BOLSA DE COMERCIO DE SANTIAGO SANTIAGO STOCK EXCHANGE

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BOLSA DE COMERCIO DE SANTIAGO(SANTIAGO STOCK
EXCHANGE)

• Megan Creahan Keith Steelman Justin
  Satterfield

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Intro to Chile

• Economy
• Large focus on international trade, with US
  accounting for largest portion of exports and
  China for imports
• Growing GDP near 246.482 billion in 2008
• Shrinking unemployment around 7
• Business Community
• Tight knit and heavily reliant on trust and
  personal relationships
• Growing due to the relatively new focus on
  international trade and business investment

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History of Chiles Stock Exchange

• 1840
• First attempt at creating a stock trading system
  resulted in little success
• 1844
• 160 companies were present
• Created a need for an exchange program to trade
  securities
• Founded November 1893, with 329 joint stock
  companies the majority of which were in the
  mining industry
• Stock Market experienced its first crisis in the
  1930s. This downturn continued until the mid
  1970s.
• Country went through what they refer to as Unidad
  Popular in which there was a hyperinflation with
  rates near 400 annually, driving the already
  weak economy to struggle even further

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Stock Market Turnaround

• Both a pension fund reform as well as new
  free-market economy adapted in 1973 assisted in
  the markets growth.
• Economic Expansion
• Stock market operation development
• Increased securities in circulation
• Transactions became diversified
• Added Pension Funds Management Institutions,
  Insurance Companies, Foreign Investment Funds,
  and Mutual Funds to the Exchange
• In the 1990s Chilean companies were opened to
  international markets via participation in
  ownership of key Latin American companies.

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Industry Analysis

• Competition from Rivals
• Low seeing as there are only a few small rivals
  and there is growing demand for stocks and other
  tradable assets
• Competition from New Entrants
• Low due to Bolsa de Comercio de Santiagos
  advanced technology as well as their already
  large portion of the market share
• Competition from Substitutes
• Depending on how narrowly you define substitutes
  it can be either low or moderate.
• If referring only to stock exchanges the
  completion is low but in reference to alternative
  methods of holding wealth the competition
  increases.

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Industry Analysis cont.

• Relative Power of Customers
• Moderate to high seeing as there is no inherent
  need for stocks and customers have complete
  control to pull out their money at any time
• Relative Power of Suppliers
• Low seeing as once stock is issued companies have
  extremely limited opportunities to withdraw the
  shares
• Overall the stock market industry seems
  attractive, indicating that potential
  profitability is high

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Objectives

• To facilitate the flow of saving and investment
  in the capitals market
• To carry out primary placement of the equity
  market securities and bonds
• To promote the free pricing and the transparency
  in the operations
• To promote measurements that enhance liquidity at
  market prices in the secondary market
• To regulate the operations of the market and to
  supervise the operations and to provide services,
  systems, and infrastructure required by the
  stockbrokers and participants of the stock market

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2008 Financial Specs

• Net Revenue
• 5,133.09 CLP
• Net Profit Margin
• 39.99
• Is the majority shareholder of Camara de
  Compensacion Bolsa de Comercio de Santiago SA
• Holds 23 interest in Deposito Central de Valores
  SA which is a for profit Central Securities
  Depository

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Organization and Technology

• Composed of three market indices including a
  General Price Index, Selective Stock Price Index,
  and an Inter-10 Index
• Trades stocks, bonds, investment funds, stock
  options, futures, gold and silver coins, and U.S.
  dollars
• Implemented the use of technology in 1981with
  computerized main processes
• Created a network of over 100 Tandem brand
  computer products
• The main system run by Bolsa Comercio Santiago is
  Telepregon
• Currently accessible to worldwide customers

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Telepregon

• The Telepregon computer system allows stock,
  currency, options, and futures to be traded over
  the network
• The transactions run through the systems
  verification to determine if they are valid
  transactions to be conducted
• The system will not verify these the offers of
  trade until they are valid in which case the
  offer is held for a period of time
• The information system of the Santiago Stock
  Exchange keep an extensive database of all the
  transaction conducted

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Teleranta

• This is the system that informs the necessary
  parties on the offers
• The electronic auction system aspect allows
  offers to be placed in a given time and after
  this period ends the it gives the offer to the
  best purchase bid

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Other Services

• The Bolsa Comercio Santiago also provides its
  customers with other technical services
• FonoBolsa allows access to the stock prices,
  trade amounts, dividends, and other information.
  This system is operated over the telephone.
• InfoMail, like FonoBolsa, offers access to some
  of the same information summarizing the market,
  its index as well as closing prices
• Similarly StockView offered directly through the
  website allows the traders access to company
  information and market transactions

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IBM System

• On December 10, 2008 it was revealed that Bolsa
  Commercial de Santiago, would begin using an IBM
  security trading system that would
• Allow for faster transactions 3000 orders per
  second
• Better communications
• Improve security
• Automatic order processing

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Employees

• The employees who operate these systems need to
  have some background in the computer technology
  used as well as the software employed
• A background in science for these employees would
  go hand in hand with their engineering knowledge
  and capabilities

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Interesting Trends

• Transition from interpersonal transactions to
  entirely electronic
• Role the government plays in economic growth and
  decline
• Good example of market fluctuation

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QUESTIONS (for professionals)

• What was cost effects of switching to a
  computerized system?
• What use does the old exchange hold?
• What percent of business is performed in Spanish?
  English? Where are your computer systems housed?
• For how long do you back up your recorded
  information?
• How was the change to computer systems handled in
  1981?
• Do you expect any more large scale changes such
  as the incorporation of IBM technology?
• What percentage of your investors are foreign?
• How long has the Telepregon system been in place?
• What do you feel is the largest obstacle
  necessary for the Bolsa Comercio Santiago to
  overcome concerning its technology?

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QUESTIONS (for students)

• Where do the majority of business/engineering
  students work after graduation?
• What do you see as the biggest difference between
  business in Chile and the United States?
• Why do you believe the Chile has been less
  affected by the global financial crisis?
• What are the most popular fields of study for
  Chilean student?
• What specific types of engineering (chemical,
  civil, electrical, etc.) are the most popular?

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Sources

• http//www.bolsadesantiago.com/english/index/asp
• http//www.nomura.com/research/QuantsPublication/R
  esearchReports/QuantitativeStrategies/GlobalMarket
  Guide2008.pdf
• http//www.wallstreetandtech.com/exchanges/showArt
  icle.jhtml?articleID212400133
• http//en.wikipedia.org/wiki/Santiago_Stock_Exchan
  ge