Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 4

Each market must have clear rules assuring investor protection by safeguarding participants from the financial risks of failed settlement and ensuring that listed companies are required to follow sound policies on corporate governance, transfer of economic benefits and shareholder rights.

1.	Does the depository or the market have securities lending and borrowing schemes in place, and are these open to all market participants and their settlement agents?	A securities lending scheme is planned to be implemented by November 15, 2001. Final tests are currently being conducted. The scheme will be open to all investors and they must mandatorily be traded by a broker.
2.	Does the settlement system mark fail trades to market and collect margin from the failing counterparty to protect the innocent counterpart's interest?	There is not a collect margin for failed trades, but there is an Execution Process for failed trades, and a Settlement Fund to cover the settlement risk.
3.	Does the market operate a guarantee fund or have an equivalent procedure to protect against the cost of failed transactions; and which sectors of the market does it cover?	CAVALI operates a Settlement Fund in order to protect Participants from the Settlement Risk originated for a prices differences after the Execution Process. The Settlement Fund covers spot trades with equities and debt instrument. Contributions are made by the CAVALI participants, by adding a small percentage on the trade amount turnover to each transaction (most participants pass the charge on to their clients). Contributions are accounted in a sub-account maintained for each participant. Participants may draw up to two times their contribution to the fund. CAVALI initially made a contribution of approx. USD 150,000 to the fund, which was allocated evenly among its 23 participants. The fund currently has assets of approx. USD 500,000 accumulated in the 18 months since inception. The fund has never been used to date.
4.	Are the stock transfer agents (share registrars) linked electronically to the depository?	CAVALI is the market's central transfer agent/registrar. Registration is completed automatically as part of settlement.
5.	Is there a legal maximum time period to complete ownership transfers in the books of the issuer? If so, does market practice adhere to the deadline?	The legal maximum time period to complete ownership transfers of the securities is that equivalent to the settlement term.
6.	Are investors entitled to all benefits arising on a security from the point of purchase; and how are any rules enforced?	Buying investors obtain the rights to benefits as from the point of purchase, provided settlement takes place no later than T+3. There is a specific rule governing mandatory compliance thereof.
7.	Is proxy voting permissible in the market and can such proxies be lodged by post or other remote delivery method?	The law allows proxy voting in General Shareholders' Meetings, through third parties, provided a special or general power of attorney has been granted to that effect. However, voting through electronic mail or any other remote method is not yet allowed for Shareholders' Meetings, as this is only permitted for board of directors' meetings.
8.	Are there binding rules in the market stating the minimum and maximum lapsed time between the announcement and completion of key events, including registration, the calling of shareholder meetings, the payment of dividends or interest, rights issues, tender offers and other voluntary corporate actions?	Yes, there are time periods which must be met between the date when the event is announced, registered, cut off and delivered. Dividends, bond interest payments and redemption proceeds must be paid by the issuer to CAVALI 24 hours prior to the official payable date. CAVALI is then responsible to pass the funds onward to its participants before 12:00 Noon on payable date.
9.	Are all voluntary corporate actions advised through a central mechanism assuring consistent information to all investors?	The information is provided through the Lima Stock Exchange. Its is also available from the issuer and from CONASEV.
10.	Is information on corporate actions available electronically, and is the minimum lapsed time for responding to such actions sufficient to enable all domestic and foreign investors to respond in a timely and considered fashion?	Information concerning corporate actions is automatically available in the web site of the Lima Stock Exchange. Whenever these actions are voluntary, they are managed by the respective issuer, with reasonable timeframes.