The Bolsa De Valores De Panama

THE BOLSA DE VALORES DE PANAMA

1. DEFINITION

A stock exchange is an entity which provides "trading" facilities for stock brokers and traders, to trade stocks and other securities. Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividends. The securities traded ona stock exchange include shares issued by companies, unit trusts, derivatives, pooled investment products and bonds.

1.1 THE ROLE OF STOCK EXCHANGES

Stock exchanges have multiple roles in the economy. This may include the following:

• Raising capital for businesses
• Mobilizing savings for investment
• Facilitating company growth
• Profit sharing
• Corporate governance
• Creatinginvestment opportunities for small investors
• Goernment capital-raising for development projects
• Barometer of the economy

2. THE BOLSA DE VALORES DE PANAMA (THE BVP)

is a private corporation (Stock Exchange) that have issued stock held by investors and created with the objective of establishing a centralized mechanism to trade securities in Panama. It is an organized securities marketwhere investors, such as buyers or sellers of securities, can trade in a transparent and organized manner. As an issuer, the BVP is subject to the pertinent rules and regulations adopted by Panama’s National Securities Commission (“NSC”) and the rules promulgated by the BVP as a self-regulatory organization (“SRO”). The majority of its stock is not controlled by its members.

2.1 HISTORY

In1989, when Panama was passing through the worst political and economic crisis in its republican history, a group of businessmen conceived one of the most needed projects in the local financial market: the founding a stock exchange. This private sector initiative sought a centralized trading mechanism whereby the forces of supply and demand for securities could operate transparently and freely. Inline with this objective, the Panama Stock Exchange, Inc. [Bolsa de Valores de Panamá, S.A. o BVP] was created.

On the 26th of June of 1990, the BVP held its first trading session, marking a new stage in the development of the securities market in Panama. During the decade of the 90’s, the BVP consolidated its position in the local competitive financial brokerage market, as more participantsjoined the BVP as seat holders or as Issuers and Investors. New institutions evolved to support the growth of the securities market. This led to an increase in trading volume, year after year, growing from US$ 3.3 million in the year 1990 to US$ 2,256.3 million in the year2006. This growth was the result of a positive business environment, characterized by the return to political stability, togetherwith far-reaching economic reforms, as well as the adoption of equal tax treatment for the different financial instruments, which eliminated the tax bias that existed until 1991 and which held back the development of the securities market.
2.2 FUNCTION
The BVP handles equity and debt securities traded through its members. These securities have been previously dematerialized and are under thecustody of Central Latinoamericana de Valores, S.A. (also knows as “LatinClear”). Government debt instruments are also dematerialized and deposited with LatinClear for trading purposes. The majority of these securities are registered with the NSC, with the exception of government debt instruments that do not have to be registered. There is no over-the-counter market in place at the BVP.
Thestock exchange per se operates for trades only from 10:00 am to 3:00 pm during these days, except for holidays. When there are primary issues offered for sale, they are posted from 9:30 am until 10:00 am, but no trades are allowed during this time. All transactions are executed through the electronic trading system called SITREL (the acronym in Spanish for “Sistema Transaccional Electrónico” or...