MILA, the Andean Exchange Integration: Out of Many, One New Latin American Contender?
Report Summary
MILA, the Andean Exchange Integration: Out of Many, One New Latin American Contender?
MILA is primed to be the second-largest market in Latin America, with a combined market capitalization of US$654 billion.
Boston, May 5, 2011 – A new report from Aite Group examines the integration of the Chilean, Colombian, and Peruvian stock exchanges into a single marketplace, dubbed “MILA” (Mercado Integrado Latinoamericano). The report provides observations into the macroeconomic and capital market conditions of the three participating nations, insight into the benefits and challenges of exchange integration, and a strategic outlook for the MILA exchange.
The concept for MILA was developed in 2007, when Colombia and Peru began discussing ways to address the limited equity investment opportunities in their countries. The integrated market is set to launch on May 30, 2011 and is primed to position itself as the second-largest market in Latin America, with a combined market capitalization of US$654 billion.
Predictably, preparing the integrated market to support the trading and connectivity of the new three-way model has faced hurdles; because MILA is an integration and not a fully incorporating entity, however, it has seen fewer challenges than would be expected from a full merger, especially since participating countries are not standardizing taxation and regulations. Market participants will benefit from easier cross-border investment, although local brokers may find themselves facing increased competition as investors will be able to contract with a broker in any of the three countries. Overall, the integration should result in increased market depth and liquidity, which will benefit each nation’s market and potentially attract more IPOs.
“The core aim of the MILA initiative is to attract more capital--and therefore more liquidity--to the Chilean, Colombian, and Peruvian markets,” says Danielle Tierney, research associate with Aite Group and author of this report. “The outlook for further integration and foreign investor interest will depend on the events that transpire in the first 12 to 24 months of trading in the integrated market.”
This 40-page Impact Report contains 28 figures and three tables. Clients of Aite Group's Institutional Securities & Investments service can download the report.