Settlement services - Mexico
Pre-matching service
The table below summarises CBL’s pre-matching service for external settlement instructions, as well as the pre-matching method and start time in the market. For details of CBL’s pre-matching services, see Pre-matching services for external settlement instructions.
| Service offered | Method employed | Start (local time) |
| All securities | ||
Immediate Release Flag available | Manual (“best efforts” basis) | On receipt of instructions |
| Connectivity medium | Instruction format |
Xact Web Portal | Tick to enable the “Immediate Release” option. |
Xact via Swift and Xact File Transfer | Field :22F::STCO/CEDE/IREL |
Procedures for domestic counterparties
| Procedure for the domestic counterparty | Deadline | |
| Receipt in CBL | ||
Domestic counterparties delivering securities in favour of a CBL client must indicate in their instructions:
| Market deadline | |
| Delivery from CBL | ||
Domestic counterparties receiving securities from a CBL client must indicate in their instructions:
| Market deadline | |
Allowed countervalue difference
For transactions settling at Indeval, a limit of MXN50 applies to all against payment transactions. If within the limit, Clearstream Banking’s custodian will settle the against payment transaction with the amount instructed by Cleastream Banking.
For transactions settling within Clearstream Banking’s custodian books, the applicable limit is USD 25. If the difference is within the limit, Clearstream Banking’s custodian will settle the against payment transaction with the amount instructed by Clearstream Banking.
Specific settlement rules/settlement restrictions
It is market practice to pre-match Custodian to Custodian, and Custodian to Broker settlement (free of and against payment) for both equities and fixed income on contractual settlement date. Pre-matching is performed via telephone or through “Auto-Prematch”.
Banco Citi Mexico S.A. reports pre-matching statuses in real time.
Settlement at Indeval is performed against MXN only.
Clients that require payment in another currency (for example, USD) should settle instructions on a free of payment basis and arrange payment in a separate bilateral agreement with their counterparty.
Settlements with domestic counterparties - DVP settlement at Indeval
Via DALI1, final transfer of securities from the seller to the buyer account occurs throughout the processing cycle.
For Stock Exchange transactions, Indeval transfers the net securities into the receiving Clearing Agent's account. If the securities are available, the net cash proceeds are transferred into the selling broker's cash account. If cash or securities are not available, the transaction is held until the next cycle. The transaction is considered final once the cash and securities are transferred.
OTC transactions are processed on a gross basis. The cash is debited or credited in the member's cash memorandum account. Trades are considered final once they are settled, they cannot be reversed.
Each Indeval participant maintains a net cash balance account, also referred to as a “control account”2, which is used to record the debits and credits related to securities transactions in Indeval. The control account starts and ends with a zero balance every day. Each day, Banxico allocates credit lines to its participant banks. Participant banks, allocate in turn, credit to the brokerage houses for which it clears securities at Indeval.
Brokers with a net positive balance in their control cash account at the end of the day will have this amount posted to their account at Banxico through the SIAC system. For brokers that have a negative balance at the end of the day, Indeval will execute a repo automatically with the bank granting the credit line, using the collateralised securities in order to cover the short cash position. In practice, most brokers will transfer the funds to their control cash account via SIAC to cover any short cash position.
Indeval maintains a link between its system and SIAC. Through this link, participants are able to transfer funds from their central bank accounts to Indeval and vice versa at any point of the day.
Transaction amounts
In accordance with domestic market practice, Mexican debt securities are traded in units. Units typically represent nominal values of MXN 10 (CETES), MXN 100 (Ajustabonos, BONDES, UDIBONOS) or USD 1000 (Tesobonos).
Cash
The Mexican peso (MXN) is freely convertible. There are no repatriation restrictions in Mexico.
Overdrafts are permitted as long as credit facilities are in place.
Management of failed instructions
Receipt instructions with domestic counterparties that have not settled by the sixth business day after the estimated settlement date and have not been re-confirmed by the client will be cancelled by CBL.
Delivery instructions with domestic counterparties that have not settled by the estimated settlement date in the domestic market will generally be cancelled by CBL and the securities will be re-credited during the start of the real-time processing that follows the estimated settlement date.
Mexican International Quotation System (SIC)
The Mexican International Quotation System (SIC) is an electronic system for the stock exchange where foreign securities (equities, ETF and ADRs) are traded in Mexico.
The Mexican Central Securities Depository (Indeval), charges an out-off-pocket fee of USD 12 related to the processing of cross border transactions for these securities, notwithstanding its settlement and therefore such a fee also applies if there is a cancellation.
Subsequently, from June 2020, clients should take the out-of-pocket fee into consideration when investing in securities traded via cross-border transactions in SIC.
Banco Citi Mexico S.A. is changing the deadlines for settlement-delivery instructions for securities traded in the SIC (position other than ISIN MX codes), in order to meet Euroclear and Clearstream deadlines.
Since Mexico will not observe Daylight Savings Time (DST), during European DST the deadlines will be as follows:
- Deadline to receive settlement instructions: Settlement date -1 business day, by 17:45 local time.
- Deadline to receive position for onward delivery: Settlement date by 10:30 local time.
After this period, the deadline to receive position subject to CSDR will return to its regular time: Settlement Date by 11:30 local time.
New issues settlement
Transactions in new issues are settled at the start of the real-time processing one or two business days after the distribution date in Mexico City.
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1. DALI is Indeval’s clearing and settlement system for fixed income and equity transactions.
2. The cash “control account” is a record-keeping account. It does not hold cash. Cash is held by banks at Banxico.