BUENOS AIRES (Dow Jones)--Argentina's two main bourses have moved to integrate operations with a smaller exchange in the city of Cordoba to make it easier for investors to trade on a common platform.
The Bolsa de Comercio de Buenos Aires and Mercado de Valores de Buenos Aires SA (VALO.BA), or Merval, signed a memorandum of understanding with the Mercado de Valores de Cordoba, stepping closer toward the creation of a new national market, the exchanges said in a statement Wednesday.
The new market is called Bolsas y Mercados Argentinos SA, or B&MA. Last month, the presidents and boards of directors from the Bolsa de Comercio de Buenos Aires and Mercado de Valores de Buenos Aires SA approved a plan to create the market. The addition of the Cordoba exchange makes it even larger.
Argentina has the third-largest economy in Latin America, but trading volumes on its securities exchanges are minimal compared with those of many other countries in the region.
Argentina's nationalization of its private pension system at the peak of the 2008-09 global crisis deprived the market of most of its liquidity. Meanwhile, Argentine companies are often reluctant to open their books to outsiders, which partly explains the dearth of IPOs in recent years.
Foreign investors also avoid Argentina's capital market because of strict capital controls that require nonresidents to deposit the equivalent of 30% of all financial investments with the central bank for a year.
In addition, currency controls make it extremely difficult for people and companies to get money out of the country legally.
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