Transcript Bolsa Comercio Santiago (Santiago Stock Exchange)

BOLSA DE COMERCIO DE SANTIAGO
(SANTIAGO STOCK EXCHANGE)
Megan Creahan
Keith Steelman
Justin Satterfield
Intro to Chile
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Economy
 Large
focus on international trade, with US accounting
for largest portion of exports and China for imports
 Growing GDP near $246.482 billion in 2008
 Shrinking unemployment around 7%
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Business Community
 Tight
knit and heavily reliant on trust and personal
relationships
 Growing due to the relatively new focus on
international trade and business investment
History of Chile’s Stock Exchange
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1840
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1844
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First attempt at creating a stock trading system resulted in little success
160 companies were present
Created a need for an exchange program to trade securities
Founded November 1893, with 329 joint stock companies the
majority of which were in the mining industry
Stock Market experienced its first crisis in the 1930’s. This downturn
continued until the mid 1970’s.
Country went through what they refer to as Unidad Popular in which
there was a hyperinflation with rates near 400% annually, driving
the already weak economy to struggle even further
Stock Market Turnaround
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Both a pension fund reform as well as new free-market
economy adapted in 1973 assisted in the market’s growth.
Economic Expansion
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Stock market operation development
Increased securities in circulation
Transactions became diversified
Added Pension Funds Management Institutions, Insurance
Companies, Foreign Investment Funds, and Mutual Funds to the
Exchange
In the 1990’s Chilean companies were opened to
international markets via participation in ownership of key
Latin American companies.
Industry Analysis
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Competition from Rivals
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Competition from New Entrants
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Low seeing as there are only a few small rivals and there is
growing demand for stocks and other tradable assets
Low due to Bolsa de Comercio de Santiago’s advanced
technology as well as their already large portion of the market
share
Competition from Substitutes
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Depending on how narrowly you define substitutes it can be
either low or moderate.
If referring only to stock exchanges the completion is low but in
reference to alternative methods of holding wealth the
competition increases.
Industry Analysis cont.
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Relative Power of Customers
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Relative Power of Suppliers
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Moderate to high seeing as there is no inherent need for
stocks and customers have complete control to pull out their
money at any time
Low seeing as once stock is issued companies have
extremely limited opportunities to withdraw the shares
Overall the stock market industry seems attractive,
indicating that potential profitability is high
Objectives
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To facilitate the flow of saving and investment in the
capitals market
To carry out primary placement of the equity market
securities and bonds
To promote the free pricing and the transparency in the
operations
To promote measurements that enhance liquidity at
market prices in the secondary market
To regulate the operations of the market and to
supervise the operations and to provide services,
systems, and infrastructure required by the stockbrokers
and participants of the stock market
2008 Financial Specs
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Net Revenue
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Net Profit Margin
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$5,133.09 CLP
39.99%
Is the majority shareholder of
Camara de Compensacion Bolsa
de Comercio de Santiago SA
Holds 23% interest in Deposito
Central de Valores SA which is a
for profit Central Securities
Depository
Organization and Technology
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Composed of three market indices including a General
Price Index, Selective Stock Price Index, and an Inter-10
Index
Trades stocks, bonds, investment funds, stock options,
futures, gold and silver coins, and U.S. dollars
Implemented the use of technology in 1981with
computerized main processes
Created a network of over 100 Tandem brand computer
products
 The main system run by Bolsa Comercio Santiago is
Telepregon
 Currently accessible to worldwide customers
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Telepregon
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The Telepregon computer system allows stock, currency,
options, and futures to be traded over the network
The transactions run through the systems verification to
determine if they are valid transactions to be conducted
The system will not verify these the offers of trade until
they are valid in which case the offer is “held” for a
period of time
The information system of the Santiago Stock Exchange
keep an extensive database of all the transaction
conducted
Teleranta
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This is the system that
informs the necessary
parties on the offers
The electronic auction
system aspect allows
offers to be placed in a
given time and after this
period ends the it gives the
offer to the best purchase
bid
Other Services
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The Bolsa Comercio Santiago also provides its
customers with other technical services
 FonoBolsa
allows access to the stock prices, trade
amounts, dividends, and other information. This system is
operated over the telephone.
 InfoMail, like FonoBolsa, offers access to some of the
same information summarizing the market, its index as
well as closing prices
 Similarly StockView offered directly through the
website allows the traders access to company
information and market transactions
IBM System
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On December 10, 2008 it was revealed that Bolsa
Commercial de Santiago, would begin using an IBM
security trading system that would:
 Allow
for faster transactions; 3000 orders per second
 Better communications
 Improve security
 Automatic order processing
Employees
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The employees who operate these systems need to
have some background in the computer technology
used as well as the software employed
A background in science for these employees would
go hand in hand with their engineering knowledge
and capabilities
Interesting Trends
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Transition from interpersonal transactions to entirely
electronic
Role the government plays in economic growth and
decline
Good example of market fluctuation
QUESTIONS (for professionals)
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What was cost effects of switching to a computerized system?
What use does the old exchange hold?
What percent of business is performed in Spanish? English? Where are
your computer systems housed?
For how long do you back up your recorded information?
How was the change to computer systems handled in 1981?
Do you expect any more large scale changes such as the incorporation
of IBM technology?
What percentage of your investors are foreign?
How long has the Telepregon system been in place?
What do you feel is the largest obstacle necessary for the Bolsa
Comercio Santiago to overcome concerning its technology?
QUESTIONS (for students)
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Where do the majority of business/engineering
students work after graduation?
What do you see as the biggest difference
between business in Chile and the United States?
Why do you believe the Chile has been less
affected by the global financial crisis?
What are the most popular fields of study for
Chilean student?
What specific types of engineering (chemical, civil,
electrical, etc.) are the most popular?
Sources
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http://www.bolsadesantiago.com/english/index/as
p
http://www.nomura.com/research/QuantsPublicatio
n/ResearchReports/QuantitativeStrategies/Global
MarketGuide2008.pdf
http://www.wallstreetandtech.com/exchanges/sho
wArticle.jhtml?articleID=212400133
http://en.wikipedia.org/wiki/Santiago_Stock_Exch
ange