Caracas Stock Exchange
Encyclopedia
The Caracas Stock Exchange or Bolsa de Valores de Caracas (BVC) is a stock exchange
located in Caracas
, Venezuela
. Originally established in 1947, BVC merged with a competitor in 1974 to become the only securities exchange operating in Venezuela.
and securities (renta fija y de renta variable) with the purpose of securing capital
from public investors. BVC is also used as a location for trading in Bond
s and other debt
instruments.
The legal structure prevailing in the Venezuelan capital market are the Securities Marketing
Law (la Ley de Mercado de Capitales, enacted in 1975 and amended in 1998), Transaction Law (Ley de Caja de Valores), the Statutory Law of Public Credit (Ley Orgánica de Crédito Público), the Law of Organizations of Collective Investment and the norms dictated by the National Exchange Commission (Comisión Nacional de Valores, or CNV). Exchange activities are regulated and supervised by the National Exchange Commission, a public entity assigned to the Ministry of Finance, that authorizes internal procedures and regulations.
of the Caracas Stock Exchange is presided over by Víctor Julio Flores. Additional members include Santiago Fernández Castro, Marcel Apeloig, Omar Delgado, José Gregorio Castro, Gabriel Osío, Jesús Tadeo Prato, Luis Oberto, Carlos Fernández and Mario Dickson, as well as by advisers Luis Andrés Guerrero and Rubén Manzur.
era, when in 1805 Don Bruno Abasolo and Don Fernando Key Muñoz founded the Casa de Bolsa y Recreación de los Comerciantes y Labradores in Caracas. The exchange was officially founded on January 21, 1947 and inaugurated its first trading session on April 21 of the same year, after previously trading stocks over the counter. On May 6, 1976, the assembly of shareholders decided to change the denomination of the institution to Bolsa de Valores de Caracas C.A., and initiated a new operating structure composed of 43 shareholders, or puestos de bolsa, an amount that would be increased to 63 members in 1995.
, the migration of stocks to the U.S. markets in the form of American Depositary Receipt
s (ADRs), corporate takeovers with a concomitant reduction in the number of shares available for trade and an increasing country risk that has frightened investors, particularly foreign investors. Daily trading volume decreased from the equivalent of $25 to $30 million in 1997 to less than $1 million by 2000. The BVC survived during this period thanks to a growing trade of government debt securities. Stock prices, measured by the Indice Bursátil Caracas, were also depressed during the 1990s and have yet to recover to the highest ever leves experienced in 1991. Accoriding to the International Finance Corporation, the market value of the BVC was $7 billion in 2000, or just about 6 percent of GDP. In 2005 total transactions on the BVC totaled USD$ 438 million.
entered operations. On July 2, 1999 another technological change was made when the SIBE (Sistema Integrado Bursátil Electrónico), electronic trading system was officially incorporated into the Caracas Stock Exchange.
Stock exchange
A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...
located in Caracas
Caracas
Caracas , officially Santiago de León de Caracas, is the capital and largest city of Venezuela; natives or residents are known as Caraquenians in English . It is located in the northern part of the country, following the contours of the narrow Caracas Valley on the Venezuelan coastal mountain range...
, Venezuela
Venezuela
Venezuela , officially called the Bolivarian Republic of Venezuela , is a tropical country on the northern coast of South America. It borders Colombia to the west, Guyana to the east, and Brazil to the south...
. Originally established in 1947, BVC merged with a competitor in 1974 to become the only securities exchange operating in Venezuela.
Operational and Legal Structure
BVC is a private exchange, providing operations for the purchase and authorized sale of securities according to the Capital Marketing Laws of Venezuela. It is member of the Executive Committee of the Latin American Federation of Stock markets. At the exchange, companies emit by procedures authorized by the regulating authorities, instruments of fixed incomeFixed income
Fixed income refers to any type of investment that is not equity, which obligates the borrower/issuer to make payments on a fixed schedule, even if the number of the payments may be variable....
and securities (renta fija y de renta variable) with the purpose of securing capital
Financial capital
Financial capital can refer to money used by entrepreneurs and businesses to buy what they need to make their products or provide their services or to that sector of the economy based on its operation, i.e. retail, corporate, investment banking, etc....
from public investors. BVC is also used as a location for trading in Bond
Bond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
s and other debt
Debt
A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
instruments.
The legal structure prevailing in the Venezuelan capital market are the Securities Marketing
Marketing
Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
Law (la Ley de Mercado de Capitales, enacted in 1975 and amended in 1998), Transaction Law (Ley de Caja de Valores), the Statutory Law of Public Credit (Ley Orgánica de Crédito Público), the Law of Organizations of Collective Investment and the norms dictated by the National Exchange Commission (Comisión Nacional de Valores, or CNV). Exchange activities are regulated and supervised by the National Exchange Commission, a public entity assigned to the Ministry of Finance, that authorizes internal procedures and regulations.
Board of Directors
The Board of DirectorsBoard of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
of the Caracas Stock Exchange is presided over by Víctor Julio Flores. Additional members include Santiago Fernández Castro, Marcel Apeloig, Omar Delgado, José Gregorio Castro, Gabriel Osío, Jesús Tadeo Prato, Luis Oberto, Carlos Fernández and Mario Dickson, as well as by advisers Luis Andrés Guerrero and Rubén Manzur.
History and Performance
The origins of the Venezuelan stock market can be traced to the end of the colonialColonialism
Colonialism is the establishment, maintenance, acquisition and expansion of colonies in one territory by people from another territory. It is a process whereby the metropole claims sovereignty over the colony and the social structure, government, and economics of the colony are changed by...
era, when in 1805 Don Bruno Abasolo and Don Fernando Key Muñoz founded the Casa de Bolsa y Recreación de los Comerciantes y Labradores in Caracas. The exchange was officially founded on January 21, 1947 and inaugurated its first trading session on April 21 of the same year, after previously trading stocks over the counter. On May 6, 1976, the assembly of shareholders decided to change the denomination of the institution to Bolsa de Valores de Caracas C.A., and initiated a new operating structure composed of 43 shareholders, or puestos de bolsa, an amount that would be increased to 63 members in 1995.
Performance
In April 2007, 60 companies were listed on the BVC, with less than half being traded regularly. BVC experienced a severe decline in traded volumes since the mid-1990s as a result of a declining economyEconomy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...
, the migration of stocks to the U.S. markets in the form of American Depositary Receipt
American Depositary Receipt
An American depositary receipt is a negotiable security that represents the underlying securities of a non-U.S. company that trades in the US financial markets...
s (ADRs), corporate takeovers with a concomitant reduction in the number of shares available for trade and an increasing country risk that has frightened investors, particularly foreign investors. Daily trading volume decreased from the equivalent of $25 to $30 million in 1997 to less than $1 million by 2000. The BVC survived during this period thanks to a growing trade of government debt securities. Stock prices, measured by the Indice Bursátil Caracas, were also depressed during the 1990s and have yet to recover to the highest ever leves experienced in 1991. Accoriding to the International Finance Corporation, the market value of the BVC was $7 billion in 2000, or just about 6 percent of GDP. In 2005 total transactions on the BVC totaled USD$ 438 million.
Electronic Exchange
BVC has been completely electronic since February 1992, when a modern electronic trading system developed by the Vancouver Stock ExchangeVancouver Stock Exchange
The Vancouver Stock Exchange was a stock exchange based in Vancouver, British Columbia. It was incorporated 1906 and was the third major stock exchange in Canada, after the Toronto Stock Exchange and Montreal Stock Exchange , and featured many small-cap and exploration stocks.In 1991, it listed...
entered operations. On July 2, 1999 another technological change was made when the SIBE (Sistema Integrado Bursátil Electrónico), electronic trading system was officially incorporated into the Caracas Stock Exchange.