BULLS & BEARS

Mexico 2015 | FINANCE | INTERVIEW

TBY talks to Jaime Ruiz Sacristán, President of Bolsa Mexicana de Valores (BMV), on the exchange's performance, investment opportunities provided by Mexican energy reform, and strategies to ensure the listing of SMEs on the stock market.

Jaime Ruiz Sacristán
BIOGRAPHY
Jaime Ruiz Sacristán has more than 35 years experience in the financial and banking sector, where he has held management positions of high responsibility. He is founder and Chairman of the Board of Banco Ve por Mas, a position he has held since July 2003. He was Director General of the companies that joined Grupo Financiero Bital. He also played a key role in the purchase of the bank by Prime Group. In the beginning of his career, he held important responsibilities in Banco Mexicano Somex and Citibank Mexico.

The Mexican Stock Exchange (BMV) reported a slight rise in its main index in 2014. What is your assessment of the BMV's performance, and what is your outlook for 2015?

We have lower worldwide growth expectations for 2015, especially for emerging markets and certain countries in the Eurozone, due to the sharp drop in oil prices, Greece's still fragile debt situation and global expectations of higher interest rates in the US. There was modest growth of the Mexican Stock Exchange in year 2014. Even though we observed less trading activity during 2014 measured by the average daily trading amount, the good news is that the BMV has seen its trading activity improve by 20% in February and in similar fashion during the month of March of this year.

What impact do you expect the energy reform to have on the performance of the BMV over the coming years, and what steps does the BMV plan to take in order to capitalize on it?

Energy reform opens up new investment alternatives for companies in the energy sector. These companies will eventually need to define their funding alternatives and we think the BMV could offer such alternatives through our current products such as equity, CKDs, and securitizations. These reforms also provide the BMV and its capital market with the opportunity to create and develop new local products that have been successfully proven in other markets such as Master Limited Partnerships in the US. Together with local authorities, we are analyzing the possible regulatory and tax environment for its development.

Mexican SMEs make up the majority of companies in Mexico. What strategies has the BMV taken to facilitate listing such firms on the stock exchange?

The challenge we face in raising the number of listings mainly concerns eradicating outdated attitudes regarding the size of the company—many still hold a bias towards smaller companies—information disclosure, corporate governance practices, fear of losing control, and cost and excessive regulation. In recent years the BMV and certain market participants have been undertaking promotional efforts to encourage a paradigm shift in perceptions, and clarify the advantages of being a listed company, such as raising capital, inculcating a positive image, creating market value, and institutionalization, among others. Additionally, we have reduced our quantitative requirements, and any company with a paid-in capital of over $8 million can become listed. The financial reform encompassed in the Securities Market Law created new figures such as SAPI Bursátil and the Qualified Investors Offer (Oferta Dirigida a Institucionales) that make access easier for mid-sized companies.

A major challenge the BMV faces is current volatility of the global economy. What strategies will the bourse take to cope with this challenge?

All other economies and exchanges are suffering from current volatility, due to Central Bank monetary policy decisions. Market volatility has been evident since the 2008 crisis, but we hope that some windows will be open to allow new companies—especially mid-sized firms—to pursue the IPO route. We also think that by developing new products and financing alternatives for potential issuers and offering a wider range of investment alternatives we could help investors diversify their portfolio and see better risk-return ratios. And additionally, by promoting our derivative market Mexder and its hedging alternatives, we can offer both issuers and investors options to reduce market risk.

You were appointed as the President of the BMV in late 2014. What are your main priorities for the coming years?

As Grupo Bolsa's main activity is to provide state of the art infrastructure (systems, rules, procedure, etc.) in the various markets (equity, debt and derivatives) and segments (pre-trade, trade and post-trade services), it is our priority to increase efficiency in providing those services to brokers, issuers and investors.