DOLLARS AND SENSE

Mexico 2019 | FINANCE | INTERVIEW

BMV seeks to gradually change the financial culture in Mexico to engage more people in finance, investment, and savings.

José-Oriol Bosch
BIOGRAPHY
José-Oriol Bosch has been CEO of the BMV since 2015. He has more than 30 years of experience in the financial markets. Bosch was previously Chairman and CEO of J.P. Morgan brokerage firm. He also chaired the Mexican Financial Markets Commission at the Mexican Banking Association (ABM) from 2007 to 2014.

How is the vision of the new administration affecting the country and BMV in particular?

We have been positively surprised by the new administration, even though it is a significant change from the previous administration. At the beginning of the year, the new administration made an announcement supporting the exchange, with a program to promote the financial system. That program includes helping the banking sector and the local stock exchange market, including a tax reduction for IPOs from 30% to 10% as well as supporting the development of the securities lending market. We thought the new administration would not prioritize the stock exchange, but it was one of the first things it announced. This was a positive message for the markets and investors. The new administration has many infrastructure plans, and it knows many of these projects will need money. And one effective way to raise this money is through the exchange.

What strategies do you use to maintain the competitiveness of BMV?

We maintain our competitiveness in the global capital market by developing tools that meet consumer and client demands. We have to continue to increase our competitiveness. One of our main competitors is the US market. We have drawn many foreign investors to participate in the exchange. When there is a US holiday, the trading volume of the businesses in Mexico is 10% of a normal day because of that. Commercially, we see a great deal of interaction between Mexico and the US in the exchange. We are competing with these markets, so we have to continue to be competitive. In the local market, we have 150 companies just talking about equities, not including fibras and all the other products. We also created an International Quotation System (SIC), after noting great interest from locals in foreign equities. SIC has added a great deal of activity to our daily traded volume in the stock exchange, mostly for US companies. Mexicans can use it to invest in any company around the world. Today, we have 2,000 listed values in BMV. Of those 2,000, almost half are stocks and half are ETFs. On average, we have MXN15 billion (USD782 million) total daily trade volume. Of that, MXN9 billion (USD469 million) are local stocks and MXN6 billion (USD312 million) are foreign stocks. Of those 2,000 foreign values, about 70% are US companies.

What cultural barriers does BMV face when it comes to incentivizing more companies to list?

There are many cultural barriers to overcome, because most of the companies in Mexico are family owned. They are reluctant to go public. It also takes a lot of time for companies to list, because there are many things the company needs to work on before going public. These tasks include regulatory compliance in terms of financial information, standardized financial information, and corporate governance. The main challenge in Mexico is the lack of knowledge about the exchange. Both companies and investors underestimate the benefits of being public or investing in the stock exchange and overestimate the costs and requirements for a company being publicly traded or for an investor to participate in the stock exchange. The 150 companies listed in Mexico are highly concentrated in Mexico City, Nuevo León, Jalisco, the state of Mexico, and Chihuahua. There many other states that have companies and industry sectors with the potential to join the BMV, but they may have no idea where to start. People think they need be a huge company or a big investor to join the BMV and become a public company. However, this is not the case. That is why companies are always surprised that the requirements and the limits are much lower than what they had assumed. We should all be changing the financial culture for everyone in Mexico. This is a challenge for everyone, not just BMV. We should all be engaged with finance, investing, and savings.