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Markets Work: How Bolsas y Mercados Argentinos (BYMA) is Navigating COVID-19

Nasdaq's Market Technology community is truly keeping markets up and running. Alejandro Berney, CEO of @BYMAOficial, shares how his exchange is managing the current environment for their stakeholders, members and employees.

Nasdaq is committed to the resiliency of the global market ecosystem during this time of unprecedented change in our industry. Our Market Technology community, which includes market infrastructure organizations spanning more than 50 countries, is truly keeping markets up and running. With exchanges laying the foundation for capital formation and job growth, these organizations will continue to play a critical role in the health and recovery of local economies around the world and greater global capital markets ecosystem.

Alejandro Berney

We sat down with Alejandro Berney, CEO of Bolsas y Mercados Argentinos (BYMA) and Executive Director of Caja de Valores, to discuss how his exchange is managing the current environment for their stakeholders, members and employees.

1. How is COVID-19 affecting your client base? Are you changing how you interact and communicate as a result?

The Argentine capital market has gone through a significant transformation in the past couple of years. Less than four years ago, we began a demutualization process. As we changed our corporate structure, we also made significant investments to begin a modernization of our infrastructure.

As a result, BYMA has the technology tools in place, which allowed the local brokerage community to interact completely electronically with us, both for execution and for settlement. For example, more than 85% of the daily offers come to our central order book via our DMA offering or via algo traders. Therefore, when a mandatory quarantine was put in place on March 20th, the volumes on the exchange were practically the same as before.

We did see that the entire ecosystem did not evolve at the same pace, and some of the smallest brokers did experience an initial impact when the quarantine was mandated. Those offices quickly implemented remote tools to access their back-office systems, and a week after that initial date, all members were fully functional.

The quarantine did oblige our members to only use electronic communication channels. Since the smallest brokers have lower technology investments in their back offices, some of them continued to use physical forms to instruct the CSD (central securities depository). The current situation has, therefore, obliged all members to use our electronic channels, which helps us in pushing through the modernization of the ecosystem.

2. How are your systems impacted by the current environment?

BYMA’s operation was not impacted by the COVID situation, per se. However, the financial situation that Argentina is going through in renegotiating our external debt, coupled with the impact of the quarantine on the economy, has translated into significant volatility in the market, and with that, increased transaction volumes.

To put it in perspective, the amount of offers in our order book has risen 5-fold in the last year. The peak of daily transactions has increased by 25% in the same space of time, and the daily averages have doubled. Our infrastructure, therefore, is constantly stressed.

Our daily average transaction volumes also rose significantly since we demutualized four years ago, and thus we have been constantly investing in our infrastructure to allow for these growth rates. As a result, this situation did not take us by surprise, but it does translate into having to accelerate our investments since we have reached thresholds earlier than anticipated.

3. How do you prepare for this type of situation to help ensure a resilient, operational environment?

BYMA has a strong focus on risk management in general, and continuity of business (COB) in particular. Our process included scenario planning in which our employees could not access our buildings. However, the scenario assumed that the critical employees could gather at our alternative site.

The COVID pandemic required us to move quickly during the week before the mandatory quarantine. We quickly rolled out remote working tools (eg, VPNs, VDIs, among others) to all employees so that we could be fully functional without accessing our contingency site. We also prepared company laptops for those critical employees that didn’t have one already. Having the alternative for all employees to work remotely has been a key pillar in our ability to continue providing our normal levels of service.

The other key aspect was having a technology infrastructure that could handle the volatility of the operations, as commented in the previous response.

4. What are some of the things you’re most happy to have accomplished over the first part of this year amidst a truly chaotic market environment?

When BYMA demutualized in 2016, we laid out a strategic plan to modernize the company and make it more efficient. Argentina has suffered several significant shocks in the last couple of years, hence why the government is requesting a renegotiation of its external debt. The COVID pandemic has been a black swan event that added significant volatility and uncertainty to the financial and economic outlooks.

Within this environment, we are pleased with our organization. It has allowed us to continue to grow according to our strategic plans, improving the services we offer and the new products we have rolled out. The work-from-home environment has functioned very well thanks to our previous planning.

The contingency situation has not impeded us to roll out new products, such as EPYME which allows SMEs to discount Echeqs and Promissory Notes on local exchanges, and our platform for issuers BYMA Listadas which allows issuers to handle all regulatory filings completely digital.

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