BMV to launch new trading engine, dark pool

Bolsa Mexicana de Valores, the domestic Mexican stock exchange, has announced plans to build a new trading engine and dark pool by Q2 2012.
By None

Bolsa Mexicana de Valores (BMV), the domestic Mexican stock exchange, has announced plans to build a new trading engine and dark pool by Q2 2012.

The new internally developed trading platform will be multi-market, multi-asset, flexible and scalable, with throughput of more than 200,000 messages per second. It will have the ability to execute trades in 100 microseconds, an improvement of over 25 milliseconds on the legacy trading system.

The new hidden order book will offer trading at the mid-point price displayed on the main exchange, which BMV says will be useful for institutional investors that want to trade large blocks anonymously with reduced execution risk.

The upgrades follow a host of recent improvements at Latin America’s second largest exchange after Brazil’s BM&F Bovespa, aimed at promoting foreign investment in the Mexican financial markets.

The improvements include the addition of low-touch DMA in a bid to make trading faster, more efficient, and seamless.

“Dealers, pension funds, qualified investors, institutional investors and other market professionals have all benefited from these operational modifications on the exchange,” said Luis Téllez, president and CEO of BMV Group.

In addition to DMA, BMV now offers international participants high-speed co-location services and FIX standard protocol for order routing and market data.

“By successfully improving upon our operative rules to better comply with international market standards, BMV is now better equipped to provide global investors with more efficient trading and connectivity to Mexico,” said Téllez. “Global market participants can access the Mexican Exchange, as well as benefit from trading our products, in a more seamless and efficient manner than ever before.”

Foreign securities trading now represents 18% of total trading volume at the exchange and the number of listed securities in the segment reached 750, including 339 individual stocks from around the world and a diversified group of 411 exchange-traded funds (ETFs). So far in 2011, Latin American securities – about 13% of the volume traded in the exchange’s global market – has hit US$5 billion in volume in 2011, with 29 stocks and 10 ETFs from Brazil, Chile, Colombia and Peru.

In 2011, the exchange also established a routing agreement between the Mexican Derivatives Exchange (MexDer) and the Chicago Mercantile Exchange (CME), giving Mexican investors access to CME Group’s benchmark derivatives contracts, including interest rates, foreign currencies, equity indexes, energy, metals and agricultural commodities, and CME Group customers with access to MexDer benchmark products, including Mexican Stock Exchange Index futures, bond futures and MXN peso/US dollar futures contracts.