1

Principles for financial market infrastructures

Mexico’s experience

National Banking and Securities Commission Vice Presidency of Securities Supervision

INTRODUCTION

In line with the G20, CPSS and IOSCO’s expectations, Mexico has committed to adopt the 24 Principles and the five Responsibilities included in the PFMI’s.

In Mexico, there are 3 FMI´s for the securities and derivatives markets:

Stock Exchange

Derivatives

Exchange

Investor Debt

Market

Central Counterparty (securities)

Central Securities Depository

Central Counterparty (derivatives)

Mexican Financial Authorities (MFA)

Central Bank of México (BDM) and the National Banking and Securities Commission (CNBV) have regulatory and oversight responsibilities for INDEVAL. The main activities where BDM and CNBV have regulatory relations are:

• Provide an opinion to the Minister of Finance to grant and revoke the concession.

• Approval of the internal rules and their amendments.

• Approval the scheme of fees.

Mexican Financial Authorities (MFA)

• Stakeholder of Indeval (1 Share).

• Part of the Board of Directors.

• Manager of the participants’ cash accounts.

• Surveillance and oversight.

• Establish the regulatory framework of their operations.

• Enforcement of the Securities Market Law.

CENTRAL SECURITIES DEPOSITORIESStatistics

2010 2011 2012 2013 2014

252,026,793,43

5

261,937,358,52

2

308,773,000,19

2

310,039,517,22

6

285,564,819,767

Daily Average amount cleared by year (billions of USD)

CENTRAL SECURITIES DEPOSITORIES:Implementation monitoring of PFMI’s(May -14)

Australia

Brazil

India

Japan

United Kingdom

Germany

Spain

Canada

Mexico

Switzerland

Russia

Argentina

Indonesia

Turkey

0 0.5 1 1.5 2 2.5 3 3.5 4

PFMI’s

Regarding the Responsibilities, all countries assessed are rated with a 4, which means that final implementation measures are in force.

CENTRAL SECURITIES DEPOSITORIESGeneral Status

1 Legal basis

2 Governance

3Framework for the comprehensive management of risks

10 Physical deliveries

11 Central securities depositories

13 Participant-default rules and procedures

15 General business risk

16 Custody and investment risks

17 Operational risk

18 Access and participation requirements

19 Tiered participation arrangements

20 FMI links

21 Efficiency and effectiveness

22 Communication procedures and standards

23 Disclosure of rules, key procedures, and market data

1

2

3

10

11

13

15

16

17

18

19

20

21

22

23

0% 25% 50% 75% 100%

CENTRAL SECURITIES DEPOSITORIES

MFA have taken the following actions:

1. The current regulation allow the Indeval's adoption of PFMI’s.

2. MFA have informed Indeval that it should comply with PFMI’s.

3. Furthermore, in October 2013 and January 2014, CNBV and BDM published their new policy statements, requiring PFMIs’ compliance, respectively.

4. Since 2013, MFA have formally requested amendments to Indeval’s internal rules to ensure the adoption of the PFMI’s and have already done assessments to evaluate it. In the cases where Indeval has failed to meet the required standards, the appropriate corrective measures have been imposed.

CENTRAL SECURITIES DEPOSITORIES

MFA have taken the following actions:

5. The minimum capital requirement was strengthened, in order to ensure Indeval can cover general business risks such as revenue shortfalls or unexpected costs.

Next Step:

6. Considering the assessments mentioned above, CNBV and BDM are working on determine the limit date to require Indeval to observe the Principles in the near future.

Eduardo Flores HerreraVice President of Securities

SupervisionMay, 2015.