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FATCA y QI – An update Gerardo Gamboa - Indeval April, 2012.

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Presentation on theme: "FATCA y QI – An update Gerardo Gamboa - Indeval April, 2012."— Presentation transcript:

1 FATCA y QI – An update Gerardo Gamboa - Indeval April, 2012

2 What does FATCA means to the BMV Global Market? International Quotation System Investors can trade in the Mexican Stock Exchange international securities listed in The Global BMV Market under the International Quotation System (SIC) trading and regulatory scheme. Listing securities in this portion of the market is only possible if they belong to recognized foreign markets or are listed by issuers recognized by the Mexican Securities and Exchange Commission (CNBV). Recognition is granted by the Mexican Securities and Exchange Commission (CNBV) if there is compliance with the following criteria:  Listed securities can be acquired by Mexican investors.  The features and terms of listed securities are fair and consistent with local market regulation.  Issuers objectives are aligned with investors view and interests.

3 Indeval acts as a custodian and settles abroad all the Global Market operations that are instructed by their clients including “Delivery versus payment model” which eliminates counterparty risk. Indeval Services Custody, Crossborder Settlement, Corporate Events In addition to, Indeval processes payments related with redemptions, interests and any type of dividends in a straight through processing environment (Deutsche Bank, J.P. Morgan, Euroclear y Clearstream) In just one platform Sistema (Dalí) are recorded both holding local and foreign securities, avoiding connections to different systems and facilitating the reconciliation of holding and oversight from regulators.

4 Indeval makes all the processing with its Global Custodians and ICSD abroad, for obtaining tax benefit rate “0” for pension funds and 10% for other Mexican Investors on issues registered at The American Market. On January 2014, BMV Group will initiate the Certification Process to the Internal Revenue Service of The United States (IRS) in order to obtain the “Global Intermediary Identification Number (GIIN)” according to the FATCA regulation. Indeval Services Tax Relief

5 Intergovernmental Agreement (IGA) México – E.U.A. FATCA (Foreign Account Tax Compliance Act) April, 2012

6 México (SHCP) – U.S. Treasury Departament On 19 November 2012, the Mexican government, through the Ministry of Finance signed an Agreement with the Treasury Department of the United States of America to improve the International Tax Compliance regarding FATCA. The Agreement model signed corresponds to Model I, "Intergovernmental model with Reciprocity" same as that was released by the U.S. government the past month of July 2012 and for which stand out the following characteristics: 1.- The Agreement parameters do not differ greatly from those set forth in the proposed regulations released by the U.S. Treasury in the month of February The obligations are now explained in greater detail and more clearly. 2.- The Mexican Financial Institutions are not subject to any retention, and are not obliged to carry out the Withholding on payments made to recalcitrant account holders (Owners who do not provide documentary evidence that they are not U.S.); it continues the obligation to carry out a process of due diligence and data collection and reporting. 3.- Each financial institution must identify the "U.S. Reportable Accounts "and accounts pertaining to" Non-Participating Financial Institutions. " 1.- The Agreement parameters do not differ greatly from those set forth in the proposed regulations released by the U.S. Treasury in the month of February The obligations are now explained in greater detail and more clearly. 2.- The Mexican Financial Institutions are not subject to any retention, and are not obliged to carry out the Withholding on payments made to recalcitrant account holders (Owners who do not provide documentary evidence that they are not U.S.); it continues the obligation to carry out a process of due diligence and data collection and reporting. 3.- Each financial institution must identify the "U.S. Reportable Accounts "and accounts pertaining to" Non-Participating Financial Institutions. " Intergovernmental Agreement (IGA) México – U.S.A. for the implementation of FATCA

7 Characteristics Date of Implementation : The IGA l Acuerdo will come into force starting January 1, The agreement covers all financial institutions who are residents of Mexico, as well as all branches of foreign financial institutions. In this regard if an entity is consider as a "Financial Institution of Mexico Subject to Report" under FATCA, will be obliged to register with the National Tax Authority and comply with all obligations of Identification, Obtaining Information and Report unless it can be identified as a "Financial Institution of Mexico No Subject to Report". In the event that a Financial Institution Subject to Report does not comply with the obligations under the IGA Agreement, the U.S. authorities will notify the Mexican authorities in order to apply the local laws. In the event that the Financial Institution continue without fulfilling their obligations after 18 months, will be considered a "Non- Participating Institution" and shall be subject to 30% withholding In the event that a Financial Institution Subject to Report does not comply with the obligations under the IGA Agreement, the U.S. authorities will notify the Mexican authorities in order to apply the local laws. In the event that the Financial Institution continue without fulfilling their obligations after 18 months, will be considered a "Non- Participating Institution" and shall be subject to 30% withholding Date of Implementation & Coverage Coverage: Intergovernmental Agreement (IGA) México – U.S.A. for the implementation of FATCA

8 In General 1.- Date of entry into force of the Intergovernmental Agreement 2.- Consultations for modification of The Agreement Information Exchange 1.- Beginning Reports of Information corresponding to Relevant information from the 2014 and beyond Incorporation of Preexisting and New Customers 3.- Implementation of procedures for New Customers 4.- Preexisting accounts and payees January 1 September 30, 2015 Start Date Reports Maximum dates for identification January 1 High Value Accounts Low Value Accounts Implementation schedule Intergovernmental Agreement (IGA) México – U.S.A. for the implementation of FATCA

9 FATCA Proyect in Grupo BMV Under this new panorama Grupo BMV during 2014 we will focus on: 2. Review in conjunction with Mexican authorities who will report the operating cash flows of buying and selling securities issued and register in U.S. S.D. INDEVAL, ó sus - DEPOSITORS 2. Review in conjunction with Mexican authorities who will report the operating cash flows of buying and selling securities issued and register in U.S. S.D. INDEVAL, ó sus - DEPOSITORS 1.Indeval, CCV, Asigna and Bolsa Mexicana de Valores SAB de C.V. should continue with the FATCA project in order to progress and conclude with: Application of Regulations and Implementation Planning. Obtaining GIIN for each of the companies 1.Indeval, CCV, Asigna and Bolsa Mexicana de Valores SAB de C.V. should continue with the FATCA project in order to progress and conclude with: Application of Regulations and Implementation Planning. Obtaining GIIN for each of the companies 4. Indeval must continue with the process of collection and delivery to their custodians in the U.S. and Europe, the "W" formats for obtaining the tax benefit on issues registered in the U.S. according to the no double taxation treaty. 3. Obtain the certification as "QUALIFIED INTERMEDIARY (QI)“having as benefits, savings in operational processes, costs and co-participation with other international markets infrastructures

10 Benefits of FATCA and QI Certification for BMV Group Converting the BMV Group and in particular S.D. Indeval, in an institution compliance with FATCA regulation, allows it to maintain under the same conditions all international services provided to Mexican and Foreign Investors: Custody of international securities for about 40 billion dollars. Crossborder settlement in the scheme DVP with more than 300 transactions per day in Europe and the United States. Payment of any exercise of rights to more than 800 annual transactions Obtain tax benefits for mexican investors with tax reduction of approximately 30 million dollars in annual average.

11 But, most importantly allows to give viability of growth to the Mexican stock market in new business lines, where the co-participation with other market infrastructures and foreign investors will be vital for the strategy of BMV Group, having as an example: Platforms for collateral management and investment funds. Availability for direct placement of national and foreign securities in of international securities lending systems. Cash Flows in dollars for settlement of transactions in OTC derivatives markets. Probable trading and settlement of Mexican securities in currencies other than the Mexican peso in Benefits of FATCA and QI Certification for BMV Group

12 Thank you! Gerardo Gamboa - Indeval Abril, 2012


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