Building Better Markets: Achieving the LatAm Operating Model of Tomorrow
Foreign investment into Latin America is poised to accelerate, but market structure issues must be solved to unlock flows. A new report from Nasdaq and The ValueExchange explores the opportunities (and expectations) for improving post-trade processes and standards.
The Growth Challenge
The top takeaway from our survey is that 84% of respondents want to grow their Latin American exposures – but 59% experience market inefficiencies that block or limit their investments. The prime culprit? Regional variance. From settlements to securities lending, collateral management and proxy voting, post-trade inefficiency and fragmentation is holding back investment.
The solution? Regional consolidation or harmonization that lifts these roadblocks and lays the groundwork for the efficient operating model of tomorrow.
Building Better Markets: Achieving the LatAm Operating Model of Tomorrow
Listen to Christian Sjöberg, Head of Business Development & Portfolio Strategy, discuss the importance of standardization, harmonization, and collaboration in attracting international investments and driving market change in the LatAm region.
Who Participated?
We spoke to more than 100 buy-side firms across North America, Europe/Middle East/Africa and Asia-Pacific on their volumes, blockers and growth plans.
Different Markets Attract Different Investors
Foreign investment flows are expected to grow 16% on average into the region over the next two years.
80% Institutional Growth
Share of investors with more than $1 billion set to expand LatAm exposures.
53% Investment Returns
Share of investors active in Argentina who cited attractive investment returns as their primary driver.
30% Index Opportunities
Share of North American-based investors who cited passive investments as their primary driver for regional investments.
43% Diversification
Share of investors active in Brazil who cited investment diversification benefits as their primary driver.
Variance and Manual Workflows Breed Errors and Costs
67%
of Respondents Experience Unreasonably High Levels of Settlement Failures
288%
More Headcount Required to Manage LatAm Investments Than Comparable Markets, Largely Due to Manual Processing
52%
Average Straight-Through Processing (STP) Rate for Wealth Investors Across Key LatAm Markets
Head of Product, Global CustodianLack of consistency in processes (e.g., proxy voting, account opening, account structures) is a major challenge.
Head of Network Management, Global CustodianLatAm markets are expensive. Flows could be so much more, but they aren’t because it costs too much.
Several Blockers Challenge Investment Volumes
17%
of Investors Active in Argentina Said FX Documentation Requirements Blocked Flows
15%
of Investors Active in Brazil Said Inability to Lend Securities Using Global Platforms Blocked Flows
20%
of Investors Active in Colombia Said Lack of Global Messaging Standards Blocked Flows
17%
of Investors Active in Argentina Said FX Documentation Requirements Blocked Flows
Tomorrow’s Headlines
Market Efficiency in Focus
Respondents ranked market infrastructure changes as the most impactful driver in establishing a modern and future-proofed operating model.
Benefits of Post-Trade Transformation
Respondents saw wide potential for P&L improvement, including 81% who believe standardized messaging in collateral management could deliver up to 21% improvement.
New Asset Class Growth?
Solving today’s challenges could put LatAm markets in position to capitalize on new opportunities in tokenized digital assets (13% average growth) or voluntary carbon credits (9% average growth).
Related Resources
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