DCC Product Team
Mauricio Schwartzmann – Securities Country Manager
Gabriela Jimenez – Client and Market Manager
Maria Gilardi – Product Manager
Macroeconomic Overview
Source: Citibanamex
10
11
12
13
14
15
16
17
18
19
20
21
22
23
2010 2011 2012 2013 2015 2016
Exchange Rate (MXN / USD)
Feb’17
19.8302
Nov’16
Exchange rate performance Depreciation vs USD January 2017
Macroeconomic Overview
Foreign Investors Holdings
2.00
2.50
3.00
3.50
4.00
4.50
5.00
5.50
6.00
6.50
Cetes 28 Inflation
Feb’17
6.06 Interest Rates
Feb’17
4.86
Foreign Direct Investment (US$ in Bn)
2016 2017f 2018f
GDP Growth 2.1% 1.2% 2.2%
Banxico’s Rate 5.75% 7.50% 7.50%
Inflation 3.40% 5.20% 4.20%
Exchange rate 20.50 22.70 22.10
Intl. Reserves 175 179 184
Unemployment 3.9 5.0 4.3
Forecast
0
10
20
30
40
2009 2010 2011 2012 2013 2014 2015 2016 2017f 2018f
22 22 23.7
17.8
39.2
20.7
28.4 29.6 25
27
Jan-16 Mar-16 June-16 Sept-16 Dec-16
Source: Citibanamex
Our Services
• Securities Solutions
• Direct Custody & Clearing
• Global Custody
• Securities Lending
• Account Operator
• Treasury Solutions
• MXN Peso Clearing
• CLS Clearing
• Foreign Exchange
Our Business
Custody and clearing, complemented by a wide array of products
and services, constitute an important part of our core businesses
in Mexico. Citibank Mexico was established in 1929 and on 2001
Citibank Mexico and Banco Nacional de Mexico (Banamex)
merged into a single institution, now known as Citibanamex.
Our Footprint
• DCC clearing services were locally established in 1988
• Our Market Share (Foreign Clients): 75%
• AUC’s (Foreign Clients): $350bn
Local Clients
– Pension Funds
– Insurance Companies
– Government entities
– Fund Managers / Mutual
Funds
– Corporations
Our Business (cont.)
Client Information
Citibanamex manages two client bases and offers multiples services:
Strengths
Strong market presence
Strong DCC product offering, Peso clearing and CLS Services
Robust and consistent Product and Client Services teams, operational and
technology model, delivering service and quality to all our clients
Challenges
FX and rates
Tax, KYC and compliance/ AML requirements
Competitors
Solutions Implemented
Securities Market Interface (SMI)
Link a group of transactions to settle upon reference
CitiFX Pulse
Foreign Clients
– Global Brokers
– Global Custodians
– Banks
– Financial Institutions
– Government entities
– Local Brokerage Houses
Key Highlights Summary Client Benefit
• Early Book • Clearing of all book to book transactions prior to Market
opening
• Earlier transaction clearing, notifications, liquidity and
holdings
• Shadow Posting Services for Lent
positions.
• Provide additional regular reporting for positions out on
loan
• Enhanced securities holding report supporting off-shore
Securities Lending
• Withholding Tax Process • Enhanced processing allowing same day withholding
and notification
• Tax withholding and client notification, for coupon and
dividend payments
• Reduced Proxy Voting Deadlines • Improved instructions deadline for common events, of
2 business days prior to meeting day
• Wider window for event participation
• Trade Prioritization • Capability to prioritize trades based on counterparty • Potential fails reduction
Service highlights
Key Highlights Summary Client Benefit
• CSD (Indeval) live trade status • Clients will experience an improved online trade status for
Indeval’s transactions. The new MT548 will reflect the
status of the transactions once uploaded to Indeval
• The Indeval trade status will allow the clients to monitor
the transactions’ life cycle and timely identify and fix
discrepancies
• Enhanced Income notifications • Notification’s enhancements on SWIFT messages
including tax breakdown (MT566)
• Additional and more detailed information
• Enhanced income reporting for money
market instruments
• Event notification message via an MT564 sent to holders
five days prior to Pay Date
• Improve cash flow and repatriation management
• Dividends Tax Platform • Tax platform enhancements to comply with new tax
process on dividends
• Improved reporting and withholding process
Service highlights (Cont.)
Key Highlights Summary Client Benefit
• FX Pulse • CitiFX Pulse is a global end-to-end electronic FX
solution
• Allows our clients to close their own FX using a Citi web-
based platform with features such as real-time portfolio
analysis, an integrated exposure management tool, and
automated straight-through processing directly into your
Treasury Management System (TMS). Completed 3Q’16
• Securities Market Interface (SMI) • Banamex to migrate its CSD’s interface to a global
proprietary tool - SMI
• Clients will benefit from an enhanced and new platform
with global settlement standards, more agile and flexible,
for new requirements. Completed 4Q’16
• Linked transactions • Link a group of transaction to settle upon reference • For omnibus account structures the client is able to link a
reference and manage their settlement flows. Completed
4Q 2016
Service Enhancements and Initiatives
Updates Summary
• T+2 • T+2 migration along with the US Market - Sep’17
• BIVA • New stock exchange to enter the Mexican Market – May’17
• International Quotation System (SIC) – DB • Deutsche Bank to exit SIC in 2017, Indeval expected to take over as agent
• SPID • SPID (Dollars Interbank Payment System) will allow local bank-to-bank USD
currency payments in the market – Jan’17
• Derivatives • Mandatory for local Banks and Brokers to trade and clear TIIE Swaps in
recognized markets and clearing houses for operations performed – Apr’16
Market Updates
BIVA Bolsa Institucional de Valores Mexico
• 15th economy worldwide
• Stock market:
#44 in LISTED COMPANIES
#25 in TRADED AMOUNT
#8 in OTC SECURITIES such as FX, IRS, and bonds
Why now? BIVA recognizes the historic opportunity of contributing to the country’s economy growth
• Stock exchanges’ dynamic evolution around the world
• Mexico’s lag on equities market growth
• New financial regulation
• CENCOR’s experience developing financial market infrastructure
BIVA Bolsa Institucional de Valores
BIVA’s contribution to the stock market
• BIVA has triggered regulatory changes that will modernize the Mexican stock market
• Market promotion is stimulated
• Continuous innovation in trading models (blocks and auctions)
• State of the art systems provided by Nasdaq that use world standards in connection
protocols
• Boosts the securities lending market
• New inclusive and representative indexes
• Attracting and including new and smaller companies into the public market
T+2 Settlement Cycle
Migration date announced by the MSE September 5, 2017
• MSE officially confirmed the migration date on February 16, 2017
• Low Corporate Action season
• Align the settlement cycle with US and Canada
• Reduce counterparty and operational risk in the market
Impacted Securities:
• Mexican and foreign equities
• Fibras (REITs) and Fibra E (Energy and Infrastructure Certificates)
• Exchange Traded Funds and Debt Exchange Traded Funds
• Equity warrants
Regulatory / Documentation changes required
• No regulatory changes are required from the CNBV for T+2 for CCV and Indeval
• Grace Period changes for fail transactions need CNBV approval
• No documentation changes have been identified
T+2 Settlement Cycle
Affected Local Market Participants
• Mexican Stock Exchange
• Central Counterparty
• Brokerage houses and banks executing trading and settlement
• Central Securities Depository Indeval
• Issuers
Corporate Actions process changes
• Corporate Actions Dates: Record Date will change to Ex-date + 1
Liquidity Considerations
• Guarantees paid to the Central Counterparty
• Market and Citi liquidity needs on Thursday September 7
Testing • Grupo Bolsa to support testing with market participants starting in July
• Citibanamex will support testing with clients upon request
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