The IPC (Indice de Precios y Cotizaciones) is an index of stocks that trade on the Bolsa Mexicana de Valores (BMV), which is Mexico’s only stock exchange. The IPC is the main indicator of the BMV. It measures the performance of the Mexican stock market, and it is representative of all shares listed on the stock exchange. This indicator was implemented in its current structure in 1978.
The BMV is headquartered on Paseo de la Reforma in central Mexico City. BMV is a private limited company, with the exchange’s shareholders consisting exclusively of authorized brokerage firms, each of which owns a single share. The exchange trades debt instruments including federal Treasury certificates (CETES), federal government development bonds (BONDES), investment unit bonds, bankers’ acceptances, promissory notes with yield payable at maturity, commercial paper, and development bank bonds. In addition, it also trades stocks, debentures, mutual fund shares, and warrants. Trading is conducted electronically through the BMV-SENTRA Equities System.
The mission of the BMV is to contribute to domestic savings, productive investment and stock brokerage in the country, meeting the needs of companies, issuers and governments, as well as of domestic and foreign investors. Provide services to enable access to the Stock Exchange infrastructure, in order to facilitate listing and trading of securities, information dissemination and the operation of the organized capital and debt market and other financial assets.
Investors go to stock exchanges worldwide as an option to protect and increase their monetary savings, supplying monetary resources that in turn allow corporations and governments to finance productive and development projects that in turn generate jobs and wealth. The stock exchanges are organized markets that contribute to this financial channeling in a free, efficient, competitive, equal, and transparent way, holding up previously agreed rules for all participant parties.
The BMV is the physical place where the trades made by the brokerage firms are executed and registered. Investors buy and sell stocks and debt securities through intermediaries, called brokerage firms. Note that the BMV does not buy or sell securities directly. The investors send their orders through an account executive employed by a brokerage firm. These account executives are registered specialists who have received training and are authorized by the CNBV. The buy and sell orders are transmitted from the brokerage firms to the market through a sophisticated Negotiation, Transaction, Registry and Assignation Electronic System (BMV–SENTRA Capitales) where they wait to find an equal but opposite order and thus perfect the operation. Once shares or debt securities have been acquired, performance can be monitored in specialized newspapers and the electronic information system of the BMV.
The BMV is where Mexico’s organized securities market transactions are held, and its main objective is to facilitate the securities transaction process as well as market development, fostering its expansion and competitiveness through the following functions:
- Establish the facilities and mechanisms as an aid in the relationship of the securities supply and demand, credit certificates, and other documents registered at the National Securities Registry (RNV), as well as provide the necessary services for underwriting, offering and the exchange of the aforementioned securities.
- Publish, provide, maintain, and make available to the general public the pertinent information about the securities listed at the BMV and at the International Quotations System (SIC), about its issuers as well as of the executed transactions.
- Establish the necessary means to ensure that the transactions held at the BMV by the brokerage firms comply with the applicable legislation.
- Issue regulations that set standards and operative guidelines as well as conduct norms to promote fair and equitable market practices at the securities market; guard their observation and impose disciplinary and corrective measures, in case of lack of fulfillment, that are mandatory for brokerage firms and the issuers with listed securities at the BMV.
Some important milestones in the history of the BMV are outlined below:
1982—President Miguel de la Madrid allowed the establishment of private brokerage houses with wide latitude to conduct financial transactions in domestic capital markets.
October 1987—U.S. stock market crash. The BMV recovered slowly in 1988.
1991—The index of traded stocks rose 128 percent in new peso terms and 118 percent in U.S. dollar terms. In November 1991, the government eliminated all exchange controls, thereby unifying the various peso exchange rates.
1992—199 companies were listed as trading on the stock exchange. A total of 11 trillion new pesos were traded, and the exchange had a total capitalization of US$139 billion and a price-to-earnings ratio of more than 13.
1993—Mexican investors held about 75 percent of the equities traded.
1994—The market was buffeted by a series of political shocks—including two high-profile political assassinations, revelations of high-level corruption in President Carlos Salinas’s entourage, and continued unrest in Chiapas—that contributed to its high volatility throughout the rest of the year.
1995—The stock market collapsed, causing the stock index to fall to less than 1,500 points in February of that year. The main stock index gradually recovered to just under 3,000 points by the end of 1995 and reached 3,300.
September 1996—Mexican stocks gained 24 percent in dollar terms during the first eight months of 1996. A slow recovery would follow in the next years.
2008—The world financial crisis that began in 2008 affected Mexican stocks negatively. The falling peso was a precipitating factor.
- Bolsa Mexicana de Valores, www.bmv.com.mx (cited March 2009);
- F. Coronel Brizio and A. R. Hernández Montoya, “Asymptotic Behavior of the Daily Increment Distribution of the IPC, the Mexican Stock Market Index,” Revista Mexicana De Fisica (v.51/1, 2005);
- Financial Forecast Center, www.forecasts.org (cited March 2009).
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