Using a web platform with key information from all of the markets in the region and the Dominican Republic, Central American stock exchanges propose reviving the plan to create a truly integrated regional market.
Once again authorities at stock exchanges in Central American countries and the Dominican Republic have put back on the table the plan to integrate the stock markets in each each country into a single regional one.
Grupo Prival, a financial institution of Panamanian origin, has announced the sale of its subsidiary Prival Securities El Salvador, on May 8, 2018.
Elcapitalfinanciero.com reports that "... In a note sent to the Superintendency of the Stock Market (SMV) for public knowledge, the banking institution reported that the change was duly notified and authorized by the Superintendency of Banks of Panama (SBP). "
Four months after the operations of the two markets were integrated, five brokerage firms are already carrying out transactions and four other are waiting for their operating permit to be processed.
The attractiveness of the Panamanian stock market for both investors and companies raising money explains the great interest that the brokerage firms in El Salvador have shown in being part of the platform that allows them to operate remotely in the Panamanian market.
Taxes on transactions made on the stock exchange in El Salvador are discouraging operations on the secondary market, which fell 80% in May compared to the same period in 2015.
The reduction from 20% to 3% in the tax on stock profits was not enough to prevent trading on the secondary market in the first quarter of the year falling by 94%.
The sale of Citibank operations in El Salvador to Honduras' Grupo Terra has been formalized, with the insurer SISA included in the transaction.
From a statement issued by the Stock Exchange of El Salvador:
It was reported that subject to regulatory approvals from the competent Salvadoran authorities, Inversiones Financieras Citibank, S.A. has sold to the company designated by the Terra Group, all of its shares in Citi Tarjetas de El Salvador, S.A. de C.V.and Banco Citibank de El Salvador, SA and that Citibank Overseas Investment Corporation and Citibank Investments, SA, sold the company designated by the Terra Group its minority stake in Cuscatlán Valores, SA de CV Casa de Corredores de Bolsa.
On January 26, the Ministry of Finance will be auctioning in the local stock market $25 million in Treasury bills with maturities of between 316 and 346 days.
From a statement issued by the Stock Exchange of El Salvador:
Lowering the tax on transactions for non-domiciled investors from 20% to 3% had a positive effect on the performance of the stock market in 2015, which grew by 6% compared to 2014.
The forecast made by Rolando Duarte, president of the Stock Exchange of El Salvador (BVES), is that this type of investment will continue to grow, thanks to the incentive which was first implemented in 2015.
An agreement has been announced which will allow Salvadoran and Panamanian investors to buy securities on the stock exchange of the other country without them being registered in both markets.
The stock exchange authorities announced that the agreement implies that each recognizes the other's jurisdiction, allowing a "... Salvadoran investor to order their brokerage house to purchase a share in the Panamanian system directly and deposit the money system in custody in Panama . "
A proposal has been made to eliminate the tax on financial operations and lower from 20% to 5% income tax paid by foreign investors in the stock market.
The reform which was carried out in September 2014 on the taxes charged on transactions in the financial market has affected market activity, say industry representatives. Carlos Araujo, president of Banco Azul, said that "the tax has had a direct impact on the decline in bank deposits; However, the main reason could be the country's economic situation.'"
Rules are now in effect to govern the creation, management and marketing of investment funds in the country, and it is estimated that in the first three years about $1 billion will be managed.
Financial companies expect that sometime before March 30 regulations of these investment instruments whose law was passed last year will be published.
It is expected that in the second half of the year the first fund management companies will be operating, once the legislation being prepared by authorities for the financial market is made known in detail.
Market actors in El Salvador claim that transactions are being subjected to double retention, both by brokerage firms and the bank related to it.
Because of the speed with which the financial sector has been forced to comply with the withholding tax on financial transactions, effective from September 1st this year, the same market participants are claiming that investors are suffering because they are being billed the tax twice on each transaction.
The package of new taxes proposed by the government of El Salvador will raise the price of the stock trading and the business of repurchasing shares.
The tax reform would not only reduce the profitability of the business, but would also make the resources accessible to the government, when it comes to the local market to issue bonds in order to finance public investment projects, more expensive.
A potential tax on financial transactions would discourage investment in the stock market as securities would be taxed each time they are traded.
In light of a tax proposal that would tax at 0.25% per $750 all kinds of securities, including repos and securitizations, the Stock Exchange of El Salvador (BVES) has expressed its concern for contracts already traded on the market and its dampening effect on investment.