Grupo BMV, Euroclear join forces

The Mexican stock exchange group Grupo Bolsa Mexicana de Valores (Grupo BMV), and Euroclear, the Brussels-based international central securities depository (ICSD), have signed an agreement to create a joint venture. They say that BMV Fondos SA de CV (BMV Fondos) will accelerate and deepen the liquidity of the Mexican mutual funds market.

BMV Fondos says its 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 investment fund processing technology – FundSettle – a dedicated platform has been customised and introduced to meet the domestic needs of the Mexican market. The premise is that 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 said: “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. 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.”