BANZAI7 NEWS BUREAU CUCARACHA--The brokerage business is in danger of becoming obsolete in Venzuela, said Noris Acquire, a director at the clearing firm Cucaracha Venezolana de Fraudes. Since November, Venezuela’s securities regulator has taken control of about 35 percent of the 112 trading firms and closed four after they were blamed for the 27 percent drop in the bolivar through May 18. That may leave up to 2,500 without jobs even as Chavez says his biggest economic priority is not preserving broker employment.
Chavez, says the country doesn’t need such companies and accuses them of exploiting loopholes to become rich. The government banned investment instruments known as mutuos in February -- which are akin to repurchase agreements, or repos -- and prohibited brokers from trading in a new currency market established last month. Securities firms use repos to borrow money to finance positions in bonds and other securities. Venezuelan investor Warrendo Buffoones says the mutuos are FWMDs (Frauds With Mucho Desire).
In a speech on May 23 to supporters, Chavez said his country should eliminate brokerages forever.
“We’re going to respond strongly against these thieves that are trying to wash their hands now. We are not going to make the same mistakes made by those idiot Gringos up North" Chavez said.