1. S.D. INDEVAL / Securities Clearing and Settlement System
Luis Cano,
Risk Management Specialist
October 8, 2007

2. Mission (INDEVAL)
Provide the financial sector with the public interest services of safekeeping, custody, management, clearing and settlement of securities within a framework of maximum assurance and security.
Strive to cover customers needs under transparent and effective services with high quality standards.
In order to fulfil its mission INDEVAL depends on solid finances, adequate technology, adopting and developing the best business practices and on its human resources.

3. Services and Functions
Custody and Management of Securities.-
Securities safekeeping in physical or electronic book-entry form with authorized custodians.
Physical securitied deposit and withdrawal at the depository’s vault;
Domestic Transactions
Electronic securities transfers
Electronic money transfers
Trade clearing and “DVP¨ settlement
Money Market settlement of transactions, and
Collateral Management
International Transactions
Settlement of transactions executed on the international markets
Corporate action processing on foreign issues
Tax services on US shares
Information Services
Assign ISIN codes to security issues
Services to issuers

4. Corporate Structure

5. Mexican Financial Infrastructure
CSD, Custodians
Derivatives
CCP
Indeval
CSD
Issuers
Equities & Debt
Mexican Stock Exchange
Representatives
Banks
Broker firms
Brokers
Banks, Custodians
Broker firms
Payment
Systems
CCP
Investors
Institutional
Retail
Supervised:
Central Bank
CNBV

6. Indeval’s Components Participants Participants Delivery Means
Indeval’s Financial Protocol
Web Site
Match
Securities Settling
System (SLV)
Collateral
Management
Safekeeping
Vault
Securities
Lending
Corporate
Action
Processing
(Issuers)
Pre-settlement
Settlement ( )
Collateralized
Repos
Safekeeping
Accounts
Clearing ( )

7. Transaction cycle INDEVAL - CSD CCV Securities and transactions Pre-
Trade
Post-Trade
Pre-Settlement
Post- Settlement
Trade
Settlement

8. Centralized Settlement
Corporate Debt
Shares issued abroad
OVER-THE-COUNTER TRANSACTIONS (OTC)
BANKING
GOVERNMENTAL
Brady’s & UMS
INDEVAL
DVP
Settlement by securities transfer
followed by net settlement by funds transfer

9. Average daily settlement (June 2007) Average transaction amount
Indeval Statistics
Amount in Custody
USD 809 billion
Government Securities
USD 238 billion
Bank Securities
USD 43 billion
Shares and Private Debt
USD 528 billion
Number of securities
4,783
Non-Local Custody
USD 25 billion
Registered
USD 4 billion
Global BMV market
USD 6 billion
Eurobonds
USD 15 billion
Number of Securities
638
La custodia en el Indeval tiene un valor 20% mayor al Producto Interno Bruto del país el año pasado (2006). El 65% de la custodia está en acciones y deuda privada, el 30% en instrumentos gubernamentales y el resto en deuda bancaria. En custodia se tienen más de 4,500 instrumentos.
De los 745 mil millones de dólares custodiados 19 mil corresponden a instrumentos no locales, de los cuales más del 50% corresponden a Deuda Soberana, como lo son los bonos del gobierno mexicano colocados en el exterior UMS y otros Eurobonos. La deuda externa pública mexicana es de caso 60 mil millones de dólares.
En promedio el Indeval liquidó más de 150 mil millonres de dólares en Esto coloca a la institución como uno de los principales sistemas de liquidación de valores en el mundo. Más del 60% de ésta liquidación son reportos.
El Indeval tiene 41 accionistas: Banco de México, Bolsa Mexicana de Valores, Casas de Bolsa, Bancos y Aseguradoras
Average daily settlement (June 2007)
USD 208 billion
Average transaction amount
USD 24 billion

10. Indeval Statistics Government Securities Shares and Private Debt
30%
65%
USD 528 billion
USD 238 billion
43 MM USD
Bank
Securities 5%

11. Transactional Process for Settlement
Trade
Collateral
Requirement
Registration
Process
Incorporation
of Transactions
Is there sufficient
collateral
Clearing
YES NO
Appointment of
Agents for the
Payment of Transactions
transacitons
Pending settlement
Settlement

12. Extended settlement period Settlement of Transaction in default
Life-cycle of a Transaction T
T+1
T+2
T+3
T+4
T+5
T+6
T+7
T+8
8:30
Trade
Non-recurring
Period
Extended settlement period
Buy- In /
Sell -Out
Non-recurring cash settlement
Settlement of Transaction in default
Settlement
Cycles
Collateral requirements
Novation or
registration
15:00
Market Closing
Securities Lending
Agents in default
15:30
Securities Lending
CCV
15:45
Last settlement
cycle
Defaulted
Transaction
Transaction in default
16:00
Clearing
Cycle
20:00

13. Clearing /Settlement Transaction Clearing:
For each counterparty and issue, there will be a net resulting from the lesser amount of securities compared tof the total amount received versus the total amount delivered.
Price differential due to Clearing:
Since the clearing is performed with agreed prices, there will be a price differential which comes from the Clearing of Transactions.
CCV shall net the price differentials from Clearings for all issues, for each pair of participants; thereby generating a global differential that will be sent for settlement.
Net payment to DVP:
DVP criteria shall be applied to the settlement of the remainder of non-cleared securities which are party to a net settlement.

14. System of Financial Safeguards
The System of Financial Safeguards (SSF) is a set of measures aiming to guarantee compliance with obligations derived from Transactions where CCV performs as a reciprocal creditor and debtor.

15. Clearing Fund Settling Agent was Suspended
Financial Safeguards
Mutualized Clearing Fund
Reserve
Fund
Equity
80%
Contribution Fund
Agent was suspended
Equity
20%
Clearing Fund Settling Agent was Suspended
Sale of the AL shares suspended

16. CCV Statistics Monthly Average 2007: Change 2006 – 2007:
Transaccion Volumes
340,000
40%
Trade Amounts
13.3 billion USD
49%
Numer of Fails
839
-23%
Amounts of Fails
36 million USD
-24%
Resolved in 1 day:
31 million USD
-18%
Resolved in 2 or more days:
5 million USD
-12%
Amount of fails resolved by securities lending
42 million USD
97%