Thinking

To BIVA or to BMV: That Is the Question

BIVA, ready to step in as Mexico's newest exchange, is betting that its technology will convert investors.

Access to Mexico’s equity markets via the national exchange Bolsa de Valores (BMV) experienced several significant and disruptive infrastructure issues over the course of 2016. Highlighting the need for venue competition, local regulators are backing the creation of the Bolsa Institutional de Valores (BIVA)—an alternative venue serving domestic and international investors. BIVA is currently awaiting approval from the Ministry of Finance, expected this month, and anticipates a 3Q17 launch date. If successful, BIVA will be the first competitive exchange for LatAm markets.

Skeptics question whether a new exchange is warranted. Rodrigo Velasco, director of operations for BIVA, recently commented, “Fragmented markets, algorithmic trading and low latency solutions are what foreign investors are familiar with across the globe. We look to provide the best in technology to allow them to have a similar experience in Mexico.”

This view has been supported by several quantitative managers who have kept Mexico at arm’s length for investment until its infrastructure was on par with other electronic markets. The progress BIVA has made and the technology being implemented have these managers considering Mexico for quantitative investment in 2017.

Read the full Mexican market structure commentary and what steps ITG is taking in response and to ensure best execution>