Overview

2018 History

Open Outcry Trading starts & MXP/US Dollar 1998 2007 Emerging Market of the year Future Contract listing Interest Rates and Index Futures Contracts 1999 2008 BMV Group IPO listing

2000 Electronic Trading 2009 Co-location

2001 Local Market Makers 2011 Order Routing Agreement Implementation

Partnership with MEFF for the Options Yellow Corn Future- 1st Commodity Futures 2003 2012 Market Contract Development and launching of the equity MoNeT Derivatives. 2004 2013 options market TIIE Swap Listing 10-Year Future Bond (M241205) Listing. 2005 Omnibus Accounts 2014 Mini IPC Future Listing

2006 Remote Participants 2015 Capital requirement rules www.mexder.com.mx 2 MexDer

• MexDer is the Mexican Derivatives Exchange, subsidiary of the Mexican Exchange (BMV Group), that began operations in 1998.

• A self-regulated entity, MexDer along with Asigna (Clearing House), offer transparent benchmark products based on Interest Rates, Foreign Exchange and Stock Indexes

www.mexder.com.mx 3 What makes MexDer so attractive?

 No Withholding Taxes when trading in MexDer from a country with a double taxation agreement with .  Free convertibility.  No local presence required in Mexico.  Omnibus Accounts: Rule 30.7 (CFTC) segregation:  Proprietary trading.  Customer trading.  Remote Membership  CFTC no action letter to offer products like Equity Indexes, Fx and Fixed Income contracts in the US & Foreign Board of Trade status pending.  Co-location and Sponsored DMA.  Collaterals may be pledged in the US.  Risk Management Controls

www.mexder.com.mx 4 Nuestros Productos

Swaps

28 Day TIIE Swap

Futuros Opciones

www.mexder.com.mx 5 Asigna: Central Counterparty Clearing House

Local Rating Global Rating Fitch Rating AAA (mex)/F1+(mex) Standard & Poor’s mxAAA/mxA-1+ BBB+/A-2 Moody’s Aaa.mx A3

www.mexder.com.mx 6 Collaterals

Asigna accepts collaterals in the Local Haircut Foreign Haircut following currencies and securities Pesos US Dollars 6.50% (“Haircuts” apply) * 20.00% T-Bills, T-Notes & T-Bonds 6.50% - 13.00% Naftrac 10.00% Berms 0.80% BPAG91 1.50% Bonde 182 1.50% Bondes D 1.50% BPAG28 1.00% Taxed Cetes 0.50% BPA’s 182 1.50% Additional Margins may be requested by M Bonds 1.00% - 8.00% Clearing Members due to credit quality. Udibonos 1.00% - 7.00%

• Securities pledged as collateral may be exchanged at any time. • Cash Collateral proceeds are credited to the client.

www.mexder.com.mx 7 How to participate in MexDer?

www.mexder.com.mx 8 Participate in MexDer

Clearing Contract

Contracts (Omnibus Account included)

Client’s Trading Members . Proprietary Trading Member(*) Clearing Members Local or Foreign . Market Maker . Third Parties Trading Member (*) . Proprietary Trading Member and Third Parties Trading Member(*) . Global Accounts

Derivatives Exchange Clearing House Matching Engine

www.mexder.com.mx 9 Products

www.mexder.com.mx 10 MXN/USD Futures Contract

www.mexder.com.mx 11 Description

• The MXN is one of the most traded currency in the world, the third most traded in the and the most traded in LATAM.

• MXN has become the main hedging currency for emerging countries, whose currencies don’t have enough liquidity

• Due to current high yields offered by Mexican Fixed Income Instruments, large international cash flows are generated thus incrementing FX Derivatives trading volumes

• Very useful contract to create synthetic rates given daily deliveries that can be simultaneously spread traded versus a Monthly delivery, replicating an FX Swap.

www.mexder.com.mx 12 Specifications

Underlying: US Dollar. Contract Size: $10,000 Dollars. Delivery Months: Daily, monthly and quarterly, up to 15 years. Trading Symbol: DA Quotation: Pesos per Dollar. Tick: 0.0001 Pesos. Tick Value: $1 Peso. Tick Ratio/ Fee: 0.31 times. Initial Margin: $13,600 Pesos Opposite Margin: $2,210 Pesos Trading Hours: 7:30 to 14:00 hours. Last Trading Day: Monday of the week of the third Wednesday of the contract month. Maturity date: Monday of the week of the third Wednesday of the contract month. Settlement: Physical delivery. Bloomberg DSACT Reuters MXN/FUTEX1 0#MXP: www.mexder.com.mx 13 MXN/USD Futures Contract

• Participants: Banks, FCM’s, Pension Funds, Mutual Funds, liquidity providers. • Competitive trading and clearing costs.

Notional Value 2018

Average Daily Volume Average Daily (Pesos) Volume (USD) $3,147,628,171.71 $167,169,163.08 Pesos USD

www.mexder.com.mx 14 MXN/USD Futures Contract Uses

. Hedging: • Importers with USD commitments. • Exporters that receive USD flows. • Dollar Credits. • Infrastructure financing. . Arbitrage: • Currencies with significant correlation. . Strategies: • USD funding. • Synthetic Interest Rates in pesos and dollars. (FX Strip).

www.mexder.com.mx 15 S&P/BMV IPC Futures Contract

www.mexder.com.mx 16 Underlying Asset

• The Price and Quotation Index (S&P/BMV IPC) is the main index issued by the Mexican .

• It is a market capital weighted index formed by 35 of the most important and representative issuers, from different sectors of the Mexican economy.

• This Index is the main Mexican benchmark used by Financial Institutions in the equity market.

• The S&P/BMV IPC Futures Contract was created to hedge, manage and mitigate the risks associated with investing in the Mexican Stock Market.

www.mexder.com.mx 17 Specifications

Underlying: S&P/BMV IPC or MexBol (Mexican Stock Exchange Index) Contract Size: $10 (Ten pesos 10/100)) multiplied for the S&P/BMV IPC Value. Delivery Months: Quarterly : March, June, September, December up to one year. Trading Symbol: IPC Quotation: S&P/BMV IPC Index Points. Tick: 5 Points. Tick Value: $50.00 Pesos Tick Ratio/ Fee: 1.25 times Initial Margin: $38,500.00 Pesos Opposite Margin: $11,810.00 Pesos Trading Hours: 7:30 to 15:00 hours Last Trading Day: Third Friday of the maturity month or the previous if such Friday is a non-business day. Maturity date: Third Friday of the maturity month or the previous business if such Friday is a non-business day. Settlement: Next business day after maturity date. Bloomberg ISA CT Reuters MXN/FUTEX1 0#IPC: www.mexder.com.mx 18 S&P/BMV IPC Futures Contract

Easiest and most simple way to hedge and take short positions in the Mexican Equity Market.

Average Traded Volume

2017 2018

3,444 1,846

www.mexder.com.mx 19 S&P/BMV IPC Futures Contract

Main Participants

• Banks • FCM’s • Mutual Funds • Institutional Clients Trading Ideas • HFT

• S&P/BMV IPC Future vs Cash basket • S&P/BMV IPC Future vs Naftrac • S&P/BMV IPC Future vs Mini S&P/BMV IPC Future • S&P/BMV IPC Future vs Other Indexes and ETF’s (S&P, DOW, EWW, etc)

www.mexder.com.mx 20 Mini S&P/BMV IPC Futures Contract

www.mexder.com.mx 21 Specifications

Underlying: S&P/BMV IPC (Mexican Stock Exchange Index) Contract Size: $2 (Two pesos 00/100)) multiplied by the S&P/BMV IPC Value. Delivery Months: Quarterly : March, June, September, December up to one year. Trading Symbol: MIP Quotation: S&P/BMV IPC Index Points. Tick: 10 Points. Tick Value: $20 Pesos Tick Ratio/ Fee: 1.25 times Initial Margin: $7,700.00 Pesos Opposite Margin: $2,360.00 Pesos Trading Hours: 7:30 to 15:00 hours Last Trading Day: Third Friday of the maturity month or the previous business if such Friday is a non-business day. Maturity date: Third Friday of the maturity month or the previous business if such Friday is a non-business day. Settlement: Next business day after maturity date. Bloomberg MIPA CT Reuters MXN/FUTEX1 0#MIP: www.mexder.com.mx 22 Mini S&P/BMV IPC Futures Contract

2017 2018

Average Traded Volume 638 85 www.mexder.com.mx 23 Benefits

. Lower transactional costs compared to the cash market. . Leverage benefits and lower capital consumption. . Optimal and efficient way to take short positions. . Hedging accuracy due to the contract’s size. . High liquidity and arbitrage opportunities between the Future and the Naftrac (ETF) . CFTC approved . Attractive product for FCM’s and clients www.mexder.com.mx 24 10-Year M Bond Futures Contract (DC24 )

www.mexder.com.mx 25 Underlying asset specifications

. The Federal Government Development Bond M241205 is the most liquid bond in the market (about 25% of the total daily volume).

. It is the main Government rate benchmark for the 10 years node.

. Highly demanded by both local and foreign investors.

. Due to its credit rate and performance, it has an International Investors holding of about 50%.

. The DC24 Future is a Bond Forward, without Deliverable basket

www.mexder.com.mx 26 Specifications

Underlying: Bond M241205 Contract Size: 1,000 Bonds = $100,000 pesos. Delivery Months: Quarterly, up to one year Trading Symbol: DC24 Quotation: Bond Futures Price using ‘Dirty Price’ Tick: 0.025 Pesos Tick Value: $0.025 Pesos Tick Ratio/ Fee: 3.75 times Initial Margin: $ 3,710.00 pesos Opposite Margin: $ 640.00 pesos Trading Hours: 7:30 a 14:00 hours. Last Trading Day: Third business day preceding the Maturity Date (of the delivery month) Maturity date: The last business day of the month (of the series) Settlement: Physical Delivery of M241205 Bond Bloomberg DCYACT Reuters MXN/FUTEX1 0#DC24: www.mexder.com.mx 27 Underlying Comparison

Bond Liquidity, Average Daily Amount and Foreign Investment on Cash Bonds (Million pesos) last 3 months

Average Traded Volume

2017 2018

2,170 1,494

www.mexder.com.mx 28 Benefits

• Ideal instrument for Institutional Investors, to optimize portfolios that are looking for exposure in the Mexican Bond market. • Easiest way to take short positions. • Easy to quote: • Tick Size= 0.05 basis points(approximately). • The Future Price/Future rate equivalence is maintained- • Example: For DC16 – 124.40 will always be equal to 6. 17% • No Deliverable basket: • No Cheapest to Deliver change risk. • At all times the buyer will know which bond will be received at maturity. • Important margin optimization, which allows capital use efficiently.

www.mexder.com.mx 29 Benefits

• Perfect hedging between Cash market and Futures market: • Same sensitivity • Hedging Ratio 1:1 • Knowing the Futures contract price it is easy to learn the underlying future interest rate. • Facility to list other Specific Future Bonds. • Cash Bond Market complement . • Block Trades • Incentives and trading volume discounts for Market Makers.

Who can trade it? Banks, Brokerage Firms, Institutional clients, locals y foreigners. www.mexder.com.mx 30 M Bonds

www.mexder.com.mx 31 Specifications

Underlying: Federal Government Development Bonds Contract Size: 1,000 Bonds = $100,000 pesos. Delivery Months: Quarterly, up to three years Trading Symbol: M3/M10/M20/M30 Quotation: Bond Futures Price using ‘Dirty Price’ Tick: 0.025 Pesos Tick Value: $25 Pesos Initial Margin: From $1,310.00 to $6,870.00 pesos. Opposite Margin: From $320.00 to $1,000.00 pesos. Trading Hours: 7:30 a 14:00 hours. Last Trading Day: Third business day preceding the Maturity Date (of the delivery month) Maturity date: The last business day of the month (of the series) Settlement: Physical Delivery of M Bond

www.mexder.com.mx 32 M Bonds

Annual Comparative (Millions)

• Underlying, Bonds issued by the Mexican government (BBB+). • The most actively traded securities in Mexico. • A benchmark for Mexican domestic interest rates. • Most efficient way to hedge short positions. www.mexder.com.mx 33 TIIE Swap

www.mexder.com.mx 34 Underlying

This Swap is an arrangement where by two parties enter into an agreement to exchange periodic interest payments (IRS). The Swap in MexDer as in the OTC market is referenced to the 28-day TIIE Swap diagram:

Floating Rate

Counterpart B Counterparte A Fixed Rate MexDer’s SWAP replicates this payment scheme

Fixed rate funds Floating rate funds

www.mexder.com.mx 35 Specifications

Underlying: Interbank Equilibrium Interest Rate (TIIE28) Contract Size: $100,000 Pesos. Delivery Months: From 2 months (2x1) up to 30 years (390x1). Trading Symbol: # of Coupons of 28 days x1 Quotation: Nominal Fixed Interest Rate expressed in percentage points with four digits after the decimal point. Tick: 0.0025 of the Fixed Rate. Initial Margin: From $80 Pesos (2x1) up to $11,705 Pesos (390x1). Opposite Margin: $45 Pesos. Trading Hours: 7:30 to 15:00 hours. Maturity date: Settlement Date of the TIIE Swap Contract. Days in which the exchanges of cash flows resulting from the comparison between the Fixed Rate Settlement: and the Variable Rate will take place, established in consecutive 28 calendar day periods from the Effective Date. Bloomberg MX_n x1 CT , where “n” is # of coupons Reuters MXN/FUTEX1 MXNIRS=XD

www.mexder.com.mx 36 Benefits

• CFTC approval for “US Persons” trades. • No SEF’s needed. • No ISDA’s needed. • Transparent and anonymous market and price formation. • No Credit Risk, our Clearing House (Asigna) has a AAA* rating. • Equivalent daily valuation process for both Mexican and U.S. markets • Long and short netting positions: Valuation, margins and cash flows. • Easy management since having a single counterparty that valuates with the same curve and nets daily settlements. • No withholding tax for foreign participants and for local entities. • Block Trades available via Trading Desk in MexDer. www.mexder.com.mx 37 Benefits

• 2x1 to 390x1 tenors are always available: • Voice Services for Market Makers. • Electronic Trading for all members. • Block Trades. Block Trade reporting is available, price and amount thresholds apply. • Unwinds y Substitutions (Assignments). May be negotiated in MexDer’s Trading Desk or bilaterally to be reported as Block Trades. • Preexisting Swaps. Back-loading of preexisting OTC trades via MexDer to be cleared in Asigna will be as new trades at market value • Portfolio Compression www.mexder.com.mx 38 MexDer in the Vendors

Look up for MexDer in:

• Bloomberg: MMDD • Thomson Reuters: 0#MEXDER-MEXICO • SiBolsa - App

MexDer in the Vendors

Bloomberg Thomson Reuters MexDer General Reference MMDD MX/FUTEX1 Futures General Reference MMDF +2 MXN/FUTEX1 Options General Reference MMDO +3 MXN/OPT1 SWAPS General Reference MXN/SWAP1 MMDD 6 7 Most common Node SWAPS MXNIRS=XD VIMEX (Mexican Volatility Index) VIMEX Index VIMEX Conversion Factors MX/FACTOR1 www.mexder.com.mx 39 SiBolsa

NOW THE EXCHANGE IN YOUR HANDS

Contact:

Market Data [email protected] +52 (55) 5342 9272 www.mexder.com.mx 40 MexDer in the Vendors: Futures Contracts

Bloomberg Thomson Reuters FUTURES / U.S. Dollar DSACT 0#MXP: US. Dollar Daily Contracts DSDAILYCT 0#MXPD: Mexican Peso/ Euro BEACT 0#EURO INDEXES S&P/BMV IPC (Mexican Stock Exchange Index) ISACT 0#IPC: Mini S&P/BMV IPC Future MIPACT 0#MIP: INDIVIDUAL STOCKS SFUT MD MXN/FUTEX2 28 day TIIE (Interbank Interest Rate) DOACT 0#TII:

28 day TIIE Strip MMDD --> 4 --> 7 10 year IRS Futures Deliverable Centrally Cleared SWAP SWIACT 0#SWA10: 2 year IRS Futures Deliverable Centrally Cleared SWAP SWEACT 0#SWA02: 91 day Cetes (MXN Treasury Bill) GMACT 0#CTE: 3 year Bond in MXN (M3) MAACT 0#BN0: 10 years Bond in MXN (M10) DWACT 0#B10: Specific 10 Year M Bond (DC24) DCYACT 0#DC24: Specific 20 Year M Bond (MY31) VYBACT 0#B20: 20 year Bond in MXN (M20) VYCACT 0#B30: 30 year Bond in MXN (M30) MYOACT 0#BD31M:

www.mexder.com.mx 41 MexDer in the Vendors: Options Contracts

OPTIONS Bloomberg Thomson Reuters INDEXES S&P/BMV IPC Futures ISAOMON 0#IPC*.XD CURRENCIES Mexican Peso/ U.S. Dollar MXXOMON 0#DA*.XD INDIVIDUAL STOCKS America Móvil L AMXL MM OMON 0#AX*.XD CPO CEMEXCP MM OMON 0#CX*.XD GMéxico B GMEXICOB MM OMON <0#GM*.XD> Tlevisa CPO TLEVICPO MM OMON <0#TV*.XD> Walmex V WALMEXV MM OMON 0#WA*.XD ETF’s Naftrac 02 NAFTRAC OMON 0#NA*.XD

www.mexder.com.mx 42 Contact a Clearing Member

Diego Salles Actinver [email protected] +52 (55) 1103 6702 Aztryd Marín BBVA Bancomer [email protected] +52 (55) 5621 9370 Karla Chávez Silva Citibanamex [email protected] +52 (55) 2262 3879 Patricio de la Vega GBM [email protected] +52 (55) 5480 5815 Guillermo Ochoa Santander [email protected] +52 (55) 5269 8764 Guillermo Camou Scotiabank [email protected] +52 (55) 9179 5131

www.mexder.com.mx 43 Contact us

Laura Vázquez [email protected] +52 (55) 5342 9840

A. Gary Flagler [email protected] +1 (312) 804 1618

Aron Brener [email protected] +52 (55) 5342 9922

www.mexder.com.mx 44