Latin Finance - May 2008 - 72

brazil cvm think that these other emerging market economies have outlooks for even higher growth than Brazil and as a result the performance of these countries’ markets should have been even better. Brazil had the fifth biggest IPO volume globally in 2007 after the NYSE, the LSE, Shanghai and Hong Kong. That’s just to give a sense of a part of what were seeing. But we had also done our homework. I think what we’re seeing in the market is the result of years of dedicated work not only on the public side, through policy, strategic government decisions and regulation, but also work done by entities in the private sector. Leave the Market to Itself by Dan Shirai What were some of these developments? We had an important legislative change in 2001-2002, which was the reform of the Lei das S.A.s [law governing corporations] which, aside from strengthening minority shareholder rights, made changes that bolstered the CVM. The commission was granted power to decide on administrative and budget issues, and there was a series of other measures, such as defining insider trading and market manipulation as criminal acts, which they weren’t beforehand. A few years earlier in 1997 there were two other important changes that increased the CVM’s enforcement power. One was enabling the commission to prioritize judgment of cases it deemed urgent – in other words not having to necessarily work its way through a queue of cases to get to ones it deemed important for the market. And second, to levy significant fines on perpetrators. The man who led Brazil to sustainable strength reflects on key moments of this transformation. ernando Henrique Cardoso, Brazil’s president from 1995 to 2002, presided over one of the most transformational periods in Brazil’s modern history. Under his watch, the country leapt from weak, nascent democracy to fortified emerging market with solid foundations and institutions. These carried Brazil through the most recent period of development, starting in 2002. Cardoso tells LatinFinance about the turning points in this process and what still needs to be done to keep Brazil from stagnating. F On the regulatory side, how did the CVM employ its new mandate? Starting in 2002, the CVM made revisions to several norms and created new ones in the event of a pickup in activity, especially for equity markets. The CVM took over regulation of securitization and we made some important changes to rules governing investment funds. At the same time in 2002, we also brought the BM&F and the derivatives market under the CVM’s jurisdiction. So the CVM went from having a very narrow scope to covering all of the capital markets, save for short-term securities issued by financial institutions. Meanwhile, the Bovespa had just created the Novo Mercado in 2000. So by the time the liquidity came along and the economy started looking up everything was ready to go in terms of regulation and the investment environment. What were the biggest challenges to establishing the Real Plan? Whose advice did you rely on? The biggest challenge was to instill in the population, the politicians and members of the government a sense of confidence in the fact that it was actually possible to end inflation. I had an extraordinary group of collaborators working with me. I’ll run the risk of unjustly omitting some of the names by mentioning in particular Edmar Bacha, Pérsio Arida, André Lara Resende, Gustavo Franco and Pedro Malan. What drove the creation of the Novo Mercado? The market was disappearing and the only way we saw to prevent this from happening, given the resources available to us [at the Bovespa], was to [implement higher standards of governance]. We couldn’t change the law, so we decided to create this set of incentives on the exchange. The importance of having a strong and independent board of directors, an alignment of interests among shareholders – these are seen as an additional advantage by a large group of corporate executives. There’s still a lot of ground to be covered on that point though. LF How did your administration implement the Real Plan so that the new currency operated successfully for all sectors and demographic groups? The end of inflation translated immediately into an increase in the real income of wage earners. In this sense, everyone benefitted, especially the poor who didn’t have bank accounts and whose money wasn’t protected by indexation of deposits. With time, and thanks to specific social policies, UPDATE For more on this story see www.latinfinance.com > 72 LATINFINANCE May 2008
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Latin Finance - May 2008

Table of Contents for the Digital Edition of Latin Finance - May 2008

Latin Finance - May 2008
Contents
20 Years in Review
Markets Outlook
Awards - 20 Years of Excellence
Roger Thomas
Jose Olympio
Roberto Setubal
Bill Rhodes
William Rhodes
China and Latin America
Michael Pettis
Mohamed El-Erian
Nicholas Brady
Pedro Pablo Kuczynski
Brazilian Investment Banking
Maria Helena Santana
Fernando Henrique Cardoso
Henrique Meirelles
Arminio Fraga
Andres Velasco
José Pablo Arellano
Codelco
Eduardo Elsztain
Julio Torres
Mark Mobius
Larry Summers
Charles Dallara
Martin Schubert
Claudio Loser
Francisco Gil Diaz
Hans Humes
Francisco Gil Diaz
Therese Rabieh
Nina Shapiro
Enrique Garcia
Angel Gurria
Susan Segal
Martin Krause
Alberto Benavides
Hans Schulz
Lee Buchheit
Latin Finance - May 2008 - Latin Finance - May 2008
Latin Finance - May 2008 - Cover2
Latin Finance - May 2008 - Contents
Latin Finance - May 2008 - 2
Latin Finance - May 2008 - 3
Latin Finance - May 2008 - 4
Latin Finance - May 2008 - 5
Latin Finance - May 2008 - 6
Latin Finance - May 2008 - 7
Latin Finance - May 2008 - 8
Latin Finance - May 2008 - 9
Latin Finance - May 2008 - 10
Latin Finance - May 2008 - 11
Latin Finance - May 2008 - 12
Latin Finance - May 2008 - 13
Latin Finance - May 2008 - 14
Latin Finance - May 2008 - 15
Latin Finance - May 2008 - 16
Latin Finance - May 2008 - 17
Latin Finance - May 2008 - 20 Years in Review
Latin Finance - May 2008 - 19
Latin Finance - May 2008 - 20
Latin Finance - May 2008 - Markets Outlook
Latin Finance - May 2008 - 22
Latin Finance - May 2008 - 23
Latin Finance - May 2008 - 24
Latin Finance - May 2008 - 25
Latin Finance - May 2008 - 26
Latin Finance - May 2008 - 27
Latin Finance - May 2008 - 28
Latin Finance - May 2008 - 29
Latin Finance - May 2008 - 30
Latin Finance - May 2008 - 31
Latin Finance - May 2008 - 32
Latin Finance - May 2008 - 33
Latin Finance - May 2008 - 34
Latin Finance - May 2008 - 35
Latin Finance - May 2008 - 36
Latin Finance - May 2008 - 37
Latin Finance - May 2008 - 38
Latin Finance - May 2008 - 39
Latin Finance - May 2008 - 40
Latin Finance - May 2008 - 41
Latin Finance - May 2008 - 42
Latin Finance - May 2008 - 43
Latin Finance - May 2008 - 44
Latin Finance - May 2008 - 45
Latin Finance - May 2008 - 46
Latin Finance - May 2008 - 47
Latin Finance - May 2008 - Awards - 20 Years of Excellence
Latin Finance - May 2008 - 49
Latin Finance - May 2008 - Roger Thomas
Latin Finance - May 2008 - Jose Olympio
Latin Finance - May 2008 - Roberto Setubal
Latin Finance - May 2008 - William Rhodes
Latin Finance - May 2008 - China and Latin America
Latin Finance - May 2008 - 55
Latin Finance - May 2008 - Michael Pettis
Latin Finance - May 2008 - 57
Latin Finance - May 2008 - Mohamed El-Erian
Latin Finance - May 2008 - 59
Latin Finance - May 2008 - Nicholas Brady
Latin Finance - May 2008 - 61
Latin Finance - May 2008 - 62
Latin Finance - May 2008 - Pedro Pablo Kuczynski
Latin Finance - May 2008 - Brazilian Investment Banking
Latin Finance - May 2008 - 65
Latin Finance - May 2008 - 66
Latin Finance - May 2008 - 67
Latin Finance - May 2008 - 68
Latin Finance - May 2008 - 69
Latin Finance - May 2008 - 70
Latin Finance - May 2008 - Maria Helena Santana
Latin Finance - May 2008 - Fernando Henrique Cardoso
Latin Finance - May 2008 - 73
Latin Finance - May 2008 - 74
Latin Finance - May 2008 - Henrique Meirelles
Latin Finance - May 2008 - Arminio Fraga
Latin Finance - May 2008 - 77
Latin Finance - May 2008 - 78
Latin Finance - May 2008 - Andres Velasco
Latin Finance - May 2008 - Codelco
Latin Finance - May 2008 - Eduardo Elsztain
Latin Finance - May 2008 - 82
Latin Finance - May 2008 - 83
Latin Finance - May 2008 - Julio Torres
Latin Finance - May 2008 - Mark Mobius
Latin Finance - May 2008 - 86
Latin Finance - May 2008 - Larry Summers
Latin Finance - May 2008 - Charles Dallara
Latin Finance - May 2008 - Martin Schubert
Latin Finance - May 2008 - Claudio Loser
Latin Finance - May 2008 - Hans Humes
Latin Finance - May 2008 - 92
Latin Finance - May 2008 - Francisco Gil Diaz
Latin Finance - May 2008 - Therese Rabieh
Latin Finance - May 2008 - Nina Shapiro
Latin Finance - May 2008 - Angel Gurria
Latin Finance - May 2008 - 97
Latin Finance - May 2008 - Susan Segal
Latin Finance - May 2008 - Martin Krause
Latin Finance - May 2008 - 100
Latin Finance - May 2008 - Alberto Benavides
Latin Finance - May 2008 - Hans Schulz
Latin Finance - May 2008 - 103
Latin Finance - May 2008 - 104
Latin Finance - May 2008 - 105
Latin Finance - May 2008 - 106
Latin Finance - May 2008 - 107
Latin Finance - May 2008 - 108
Latin Finance - May 2008 - 109
Latin Finance - May 2008 - 110
Latin Finance - May 2008 - Lee Buchheit
Latin Finance - May 2008 - 112
Latin Finance - May 2008 - Cover3
Latin Finance - May 2008 - Cover4
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