In December 2014, Mexico joined Chile, Peru, and Colombia in the Mercado Integrado Latinoamericano, or Integrated Latin American Capital Market (MILA), a program that integrates the stock exchanges of the four members of the Pacific Alliance. The MILA allows investors in the stock exchanges of Mexico City, Bogotá, Lima, and Santiago to purchase securities in any of the other four exchanges through a local broker and to both pay for and receive any dividends or profits in their own local currency. The four exchanges remain independently managed, owned, and regulated in their home countries; however, MILA has integrated the technology platforms used by each stock exchange to allow trading requests to be placed directly without a local intermediary.
The MILA initiative first began with an agreement signed in 2009 between the stock exchanges of Bogotá, Lima, and Santiago. The market was formally launched in May 2011 in Lima with the integration of the three South American exchanges. MILA has been considered a key element of the economic integration efforts of the Pacific Alliance, a trade bloc that strengthens economic and political relations between the four like-minded Latin American nations.
Mexico’s entry into MILA at the end of 2014 was considered an important step for the market, given that the Bolsa Mexicana de Valores (BMV) accounts for around 54% of the total value of the integrated market. With the integration of Mexico, the integrated market is the largest stock exchange in Latin America, surpassing Brazil’s BM&F Bovespa with over $709 billion in total market capitalization. As Jaime Ruíz Sacristán, President of the BMV, told TBY, “MILA has a bright future, considering the size of the economies involved and the large market the four create once united.”
Despite the combined size of the market, interest in trading through the MILA has been slow to take off. As Sacristán explained to TBY, many investors still feel that they are unfamiliar with MILA, and those who are aware of it do not necessarily understand how it works or how to make investments through the system. “We are putting a strong emphasis on publicity, because investors need to understand and become acquainted with investment opportunities in countries other than their own,” said Sacristán in an interview with TBY in 2015.
But despite the determined publicity that the four stock exchanges have carried in global financial centers such as New York, London, and Frankfurt, MILA still stirs doubts among investors, and its progress has been slow during 2015. Sacristán himself told TBY that “the process for MILA will be slow, as investors have to be convinced to buy shares of a Mexican company;” but he remains positive with regard to the exchange’s future success because “there are many truly multinational Latin American companies, and these types of alliances and initiatives can help deepen that integration and facilitate business further across borders.”
On the other hand, Jorge Arce, Managing Director of Deutsche Bank Mexico, referred to MILA as “an opportunity for other markets to invest in Mexico. For the time being, Mexico is a net user of capital and will continue to be so because opportunities are huge in terms of investment.” Mexico and its peers in MILA have presented positive economic outcomes during 2015, and it is yet to be seen to what degree this mechanism will result in a beneficial integration among the four individual markets.