MEXICO Law and Practice Contributed by: Lizette Neme, Andrea López-Malo, Shannon Reilly, Rodolfo Flores and Dunia Salum, Áurea Partners
3.2 Legacy Players’ Implementation of Solutions Introduced by Robo-Advisers Legacy players and new entrants (fintechs) are indeed integrating robo-advisory technology. Since Mexico lacks a specific “automated advisor” licence, these solutions are being implemented under their existing authorisation as an investment advisor, in accordance with the CNBV’s “General Provisions Applicable to Financial Entities and Others Providers of Investment Services”. Commonly, the implementations follow the following strategies. • Hybrid models: legacy players are deploying super apps where robo-advisory tools serve as an entry- level feature for smaller portfolios, while high net worth clients receive human-led advice supported by the same robo-advisory or the legacy infrastruc - ture. • Strategic partnership: legacy players are acquiring or partnering with established fintechs to bypass long development cycles, integrating white-label automated rebalancing and risk-profiling tools. • Infrastructure modernisation: large players are utilising machine learning to replicate the “user- centric” experience of robo-advisers, focusing on frictionless onboarding and automated “Model Portfolios” that comply with the CNBV’s General Provisions. 3.3 Issues Relating to Best Execution of Customer Trades In Mexico, the best execution of customer trades refers to the obligation of financial institutions, broker- dealers, investment advisors, robo-advisers, amongst others, to execute trades on behalf of their clients in a manner that ensures the most favourable outcome for the client, in terms of price, speed, and overall execution quality. Nevertheless, there are some issues relating to the best execution of customer trades, as set out below. • While the CNBV requires fair treatment of clients under general conduct rules, explicit best execu - tion standards are less developed but are increas -
ingly referenced in practice. This may create regulatory ambiguities and gaps. • The Mexican financial market is less liquid com - pared to more developed markets; this can cre - ate challenges in achieving the best execution of customer trades. • Broker-dealers and trading platforms may have lim - ited access to global execution venues compared to those in more developed markets. While there are both domestic exchanges ( Bolsa Mexicana de Valores (BMV) and Bolsa Institucional de Valores (BIVA)) and some international exchanges accessi - ble to Mexican brokers, these platforms may have different liquidity levels, order types, and costs associated with them. • Although a cornerstone of investor protection, the principle of best execution is increasingly strained by the rapid pace of technological innovation and persistent regulatory gaps. • The rise of automated models and algorithmic trading has introduced complexities that traditional Mexican regulations did not originally envision, often leaving authorities to rely on broad “fair treat - ment” rules rather than specific technical stand - ards. 4. Online Lenders 4.1 Differences in the Business or Regulation of Fiat Currency Loans Provided to Different Entities Under Mexican law, differences in the business and regulatory framework for fiat currency loans depend primarily on (i) the nature of the lender (regulated financial entity versus non-regulated commercial entity) and (ii) the type of borrower (individuals versus corporations). From a compliance and onboarding perspective, lending to individuals (versus businesses) allows for a simplified due diligence process in certain cases and enables the use of digital onboarding options. However, both individual and corporate onboarding are subject to a risk-based approach, and enhanced due diligence applies in higher-risk cases.
546 CHAMBERS.COM
Powered by FlippingBook