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Market incentives help minimise Brazilian grey market
06/10/2010
Brazilian market incentives are being credited with shrinking the nation's grey market and establishing it as a leading light in the murky operations of global emerging markets.
A decade of financial development in the capital markets has been helped by increasing corporate governance standards on the BM&FBovespa multi-asset exchange. This has lead to many companies escaping 'grey market' status and formalising themselves in the legitimate economy.
Industry analysts have said wise market reforms have had the effect of encouraging companies to voluntarily implement operational reforms. Chief among these has been the 'novo mercado' listing segment - the new market.
To join this, companies must issue only voting shares, offer 100 per cent tag-along rights for minority shareholders to sell shares at the same rate if a majority shareholder sells up, and maintain a free float of at least 25 per cent of shares, among other rules.
José Luiz Osorio, a former officer on Brazil’s securities and exchange commission, said, “In 2000, the scenario was bleak. There were no new listings, and no IPOs: we needed reform to send a big signal.”
Issuer development officer at the BM&FBovespa, Cristiana Pereira, said the changes had the effect of changing the Brazilian market completely and helping the IPO market to flourish.
A decade of financial development in the capital markets has been helped by increasing corporate governance standards on the BM&FBovespa multi-asset exchange. This has lead to many companies escaping 'grey market' status and formalising themselves in the legitimate economy.
Industry analysts have said wise market reforms have had the effect of encouraging companies to voluntarily implement operational reforms. Chief among these has been the 'novo mercado' listing segment - the new market.
To join this, companies must issue only voting shares, offer 100 per cent tag-along rights for minority shareholders to sell shares at the same rate if a majority shareholder sells up, and maintain a free float of at least 25 per cent of shares, among other rules.
José Luiz Osorio, a former officer on Brazil’s securities and exchange commission, said, “In 2000, the scenario was bleak. There were no new listings, and no IPOs: we needed reform to send a big signal.”
Issuer development officer at the BM&FBovespa, Cristiana Pereira, said the changes had the effect of changing the Brazilian market completely and helping the IPO market to flourish.
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