January 19, 2018 / 10:06 PM / in a year

Argentina stock exchange operator ends connection with futures exchange

BUENOS AIRES, Jan 19 (Reuters) - Argentina’s Bolsas y Mercados Argentinos SA exchange operator said on Friday it would end an agreement that connects its trading and settlements systems with the ROFEX futures exchange, a move traders said could reduce market liquidity.

In a letter to the Buenos Aires stock exchange, BYMA said it notified ROFEX that the termination of the deals signed in 2014 and 2015 would take place on Feb. 18. BYMA also said it would end ROFEX’s license to use its benchmark Merval index beginning on April 18.

“It is too bad because it is a product that was widely used in the market,” said one Buenos Aires-based trader, referring to futures contracts based on the stocks that make up the Merval index. “It is a setback because Argentina’s capital markets were developing very well.”

The move comes as Argentina’s business-friendly President Mauricio Macri is trying to modernize the country’s capital markets, which are small compared to regional peers. Earlier this week, the government issued a resolution allowing short-selling, and Macri has sent a sweeping capital markets reform bill to Congress.

In a message posted on Twitter, ROFEX said its futures and options contracts based on the Merval index would continue trading normally until their expiry dates. It said it was working on “developing a better alternative” in light of the change.

ROFEX, based in Rosario, Argentina, also hosts futures and options trading for commodities and other financial products. (Reporting by Luc Cohen; editing by Grant McCool)

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