Bolsa de Valores de Colombia (BVC) and Peru's Lima Stock Exchange (BVL) have signed a memorandum of understanding with the aim of merging their markets by the second half of 2011.
The merger, which is subject to approval by shareholders and regulators in both Peru and Colombia, will be the first of its kind between two stock exchanges in Latin America. Under the agreement, the relative contribution of the BVC and the BVL will be 64% and 36% respectively and shareholders of both companies will become shareholders of the merged entity.
Based on end-of-year figures for 2010, the combined Colombian and Peruvian market had a market capitalisation of US$378 billion.
“The merger of the Lima exchange and the BVC generates a strategic alignment in the two countries, which strengthens our position in the capital markets in the region and enhances and complements the integration of the markets by creating a more rapid and solid growth,” said Francis Stenning, CEO of the BVC.
The proposed merger is taking place independently of the Mercado Integrado LatinoAmericano (MILA) initiative, which aims to create a market linkage between the BVL, the BVC and Chile's Bolsa de Comercio de Santiago. However, the BVC has stated that it sees the link with the BVL as “complementary” to MILA's objectives. When completed, MILA will allow brokers in each participating country to send direct market access orders via the infrastructure of local brokers in the other two countries directly to the exchanges.
MILA was disrupted at the end of December 2010 after BVL said it could not participate until Peru's capital gains tax regime was standardised. BVL rejoined the testing phase of the platform following a meeting of the Peruvian congress later that month. The full MILA integration project is expected to be completed across Colombia, Chile and Peru by the end of 2011.