by Crystal Bueno
The Depósito Central de Valores, S.A. (DCV) of Chile and DTCC signed an agreement on August 25 that recognizes and strengthens their relationship and will serve as a basis for future collaboration.
The objective of this cooperative undertaking, which will leverage the technology and expertise of both organizations, is to expand offerings and capabilities of DCV and DTCC. This will enable both organizations to take advantage of local market knowledge to develop broader offerings in Chile and throughout Latin America, while reducing risk and lowering costs.
William Aimetti, DTCC president and COO; Guillermo Tagle, DCV Board member and executive director, IM Trust; Julio Jaraquemada, chairman, Banco Internacional; Javier Jara, DCV general counsel.
"Chile has one of Latin America's strongest economies, and represents a strong and growing financial market in the Americas," said William Aimetti, DTCC president and COO. "We are delighted to have this opportunity to take the relationship with Chile's central securities depository to a new level, and we look forward to collaborating with our Chilean colleagues in helping them address the needs of their markets and supporting their customers."
"We believe this working relationship will give DCV some strategic advantages in fulfilling our own mission of making the Chilean capital markets more efficient and more attractive to capital market growth," said Fernando Yáñez, CEO of DCV. "We look forward to leveraging the expertise, technology, scale and global reach of DTCC to assist in the growth of services for capital markets throughout Latin America."
Risk and business continuity
Early discussions have identified some possible areas of collaboration tied to operational risk and business continuity. For example, DCV currently has data centers in separate locations in Santiago, the capital and largest city of Chile; however, communications with the back-up site located 500 kilometers away in Concepción City were disrupted and went offline during the February 2010 earthquake. DCV and DTCC believe there may be an opportunity to collaborate on business continuity, leveraging DTCC's own experience post- 9/11 in establishing redundant back-up data centers.
Fernando Yáñez, CEO of DCV; Fernando Cañas, DCV Board member and Chairman, Bolsa Electrónica de Chile; Oscar Raposo, Jr., DTCC managing director, Finance, and DCV Board member; Alejandro Alarcón, CEO, The Chilean Association of Banks and Financial Institutions.
History of collaboration
The agreement took shape following DCV's invitation in December 2009 to DTCC to make a 10% equity investment in DCV and join the DCV Board. In making this investment and joining the DCV Board, DTCC has expressed its commitment to the region and high expectations for future cooperative efforts with DCV.
DCV and DTCC have a long and valued relationship, and share a considerable history of collaboration. DCV has been a participant in DTCC's depository subsidiary, The Depository Trust Company (DTC), since 2007. This membership permits DCV to extend to its customers the benefit of having DTC service the underlying assets for DCV's Chilean customers, including cross-border settlements with other DTC participants, and transact both free-of-payment and delivery-vs.-payment (DVP) business in DTC-eligible issues. In addition, DCV and DTCC are among the founding members of the Americas' Central Securities Depositories Association (ACSDA), an industry organization formed over a decade ago that provides a forum for issues affecting securities depositories, such as best asset servicing practices, globalization trends in markets and instruments, technology standards and risk management.
Pablo Yrarrázaval Valdés, vice chairman, DCV Board of Directors, and chairman of Santiago Stock Exchange; Sergio Baeza, chairman, DCV Board of Directors, and chairman of AFP CAPITAL S.A.; William Aimetti, DTCC president and COO; Francisco Silva, chairman, Banco Security.
Snapshot of DCV
El Depósito Central de Valores, S.A., (DCV) is located in Santiago and serves multiple national exchanges and the over-the-counter (OTC) market. DCV is principally owned by member banks, pension funds, insurance companies and the three Chilean stock exchanges (the Santiago, Electronic and Valparaíso).
DCV holds securities worth US$214 billion. It has 166 direct participants, including banks, brokers, pension funds, mutual funds and insurance companies. In 2009, DCV processed trades worth US$0.9 trillion. For more information, visit www.dcv.cl.