ABSTRACT
The growth and expansion of economies of developing countries rely, in a great
extension, on the access to financing sources for entrepreneur activities.
Capital markets are one of the most efficient alternatives for local companies
to have access to capitals, either local or foreign, and, therefore, for the
boosting of the economic progress of such countries. In this sense, a legal
framework of capital markets that fulfill the requirements of stability,
certainty and security are essential in order to countries to compete for
international capitals and investments. Indeed, such requirements are
imperative to grow an environment of confidence of investors. Among other
important issues in the capital markets regulation scope, there are two that
have a vital importance to induce the confidence of investors and,
consequently, to attract investment: the legal protection of investors and the
regulation of the activities of credit rating agencies. It is vital that the
legal system sets a framework for the protection of investors in the capital markets. The
need of a stable, clear and secure framework does not imply an excessive
intervention of the state in the ability of private economic agents to regulate
their own interests. On the contrary, the state shall only provide for the
minimum content of the financial services agreement and assure the compliance
of the obligations taken under a contract. Furthermore, as the investment
decisions made by economic agents rely mostly on the information they have on the
financial instruments that are offered in the market, rules determining the
full disclosure of information are essential. Concerning credit rating agencies,
it is important to understand the role that such entities have undertaken in
capital markets. Information about companies and financial instruments is the material economic
agents use to make their investment decisions. But the cost to process and
analyze the whole bunch of available data is too high for most agents, so they have to rely on the opinion of experts, such as credit
rating agencies. In this context, regulation shall assure that the
aforementioned agencies act in a fair and transparent way. Rules concerning
conflict of interests, publicity of the criteria of rating analysis, and
supervision on the activities of agencies are important to the growth of a
sound capital market and an investment friendly environment. The article will
focus on some of the production-centered jurisdictions—Argentina, Brazil,
Chile, Colombia, Mexico, and Venezuela. They were chosen because they are the
major economies in the region.