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Investors' interest brings consequent regulatory interest

Reflecting the newfound popularity of Latin American stocks and a realization that these emerging markets can be easily manipulated, 13 countries have signed an agreement to toughen and unify regulation of stock exchanges in the Americas.

Meeting here earlier this month, regulators from 11 Latin American countries, the United States and Canada agreed to increase the reporting requirements for brokers, speed up dissemination of trading information to the public and more closely monitor investment advisers working with foreign clients.

"We are now convinced that the countries that have the best regulated, the most transparent, fairest markets, where there is the least possibility for manipulation and fraud, will attract the most investment from abroad," said Luis Miguel Moreno, the president of Mexico's National Securities Commission.

"What we have done does not have the force of law, but commits the regulators to a path of better regulation."

The agreement was signed under the auspices of the Council of Securities Regulators of the Americas, which was formed last year in response to rising investor interest in stock markets in Latin America.

The Securities and Exchange Commission in Washington, D.C., said holdings of Latin American stocks by U.S. investors have risen to $4.4-billion.

"I think these countries know that in order to continue their current rates of growth, they need to attract more and more capital from abroad, and one way to do that is to have efficient, transparent markets," said Mary L. Schapiro, the acting chairwoman of the SEC.

Many of the goals adopted by the securities group would provide the public with more trading information than is available on many European exchanges, Ms. Schapiro said.

Latin American markets have boomed in the past 2{ years in part because of the privatization of state-held companies and by economic policies that have reduced inflation, reignited growth and brought stability to countries such as Mexico, Argentina and Chile.

Among the privatization efforts is the planned sale next month of stock in Argentina's state oil company, Yacimientos Petroliferos Fiscales. An underwriting syndicate, led by First Boston and Merrill Lynch, hopes to raise up to $2.5-billion for a 35 percent interest in the company, making it perhaps the largest initial public offering in the world this year.

Wall Street's interest in Latin America is such that almost every brokerage firm has a group doing business here.

"I don't know of any Latin American economists on Wall Street who are out of work," said Suhas Ketkar, a Latin American economist for First Boston.

But SEC officials worry about the 50 investment advisers in Latin America who recommend stocks for American investors. There is also concern over reports that brokers often buy stocks for their own accounts before buying for their customers, pushing the prices up.

American regulators also worry that American investors may not get fair prices and that some Latin American investment advisers may fill orders for local customers first.

"What we need is for the regulators here to make sure the services these investment advisers are giving are consistent with the law," said Michael Mann, the head of the international division of the SEC.