LatAm Exchange Embraces Algos
Latin America’s markets continue to be among the leaders of the global emerging markets as they welcome algorithmic trading strategies.
“The Chilean market is still at an early stage of tremendous growth, and it is critical to us as an exchange to bring in the best technology available to our local market,” said Andres Araya Falcone, chief information officer of Bolsa de Comercio de Santiago via email.
Chile’s BCS has tapped Massachusetts-based StreamBase Systems to provide algorithmic tools for the Chilean markets. StreamBase’s Complex Event Processing platform will be integrated into BCS’ electronic trading platform, Telepregon.
The announcement from BCS came just as Deutsche Borse launched a new algorithm news feed for the Brazilian market. Its AlphaFlash product offers low-latency economic indicators and corporate news for local quant traders, hedge funds and other market participants employing algorithmic trading strategies.
Chile’s Bolsa de Comercio de Santiago, or Santiago Stock Exchange, is one of the three South American exchanges in Mila, or Mercado Integrado Latinoamericano, along with Colombia’s Bolsa de Valores de Colombia and Peru’s Bolsa de Valores de Lima. Mexico’s stock exchange, Bolsa Mexicana de Valores, in December announced plans to join Mila, which will further boost the standing of the collective exchanges.
Having Mexico’s BMV join Mila, together with the advent of algorithmic trading, is one of many steps that the Latin American markets have taken to attract foreign investors. About half of Mexico’s market activity comes from foreign investors, while about a quarter of Chile’s activity comes from abroad. While only about 8% of Colombia’s market activity originates from foreign investors, that number doubled from just two years prior.
Finamex, a Mexican agency-only broker-dealer, recently announced the launch of a new suite of algorithms aimed at trading U.S.-based securities in the Mexican market. The algorithms are designed to arbitrage any price discrepancies or inefficiencies between venues due to data latency.
Mexico has also enacted regulation designed to attract foreign order flow. In 2005, certain withholding tax rules, which for certain countries could be as high as 35%, were abolished, allowing investors outside of Mexico to invest in Mexican fixed-income securities while avoiding this tariff.