TY - JOUR
T1 - What determines market development? Lessons from Latin American derivatives markets with an emphasis on Chile
AU - Fernandez, Viviana
N1 - Funding Information:
The author wishes to thank the valuable comments of participants at the 2002 Midwest Finance Association Meeting, held in Chicago, USA, March 2002, and at a seminar held in the Central Bank of Chile in July 2001. Funds provided by Grant DID No. Soc-01/19-2 (Department of Research and Development of the University of Chile), and by an institutional grant of the Hewlett Foundation are greatly acknowledged. All remaining errors are the author's.
PY - 2003/10
Y1 - 2003/10
N2 - There is considerable heterogeneity in the development of derivatives markets in different countries. The question is: why? This paper addresses this question in the context of major derivatives markets in Latin America. The largest derivatives exchanges in Latin America are located in Argentina, Brazil, and Mexico. In addition, over-the-counter (OTC) markets exist in Chile and Peru. Excluding Peru, Chile's derivatives market is to date the least developed. We show that this is due to regulatory constrains and illiquidity. Domestic transactions are OTC, and consist mostly of exchange rate forwards. Recent changes in the Central Bank of Chile's exchange rate policy have not had a considerable impact on the aggregate trading volume of forwards. However, amendments made to the Law of Capital Markets in 2001 bring the possibility of having a more developed derivatives market in the future.
AB - There is considerable heterogeneity in the development of derivatives markets in different countries. The question is: why? This paper addresses this question in the context of major derivatives markets in Latin America. The largest derivatives exchanges in Latin America are located in Argentina, Brazil, and Mexico. In addition, over-the-counter (OTC) markets exist in Chile and Peru. Excluding Peru, Chile's derivatives market is to date the least developed. We show that this is due to regulatory constrains and illiquidity. Domestic transactions are OTC, and consist mostly of exchange rate forwards. Recent changes in the Central Bank of Chile's exchange rate policy have not had a considerable impact on the aggregate trading volume of forwards. However, amendments made to the Law of Capital Markets in 2001 bring the possibility of having a more developed derivatives market in the future.
UR - http://www.scopus.com/inward/record.url?scp=0345016873&partnerID=8YFLogxK
U2 - 10.1016/S1042-9573(03)00043-3
DO - 10.1016/S1042-9573(03)00043-3
M3 - Article
AN - SCOPUS:0345016873
SN - 1042-9573
VL - 12
SP - 390
EP - 421
JO - Journal of Financial Intermediation
JF - Journal of Financial Intermediation
IS - 4
ER -