Mar. 15, 2020

Gilberto Pazmiño


Gilberto Pazmiño

President, Quito Stock Exchange

“International companies will consider participating in the stock exchange because the benefits we provide make their operations more transparent.”


An economist with a postgraduate degree in corporate finance, Gilberto Pazmiño has served as financial vice president at both multinational and local companies and president or general manager for a variety of firms in the productive sector. He has been on the board of directors of several important Ecuadorian companies, in addition to being the former vice minister of economy and finance and a member of the executive council of several international federations for pensions, trust funds, fund managers, and stock exchanges.

What legislative changes were recently approved to facilitate the entry of foreign investment through the stock exchanges?

The government is now more aware about what needs to be done to attract foreign investment in the financial sector. To do that, Ecuador has to demonstrate its capacity by managing its public debt. To boost this sector, we need to adjust the law of stock exchanges and the laws on taxes, which are underway. We have had talks with the Inter-American Development Bank (IDB) to understand the changes we need to implement to make regulations more attractive. As a result, we have come up with a bill to reform the capital markets that the government has to send to congress and approve over the course of 2020. In addition to including new regulations and a framework, the bill has certain changes in the taxing system to make the financial sector more attractive for foreign investment. The Quito Stock Exchange is advocating for a structural and comprehensive reform. The bill reforms 94 articles. It has several articles in the taxation area, and there are many positive things that will allow a significant change in the capital markets. The IDB, World Bank, and US Treasury have been extremely helpful in conducting an analysis of our public debt and how we can better manage it.

What advantages do investors see in the local financial sector?

First, we have dollars. Second, our interest rates are highly attractive and compensate the risk to invest. Third, corporate governance standards are extremely high. Fourth, it is a growing market in many different industries. All these conditions are appealing to investors, so we need to sell the country. Our goal is to work together with the government and organize more roadshows abroad to attract investment in the financial sector. We provide Quito Invest with the technical support to develop its projects.

Some large multinationals with operations in Ecuador have raised funds through the Quito Stock Exchange. What are the benefits of this?

We have had several meetings with companies to communicate the benefits of the stock exchange and have shown multinationals that there are capacities in Ecuador to raise capital to finance local projects. In addition, it is interesting that these multinational companies have disclosure of public information in their local market, which makes risk management easier and improves relations with traditional banking. And thirdly, by participating in the stock exchange, companies realize they are developing weapons to protect themselves by having new owners of the company. It is a great decision because it forces one to better manage the savings of locals. It is a win-win situation. What's more, local firms have seen that individuals with savings are willing to invest in different options than those offered by traditional banking. In 2019, we closed with USD1.1 billion in bond issuances in every stock exchange in Ecuador.

There are plans to allow dual listing in Ecuador's market, including mining companies that are heavily investing in the country. How receptive are they to this?

International companies will consider participating in the stock exchange because the benefits we provide make their operations more transparent. We are extremely open to do dual listing and have been in talks with the Chilean and Canadian stock exchanges to explore those options. We are also taking steps to integrate our stock exchange with those of El Salvador, Costa Rica, and Panama to be able to purchase shares in different markets in Latin America. Ecuador can also become part of the Pacific Alliance, which includes integrating the local stock exchange in the MILA market, which connects us with Chile, Peru, Mexico, and Colombia. Those countries are net exporters of capital, while Chile and Mexico are entitled to invest outside of those countries and are aware of the importance of diversifying their portfolios.