World Business Expo

The rigid world of finance in Latin America seems to crumble with the emergence in the region of the online brokers. At the moment there are four in Brazil, two in Argentina, and two in Chile.

In addition, several financial sites that try to take advantage of emerging e-commerce opportunities to sell services through the Internet.

It is clear that the phenomenon, at least for now, is alien to much of the population, Internet penetration is currently only 1.4%. And throughout the region there are only 7 million users, a figure projected to grow to 34 million in 2002 (which may have to add about 14 million internet users in the U.S. Hispanic and 4 million users in Spain).

The broker strategy “pure,” whose business consists mainly of transaction fees, it has many unlikely to be successful in Latin America. Worth these data, the largest exchange in Latin America, the Sao Paulo in Brazil, does not exceed a volume of U.S. $ 400 million a day, while the second largest ever, Mexican, rarely exceeds $ 160 million dollars a day.

As a whole, the market capitalization of Latin American markets, is around U.S. $ 400,000 million, which is not even 80% of the capitalization of Microsoft Corp. which, in turn, does not mean either one twentieth of the total value of U.S. exchanges

A small market

We are facing an almost certain: the Latin American market brokerage is bound to have a relatively small size.

Given these data, it is clear that a strategy based on generating commissions stock has little chance of success for online financial brokers in the region.

Therefore, opt for a revenue model of the type of Ameritrade, which in the last quarter (ended in September 1999) 58% of their total income came from stock commissions. To this we must add another 38.5% of their income in interest to finance loans to securities transactions of its customers. This does not seem the right way.

credit to: Jorge E. Pereira
Source: www.gestiopolis.com/canales6/mkt/mercadeopuntocom/mercado-bursatil-en-internet.htm
image source: www.financebusinessinfo.com/wp-content/uploads/2010/06/finance-banking.jpg

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