Visit to the Santiago Stock Exchange

After lunch on Thursday, we visited the Santiago Stock Exchange, known in Spanish as Bolsa de Comercio de Santiago. While we still have another day for activities in Chile, this was our final business meeting, and a great way to conclude the educational portion of the trip. Alejandra Cooper, a Financial Education Analyst for the Santiago Stock Exchange (SSE), gave a presentation on the history of the SSE and its building, as well as the ways in which the market operates. The SSE was founded on November 27, 1893, in attempt to stimulate the national economy. Construction of the current building started in 1913, and was finally completed in 1917. Up until the 1930s, a majority of the publicly traded companies were part of the mining industry. Now, the market is much more diverse, consisting of companies in the construction/real estate, retail, utility, commodity, and banking industries.

(Santiago Stock Exchange, Est. 1893)

The SSE is a multi-product stock exchange, as it offers not only stocks, but fixed income instruments and money market instruments, as well. It is accompanied in Chile by the Valparaiso Stock Exchange, founded in 1892, and the Electronic Stock Exchange, founded in 1989; the SSE is responsible for 96% of shares traded throughout the country. It operates similarly to the NYSE, in that there are issuers, investors, and intermediaries; the S.V.S. oversees and regulates the entire process. Issuers are comprised of the central bank, various private banks and financial institutions, as well as a multitude of companies. Investors are categorized either by institutional or non-institutional. Institutional investors include pension funds, mutual funds, investment funds, insurance companies, and banks; non-institutional investors include citizens and legal persons above the age of 18, as well as foreigners. In order to purchase stock, investors must go through intermediaries, such as brokers. There are 26 brokerage houses associated with the SSE, and while investors can make their own purchases online, these brokers must finalize all transactions.

(Rudy Blosio, Mike Dalton, and Dustin Brahman become brokers for the day)

Similar to the NYSE’s NASDAQ and DJI, some of the SSE’s main stocks are broken up into equity indexes, such as IPSA and IGPA; there is also the Inter-10, which consists of the NYSE’s top 10 publicly traded stocks. The SSE is a privately owned company, with 11 members making up its board of directors. Since it is privately owned, it is also listed on the market, and has stock available for purchase. The SSE is highly correlated with the U.S. stock market, so it operates during similar hours. During the summer, trade is open from 9:30am – 5pm; during the winter, it is open from 9:30am – 4pm. In order to make international trading more accessible, the SSE joined the Integrated Latin American Market, otherwise known as MILA, in 2011. MILA consists of Chile, Peru, Columbia, and Mexico, and with more than 700 titles to invest in, it has greatly stimulated the SSE and Chile’s economy.

(SSE brokers finalizing stock transactions)

After the presentation, we were lucky enough to get the chance to tour the trading floor. It consisted of a giant, real-time electronic billboard, which was implemented in 1993, as well as 26 computers, one for each brokerage house. We toured the floor while the market was still open, so we got to see some live trades taking place. The presentation and visit to the Santiago Stock Exchange was an event like no other. It was extremely relevant, as most students are studying business at Bryant, and put into perspective how large the international economy really is. Some students had some positive insights regarding the experience:

“The presentation was very informative, and it was interesting to see the similarities and differences between the Chilean and U.S. stock markets.”

-Griffin Casey

            “The volatility of the market makes me want to explore Chilean stock options.”

-Matt Lawson

“I really feel that I expanded my horizons and gained a new perspective on how economics work around the world.”

-Morgan Dickson

(Group picture on the trading floor)