The Business Year

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Rodolfo Kronfle Akel

President, Bolsa de Valores de Guayaquil (BVG)

Gilberto Pazmiño

President, Bolsa de Valores de Quito (BVQ)

The country's two stock markets have yet to operate on an equal footing, but both are working hard to ensure that investment, transparency, and smart regulations are maximized.

What have been some major developments in recent years?

RODOLFO KRONFLE AKEL There have been important advances, although compared to the reality in other countries, they are not significant. This is due to the small size of the Ecuadorian market and the lack of an investment culture through the stock market of the entire population in Ecuador.

GILBERTO PAZMIí‘O The current government is aware that in order to develop the stock market, it is important to support the competitiveness of the public and private sectors. The Ecuadorian Entrepreneurial Committee, the chambers of industry and commerce, the brokerage houses, the market’s main regulators, the pension funds managed by the Bank of the Ecuadorian Social Security Institute, the dollarized economy, and the political and technical decisions of the president and cabinet ministers are all the government’s strategic allies to grow the stock market in Ecuador. The economic sectors potentially most interested in making public stock offerings and issuing debt through corporate bonds or securitizations are mining, construction, financial, exporters, companies producing raw materials, and the food and textile sectors. The productive sector also has great potential in terms of seeking financing for environmentally sustainable projects through green corporate bonds.

In 2018, the government approved a new law to improve productivity, attract investment, and create employment. Will it boost participation on the stock exchange?

RODOLFO KRONFLE AKEL Technically, it should attract more investment and movement to the stock market among other places, although in practice, because of the country’s financial situation, its volume of debt, and the lack of public confidence, we are unlikely to see the immediate result the country needs.

GILBERTO PAZMIí‘O The government has started to implement structural reforms to restore fiscal stability, redefine debt maturities, attract foreign financial and capital investment, restore international trade relations, conclude agreements with multilateral banks, and reduce the level of risk. All these steps help significantly, allowing the government to increase the placement of long-term bonds with better conditions in international bond markets. The Minister of Economic and Financial Affairs is currently implementing a plan that will allow Ecuador to be permanently present in the main international bond markets, and for a yield curve to be constructed. Regarding corporate bonds, local enterprises are deeply interested in evaluating financing alternatives in foreign markets, essentially by means of Rule 144 A and/or Regulation S, as well as through local issues of bonds that can be bought and sold by brokerage firms on behalf of foreign investors. This can be done through remote trading agreements, which in the case of Ecuador have started to be concretized under the scope of AMERCA, formerly named BOLCEN, a stock exchange association comprising the stock exchanges of seven countries in Central America and the Caribbean and BVQ.

How do you see your institution moving forward?

RODOLFO KRONFLE AKEL For us, the partnership with the Quito stock market allows us to remain the leader of the stock market in Ecuador. There is more volume negotiated than in Quito.

GILBERTO PAZMIí‘O For the coming years, my primary ambitions are to significantly boost the trading culture; make the stock exchange market accessible to the retail segment; for corporations to strengthen their financial structures through the significant inclusion of new shareholders; for our country to receive foreign financial investment; to convince our entrepreneurs and businesspeople of the importance of adopting excellent corporate governance practices; to develop an important secondary market that can provide liquidity to small and large investors; make stock market products one of the best alternatives for domestic savings; use the dollar currency and turn our country into an important financial hub; and shape our entrepreneurial society into being more inclusive with the implementation of sustainable productive practices with an emphasis on social responsibility, environmental sustainability, corporate governance, and in particular conscious capitalism.



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