1. BOLSA DE COMERCIO DE SANTIAGO (SANTIAGO STOCK EXCHANGE) Megan Creahan Keith Steelman Justin Satterfield

2. Intro to Chile  Economy  Large focus on international trade, with US accounting for largest portion of exports and China for imports  Growing GDP near $246.482 billion in 2008  Shrinking unemployment around 7%  Business Community  Tight knit and heavily reliant on trust and personal relationships  Growing due to the relatively new focus on international trade and business investment

3. History of Chile’s Stock Exchange  1840  First attempt at creating a stock trading system resulted in little success  1844  160 companies were present  Created a need for an exchange program to trade securities  Founded November 1893, with 329 joint stock companies the majority of which were in the mining industry  Stock Market experienced its first crisis in the 1930’s. This downturn continued until the mid 1970’s.  Country went through what they refer to as Unidad Popular in which there was a hyperinflation with rates near 400% annually, driving the already weak economy to struggle even further

4. Stock Market Turnaround  Both a pension fund reform as well as new free-market economy adapted in 1973 assisted in the market’s growth.  Economic Expansion  Stock market operation development  Increased securities in circulation  Transactions became diversified  Added Pension Funds Management Institutions, Insurance Companies, Foreign Investment Funds, and Mutual Funds to the Exchange  In the 1990’s Chilean companies were opened to international markets via participation in ownership of key Latin American companies.

5. Industry Analysis  Competition from Rivals  Low seeing as there are only a few small rivals and there is growing demand for stocks and other tradable assets  Competition from New Entrants  Low due to Bolsa de Comercio de Santiago’s advanced technology as well as their already large portion of the market share  Competition from Substitutes  Depending on how narrowly you define substitutes it can be either low or moderate.  If referring only to stock exchanges the completion is low but in reference to alternative methods of holding wealth the competition increases.

6. Industry Analysis cont.  Relative Power of Customers  Moderate to high seeing as there is no inherent need for stocks and customers have complete control to pull out their money at any time  Relative Power of Suppliers  Low seeing as once stock is issued companies have extremely limited opportunities to withdraw the shares  Overall the stock market industry seems attractive, indicating that potential profitability is high

7. Objectives  To facilitate the flow of saving and investment in the capitals market  To carry out primary placement of the equity market securities and bonds  To promote the free pricing and the transparency in the operations  To promote measurements that enhance liquidity at market prices in the secondary market  To regulate the operations of the market and to supervise the operations and to provide services, systems, and infrastructure required by the stockbrokers and participants of the stock market

8. 2008 Financial Specs  Net Revenue  $5,133.09 CLP  Net Profit Margin  39.99%  Is the majority shareholder of Camara de Compensacion Bolsa de Comercio de Santiago SA  Holds 23% interest in Deposito Central de Valores SA which is a for profit Central Securities Depository

9. Organization and Technology  Composed of three market indices including a General Price Index, Selective Stock Price Index, and an Inter-10 Index  Trades stocks, bonds, investment funds, stock options, futures, gold and silver coins, and U.S. dollars  Implemented the use of technology in 1981with computerized main processes  Created a network of over 100 Tandem brand computer products  The main system run by Bolsa Comercio Santiago is Telepregon  Currently accessible to worldwide customers

10. Telepregon  The Telepregon computer system allows stock, currency, options, and futures to be traded over the network  The transactions run through the systems verification to determine if they are valid transactions to be conducted  The system will not verify these the offers of trade until they are valid in which case the offer is “held” for a period of time  The information system of the Santiago Stock Exchange keep an extensive database of all the transaction conducted

11. Teleranta  This is the system that informs the necessary parties on the offers  The electronic auction system aspect allows offers to be placed in a given time and after this period ends the it gives the offer to the best purchase bid

12. Other Services  The Bolsa Comercio Santiago also provides its customers with other technical services  FonoBolsa allows access to the stock prices, trade amounts, dividends, and other information. This system is operated over the telephone.  InfoMail, like FonoBolsa, offers access to some of the same information summarizing the market, its index as well as closing prices  Similarly StockView offered directly through the website allows the traders access to company information and market transactions

13. IBM System  On December 10, 2008 it was revealed that Bolsa Commercial de Santiago, would begin using an IBM security trading system that would:  Allow for faster transactions; 3000 orders per second  Better communications  Improve security  Automatic order processing

14. Employees  The employees who operate these systems need to have some background in the computer technology used as well as the software employed  A background in science for these employees would go hand in hand with their engineering knowledge and capabilities

15. Interesting Trends  Transition from interpersonal transactions to entirely electronic  Role the government plays in economic growth and decline  Good example of market fluctuation

16. QUESTIONS (for professionals)  What was cost effects of switching to a computerized system?  What use does the old exchange hold?  What percent of business is performed in Spanish? English? Where are your computer systems housed?  For how long do you back up your recorded information?  How was the change to computer systems handled in 1981?  Do you expect any more large scale changes such as the incorporation of IBM technology?  What percentage of your investors are foreign?  How long has the Telepregon system been in place?  What do you feel is the largest obstacle necessary for the Bolsa Comercio Santiago to overcome concerning its technology?

17. QUESTIONS (for students)  Where do the majority of business/engineering students work after graduation?  What do you see as the biggest difference between business in Chile and the United States?  Why do you believe the Chile has been less affected by the global financial crisis?  What are the most popular fields of study for Chilean student?  What specific types of engineering (chemical, civil, electrical, etc.) are the most popular?

18. Sources  http://www.bolsadesantiago.com/english/index/as p http://www.bolsadesantiago.com/english/index/as p  http://www.nomura.com/research/QuantsPublicatio n/ResearchReports/QuantitativeStrategies/Global MarketGuide2008.pdf http://www.nomura.com/research/QuantsPublicatio n/ResearchReports/QuantitativeStrategies/Global MarketGuide2008.pdf  http://www.wallstreetandtech.com/exchanges/sho wArticle.jhtml?articleID=212400133 http://www.wallstreetandtech.com/exchanges/sho wArticle.jhtml?articleID=212400133  http://en.wikipedia.org/wiki/Santiago_Stock_Exch ange http://en.wikipedia.org/wiki/Santiago_Stock_Exch ange