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S.D. INDEVAL / Securities Clearing and Settlement System

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Presentation on theme: "S.D. INDEVAL / Securities Clearing and Settlement System"— Presentation transcript:

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

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 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 Corporate Structure

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

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

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

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

9 Average daily settlement (June 2007) Average transaction amount
Indeval Statistics Amount in Custody USD 809 billion Government Securities USD 238 billion Bank Securities USD 43 billion Shares and Private Debt USD 528 billion Number of securities 4,783 Non-Local Custody USD 25 billion Registered USD 4 billion Global BMV market USD 6 billion Eurobonds USD 15 billion Number of Securities 638 La custodia en el Indeval tiene un valor 20% mayor al Producto Interno Bruto del país el año pasado (2006). El 65% de la custodia está en acciones y deuda privada, el 30% en instrumentos gubernamentales y el resto en deuda bancaria. En custodia se tienen más de 4,500 instrumentos. De los 745 mil millones de dólares custodiados 19 mil corresponden a instrumentos no locales, de los cuales más del 50% corresponden a Deuda Soberana, como lo son los bonos del gobierno mexicano colocados en el exterior UMS y otros Eurobonos. La deuda externa pública mexicana es de caso 60 mil millones de dólares. En promedio el Indeval liquidó más de 150 mil millonres de dólares en Esto coloca a la institución como uno de los principales sistemas de liquidación de valores en el mundo. Más del 60% de ésta liquidación son reportos. El Indeval tiene 41 accionistas: Banco de México, Bolsa Mexicana de Valores, Casas de Bolsa, Bancos y Aseguradoras Average daily settlement (June 2007) USD 208 billion Average transaction amount USD 24 billion

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

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

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

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

16 CCV Statistics Monthly Average 2007: Change 2006 – 2007:
Transaccion Volumes 340,000 40% Trade Amounts 13.3 billion USD 49% Numer of Fails 839 -23% Amounts of Fails 36 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 USD 97%

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