Settlement services - Mexico

06.01.2017

Pre-matching service

The table below summarises CBL’s pre-matching service for external settlement instructions, as well as the pre-matching method and start time in the market. For details of CBL’s pre-matching services, see Pre-matching services for external settlement instructions.

Service offeredMethod employedStart (local time)
All securities
Immediate Release Flag availableManual (“best efforts” basis)On receipt of instructions
Connectivity mediumInstruction format
CreationOnline and Xact Web PortalTick to enable the “Immediate Release” option.
Xact via SWIFT and Xact File TransferField :22F::STCO/CEDE/IREL

Procedures for domestic counterparties

Procedure for the domestic counterpartyDeadline
Receipt in CBL
Domestic counterparties delivering securities in favour of a CBL customer must indicate in their instructions:Market deadline
-Deliver to: Indeval account of Citibanamex
-In favour of: CBL account with Citibanamex (000054)
Delivery from CBL
Domestic counterparties receiving securities from a CBL customer must indicate in their instructions:Market deadline
-Receive from: Indeval account of Citibanamex
-From: CBL account with Citibanamex (000054)

Allowed countervalue difference

The usual ISMA limit of USD 25 equivalent applies to all against payment transactions. If there is a discrepancy within this limit, the amount of the selling party will prevail (provided that, for deliveries to a Mexican domestic counterparty, the counterparty agrees to pay the amount indicated by the CBL customer). If the countervalues indicated by both counterparties differ by more than the equivalent of USD 25, settlement will not occur.

Specific settlement rules/settlement restrictions

It is market practice to pre-match Custodian to Custodian, and Custodian to Broker settlement (free of and against payment) for both equities and fixed income on contractual settlement date. Pre-matching is performed via telephone or through “Auto-Prematch”.

In 2004, Citibanamex implemented a web-based proprietary system named “Auto-Prematch” whereby most Local Participants have access and can view transactions online. Citibanamex  reports pre-matching statuses in real time.

Settlement at Indeval is performed against MXN only.

Customers that want payment in another currency (for example, USD) should settle instructions on a free of payment basis and arrange payment in a separate bilateral agreement with their counterparty.

Settlements with domestic counterparties - DVP settlement at Indeval

Via DALI1, final transfer of securities from the seller to the buyer account occurs throughout the processing cycle.

For Stock Exchange transactions, Indeval transfers the net securities into the receiving Clearing Agent's account. If the securities are available, the net cash proceeds are transferred into the selling broker's cash account. If cash or securities are not available, the transaction is held until the next cycle. The transaction is considered final once the cash and securities are transferred.

OTC transactions are processed on a gross basis. The cash is debited or credited in the member's cash memorandum account. Trades are considered final once they are settled, they cannot be reversed.

Each Indeval participant maintains a net cash balance account, also referred to as a “control account”2, which is used to record the debits and credits related to securities transactions in Indeval. The control account starts and ends with a zero balance every day. Each day, Banxico allocates credit lines to its participant banks. Participant banks, allocate in turn, credit to the brokerage houses for which it clears securities at Indeval.

Brokers with a net positive balance in their control cash account at the end of the day will have this amount posted to their account at Banxico through the SIAC system. For brokers that have a negative balance at the end of the day, Indeval will execute a repo automatically with the bank granting the credit line, using the collateralised securities in order to cover the short cash position. In practice, most brokers will transfer the funds to their control cash account via SIAC to cover any short cash position.

Indeval maintains a link between its system and SIAC. Through this link, participants are able to transfer funds from their central bank accounts to Indeval and vice versa at any point of the day.

Transaction amounts

In accordance with domestic market practice, Mexican debt securities are traded in units. Units typically represent nominal values of MXN 10 (CETES), MXN 100 (Ajustabonos, BONDES, UDIBONOS) or USD 1000 (Tesobonos).

N.B.: CBL customers must input their settlement instructions in nominal, qualifier “FAMT” (face amount), and the number of units in the quantity field; failure to do so will result in settlement failures.

Cash

The Mexican peso (MXN) is freely convertible. There are no repatriation restrictions in Mexico.

Overdrafts are permitted as long as credit facilities are in place.

Management of failed instructions

Receipt instructions with domestic counterparties that have not settled by the sixth business day after the estimated settlement date and have not been re-confirmed by the customer will be cancelled by CBL.

Delivery instructions with domestic counterparties that have not settled by the estimated settlement date in the domestic market will generally be cancelled by CBL and the securities will be re-credited during the start of the real-time processing that follows the estimated settlement date.

New issues settlement

Transactions in new issues are settled at the start of the real-time processing one or two business days after the distribution date in Mexico City.

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1. DALI is Indeval’s clearing and settlement system for fixed income and equity transactions.
2. The cash “control account” is a record-keeping account. It does not hold cash. Cash is held by banks at Banxico.