Innovation

March, 2011.

AGENDA

•Market Drives

•BMV Group Services Roadmap

•OTC Derivatives

•Currencies Payment Management

•Debt Instruments Clearing House

•Conclutions

Drivers

Regulatory Issues:• Dodd Frank• Basel III• G-20

Market Trends• High Frequency Trade (HFT)• Dark Pools• Direct Market Access (DMA)• Block Trade Systems• Algorithmic Trading Systems• Merger & Acquisitions

Systemic Risk

OTC Derivatives growing

Capital Market Securities

Money Market and Debt

Instruments

Listed Derivatives

Currencies (F/X)

OTC Derivatives

Securities Lending and

Repos

ElectronicBrokers

Central Counterparties

Clearing Balance and position registersPayments

SystemInformationValuation

Risk Reports

FinancialMarkets

Services

OTC DerivativesOTC Derivatives

CurrenciesCurrencies

Debt SecuritiesDebt Securities

Services Roadmap

OTC Derivatives Services

The Mexican Financial System, there are limited mechanisms to provide security, transparency and additional services for the OTC derivatives market.

From the market point of view and based on available information, we can detect that the market has a very important dimension and volumes as well as a big business opportunity:

Statistics

*** Millones de Pesos ***

Año Importe Listado OTC2005 130,933,998 20,924,875 110,009,131 2006 247,308,611 52,519,864 194,788,762 2007 301,937,144 46,462,549 255,474,596 2008 352,819,501 13,407,606 339,411,858 2009 135,751,710 9,062,264 126,647,558 2010 189,711,585 6,840,716 182,649,617 2011 40,399,893 860,279 39,495,132

Mercado

Market Share %

*** Million Mexican Pesos ***

Year:

Amount:

Listed:

Market: OTC:

Statistics

Billion of US Dollars*Source: Bank For International Settlements (BIS)

Total Notional Value

Includes all OTC Derivatives

Stages

1 2 3 4 51 2 3 4 51 2 3 4 5

PHASE 11) Register (Repository)

2) Match

3) Reference Codes

4) PDF hard copies

FpML

PHASE 21) Cash Flows 2) Calculation

3) Authorization

4) Instructions Delivery

5) Settlement

PHASE 31) Clearing

2) Settlement

A /B B /A

Should be eliminate• Manual Processing • Handwritten Signatures• Hard Copies

Centralized proccesing andjust one place for calculation

Phase : Securities Collateral

According with the client request, we will develop a system to offer clients the availability of making valuations, margin calls and administering cash and securities collateral.

1 2 3 4 5

DerivaRE

OTC Derivatives Services

Phase 5: Central Counterparty for OTC Derivatives

For this phase we will deliver the CCP for OTC Derivatives.

OTC Derivatives Services

1 2 3 4 5

OTC

Currencies Payment Management

Some Advantages

FXHouse

FXHouseClientClient Commercial

BankingCommercial

Banking

Sistemas de Payments

Sistemas de Payments

100

vs

Reducing RiskReducing Risk Improving LiquidityImproving LiquidityIncreasing securityIncreasing security

Paymentvs

Payment

2 diferent systems2 diferent systems

Just one system

Mexican Pesos Withdrawals: This phase will allow Dali´s participants to withdraw their cash accounts at Indeval crediting any checking account in any commercial bank. (Beneficial owner)

Foreign Currencies Withdrawals: In an automated process, Dali`s participants will be able to credit any foreign account in any foreign commercial bank with the cash received from crossborder corporate events and settlement.

Securities Settlement using foreign currencies: The settlement engine of Dalí System (SLV) has been prepared to perform multicurrencies settlement for local and issued abroad securities registered at Indeval.

Payment vs Payment: Finally, FX transactions performed at FX markets will be included in the Dali´s settlement processes in order to join up, in only one system, the different payment obligations of the Mexican Financial Institutions.

Central Counterparty for Currencies: To obtain the highest liquidity in Fx transactions for the local market.

Currencies Payment Management

Currencies Payment Management

The project will allow an efficient management of the currency balances in the cash accounts at Dalí System.

There are four main stages for the Currencies Payment Management:

Currencies Clearing House Foundation

Mexican

Pesos Withdrawals

Foreign Currencies Hithdrawals

Securities Settlement

using Foreing Currencies

Payment vs

Payment

CCP Foreing

Currencies

CCP Foreign Currencies

1 2 3 4 5

OTC Fx

Phase 5: Central Counterparty for Foreign Currencies

For this phase we will deliver the CCP for Foreign Currencies.

Debt Instruments Clearing House

Debt Instruments Clearing House

• The launching of the Dali system generated efficiencies for participants in terms of settlement reducing in 52% the use of cash and 26% in the use of securities.

• The development of a Debt Instruments Clearing House aims as main objectives to increase trading volumes, improve infrastructure and attract foreign investment.

• At the same time, It will also start operations anonymous debt securities electronic brokers with the intention to eliminate inequities for small and medium market participants. These mechanisms will assume the ownership of all traded positions.

With the start up of three new clearing houses, Indeval will be cover the needs of the Mexican Market, giving added value to the Dalí model.

All the net payments, produced from the clearing houses will be settled in the Central Security Depository (SLV).

Conclusions

OTC Divisas

Novaclear

Equity

Debt

Derivatives OTC Currencies

Derivatives

Security Settlement

System

Added value services

PRE TRADING POST TRADING

CLEARING AND

SETTLEMENT

GALA

OTC

Divisas

Novaclear

PRE TRADECONTROL

OTC MATCHINGTOOL

SECURITIESLENDING

RISK ANALISIS

PRICE VENDOR

POST TRADECONTROL

RISK ANALISIS

PRICE VENDOR

SECURITIES LENDING

Equity

Debt

Derivatives OTC

Currencies

Derivatives

Security Settlement System

Acciones

Mercado Dinero

Derivados

Divisas (F/X)

Derivados OTC

Préstamo de Valores y Reportos

Mecanismos de Negociación

Contrapartes

Compensación Registro de PosicionesSistema

de Pagos(Banxico)

InformaciónValuación

Reportes Reg.

Grupo BMV tiene áreas factibles de crecimiento

Mercados

Servicios

OTC OTC OTC

Divisas Divisas Divisas

Novaclear

OTC DerivativesOTC Derivatives

DebtDebt

CurrensiesCurrensies

Thanks!!!!!!

March, 2011.