Doing Business

Doing Business in Mexico 2015

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57 Doing Business in Mexico 2015 permit supervision of the operation and financial situation of their respective participants. These self-regulatory functions govern contract execution, regulation of members, enforcement and compliance issues, and dispute resolution and disciplinary measures. The specific role of ASIGNA is to liquidate futures and options contracts executed on the MexDer and to act as counterparty in the context of these operations. Banks and investment banking firms are the only operating partners authorized to conduct operations on behalf of clients on the MexDer. Initially, the MexDer offered futures and eventually options with respect to a specific index, and dollar and interest rate futures. The intention is to permit trading in both dollar and interest rate options. The BMV developed the MexDer after consulting with the world's largest stock exchanges in an effort to ensure a solvent and competitive market that would facilitate broad participation, reduce transaction costs, increase liquidity and provide better risk coverage in the management of portfolios. International financial market Mexico provides the full range of international financial services to both residents and non-residents. Most major banks have full-service bank branches in the major international financial centers (including New York, Los Angeles, London, and Tokyo). Some foreign banks (mainly U.S., Spanish, British and Canadian), have opened subsidiaries in Mexico. There is an active foreign exchange market. However, because of Mexico's proximity to the United States and because it is Mexico's principal trading partner, most foreign currency transactions (purchases, sales, remittances, and futures) are carried out in U.S. dollars. Additionally, other foreign currencies (which are traded in very low volumes), including the euro, have fluctuated against the Mexican peso in similar proportions to the U.S. currency, as the Mexican peso is seen as pegged to the U.S. dollar in the European market. Eurobonds are not traded in Mexico, but Mexican corporations and individuals may invest in such instruments in foreign markets. Offshore financial services Mexican companies are free to carry out offshore activities, including banking transactions (deposits, borrowings, remittances and transfers). As mentioned above under "International financial market," Mexican banks are authorized to open branches overseas and to carry out banking activities with both residents and non-residents of Mexico. Mexican taxpayers are required to file an annual information return when their source of income is located in a country deemed to be a tax haven or preferential tax regime by Mexican law or in a country with a territorial tax system. More information on the taxation of investment income can be found in the relevant chapters dealing with taxation of the different types of investors. Sources of funds Short-term credit Commercial banks provide most local-source financing. Short-term credit is furnished on a line-of-credit basis and may be supported by a pledge of inventories or by discounting customer paper. 7

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