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1 S.D. INDEVAL / Securities Clearing and Settlement System Luis Cano, Risk Management Specialist October 8, 2007.

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Presentation on theme: "1 S.D. INDEVAL / Securities Clearing and Settlement System Luis Cano, Risk Management Specialist October 8, 2007."— Presentation transcript:

1 1 S.D. INDEVAL / Securities Clearing and Settlement System Luis Cano, Risk Management Specialist October 8, 2007

2 2 Mission (INDEVAL) Provide the financial sector with the public interest services of safekeeping, custody, management, clearing and settlement of securities within a framework of maximum assurance and security. Strive to cover customers needs under transparent and effective services with high quality standards. In order to fulfil its mission INDEVAL depends on solid finances, adequate technology, adopting and developing the best business practices and on its human resources.

3 3 Services and Functions Custody and Management of Securities.- –Securities safekeeping in physical or electronic book-entry form with authorized custodians. –Physical securitied deposit and withdrawal at the depository’s vault; Domestic Transactions –Electronic securities transfers –Electronic money transfers –Trade clearing and “DVP¨ settlement –Money Market settlement of transactions, and –Collateral Management International Transactions –Settlement of transactions executed on the international markets –Corporate action processing on foreign issues –Tax services on US shares Information Services –Assign ISIN codes to security issues –Services to issuers

4 4 Corporate Structure Indeval CSD CCV 51% CCP (Equities) Asigna 21.3% CCP (Derivatives) Bursatec 1% (Technology Provider)

5 5 Mexican Financial Infrastructure CCP Indeval CSD Payment Systems Issuers Equities & Debt Representatives Banks Broker firms Investors Institutional Retail Brokers Banks, Custodians Broker firms Mexican Stock Exchange Supervised: Central Bank CNBV CSD, Custodians Derivatives

6 6 Delivery Means Collateral Management Pre-settlement Settlement Participants Match Clearing Safekeeping Vault () Safekeeping Accounts () Collateralized Repos Collateralized Repos Indeval’s Components Indeval’s Financial Protocol Web Site Securities Settling System (SLV) Securities Lending Corporate Action Processing (Issuers)

7 7 Pre- Trade Post-Trade Pre-Settlement Settlement Post- Settlement Securities and transactions INDEVAL - CSD Transaction cycle CCV

8 8 Centralized Settlement INDEVALDVP Settlement by securities transfer followed by net settlement by funds transfer followed by net settlement by funds transfer OVER-THE-COUNTER TRANSACTIONS (OTC) BANKING GOVERNMENTAL Brady’s & UMS Corporate Debt Shares issued abroad

9 9 Amount in CustodyUSD 809 billion Government SecuritiesUSD 238 billion Bank SecuritiesUSD 43 billion Shares and Private DebtUSD 528 billion Number of securities4,783 Non-Local CustodyUSD 25 billion RegisteredUSD 4 billion Global BMV marketUSD 6 billion EurobondsUSD 15 billion Number of Securities638 Average daily settlement (June 2007) USD 208 billion Average transaction amountUSD 24 billion Indeval Statistics

10 10 Indeval Statistics Shares and Private Debt USD 528 billion Government Securities USD 238 billion Bank Securities 43 MM USD 65% 30% 5%

11 11 Trade Incorporation of Transactions Appointment of Agents for the Payment of Transactions Collateral Requirement Is there sufficient collateral transacitons Pending settlement NO Registration Process Clearing Settlement YES Transactional Process for Settlement

12 12 Life-cycle of a Transaction TT+1T+3T+4T+5T+6 DefaultedTransaction Non-recurring cash settlement Securities Lending Agents in default Trade Settlement of Transaction in default Non-recurringPeriod T+2 T+7 Extended settlement period Buy- In / Sell -Out T+8 ClearingCycle 8:30 15:00 20:00 15:30 15:45 16:00 Collateral requirements Novation or registration Market Closing Securities Lending CCV Last settlement cycle Settlement Cycles Transaction in default

13 13 Clearing /Settlement Transaction Clearing: For each counterparty and issue, there will be a net resulting from the lesser amount of securities compared tof the total amount received versus the total amount delivered. Price differential due to Clearing: Since the clearing is performed with agreed prices, there will be a price differential which comes from the Clearing of Transactions. CCV shall net the price differentials from Clearings for all issues, for each pair of participants; thereby generating a global differential that will be sent for settlement. Net payment to DVP: DVP criteria shall be applied to the settlement of the remainder of non-cleared securities which are party to a net settlement.

14 14 System of Financial Safeguards The System of Financial Safeguards (SSF) is a set of measures aiming to guarantee compliance with obligations derived from Transactions where CCV performs as a reciprocal creditor and debtor.

15 15 Reserve Fund Equity 80% Equity 20% Sale of the AL shares suspended Contribution Fund Agent was suspended Clearing Fund Settling Agent was Suspended Mutualized Clearing Fund Financial Safeguards

16 16 CCV Statistics Monthly Average 2007: Change 2006 – 2007: Transaccion Volumes340,00040% Trade Amounts13.3 billion USD49% Numer of Fails839-23% Amounts of Fails36 million USD-24% Resolved in 1 day:31 million USD-18% Resolved in 2 or more days:5 million USD-12% Amount of fails resolved by securities lending 42 million USD97%

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