Costa Rica: Country and Foreign Investment
The Bolsa Nacional de Valores SA (BNV) began operating the first security market in Costa Rica and Central America on August 19 1976. Approximately 97% of the Bolsa Nacional de Valores is owned by the brokerage firms and it is ruled by a Board of Directors which is elected by the General Assembly; however, the General Manager and a group of executives are accountable for the operation, administration and management of the BNV.
Daily trading volume on the BNV of approximately US$50m in 1999 had risen to US$140m by the end of 2005, and market capitalisation was standing at US$2.1 billion. There are several thousand listings on the exchange, and around 30 brokerages are permitted to trade securities on the BNV. The BNV index reached a high of 9,000 in early 2008, but was standing at less than 6,000 in early 2009 and another 500 points lower in early 2010.
The General Securities Superintendence (previously known as National Securities Commission) was granted responsibility for regulatory oversight of the BNV. The main piece of legislation is the Security Regulation Law (Ley Reguladora de Valores) 1998, a modern law superseding the one issued in 1990. Likewise, new Internal Rules and Regulations of the Bolsa Nacional de Valores S.A. were made effective in 1999.
Besides equities and public and private sector bonds which are traded on the BNV, there is activity in a number of other instruments, including the Money Market Account, Lien Certificates, Repurchase Agreements (REPOS), securities issued in foreign currency and paid in colons and securities issued in colons and paid in US dollars, Multiple Certificates or macro securities and investment funds.
The trading process is completely automated. The systems used by the Bolsa Nacional de Valores have been created for the needs of the securities market and designed by Costa Rican technicians. The market has been largely de-materialized, and the central custodian holds over 90% of all stocks.
The Bolsa Nacional de Valores operates on a T+3 settlement basis for share purchases. Other types of transaction use different settlement procedures:
- Spot-price transactions - payment must be made 24 hours after the transaction has been made. Within this 24 hour-period, the brokerage firms and the Bolsa Nacional de Valores will have the opportunity to secure the transaction. Furthermore, the investor who is buying will issue his payment 24 hours after the transaction is done and the seller will receive its payment then. This type of transaction may be carried out in primary and secondary market.
- Securities market settlement - the buyer and the seller agree about the transaction date and the settlement date. The settlement date may be 24 hours after the transaction occurs, or it could be as far as 360 days after the negotiation date.
In February 2008, BNV launched a new equities market called MAPA, similar to London’s PLUS. The exchange has also launched new foreign exchange derivatives and fixed income products, including an OTC Contract for Differences (CFD) on the Colon.