What action can you take at the BVC to help investors distinguish between companies that will be affected by the falling price of oil and those that will not?
It is up to the investment community to understand and distinguish what is going on in a given market. At the management level there is little that we can do but ensure full transparency and disclosure. Ensuring that the general public understands the overall environment in Colombia, the region, and the world is crucial since the financial crisis led to the bulk of capital flows around the world not being driven by fundamentals, but by the monetary policies of big central banks. When there are such major changes in monetary policy it can undermine the economy. There are companies in Colombia not connected to the oil sector, but that have been affected because they were caught in the middle of this massive capital flow and change in investment sentiment toward commodity-procuring countries. If you consider the specifics of the company, nothing has changed. The price may have dropped by 20-30%, and this seems unfair, but the risk evaluation remains the same. It would be fair to say that Colombia is undervalued at current levels. It is no surprise that the country, given the relevance of oil in its export basket, has experienced such an effect on the exchange rate and overall attitudes toward the market. If you look at domestic dynamics and specific non-oil related companies in the market, it appears that the correction went somewhat too far. The market is just now adjusting itself.
In February you launched a roadmap concerning the developments of the BVC on infrastructure and internalization. Could you talk us through the primary areas of improvement in the institution?
We have three main pillars in our overall strategy for the exchange and for the market. These are related to improving market conditions to encourage growth and ensure that the BVC grows in parallel. One of these is to foster quality markets, and we are aiming to guarantee that international standards are followed, whereby businesses feel comfortable operating in Colombia. Transparency as assessed by the research of brokerage firms, along with better investor access to information and sounder advice, are important elements of this. Moreover, improving liquidity, attracting market makers, reducing the bid-offer spread, and improving the quality of price relation through better regulations and higher quality products are also crucial. The second pillar is related to the internationalization of the Colombian market. This is where the MILA initiative comes into its own, linking markets together to create greater critical mass and attract more foreign participation in our local market. There are also efforts to promote investments such as the Colombia Inside-Out program, which creates awareness. The third pillar in the traditional structure concerns improving market infrastructure. Today's highly competitive world requires international standards, risk mitigation, and clear internal mechanisms that widely instill confidence, as well as financial security, DMA access for both local and international participants, and more general improvements to market infrastructure. One of the main initiatives in which we are involved is the introduction of CPP clearing for the equity market. Colombia is the fourth largest market in Latin America. The three larger markets have CCP in their equity markets, with the last one to introduce this being Chile. There is significant pressure on exchanges in general, not just on the BVC, to diversify their sources and revenue, given the rising pressure in traditional business areas. Another pillar involves branching out into other IT services related to financial transactions and the interaction of participants in financial markets. Branching out into such services is something in which we are particularly interested. We have already started work on this by creating partnerships. We have branched out into providing prices to add value to all portfolios in the local market.