Considerations for the Design of a Central Counterparty for the Mexican Money Market

The financial crisis has brought the problems of regulatory failure and unbridled counterparty risk to the forefront in financial discussions. In the last decade, central counterparties have been created in order to face those insidious problems. In Mexico, both the stock and the derivatives markets have central counterparties, but the money market has not. This paper addresses the issue of creating a central counterparty for the Mexican money market. Recommendations that must be followed in the design and the management of risk of a central counterparty, given by international regulatory institutions, are presented in this study. Also, two different conceptual designs for a central counterparty, appropriate for the Mexican market, are proposed. Final conclusions support the creation of a new central counterparty for the Mexican money market.Central counterparty; money market; international regulatory institutions.

Payment, clearing and settlement systems in the CPSS countries

The Committee on Payment and Settlement Systems (CPSS) publishes””under the aegis of the Bank for International Settlements (BIS)””reference works on the payment systems and other financial market infrastructures of various countries, widely known as Red Books

NAFTA, capital mobility, and Mexico's financial system

Typically the impact of the North American Free Trade Agreement (NAFTA) is analyzed from a macroeconomic perspective, to examine the implications for capital market flows or for the aggregate degree of financial integration. This analysis often involves examining whether certain conditions of arbitrage or efficiency tend to hold, given greater integration of financial markets. Alternatively, other work examines only the effects of greater financial integration for the efficiency with which financial services are provided microeconomically. The two approaches are rarely combined, nor are the effects of integration considered within such a combined framework. The authors combine the two approaches to examine how NAFTA will affect capital flows and the efficiency with which financial services are provided in Mexico. They also call attention to domestic financial systems and monetary and exchange rate policy issues that Mexico must address if greater financial integration is not to result in increased risk for the domestic financial system or greater macroeconomic instability.Payment Systems&Infrastructure,Banks&Banking Reform,Financial Intermediation,Economic Theory&Research,International Terrorism&Counterterrorism,Macroeconomic Management,Banks&Banking Reform,Financial Intermediation,Economic Theory&Research,Environmental Economics&Policies

Equity Issuance in Mexico.

This dissertation examines the equity issuance process from an international perspective. Specifically, it examines the underpricing, long run stock price performance and operating performance of Mexican ADR IPOs compared to that of domestic Mexican IPOs. This study also examines the share price response to global seasoned equity offerings by Mexican firms. Mexican IPOs and global seasoned equity issues by Mexican firms are further distinguished based on the nature of the foreign tranche, that is whether it is a Level III (public offering) or a 144A (private placement) issue. This distinction is maintained throughout the study owing to the differences and the unique nature of these markets. ADR IPOs and ADR seasoned equity offerings are generally undertaken by large, well established Mexican firms and underwritten by prestigious underwriters. In addition, ADR issues incur substantial costs such as listing fees, increased disclosure of information, and costs incurred in complying with SEC rules and regulations. There are also benefits of an international listing such as increased investor recognition, an enlarged investor base and a higher degree of monitoring and certification. This study uses data provided by the Mexican stock exchange over the period of 1989 to 1996 and finds that ADR IPOs of Mexican firms show modest underpricing and no long run stock price underperformance or decline in operating performance subsequent to the issue, in contrast to the findings for IPOs in the U.S. These findings are consistent with the well-established nature of Mexican firms that go public as well as the institutional features of ADRs. Global seasoned equity offerings and Mexican firm commitment domestic issues show the negative share price response usually associated with seasoned equity offerings in the United States

North American free trade agreement : issues on trade in financial services for Mexico

To maximize the efficiency gains from the North American Free Trade Agreement (NAFTA), the regulatory environment for Mexican banking, insurance, and securities markets should be further harmonized with those of the more advanced and efficient Canadian and U.S. markets. The authors argue that a prerequisite for NAFTA's success is to remove regulatory distortions and to eliminate opportunities for regulatory arbitrage. Moreover, eliminating or reducing disparities between the NAFTA countries'tax rates and ways of levying taxes would help prevent distortions, tax evasion, and tax avoidance. Complete harmonization may not be feasible or even desirable, given the way the three countries'financial systems have evolved and the differences between their industrial structures and stages of economic development. In banking, insurance, and securities markets, the main free trade issues are the convergence of authorization criteria and the removal of most of the obstacles to freedom of establishment. It is also important to harmonize guarantee schemes and to create well-defined Mexican schemes to protect small, unsophisticated investors rather than mismanaged institutions. The key to NAFTA's success in the financial sector will be effective prudential regulation and supervision - particularly because of the heavy financial pressures on the newly privatized banks and the financial groups that own them. Without effective supervision, the new owners of the banks may take excessive risks to recoup the substantial element of goodwill in the privatization price, before the protection from foreign competition and new entrants is phased out. An integrated market will presuppose greater cooperation and information exchange among the national regulatory authorities to ensure, for instance, that weak banks do not undermine credit standards and that weak insurers do not offer deceptively low-priced policies. In these areas, Mexico needs intensive training and cooperation with the Canadian and U.S. regulatory authorities. To increase the contestability of the financial markets and benefit from the transfer of financial technology, the Mexican financial system should be opened to foreign entry. But Mexico needs to modernize its financial institutions and the authors conclude that the proposed NAFTA should allow for a gradual approach to foreign entry. A reasonable transition period, extending up to the year 2000, will give Mexican institutions ample time to achieve the efficiency gains that motivated the quest for the agreement in the first place.Banks&Banking Reform,Financial Intermediation,Economic Theory&Research,Environmental Economics&Policies,Financial Crisis Management&Restructuring

Razvoj okvira za povećanje procesne zrelosti preduzeća

Achieving a competitive advantage in modern business conditions is a kind of challenge. Companies are increasingly finding the answer in the adoption of process orientation. Observing business from the perspective of business processes, harmonized with the company's strategy and focused on customer requirements, provides a number of benefits and ultimately contributes to the profitability of the company. However, adopting a process orientation is a complex project that requires investment and time and resources. Therefore, models of maturity have been formulated as a basis for companies in developing the ability to manage business processes. Assessment of the achieved level of maturity of the company in terms of process management is possible through the assessment of the state of maturity of the factors that affect the management of business processes. Based on the extensive literature, through the presentation of process orientation and business process management based on it and models for assessing the achieved level of maturity, a starting point for improving the business process management model has been created. Opportunities for improvement were also identified based on the analysis of the connection between business process management and modern business concepts. The part of the dissertation related to empirical research analyzes the state of critical factors of business process management maturity in companies in the Republic of Serbia in order to identify bottlenecks, in terms of the level of development of certain factors that can negatively affect the overall process maturity of companies. Based on the assessment of the significance of the identified maturity factors by the management of the surveyed companies, a framework for increasing the process maturity of companies has been formulated. The goal of the development of this framework is to improve the ability to manage business processes in companies in the Republic of Serbia, and increase the process maturity of companie