MEX CNBV Duty of Best Execution

On Feb. 19, MEX proposed variable income best execution changes.

  • MEX CNBV issued draft resolution to modify general provisions for brokerage firms.
  • Regulatory proposal aims to strengthen the legal framework applicable to the duty of best or better execution that brokerage houses must abide by on client orders.
  • Orders received by clients are executed considering the best price available on the stock exchanges, taking into account the market conditions at the time of execution.
  • Amendment Highlights
  • Brokerage houses may provide their clients with direct electronic access channels, to send instructions immediately to the electronic trading systems of a stock exchange.
  • Orders placed in this way won't be subject to distribution of daily passive positions and monthly daily average sent to stock exchanges, nor to the duty of better execution.
  • Brokers, in the transmission of passive positions of variable income, must make best effort to transmit daily to each exchange a number of passive positions.
  • Said passive positions must represent at least 30% of broker's daily passive positions.
  • Passive position is understood to be one that, when entering stock exchanges, does not perfect a transaction and remains waiting for a contrary position to execute it.
  • Firms must have automated systems for executing variable income securities orders that factor in best price available and volume of said security available on exchanges.
  • Effectiveness
  • Draft resolution effective four months after publication in the official gazette.
  • Brokerage firms will have up to two months from official publication to make modifications to their manuals and systems, and to update measures and controls.
  • MEX CNBV will have until the effective date of this resolution to approve the aforementioned modifications to the manuals and systems of brokerage firms.

Regulators MEX CNBV; MEX GVT
Entity Types B/D; Exch
Reference RF SHCP/51308, 2/19/2021; 05/0009/190221;
Functions Compliance; Operations; Suitability; Trading
Countries Mexico
Products Derivatives; Securities; Variable Annuity
Regions Am
Rule Type Proposed
Rule Date 2/19/2021
Effective Date 4/19/2021
Rule Id 98520
Linked to
Reg. Last Update 2/19/2021
Report Section International

Last substantive update on 02/22/2021