FATCA y QI – An update
Gerardo Gamboa - Indeval
April, 2012
What does FATCA means to the BMV Global Market?
International Quotation System
Investors can trade in the Mexican Stock Exchange international securities listed in The Global BMV
Market under the International
Quotation System (SIC) trading and regulatory scheme.
Listing securities in this portion of the market is only possible if they belong to recognized
foreign
markets or are listed by issuers recognized by the Mexican Securities and Exchange Commission
(CNBV).
Recognition is granted by the
Mexican Securities and Exchange Commission
(CNBV) if there is compliance with the following criteria:
 Listed securities can be acquired by Mexican investors.
 The features and terms of listed securities are fair and consistent with local market regulation.
 Issuers objectives are aligned with investors view and interests.
Indeval Services
Custody, Crossborder Settlement, Corporate Events
Indeval acts
as a custodian and settles abroad all the Global Market
operations that are instructed by their clients including “Delivery versus
payment model” which eliminates counterparty risk.
In addition to,
Indeval processes
redemptions, interests and any type
through processing
payments
of dividends in a
straight
environment (Deutsche Bank, J.P. Morgan,
Euroclear y Clearstream)
Sistema (Dalí) are recorded both holding local and
foreign securities, avoiding connections to different systems and facilitating the
reconciliation of holding and oversight from regulators.
In just one platform
related with
Indeval Services
Tax Relief
Indeval makes all the processing with its Global Custodians and ICSD abroad,
for obtaining tax benefit rate “0” for pension funds and
for other Mexican Investors on issues registered at The American Market.
10%
On January 2014, BMV Group will initiate the Certification
to the Internal
Process
Revenue Service of The United States (IRS) in order
to obtain the “Global Intermediary Identification Number
(GIIN)” according to the FATCA regulation.
Intergovernmental Agreement (IGA)
México – E.U.A.
FATCA
(Foreign Account Tax Compliance Act)
April, 2012
Intergovernmental Agreement (IGA) México – U.S.A. for the
implementation of FATCA
México (SHCP) – U.S. Treasury Departament
On 19 November 2012, the Mexican government, through the Ministry of Finance signed an Agreement with the
Treasury Department of the United States of America to improve the International Tax Compliance regarding
FATCA.
The Agreement model signed corresponds to Model I, "Intergovernmental model with Reciprocity" same as that
was released by the U.S. government the past month of July 2012 and for which stand out the following
characteristics:
1.- The Agreement parameters do not differ greatly from those set forth in the proposed regulations
released by the U.S. Treasury in the month of February 2012. The obligations are now explained in greater
detail and more clearly.
2.- The Mexican Financial Institutions are not subject to any retention, and are not obliged to carry out
the Withholding on payments made to recalcitrant account holders (Owners who do not provide
documentary evidence that they are not U.S.); it continues the obligation to carry out a process of due
diligence and data collection and reporting.
3.- Each financial institution must identify the "U.S. Reportable Accounts "and accounts pertaining to"
Non-Participating Financial Institutions. "
Intergovernmental Agreement (IGA) México – U.S.A. for the
implementation of FATCA
Characteristics
Date of Implementation & Coverage
Date of Implementation: The IGA l Acuerdo will come into force starting January 1, 2013.
Coverage:
The agreement covers all financial institutions who are residents of Mexico, as well as all branches of foreign financial institutions.
In this regard if an entity is consider as a "Financial Institution of Mexico Subject to Report" under FATCA, will be obliged to register
with the National Tax Authority and comply with all obligations of Identification, Obtaining Information and Report unless it can be
identified as a "Financial Institution of Mexico No Subject to Report".
In the event that a Financial Institution Subject to Report does not comply with the obligations under the IGA Agreement, the U.S.
authorities will notify the Mexican authorities in order to apply the local laws.
In the event that the Financial Institution continue without fulfilling their obligations after 18 months, will be considered a "NonParticipating Institution" and shall be subject to 30% withholding
Intergovernmental Agreement (IGA) México – U.S.A. for the
implementation of FATCA
Implementation schedule
Incorporation of
Preexisting and
New Customers
Information
Exchange
In General
2013
1.- Date of entry into force of the
Intergovernmental Agreement
2014
2015
2016
2017
January 1
2.- Consultations for modification of The
Agreement
1.- Beginning Reports of Information corresponding to 2013
September 30, 2015
2.- Relevant information from the 2014 and beyond
3.- Implementation of procedures for New Customers
Start Date Reports
January 1
Low Value Accounts
4.- Preexisting accounts and payees
Maximum dates for identification
High Value Accounts
FATCA Proyect in Grupo BMV
Under this new panorama Grupo BMV during 2014 we will focus on:
1. Indeval, CCV, Asigna and Bolsa
Mexicana de Valores SAB de C.V.
should continue with the FATCA
project in order to progress and
conclude with:
•
Application of Regulations and
Implementation Planning.
•
Obtaining GIIN for each of the
companies
2. Review in conjunction with Mexican
authorities who will report the operating cash
flows of buying and selling securities issued and
register in U.S.
S.D. INDEVAL , ó sus
- DEPOSITORS
3. Obtain the certification as "QUALIFIED
INTERMEDIARY (QI)“having as benefits,
savings in operational processes, costs
and co-participation with other
international markets infrastructures
4. Indeval must continue with the process of collection and
delivery to their custodians in the U.S. and Europe, the "W"
formats for obtaining the tax benefit on issues registered in the
U.S. according to the no double taxation treaty.
Benefits of FATCA and QI Certification for BMV Group
Converting the BMV Group and in particular S.D. Indeval, in an institution compliance with FATCA
regulation, allows it to maintain under the same conditions all international services provided to
Mexican and Foreign Investors:
Custody of international securities for
about 40 billion dollars.
Obtain tax benefits for mexican
investors with tax reduction of
approximately 30 million dollars in
annual average.
Crossborder settlement in the
scheme DVP with more than 300
transactions per day in Europe and
the United States.
Payment of any exercise of rights
to more than 800 annual
transactions
Benefits of FATCA and QI Certification for BMV Group
But, most importantly allows to give viability of growth to the Mexican stock market in new business
lines, where the co-participation with other market infrastructures and foreign investors will be vital for
the strategy of BMV Group, having as an example:
Platforms for collateral management
and investment funds.
Probable trading and settlement of
Mexican securities in currencies
other than the Mexican peso in
2015.
Availability for direct placement of
national and foreign securities in
of international securities lending
systems.
Cash Flows in dollars for
settlement of transactions in OTC
derivatives markets.
Thank you!
Gerardo Gamboa - Indeval
Abril, 2012