AND PERUVIAN STOCK EXCHANGES WILL
NEW BUSINESSES AND GOVERNMENTS ALIKE,
BY CARLOS IGNACIO ROJAS AND ALEJANDRO VERA
he 1999–2000 merger of
the European stock exchanges stands out as one
of the more exciting and
bold global financial developments.
Before then, European capital
markets were relatively underdeveloped compared to those of Japan, the
United States and the United Kingdom. They also suffered from the
kind of complex regulatory system
now prevalent in Latin America. A
lack of regional standardization led
to regulatory arbitration, unnecessary securities movements and excessive costs.
In 1987, the European Commission
began a process of standardization
to establish a common set of regulations for its securities markets. But
the rules issued over the next decade
were not enough to unify the markets, thus impairing full integration.
It was not until 1999, with the establishment of the Financial Services
Action Plan, that Europe’s securities
markets were finally standardized.
Soon after, the Paris, Brussels and
Amsterdam stock exchanges merged
in the second half of 2000, giving
birth to the Euronext stock market.
This merger sought to strengthen financial markets that individually
could not compete in liquidity or capitalization with those of London or
New York. Some of the world’s most
important firms became part of Euronext, including blue chips such as
Suez, L’Oreal and Philips.
The regulatory standardization
and flexibility established by Euronext were critical to its success. In
2007, the New York Stock Exchange
acquired Euronext creating one of
the world’s most highly capitalized
market groups, N YSE Euronext, operating on both sides of the Atlantic.
Euronext’s capitalization rose
from 1. 5 trillion euros ($1.35 tril-
lion) in 2001 to almost 3 trillion eu-
ros ($4.1 trillion) in 2007, according
to the International Federation of
Stock Exchanges. And although it
fell to 2 trillion euros ($2.8 trillion)
in 2009—a result of the international
financial crisis—recovery is expected
along with that of the global econ-
omy. Even with the Eurozone’s low
economic growth (close to 1 percent
annually in recent years), the stock
market’s regulatory reliability has
yielded an acceptable performance.