Grupo BMV and Euroclear bolster Mexican fund market
BMV Fondos partnership launched to automate investment fund processing
Brussels/Mexico City, 14 March 2016 – Grupo Bolsa Mexicana de Valores (Grupo BMV), the Mexican stock exchange group, and Euroclear, the Brussels-based international central securities depository (ICSD), have today signed an agreement to create a joint venture – BMV Fondos S. A. de C.V. (BMV Fondos) - to accelerate and deepen the liquidity of the Mexican mutual funds market.
Under the terms of the agreement, both joint venture parties confirm the creation of a company to promote greater levels of electronic and automated processing. Today, the Mexican investment fund market worth MXN 2 trillion (EUR 100 billion) is opening up to third party distribution, raising new challenges in terms of existing inefficiencies, costs and risks associated with the high levels of manual processing and the reliance on phones and faxes.
BMV Fondos’ ambition, as a dedicated processing platform, is to reshape the industry by connecting the 28 active fund managers with the current 70 distributor houses using standardised messaging for order routing, unit settlement and related cash movements. Confirmation of the joint venture is subject to several conditions, including regulatory approvals.
Capitalising on Euroclear’s proven investment fund processing technology – FundSettle – a dedicated platform has been customized and introduced to meet the domestic needs of the Mexican market. Rather than maintaining multiple relationships
with many different distributors using diverse communications means, fund managers now will only need to link to BMV Fondos to access the entire ecosystem of distributors. Likewise, distributors will have a single point of contact to access all funds for their clients.
“Greater distribution capabilities are a key part of our strategy to attract more investors,” said José Oriol Bosch, BMV Chief Executive Officer. “Allowing Mexican investors easier access into investment funds will improve liquidity and develop the local market. At the same time, this agreement will provide Mexican fund managers and distributors with more tools to manage their portfolios. Close to 600 funds in Mexico will be supported by tried and trusted electronic messaging. As part
of a phased approach with our partners Euroclear, this new fund processing venture will capitalise on automation of fund orders through a single interface in the first quarter of next year, followed by integrated cash settlement.”
Valerie Urbain, CEO, Euroclear Bank stated: “Together with our Grupo BMV partner, we are actively stripping away excess risk and cost by creating a one-stop-shop for all domestic investment fund needs. We are honoured to be chosen by this market to address real inhibitors to growth. There is no reason why investment fund processing should lag behind other asset classes when it comes to placing buy- or sell-orders through to final trade settlement. As of early next year, one simple electronic order from the distributor will automatically trigger the end-to-end, delivery-versus-payment settlement process, eliminating heavy cash reconciliation and generating significant savings.”
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About BMV Group
BMV Group is a fully integrated Exchange Group that operates cash, listed derivatives and OTC markets for multiple asset classes, including equities, fixed income and exchange traded funds, as well as custody, clearing and settlement facilities and data products for the local and international financial community.
BMV is the second largest stock exchange in Latin America with a total market capitalization of over US$ 530 billion.
Euroclear group is the financial industry’s trusted provider of post trade services. At the core, the group provides settlement, safe-keeping and servicing of domestic and cross-border securities for bonds, equities andderivatives to investment funds. Euroclear is a proven, resilient capital market infrastructure committed to delivering risk-mitigation, automation and efficiency at scale for its global client franchise.
The Euroclear group includes Euroclear Bank which is rated AA+ by Fitch Ratings and AA by Standard & Poor’s as well as Euroclear Belgium, Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden and Euroclear UK & Ireland. The Euroclear group settled the equivalent of EUR 675 trillion in securities transactions in 2015, representing 191 million domestic and cross-border transactions. By December 2015, the group held EUR 27.5 trillion in assets for clients.