what the corporate governance issues there are, what “reporting" means, and how much extra work it entails. I think that the financial crisis of 2008 —which I believe was not felt here in Colombia—was a good example of why you need to be diversified in your financing. What you are seeing here is that commercial paper funding or bank financing can shut down overnight. If you had planned to invest or grow over the next two years, then there is no working capital, not to mention long-term financing. Accessing the capital markets opens up financing alternatives.

What is your economic outlook for Colombia in the medium to long term?

Colombia is in a very fortunate position; the country has been doing things very well both on the economic front and on the investment side over the past 10 years. That has created a very good investment environment and confidence. Given that we had very limited investment over many years, there is a gap to fill—particularly in regards to infrastructure. The plan for the next 10 years is very aggressive in terms of road infrastructure, ports, and airports. That is going to draw most of the investment in the country. Mining, oil, and gas have been attracting a lot of investment over the past few years.