One of the main challenges in the Peruvian Market is low trading volumes. Diego Castro, Peru securities country manager for Citi, says this is being addressed through several initiatives including the development of the fixed income market and the settlement of payment for Peruvian sovereign bonds, effective January 1 2015.

The Peruvian Ministry of Finance is supporting this initiative to increase transparency in the sovereign bonds market by capturing all trading activity and generating a reference yield curve. This creates a major opportunity for participants involved in the sovereign bond market, including local and international brokers as well as custodians that will have to adjust their processes accordingly.

“While it may take a few months for all participants to get on board, it will ultimately result in a more organised and transparent market,” said Castro.

In January 2015, the Lima Stock Exchange (BVL) launched its offer to acquire up to 60% of Cavali, Peru´s central securities depository (CSD), to developing clearing and settlement activities. The Lima Stock Exchange required approval from Superintendencia del Mercado de Valores, Peru´s Securities Market Commission to develop clearing and settlement activities and launch the offer.

In February 2015, Euroclear and Peru’s Ministry of Economy and Finance signed a memorandum of understanding committing to cooperate in the development of a new international link for Peru. Once implemented, the link will allow domestic Peruvian issuers to efficiently tap into the international liquidity pool provided by Euroclear’s global investor client base. The agreement also allows Peruvian investors to trade with international counterparties.