1. New regulatory framework of the Mexican Financial System
Jaime González Aguadé
Chairman CNBV

2. STRUCTURAL REFORMS
11 structural reforms that will create an environment that fosters economic growth and the rule of law.
Energy
Competition, productivity and energy cost reduction while harboring employment.
Telecomm
Effective competition within the telecommunications industry and universal digital inclusion.
Fiscal
Fairer taxation in order to support social programs. New mechanisms to encourage formality.
Labor
A more flexible labor market to promote formality.
Economic Competition
Strengthens consumer rights and a more competitive and transparent internal market.
Transparency
Autonomy for the National Institute for Information Access (INAI); strengthens accountability and performance evaluation mechanisms.
Education
Guarantees the right to comprehensive, inclusive and quality education.
Criminal Proceedings
Ensures that everyone is judged with the same procedures.
Appeal-law
Strengthens mechanisms to prevent / correct authority and private abuses.
Political- Electoral
Strengthens the democratic system in Mexico.
Financial
Creates conditions for households and businesses in Mexico to access credit at cheaper cost.

3. REFORMAS ESTRUCTURALES
CURRENT SITUATION
Domestic credit to the private sector
(% of GDP as of 12/2014)
Why was the Financial Reform required?
Domestic credit to the private sector in Mexico reached 29.3% of GDP. To this date, this indicator has not regained its level prior to Mexico´s 1994 financial crisis.
Credit to the private sector is mainly provided by commercial banking which in turn, is heavily concentrated in a few institutions (84% is concentrated in the largest 7 banks).
Internationally, Mexico stands below peer countries (Chile, Brazil, India).
International benchmark
(% GDP)1
Concentration of domestic credit to the private sector
*Including Financiera Rural¨**Including General Warehouses, Savings and Loans sectors and Credit Unions; *** Including Infonavit, Fovissste y Fonacot.
1_/ Information as of 2013, except for Mexico (2014) 3

4. CURRENT SITUATION Why was the financial reform required? IPC in units
The IPC Index fluctuated between 37,500 and 46,000 units over the last 2 years.
The number of listed companies has remained virtually static, reaching 140.
In the last four years, 346 securities offerings are authorized on average, mainly concentrated in the debt market.
The value of the Mexican market capitalization to GDP is 44%, ranking below other peer economies.
Listed companies
Value and number of securities issued
2013
2014
2015
# Emisoras
134
140
Market Capitalization in million USD
$508,856
$544,648
$485,045*
Traded value in million USD
$143,030
$187,257
$40,828
Average daily trade in million USD
$572
$749
$669
* Peso depreciation of 5.5% vs USD.
Includes CKDs, FIBRAS, securitizations, structured notes, medium and long term debt , stocks and derivatives.

5. THE FINANCIAL REFORM
The Financial Reform seeks to establish a more leveled ground and promote better conditions for all participants.
Increase competition and quality in financial services. 1
Enhance credit via development banks.
Objectives 2
El sistema de amparos se reforzó permitiendo entre otros amparos hacia actos de particulares y la extensión de los beneficios del amparo hacia interesados directos, sin la necesidad de que cada cada uno promueva el propio.
Promote credit via private institutions. 3
Ensure a solid and secure financial system. 4

6. CHANGES TO THE REGULATORY FRAMEWORK
Regulatory focus
Strengthening the framework:
Close to 200 new rules to implement the Financial Reform.
Update of capital an liquidity rules in accordance with Basel´s international standards (jointly with Banxico and SHCP).
Regulation which encompasses the changing needs of the Mexican financial system and all its sectors.
This effort resulted in 300 changes to the regulatory framework during 2014.
1. The implementation of the Financial Reform
2. Adoption of international standards

7. CHANGES TO THE REGULATORY FRAMEWORK
Regulatory Principle
Regulatory modification
Description
Ensure strength
Capital, liquidity and leverage rules
Ensures that credit institutions have more robust capital and highly liquid assets to support its business growth plan and potential cash losses or outflows during periods of financial stress.
Derivatives market
Amendments to tripartite rules that strengthen the operation of the derivatives market.
Enhances risk management and strengthens infrastructures and participants (derivatives exchanges, clearinghouses and clearing members).
Promote competition
MILA
General framework by which the stock exchanges can negotiate securities.
The integration of the markets will expand investment options.
Investment Funds
Open architecture: increases competition by allowing distributors to offer funds beyond those that are managed by their own operator.
More investment options for clients.
Listed companies
New legal figures and mechanisms such as: restricted offerings, placement programs for all types of securities and easier registration and listing process for SAPIBs, which will allow streamlined issuance and cost reductions.
More transparency
Brokers
Strengthens corporate governance, internal controls and transparency, to improve trading conditions in these platforms (where most transactions are operated between banks).
Minority rights
Implementation of rules so that minority shareholders have access to timely information with regards to board meetings and decision making. 7

8. MILA (Latin American Integrated Market)
CHANGES TO THE REGULATORY FRAMEWORK: FINANCIAL MARKETS INFRAESTRUCTURES
Improvements
INDEVAL
Limits to 10% the acquisition of capital.
Greater transparency: allows disclosure of some services, provided that the information does not contain privileged or confidential data.
The reform allows the deposit of electronic titles.
ASIGNA
Settlement and clearing of OTC contracts.
Strengthens operational processes and risk management.
Changes in methodology to calculate the resources of the Clearing Members and the Clearinghouse security networks.
Operational integration between Peru, Colombia, Chile and Mexico, as well as cooperation between supervision authorities.
Order routing mechanisms may be agreed between Mexican brokerage houses and their counterparts in other countries.
Mexican intermediaries can operate with recognized securities directly in the stock markets of other countries.
MILA becomes the largest virtual stock market in Latin America with a market capitalization of almost $1 trillion dollars.
MILA (Latin American Integrated Market)

9. CLOSING REMARKS
In recent years, Mexico has adopted the best international practices that will lay the grounds for the development of the financial system.
In particular, the Financial Reform has established flexible mechanisms for securities registration and trade, aimed to reduce the complexity and cost of such processes.
The challenge ahead is to ensure that intermediaries properly adopt the new regulation so that the results are achieved in the markets.
We will continue working on the modernization of the regulatory framework to provide depth and soundness to the market.