José Oriol Bosch Par : Interview
How has the greater availability of instruments on the exchange helped provide financing and engagement with other sectors of the economy?
JOSÉ ORIOL BOSCH PAR: Over the last few years the Mexican stock market has matured substantially, and we now match many global exchanges in terms of the variety of instruments available. The challenge is to further engage the investor community and use the instruments available to us. Various new investment vehicles have been introduced in the last few years, including investment trusts for energy and infrastructure (fideicomisos de inversión en energía e infraestructura, FIBRA E), project investment certificates (certificados de proyectos de inversión, CERPIs) and special purpose acquisition companies (SPACs). To highlight the international relevance of these instruments, SPACs are well known in other global stock markets, and the FIBRA E is a Mexican interpretation of Master Limited Partnerships.
The importance of these tools is that they boost liquidity and investment in a wide variety of sectors, from hospital and port infrastructure, to roads, pipelines and water-treatment plants. As part of these structural reforms, I believe that the FIBRA E will be the most important instrument on the stock market by the end of this decade. The latest listings by the Federal Electricity Commission and the new Mexico City airport have solidified its place as a solid instrument to finance both large projects and emblematic government entities.
Other vehicles – such as the first CERPI, which was listed in 2016 by real estate firm Mira Manager – should see a more significant take-off in 2018 due to a 2017 change in the regulation for pension funds (administradoras de fondos para el retiro, AFORES). This regulatory change allows CERPIs to invest in projects outside Mexico, which has boosted their popularity among AFORES. By the end of 2018 we expect to see more CERPI listings than development capital certificates (certificados de capital de desarrollo, CKDs) – an unprecedented milestone.
In 2017 we had the first SPAC in Vista Oil & Gas, complemented by one in 2018 from Promecap focused on venture capital. Unequivocally, both the FIBRA E and SPAC opened the door to greater capital market participation in the energy sector. Although not new, CKDs have been fundamental to the growth of both the real estate and energy sectors, especially renewable energy, where an estimated 15% of CKDs are invested. Green bonds are also gaining popularity in Mexico, alongside our inaugural sustainable and social bonds – two instruments created in 2017 to tackle environmental and social problems.
What steps has the market taken to counter the growing global cybersecurity threat?
BOSCH: Cybersecurity is one of the most underplayed threats of recent years for a wide variety of sectors. This is particularly true for the financial sector: as the stock market grows in size and importance, so does the risk. After recent attacks on a variety of Mexican financial institutions throughout 2018 involving the interbank payment system, the BMV developed a contingency payment plan to mitigate the risk of external cyberthreats.
Through safeguarding and the implementation of secure back-up systems, the BMV was able to avoid any vulnerability to cyberattacks. Although the Mexican exchange does not sell its technology like New York’s Nasdaq does, our principal operational tool still revolves around technology.
Heightened risk does not mean the company needs to restructure its operations, but it has meant a continuation of our long-term efforts to adopt the most secure and efficient technology, and this remains one of our top priorities going forward. After all, it is up to intermediaries such as us to protect our users from the heightened risk faced by financial markets.
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