Mexico Looks to Join Mila

Terry Flanagan

The Mexican Stock Exchange will look to join the consortium of Latin American exchanges in a move to bolster the region’s markets.

BMV Group subsidiary, the Mexican Stock Exchange, has signed an agreement of intent with the exchanges of Colombia, Peru and Chile to join Mercado Integrado Latinoamericano, or Mila. The agreement is the culmination of an extensive due diligence period, which saw the Mexican exchange engaging in discussions and analysis of the potential partnership. With the signing of the agreement, the sides can get to work on the regulatory and technological details of the feasibility of BMV integrating into Mila.

“As a block we can generate a lot of synergies and become more relevant in the international markets,” Javier Artigas, BMV’s senior vice president of strategic planning, told Markets Media. “We can be helpful in using different tools to bring liquidity to (Columbia, Peru and Chile).”

Although the Mexican Stock Exchange trades a fewer number of listed securities than the three Mila exchanges put together, the listings it does trade are much more liquid, according to Artigas. “This is because the Mexican market is a little more developed and we are closer to international standards. The other three are not there yet, but with integration, we can speed them up to those standards.”

The partnership, which is subject to the authorization of regulators and legal adjustments, will integrate BMV Group to Mila with the goal of increasing listings and bringing further technological and operational benefits to participants in the region. BMV currently has “a good pipeline of IPOs in Mexico,” according to Artigas.

The Mexican Stock Exchange is the second largest stock exchange in Latin America with a total market capitalization of over US$ 453.8 billion.

BMV is also involved in a strategic partnership with CME Group, with the two originally announcing its consummation in March 2010. Part of the alliance is a north-to-south connection, which allows stateside investors to trade MexDer’s benchmark derivatives contracts, including Mexican Stock Exchange index futures, bond futures and Mexican peso/U.S. dollar futures contracts.

In addition to the order routing connection, the agreement also allows for the pursuit of other joint initiatives, including product development, marketing and clearing opportunities. CME is the exclusive provider of derivatives order routing services to MexDer outside of Latin America, and MexDer is the exclusive provider of derivatives order routing services to CME in Mexico.

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