The merger of the New York and Frankfurt stock exchanges to create the world's biggest stock market made big headlines this week, but there is a lesser-known process in South America that should also draw our attention -- the union of the Chilean, Peruvian and Colombian stock exchanges.

The stock exchanges of the three South American countries announced recently that they have finished the regulatory paperwork to start joint operations, and that they are preparing to do so within the next few months.

The three-country stock market, known as the Integrated Latin American Market, or by its Spanish initials MILA, will be Latin America's second-largest stock market, after Brazil's.

In a telephone interview this week, Juan Pablo Cordoba, president of the Colombian Stock Exchange, told me that "there is a strong commitment by the three countries to get it started before the end of the first semester this year." MILA's launching date will be announced after an internal technical try-out session next month, he said.

The idea behind MILA is that, in an increasingly globalized world, where the biggest stock markets are merging, it will be increasingly difficult for medium-sized or small economies to attract investments unless they are part of a bigger financial market, Cordoba said.

In addition to the New York and Frankfurt stock exchanges, the London and Toronto stock exchanges have announced their own mergers, and the Singapore stock exchange announced in October that it plans to buy the Australian Stock Exchange.

While the economies of Chile, Peru and Colombia have grown steadily in recent years, they are small by international standards. By unifying their operations, they will make it easier for domestic and foreign investors to buy stock in each of the participating countries' companies, thus increasing their corporations' ability to sell their stocks and attract investments.

"Colombian companies will not just have access to Colombian investors, but to those of Chile and Peru as well," Cordoba said. "They will have access to more investors, and to a bigger pool of capital."

A second advantage, he said, is that "it will make us more visible to international investors, because it's easier to invest in integrated markets than in individual countries."

Unlike the New York-Frankfurt stock exchange merger, the Chile-Peru-Colombia stock market union will not initially be a merger of the companies running the stock exchanges, but an "operative integration" of the three stock exchanges.

Two of the participating stock exchanges, those of Peru and Colombia, are planning to go a step further and announce the merger of their respective holding companies later this year, he said. Later, if everything goes well, other Latin American stock exchanges may join the group, he added.

"In Latin America, we have been talking about financial integration for the past 50 years, and nothing has been done," Cordoba said. "We are doing something concrete, from the bottom up."

Will it work, I asked Alberto Bernal, chief analyst with Bulltick Capital Markets in Miami. "Sure. It will be very relevant for the development of capital markets in each of the three countries. And if Mexico joins then in the future, it will be even more so," Bernal said.

My opinion: The Chile-Peru-Colombia stock market integration couldn't have been more timely. There is a new world trend of increasingly fewer and bigger stock exchanges, and countries without huge internal markets that are not part of any larger stock market -- such as Argentina, Ecuador and Central American countries -- will find it more difficult to attract capitals and make their companies more competitive.

We may be witnessing the redrafting of Latin America's financial architecture. Will MILA be extended to include more countries in the region soon? Will the stock markets of Brazil and Mexico team up to become big players in the world financial scene? Will there ultimately be a unified Latin American stock exchange?

Latin American governments have failed to advance the cause of integration despite grandiose announcements at regional summits that they have created a region-wide common market. Maybe the region's stock exchanges will be able to start doing what politicians have failed to do for so many years. We should wish them luck.

Andres Oppenheimer is a columnist for the Miami Herald.

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