FiNETIK – Asia and Latin America – Market News Network

Asia and Latin America News Network focusing on Financial Markets, Energy, Environment, Commodity and Risk, Trading and Data Management

Mexico, The Emerging Latin American Powerhouse

TABB Forum:  For the past few years, coverage of Mexico in the U.S. media has largely been dominated by stories of violence stemming from the country’s drug cartels. Lately though, the media have increasingly been turning their attention to the story of Mexico’s booming economy, and new president Enrique Peña Nieto’s bold moves to radically reshape it. This robust growth in Mexico looks set to continue for some time, which has led the Financial Times to label Mexico as the “Aztec Tiger.”1

MexDer, the nation’s only futures exchange, has been taking steps to ensure that it grows apace with the nation’s economy by making substantial upgrades to its matching engine, while continuing to make it easier for foreign investors to access the market. As a result of these changes, as of yesterday, April 14, north-to-south routing to MexDer via CME Group’s Globex® platform is available on Trading Technologies. You can read the details in the news release that we published today and on  TradingTechnology website.

The Aztec Tiger 

A perfect storm of positive influences is coming together to make Mexico one of the world’s emerging economic powerhouses. Mexico has a young and growing population, low levels of government debt and low inflation. The country is developing into a leading exporter due in part to widespread implementation of new manufacturing processes, but also due to the fact that Mexico has free trade pacts with 44 countries—more than any other nation on earth.These forces have combined to make Mexico’s economy one of the few bright spots in a global economy still working off the hangover resulting from the credit bubble. Mexico’s economy grew at around four percent in 2012, quadruple the growth rate of Latin America’s largest economy, Brazil.2 The Mexican peso hit a 19-month high against the U.S. dollar in March, and has outpaced 16 other major world currencies over the last month.3

With its growth track record and favorable conditions for growth to continue, a Nomura Equity Research report in July 2012 predicted that Mexico would overtake Brazil to become the largest Latin American economy within the next decade.4 In addition, Standard & Poor’s and Fitch have indicated that in the near future, they are likely to upgrade Mexico’s debt, which is already investment grade.5

A Pact for Mexico, An Open Door for Growth

Much of the optimism for Mexico’s future can be traced back to its new president, Enrique Peña Nieto. He hails from the Institutional Revolutionary Party (PRI), which ruled Mexico uninterrupted for 71 years and was identified with corruption and inefficient bureaucracy. That being said, President Nieto is quickly making himself known as a risk taker, willing to take on fights in which none of his predecessors seemed willing to engage.

Within two days of his swearing-in last December, Nieto’s PRI signed a “Pact for Mexico”6 with the opposition National Action Party (PAN). This pact outlines 95 proposals to modernize and liberalize Mexico’s economy. Nieto began by taking on the richest man in the world, Carlos Slim, by announcing plans to foster competition in the telecommunication and television industries, which are currently dominated by monopolies. Later this year, Nieto is expected to propose his most significant change, opening up Mexico’s energy market and allowing the state-run oil concern Pemex to work with the world’s largest oil companies. It’s expected that these reforms, once enacted, will increase Mexico’s GDP growth from four percent to six percent a year.7

Making MoNeT

In parallel, MexDer and the Mexican government have done quite a bit to attract foreign investors, and to make it easy for them to access the market. Perhaps one of the most significant changes has been the development of the MoNeT matching engine, which went live on Bolsa Mexicana de Valores (BMV), the equities segment, last fall.

The MoNeT matching engine was designed to attract high-frequency traders, mainly from the U.S. and Europe. It boasts internal latencies of 90 microseconds, which is faster than the 110 microseconds of NASDAQ or 125 microseconds at the London Stock Exchange.8 BMV volumes have increased 30 percent to 40 percent since the launch of the new matching engine.9For international traders and investors, accessing MexDer is straightforward. The north-to-south routing available via CME Globex allows any TT customer with an existing CME infrastructure to route orders to MexDer’s matching engine. MexDer is also accessible now in TT’s MultiBroker environment, which is currently available in beta. Additional information regarding how CME users can access MexDer is posted on the CME website.There are a number of other reasons why doing business in Mexico is easier than most other Latin American countries. Unlike Brazil, there is no withholding tax of any kind on foreign investment. The Mexican peso is a freely traded and easily convertible currency, and MexDer’s clearing house, Asigna, accepts U.S. dollar-denominated collateral.

La Oportunidad Está En Todas Partes

Owing to the fact that the U.S. does $1.5 billion per day in trade with Mexico,10 the Mexican markets are, predictably, highly correlated with America’s. North-to-south customers trading MexDer via Globex have access to a number of financial futures that allow for arbitrage opportunities against their American counterparts.

MexDer lists the IPC index of the BMV, which in general tracks closely to the S&P 500. The full Mexican yield curve is available on MexDer, from one-month bills to 30-year bonds, and it converges with the U.S. yield curve. Finally, MexDer lists a Mexican peso/U.S. dollar FX future, one of the 20 biggest FX futures contracts in the world by volume, which sets up arbitrage opportunities with the CME’s equally liquid peso/U.S. dollar future. In a recent MarketsWiki interview, MexDer CEO Jorge Alegria indicated that going forward, the exchange would likely look to list commodity futures linked to similar contracts listed on CME Group.

BMV IPC vs. S&P 500
Chart obtained from Yahoo! Finance

The ascent of the Aztec Tiger is no sure thing. There is always the danger of President Nieto’s PRI party losing its appetite for reform and returning to its old ways. There’s the chance that the hiccups in the U.S. economic recovery may impact Mexico, given that 30 percent of the Mexican economy is tied to U.S. exports. There may even be signs that Mexico’s economy is stalling already, which led the central bank to reduce interest rates for the first time since March 2009. Either way, TT users now have the ability to participate in one of today’s most interesting markets.

1 Thomson, Adam. “Mexico: Aztec tiger.” Financial Times. January 30, 2013.
2 Rathbone, John-Paul. “Mexico’s reform plan lifts hopes for greater prosperity.” Financial Times. March 20, 2013
3 Kwan Yuk, Pan. “Mexican peso hits 19 month high”. Financial Times. March 14, 2013.

Filed under: BMV - Mexico, Exchanges, Latin America, Mexico, News, Trading Technology, , , , , , , , , , , , , , , , , , ,

Nyse Technologies, Bolsa Mexicana and ATG build Mexican trading infrastructure

Nyse Technologies, the commercial technology division of Nyse Euronext (NYX: NYX) today announced that in collaboration with Bolsa Mexicana de Valores (BMV) and Americas Trading Group (ATG) it has built and deployed a state-of-the-art trading infrastructure complete with global connectivity, risk management functionality and direct market data distribution for customers trading in Mexican markets.

Designed to support the launch of Bolsa Mexicana’s new matching engine and midpoint hidden order book, this solution incorporates advanced technology developed specifically for every part of the trade cycle to provide unprecedented accessibility, performance and risk management for trading on Bolsa Mexicana’s exchanges with the aim of establishing Mexico as a premier Latin American investment destination.

Initially, this collaboration will provide:
• A new co-location model for access to cash and derivatives markets (through ATG directly at the KIO Data Center)
• Global connectivity for buy side, sell side and vendors from the US, Europe, Asia and also other Latin American markets such as Brazil and Chile.
• Sophisticated risk management functionality for international order routing (solution implemented by NYSE Technologies)
• Low touch order stamping by Bolsa Mexicana’s members to settle orders
• Global Market Data distribution via NYSE Technologies Secure Financial Transaction Infrastructure (SFTI) with direct contracting with BMV

“We are excited to again work with one of Latin America’s leading market operators in Bolsa Mexicana and market participants in ATG to deliver dramatic improvements across critical elements of the trade cycle,” said Dominique Cerruti, NYSE Technologies. “By continuing to improve access to key Latin American exchanges and customers, we continue to realize our vision of creating a global capital markets community with cutting-edge connectivity, performance and risk management.”

“Today’s announcement with NYSE Technologies and ATG demonstrates our ongoing commitment to grow and enhance our markets in Mexico to deliver highly flexible multi-market, multi-asset trading,” said Jorge Alegria, Head of Market Operations, Bolsa Mexicana de Valores. “We look forward to extending our relationship and cooperation with NYSE Technologies in several important areas that will f further expand that growth and performance in the near future.”

Source: FinExtra, 18.10.2012

Filed under: Asia, BMV - Mexico, Chile, Colombia, Data Management, Data Vendor, Latin America, Market Data, Mexico, Risk Management, Trading Technology, , , , , , , , , , , , , , ,

BMV – Mexico’s Stock Exchange to change trading hours from October 29 – November 1st, 2012

Mexico’s Stock Exchange  will change its trading hours from 08:30-15:00 local time (09:30-16:00 EST) to 07:30-14:00 local time (8:30-15:00 EST) from October 29 thru November 1 to adjust to the daylight savings time difference between Mexico and the US. Mexico’s Stock Exchange will continue to trade the same trading hours that the NYSE is open, during that period.

Source: BMV,10.10.2012

 

Filed under: Exchanges, Mexico, , , ,

Mexico: BMV Mexican Stock Exchange Aims to Attract High Frequency Traders with Platform Upgrade

Mexican stock exchange operator Bolsa Mexicana de Valores detailed its investment in a new trading platform that the bourse hopes will reduce execution time for trades while also boosting trading activity.

The platform will enable the bourse to complete a trade in 90 microseconds, or to facilitate around 100,000 transactions per second, putting it on par with the Singapore Stock Exchange and besting the New York Stock Exchange’s completion rate of 150 microseconds per trade, the Mexican exchange said. The platform, which began handling stock transactions on Sept. 3 and will handle derivatives trades starting in December, cost the bourse 150 million pesos ($11.5 million.)

The Mexican exchange hopes the updated platform will attract a greater number of sophisticated international market participants who are interested in executing algorithmic trades. Currently, such high-frequency trades account for 17% of the volume operated on the bourse, versus 70% of the volume in the U.S., the exchange said. In August the exchange averaged 1.9 million stock transactions a day.

The new platform also incorporates filters to prevent erroneous trades, for example by detecting price action that is out of sync with the market or unusually high volumes. In April the local brokerage house of Bulltick Capital Markets triggered a mini “flash crash” by entering an erroneous trade, knocking Mexico’s benchmark IPC stock index down about 2 percentage points.

Source: FIF Financial Information Forum, 17.09.2012

Filed under: BMV - Mexico, Exchanges, Latin America, Mexico, Trading Technology, , , , , , , , , , , , , , , ,

Finamex: It’s a Fine Time to Cross the Border – Mexico the Emerged Market of Growth

In January of this year the theme of emerging markets became more of a primary investment rather than that of an alternative one. Many people ventured toward countries that have had rocket high growth over the last few years such as the BRIC countries of Brazil, Russia, India and China which received the preponderance of excitement in the emerging market approach.

Read full article Mexico the Growth Market

Today, the BRIC countries have been challenged to maintain upward momentum. The simmering down of the American market crisis and the expanding concerns for the Eurozone present a dilemma and are showing the effects. The Institute of International Finance (IIF), a global association of financial institutions, says that “net private capital flows to emerging market economies remain quite volatile and subject to disturbance from the euro area”. According to the research, data capital flows fell in 2011 to $1.03 trillion from $1.09 trillion in 2010 and are expected to fall again this year to $912 billion before rising to $994 billion in 2013.

The woes of the Eurozone monetary crisis have influenced investors to move money out of country and to seek safe haven in securities markets elsewhere. Brazil, Indonesia, China as well as others are no longer experiencing upward momentum and are now even in decline or negative.

However year after year, analysts continue to see strong signs of growth and long term prosperity in Mexico as many of the emerging markets troubles are not being seen in Mexico, in fact quite the opposite.

Brazil with its lucrative energy industry capitalized by the largest South American exchange, has attracted many investors to seek opportunities in Latin America. Brazil has enjoyed the influx of foreign investments and has gone further to encourage more interest from the North by recently lowering some of its staggeringly high tax penalties on returns and additionally allowing the shares of foreign instruments to take more of a part in portfolios of its domestic shareholders. “Investors are more cautious with Brazil,” Gustavo Mendonca, an economist with Oren Investimentos in Sao Paulo said this week. “The country has slowed very sharply and the prospects for long-term growth have gone downhill.”

Policy adjustments invite and attract investments, but many of these actions are late and under pressure by issues developing in other countries such as Spain. On the other hand, the opportunities for a rudimental Northern investor looking South of the Border to Mexico remain solid.

A key factor with Mexico is that it has  some of the most definitive metrics that provide the level of transparency needed in a volatile global market.  Unlike Brazil, Russia, India or China, Mexico is directly tied to American monetary policy with a correlation that does not exist in other Emerging Market countries and not surprisingly is also growing alongside the American economy.

Is Mexico beyond ridicule and examination? Of course not, but to begin to understand the benefits of investing in Mexico for the short and the long term we should begin with how Mexico plays a key role as a member of NAFTA (North American Free Trade Agreement). The implementation of NAFTA along with close inter-country relationships, ties Mexico’s trade and currency valuation to that of the US and Canada.

 For example, in 2010 many believed the US would remain flat for the next two years, but we now see this was not the case. As a result of American performance, Mexico’s markets have also increased working in parallel a framework portfolio managers find affirmative Mexico has also maintained a weak peso over the last ten years. The Mexican peso has been priced at a competitive advantage with China.

 Currency rates have helped Mexico realize an economic boom that continues to rise since the 90’s. The move to NAFTA in 1994 could be the key contributing factor for Mexico’s 600 percent increase in sales to the US. With inflation no longer under control in countries like China and  Brazil, analysts are discovering that Mexico’s policies have proven successful in weathering many global financial catastrophes.

…..

As opportunities within the developed markets diminish, the Mexican marketplace is standing strong. As a top emerging market for the global investing community, particularly in Latin America, Mexico represents a substantial alternative to Brazil, home of the leading Latin American stock market. Mexico, although not a BRIC country, certainly has more promising economic stability and growth potential than some of the most mature economies. With a clear goal in sight, the local markets in Mexico continue to take measures that enhance liquidity in equities and derivatives trading which provide surety to its financial institutions and reach more investors abroad.

Source: FINAMEX /Dan Watkins, 01.08.2012  dwatkins@cc-speed.com

Filed under: Asia, BMV - Mexico, Brazil, China, Exchanges, Latin America, Mexico, News, Trading Technology, , , , , , , , , , , , , , , , , , , ,

Fidessa explores the development of electronic trading in Latin America

Fidessa group plc , provider of high-performance trading, investment management and information solutions for the world’s financial community, has today announced the publication of a white paper, Life in the fast lane: the development of electronic trading in Latin America. The paper explores the current trading landscape in Brazil, Mexico and the Andean region, and how recent technology and regulatory developments will affect domestic and international brokers trying to establish a rewarding position in these fast-paced markets.

White paper looks at market growth and trading technology in Brazil, the Andean region and Mexico

To highlight the unique trading conditions, market challenges, technology and regulatory changes shaping each market, Fidessa’s white paper considers specific regions in Latin America individually: from the extreme growth of Brazil as a strategic trading destination, to upgrades being made to Mexico’s trading infrastructure as well as the Andean region’s efforts to boost liquidity and exploit economies of scale. The paper explores the challenges presented by Latin America’s varying stages of growth as an electronic marketplace and concludes that flexibility, agility and scalability will be key attributes of the technology solution.

Alice Botis, Fidessa’s Head of Business Development in Latin America comments: “Latin America is attracting significant interest from global market participants and this shows no signs of stopping. Brokers are looking at the unique benefits each country has to offer and are taking the necessary steps to gain a presence in multiple locations across the region, in financial centers such as Brazil, Chile, Colombia, Mexico and Peru. Each country retains its unique style of trading, so it is important for buy-side and sell-side firms to understand how the marketplace is evolving in each region within Latin America and how those developments fit in with their local and global trading strategies.”

Source: Bobsguide, Fidessa 12.07.2012

Filed under: Brazil, Chile, Colombia, Latin America, Mexico, News, Peru, , , , , , , , , , , , , , , , , , , ,

Mexico:RTS Powers Bolsa Mexicana de Valores Trading Front-End for Members

Chicago/Mexico City, June 14, 2012 – RTS Realtime Systems Group, a leading global trading solutions provider, and the Mexican Stock Exchange BMV (Bolsa Mexicana de Valores) announced today the roll-out of a new front-end for the BMV equity marketplace powered by customized RTS front-end technology. This further expansion of their relationship comes after RTS has provided next generation trading technology for more than three years to MexDer, the Mexican Derivatives Exchange owned by the BMV Group.

The launch enables members of both BMV and MexDer to access the equity and derivatives markets and their market data on one, exchange-provided trading screen. It also brings members of BMV markets the ability to utilize sophisticated RTS risk management technology to control access to all available asset classes.

  • Access equity and derivatives markets on one exchange-provided trading screen
  • Trade multiple markets across asset classes with sophiticated new capabilities and speed
  • Easily combine click and algorithmic trading to automate orders
  • Trade spreads between BMV, MexDer and CME Group

Alfredo Guillen, Chief Operating Officer for the Equity Markets at BMV Group, said:  “We are pleased to offer our members the sophisticated new capabilities and speed provided by RTD Trader, RTS’ solution for click traders.  As our members are increasingly interested in trading across asset classes, this new deployment will bring them the opportunity to easily access and participate in the equity and derivatives markets alike.”

Timo Pentner, RTS Managing Director, Americas, said:  “We’re very proud to expand on the important relationship we have established with the BMV Group and its markets. For algorithmic trading, members can easily transition to our RTD Tango Trader solution which combines click and algorithmic trading. With this we support sophisticated order execution capabilities including the ability to automate all types of orders.”

Jorge Alegria, Head of Market Operations at BMV Group, said:  “This is a great example of successful collaboration between a technology vendor and exchange staff to introduce the seamless integration of multiple trading platforms onto one screen.  Thanks to a terrific, dedicated effort in recent months – and groundwork laid in 2009 by MexDer and RTS – when we complete the final phase of adding cash bond markets execution capabilities, BMV Group will be one of the first exchanges to list all asset classes on one, exchange-provided front-end.”

Pentner said that RTD Tango Trader can enable members of BMV and MexDer to trade spreads not only between those two markets but also the markets of CME Group, as part of the South to North order routing agreement established between BMV Group and CME Group.  He said adding access to other international markets would also be an easy upgrade as RTS offers connectivity via RTD Trader to more than 135 marketplaces globally.

Source: RTS, 14.06.2012

Filed under: BMV - Mexico, Exchanges, Latin America, Mexico, , , , , , , , , , , , ,

Latin America: NYSE Technology & ATG stream line Trading & Data Access to LatAm

NYSE Technologies, the commercial technology unit of NYSE Euronext, and Americas Trading Group (ATG) are pleased to announce the production use of their high-performance order routing and market-data platform offering the global trading community low-latency access to the key trading venues in Latin America.  Leveraging NYSE Technologies’ Secure Financial Transaction Infrastructure (SFTI), the network connection delivers the lowest possible latency between New York and Sao Paulo.

Now the Global Capital Markets Community can leverage their existing SFTI connectivity to access ATG’s sponsored access gateways for direct order routing to Latin American exchanges and brokers.   Market data from key global financial markets is also available to clients in Latin America while Latin American market data can now be distributed world-wide.

“We are pleased to continue our strong partnership with ATG by working closely to expand our presence in Latin America to offer faster, simplified access to these highly attractive trading venues,” said Stanley Young, CEO, NYSE Technologies. “This is a key step in increasing access to, and liquidity in Latin America and working with ATG we will operate the highest performing route in the region.”

“Our local expertise, relationships and long-term commitment to the region combined with the technology and know-how NYSE Technologies brings to this project, create a compelling customer solution to a challenging market,” commented Martin Fernando Cohen, CEO, ATG.  “With the emergence of Sao Paulo as one of the world’s financial capitals, the increased access to local markets by global investors will enable local buy and sell side firms to play a significant role in the further emergence of a global capital markets community.”

ATG uses NYSE Technologies’ Managed Transaction Hub to offer access to local and cross border order flow between exchanges and brokers in Brazil, Mexico, Chile, Colombia and Peru.   All SFTI customers will have the ability to directly access Chile’s Bolsa de Comercio de Santiago, Colombia’s Bolsa de Valores de Colombia and Peru’s Bolsa de Valores de Lima using the ATG’s Mercados Integrados Latino Americanos (MILA) infrastructure.

Source: Mondovisione, 01.05.2012

Filed under: Brazil, Chile, Colombia, Exchanges, Latin America, Market Data, Mexico, Peru, Trading Technology, , , , , , , , , , , , , , , , , , , , ,

Latin America: Investors Newsletter 13 April 2012- Alternative Latin Investor

Alternative bioenergy M&A picks up steam in LatAm
-
Ethanol deals wait for better days

Alternative bioenergy crops could drive the next big wave of M&A in Latin America, much like sugarcane drove activity during the ethanol boom in the early 2000s, according to industry sources.

European Bank Crisis
-How will it affect Latin America?

European banks provide 45% of all the external credit lines to LatAm. Could a pullback from their international lending activities affect the operations of LatAm companies?

Other News from Latin America

LatAm tops for emerging Private Equity 

UBS Promotes LatAm Dealmaker 

Latin America’s Start Ups Expand: From Silicon Valley to Tequila Valley 

GM urges Latin America to honor trade pacts 

Private Equity Poised For Gains In Brazil On Growth Ahead 

Brazil Stocks Erase Gains, Slump On Foreign Investor Exit

Mexican firm eyeing Cuba offshore oil projects

Mexico steps out of Brazil’s shadow

Chile LAN-Brazil TAM Tie-Up Co Seen Having 2014 Revenue Of $17.5 Billion

YPF Jumps on Report Argentina Seeks Control: Buenos Aires Move

Investors Should Say Goodbye Argentina

Peru Central Bank Buys $668 Million to Stem Sol Gain: Lima Mover

Uruguay’s Credit Rating Returned to Investment Grade by S&P

Fitch revises outlook on 5 Venezuelan banks to negative

Ecuador Chosen as Best Overseas Residential Investment Market

 

Source: Alternative  Latin Investor, 13.04.2012

Filed under: Argentina, Brazil, Chile, Colombia, Latin America, Mexico, Peru, Risk Management, Venezuela, , , , , , , , , , , , , , , , , , , , ,

Emerging Markets: Energy or Enigma? Mexico, Brazil & China – Dan Watkins

Emerging market trading strategies should remain closely aligned with inter-country trade relations, or so one would think.

A professional stock investor’s interest in a company, after all, coincides with that company’s vision and operational policies. Would such a metric be appropriate in trading an entire economy? Interestingly, popular opinion leans toward headlines rather than fundamentals as being the key determining factor.

That raises a question: Can a market investor be expected to trade a country’s equity, commodity or currency without being able to derive its true value on a balance sheet?

One would gather from the latest international finance journals that China and its markets dominate the emerging markets dialogue. Sure, China and the U.S. have strong trade programs in place but there are issues such as currency valuation headaches that must be considered.

The BRIC (Brazil, Russia, India and China) countries all have exponential growth potential both short-term and long-term and can be considered underdeveloped vs. their population participation. Capital market returns usually delineate the leader of the pack so among the “fantastic-four” BRIC countries, Brazil reigns supreme.

Brazil has had unrelenting stamina in moving high-energy, high-value energy companies’ stocks higher over the last half decade. One reason for Brazil’s success is its massive capital markets restructuring in policy, participation and innovation. Of course the first thing Brazil had to do was stabilize its currency from its inflation plague so that the Real could sustain itself against economic and political monetary fatigue.

Brazil is on top of asset manager and retirement account lists in equity, equity options, futures contracts and fixed income because of the basis of its economic stability and strong natural resources. So while Brazil has brought equilibrium to its markets, Russia, India and China deal with inflation. But trading Brazil can also be worrisome due to inter-country trade relations with the U.S. being less-than-favorable.

Those issues raise an interesting question: What market doesn’t make the news but is hot, has been hot and continues to sizzle like fajitas-picante?   MEXICO

News stories on Mexico cover drug war violence, immigration and tourism, but is that the end of the story? Washington – and therefore public discourse – has focused on the $100 billion in trade to China over the last year. What most don’t hear is that the U.S. has exported nearly $400 billion to Mexico during the same time period. Compare all BRIC countries with Mexico and Mexico tops them all collectively.

Mexico reached 4 percent annual GDP growth rate last year, helped by direct investments from the U.S. and China. On the day the U.S. Federal Reserve announced that it would maintain its low interest rate policy through 2014, the Mexican peso rose 0.6 percent, marking a 7 percent climb for the month of January. How many other markets can be traded as strongly in response to a U.S. Treasury policy announcement?

If Mexico were to equitize or make public its oil production industry as Brazil has, by publicly trading leading oil company Petroleos Mexicanos, also known as Pemex, for example, a major trade explosion in Mexico’s capital markets would quickly follow. Pemex is a Mexican state-owned company worth over $415 billion – that’s $100 billion in assets more than Brazil’s giant Petrobras.

Mexico worth more than Brazil and China long term? Mexico reaches higher ground four times that in trade over the entire BRIC countries. One of Mexico’s oil companies is four times the size in assets over Brazil’s all-star Petrobras. What’s more, Mexico’s inflation is under 5 percent while Brazil, Russia, India and China all have inflation rates closer to 7 percent.

A reflection of U.S. involvement and stabilizing influence in Mexico can be seen in the Mexican stock market with more than 1,000 symbols, many of which are high value and liquid ADRs from the New York Stock Exchange and Nasdaq OMX.

Why not follow the money? Taking a look at the presence of Wall Street on La Reforma in Mexico City, where the Bolsa Mexicana de Valores (the Mexican Stock Exchange) is, you’ll find BMV members such a Citigroup, JPMC, Credit Suisse, Barclays, Deutsche Bank, Merrill Lynch, HSBC, Scotia, ING and UBS. No small potatoes there.

The top players and astute institutional investors are solidly positioned in Mexico. They monitor and believe they can best forecast movement in the market by keeping an eye on U.S. and Chinese import/exports with Mexico. A closer eye is kept on the cash equity ADRs and the Mexican bond markets. Many investors tend to believe that Mexico is just undervalued and other emerging markets are overvalued. But one more thing to remember, the U.S./Mexico trade policy should provide Mexico with lots of energy to outlast the steam of the emerging markets chatter.

Perhaps we should start thinking about MBRICs?

By Dan  Watkins, CC-Speed (dwatkins@cc-speed.com)

Sourc: TABB Forum, 07.03.2012

Filed under: BM&FBOVESPA, BMV - Mexico, Brazil, China, Exchanges, Mexico, , , , , , , , , , , , , , , , , , ,

LatAm Traders reach home base – Brazil/Mexico

Latin America continues ease market access for foreign capital, and in the process, garners home bias from local participants.

Throughout the 1980s, U.S. capital flow to foreign markets averaged roughly U.S. $50 billion per year. Such levels have risen greatly to pre-financial crisis times; outflows to foreign capital markets increased to reportedly $2.1 trillion in 2007. While net inflows dipped by approximately 75% during the financial crisis, the emerging markets today have bounced back at a healthier rate than the sluggish developed economies of the U.S and Europe.

Due to its macroeconomic and private-sector growth, as well as its ease of market access, U.S. investors and traders have come to favor Latin America. Currently, a reported $57 billion of U.S. dollar is being poured into Brazil—often seen as the region´s  most developed nation.

Mexico comes in second with approximately $20 billion coming in from the U.S. last year. Local entities have poured interest in Mexico as well, as Mexican pensions, which aggregate $150 billion, have a primarily domestic mandate. Carlos Slim, the world’s richest investor, also recently announced plans to surge a $10 billion peso investment in Mexico’s telecom industry.

As a result of budding local and foreign interest, LatAm’s sell side has gone to work in building a “best-of-breed” suite of products to help provide access to Mexico. The Bolsa Mexicana de Valores, the country’s equity exchange and its derivatives exchange, MexDer are channeling efforts to better technology and infrastructure to attract liquidity providers. Yet, just how effective is the push to be better?

In 2011, MexDer experienced a 30% increase of trades to roughly 43,000 a day. Mexican brokerage assets were $21.4 million in 2005, to $2 billion in 2011–a clear reap of rewards from the sell side’s efforts to host opportunities for market participants.

While high frequency traders increased their activity in Mexico by 105% in 2011, buy-side views on trading via local resources have been mixed.

“Local knowledge on the part of on-the-ground brokers and exchanges is useful, but, it’s not essential to have a well developed sell side,” said Nick Robinson, director of the $250 million dollar Aberdeen Latin American Equity Fund. “As long as the market works and you can use the market without counter party risk then that should give (participants) enough comfort.”

MarketMedia, 15.02.2012

Filed under: BM&FBOVESPA, BMV - Mexico, Brazil, Exchanges, Latin America, Mexico, Trading Technology, , , , , , , , , , , , , ,

Fidessa on Latam Trading – Opportunities and Challenges

Electronic trading in Latin America continues to be a hot subject, with action moving beyond Brazil to other countries. Low-Latency.comspoke to Fidessa’s head of business development for the region, Alice Botis, to get an update, and a handle on low-latency initiatives in the marketplace.

Q: Can you start by some scene setting – where is the electronic trading action in the Latam market?

A: Electronic trading is already well established in ;Brazil, Mexico and Chile, and with the introduction of MILA, both Colombia and Peru have also adopted FIX order routing. Colombia has not yet opened their market to allow FIX connectivity to third-party network providers, but they are looking forward to making that available in 2012-2013.

In Peru, the decision to make FIX connectivity available to third-party network providers is still pending regulatory approval, but if approved, they expect implementation to move swiftly.

Buy-sides in Latin America have been slow to adopt electronic order routing, but where they have, they often still pick up the phone to have a conversation with the trader for local colour. But, by having electronic connectivity, the sell-side is able to enter the order into their OMS and send unsolicited notices of execution back to the client which minimises manual errors.

The move toward the adoption of electronic order routing in Latin America is significantly driven by the desire to attract international order flow and to make trading in Latin America as seamless as trading in other mature markets.

Q: Where does Fidessa have operations, and connectivity? What’s the latest news on that front?

A: Fidessa recently opened an office in Sao Paulo to serve our clients in Latin America, including Mexico. The office was opened to provide on-the-ground technical and production support to our local clients. Our plan is to continue building out the appropriate infrastructure to offer data centre hosting, hosted services such as a local ticker plant and a local network hub to facilitate North, South and local order routing and execution. We will also be hiring local staff to ensure support in both Spanish and Portuguese.

We currently have 21 receiving brokers in Latin America concentrated in Brazil, Mexico, Chile and Colombia, and we are in discussions with several others in the region to join the Fidessa network.

Q: What are the infrastructure challenges of working in Latam?

A: The greatest infrastructure challenges are being seen by international players looking to gain access to the local markets. There are many challenges, such as hardware and telecom acquisition, so they seek the expertise of local brokers, custodians and technology vendors to help them put the appropriate infrastructure in place to start trading.

It is important to understand the workflow the client is looking to facilitate to assure a balance of cost and speed. As demand in the region continues to increase, things will only get easier, and we can hope, with scale, less expensive.

Q: Focusing on Brazil, it looks like competition is heating up there with Bats and Direct Edge planning to take on BM&FBOVESPA. What opportunities does this open up for Fidessa?

A: With the introduction of fragmentation comes the increased responsibility for brokers to provide best execution to their clients. In some markets, the exchanges themselves will be mandated to provide aggregated quote data and routing to the best price, but even in these markets, brokers will compete for business by aggregating the data feeds and connecting directly to each market themselves to more quickly identify and access best price and volume.

Whether you are an international player who has experienced fragmentation in other markets or a local player who has never had to overcome this challenge before, there will be a significant investment in time and money to accommodate the data feed, connectivity and smart order routing requirements. Working with experienced vendors in other markets like Fidessa, who has worked with Bats and Direct Edge, can provide a time to market and cost advantage to implementing the required technology and infrastructure.

Q: Are Latam markets looking to invest in low-latency technologies and offerings in a similar way that markets in North America and Europe have? Is this ‘me too’ or are they learning from others’ experience and doing things differently?

A: Brazil, Mexico and Chile have all made significant investments in their exchange technology to provide lower latency, higher throughput execution for their participants, setting the stage for algorithmic and HFT participation in their market. Brazil is leveraging the experience and expertise of the CME by partnering with them for the implementation of their new multi asset trading engine. Chile has extended their proprietary technology along with partnerships with technology providers like IBM for their low-latency messaging, and Mexico ;is enhancing their proprietary technology to provide significant improvements to latency and throughput.

Brazil has seen the highest rate of clients seeking to set up local infrastructure to facilitate low-latency market access for algorithmic and HFT participation. But, there is a delicate balance that firms are trying to find between investment in low-latency technology and return on investment on that technology purchase. That said, the amount of high frequency trading participation in the region as a whole is still growing, so as volume continues to increase, so might the returns on those technology investments.

Q: What about regulatory oversight for all of these developments? Is there a MiFID in the works for Latam?

A: There is not currently a regional regulation such as MiFID or Regulation NMS for best execution in place because Latin America is not yet fragmented. However, each country does have its own regulatory rules in place to oversee the various different types of order flow and assure quality execution for retail transactions.

In Chile, for example, there are three exchanges that are not electronically linked. The brokers are not obligated to provide best price. As long as they demonstrate they are trading on the primary exchange, and provide the best price along with the executed price on the confirmation, they are in compliance with the local rules.

As fragmentation is undoubtedly coming to LatAm, I do believe you will see local regulators augment their current rules to protect their market participants.

Q: What do you expect to be some other specific developments in the coming year in Latam, for the markets and for Fidessa?

A: As far as market changes that might affect the region, the potential addition of Mexico to the Integrated Latin American Market (MILA) will certainly affect the development of the region. Mexico has already signed a letter of intent to join MILA, and if they do, it will further drive connectivity in the region and the need for trading systems to manage higher volumes and provide multi-regional orders and execution capabilities.

The region is very dynamic with growth, change and investment, and we are excited to be working with partners in the region who are driving the extension of our trading services to accommodate their growth and success.

Source: Low Latenency, 08.02.2012

Filed under: BM&FBOVESPA, BMV - Mexico, Brazil, Chile, Colombia, FIX Connectivity, Latin America, Mexico, Peru, Trading Technology, , , , , , , , , , , , , , , , , , , , ,

Mexico – Durable, Consistent and Undervalued

Since global markets unraveled back in 2008 we’ve again been reminded that even developed economies can have a tough time dealing with crisis (think TARP, bailouts, recessions and policy restructurings). In some cases, seemingly simple issues like inflation can be the main reason international investors turn away. However, in looking at mid-tier countries within emerging markets, one exception is Mexico.

The Mexican peso, for example, has appreciated by nearly 20 percent since the peak recession level of two years ago. In addition to a more predictable and forecastable currency, Mexico enjoys direct investment from both the United States and China. Many experts agree that this flow of capital helped Mexico reach a 4 percent annual gross domestic product growth rate in 2011.

The peso’s solid gains can be attributed to a variety of factors, but are directly correlated to market statements made by U.S. banking and government officials. Interest rate stability, for example, ensures the peso’s projected outlook by hedging its value with that of the dollar as well as Mexico’s import-export relationship with the U.S. Most recently, on the day the U.S. Federal Reserve announced that it would maintain its low interest rate program through 2014, the peso rose 0.6 percent, to $13.0190 per U.S. dollar. That marked a 7 percent climb for the month of January.

From an investment, trading and trade relations perspective, Mexico boasts free-trade agreements in which tariffs are lower than many countries. So low, in fact, that nearly 90 percent of all its exports are essentially duty free. For example, Mexican goods are exported duty-free to the U.S., Canada, Europe, Latin America and Japan. This past week, Mexico announced a preliminary trade surplus of $7.7 million for December 2011. Most other countries, on the other hand, trade with a much smaller surplus if not deficit. Investors keen on taking advantage of this advantage can use the iShares MSCI Mexico Index.

In fixed income, Mexican notes return more than the average of other emerging market debt. What’s more, Mexico correlates better with the U.S. than other high profile emerging markets like Brazil, China or Russia.

Mexico has proven that it is able to withstand both global and internal drags on its economy while still holding its position among the advanced emerging markets community such as Brazil, Czech Republic, Hungary, Malaysia, Poland, South Africa, Taiwan and Turkey.

Taking a closer look at the value to an individual or institutional investor, Latin America generally – and Mexico specifically – continues to hold and return value better than other emerging markets. Debt and inflation from Europe more closely impact Russia, India and China, for example, whereas Mexico and LatAm are more closely tied to the U.S., where the economy is slowly rebounding

Mexico vs. other LatAm hotspots  ….read full article at   Tabb Forum

Source: Tabb Froum, Dan Watskin, 02.02.2012

Filed under: BMV - Mexico, Latin America, Mexico, News, , , , , , , ,

SunGard Opens Trading Network Hub in Chile

SunGard has established a SunGard Global Network (SGN) hub in Santiago, Chile. SGN provides global order routing, market data and associated services on 120 markets worldwide, linking 2000 asset managers and 500 broker dealers. The Santiago hub, SunGard’s third in Latin America after Mexico City and Sao Paulo, will provide international investors with access to Bolsa de Comercio de Santiago (BCS), Chile’s equity and derivatives exchange. In addition, financial institutions in Chile will be able to access the SGN brokerage community.

SunGard will also offer Valdi Market Access to Chile, which delivers Software-as-a-Service* (SaaS) based connectivity to markets worldwide through SGN. This direct market access service gives exchange members and their clients the ability to trade on electronic markets from any application connected to SGN. It is fully managed by SunGard, helping reduce their infrastructure and support costs. For Bolsa de Comercio de Santiago (BCS), the Valdi Market Access servers will be directly co-located at the exchange, offering low latency services.

Mr. Andres Araya Falcone, chief information officer of the Bolsa de Comercio de Santiago, said, “Chile continues to grow, and the region is focused on being an important player in the global economy. SunGard is supporting this growth by providing electronic trading solutions and global connectivity to market participants in Chile, which will help our exchange members find new investment opportunities. In facilitating exchange connectivity, this should also help attract new firms to the Bolsa de Comercio de Santiago.”

Danielle Tierney, an analyst at Aite Group, said “Opening a new hub in Santiago is a very strategic placement for SunGard. Santiago is the third largest individual exchange in Latin America by market capital and volume, in addition to being a part of the MILA integration of the Andean exchanges. By establishing this additional point of connectivity, SunGard has essentially made its SGN hub into a pan-LatAm offering.”

Philippe Carré, global head of connectivity of SunGard’s global trading business, said, “SunGard’s Valdi and SGN address the connectivity and execution challenges of trading multiple asset classes on multiple markets. SunGard already offers Valdi and SGN solutions in Argentina, Brazil, Chile, Colombia, Mexico and Peru, helping traders in Latin America access new markets and diverse liquidity, as well as helping international traders access Latin America markets.”

Source: A-TEAM Electronic Trading, 13.12.2011

Filed under: Argentina, Brazil, Chile, Colombia, Latin America, Mexico, News, Peru, Trading Technology, , , , , , , , , , , , , , , ,

Alternative Latin Investor: Latam Fund & Investment Trends- December 2011 Issue Nr 12

Latin America fund assets to exceed $3 trillion by 2020
-Driven by appetite for Asia – U.S. and European asset managers benefit most

While still smaller than other global regions in terms of aggregate assets – around US$1.4 trillion in mutual fund assets and about $710 billion in pension assets – fast growth in Latin America as a region is capturing the imagination of investors, distributors and asset managers alike, with tactical and strategic opportunities prompting resource allocations and investments.

Subscribe to the free issue of  at http://www.alternativelatininvestor.com/index.html.

Source: Alternative Latin Investor, 06.12.2011

Filed under: Argentina, Brazil, Chile, Colombia, Latin America, Mexico, News, Peru, , , , , , , , , , , , , , , , , , , , , , , , , ,

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