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Chavez Signs Law That Will Kill Private Brokerages

Wednesday, 18 August 2010 09:41 AM

Venezuelan President Hugo Chavez signed a new law into effect on Tuesday that formalizes the exclusion of private brokerages from trading the local bolivar currency or public sector dollar-denominated debt.

The new Capital Markets Bill, which had already been approved by parliament and only needed the president's signature, means private brokerages will only be able to trade local equities and securities issued by the private sector.

"With this we are leaving behind the rot of capitalism," Chavez said in a phone call to state television. "Venezuelans can now save, but not save in the rotten brokerages of the bourgeoisie that take the money to the United States."

Market players say the law would spell the end of private brokerages in a country where the bourse traded an average of less than $500,000 a day last year and there is almost no investment banking or initial public offerings.

Chavez has recently stepped up the pace of socialist reforms in the OPEC nation, including nationalizing swathes of industry and promoting new communal property laws. He has also increased his government's role in banking.

Struggling with a stubborn recession ahead of legislative elections on September 26, Chavez has turned on the private brokerages as representatives of capitalist speculators who he blames for a weak currency and rampant inflation.

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Wednesday, 18 August 2010 09:41 AM
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