Bloomberg: Mexican Financial Leaders Brace for ETF Boom

The unprecedented global growth of Exchange-Traded Funds (ETFs) is creating new challenges and opportunities in the Mexican financial market, leading market experts said at a recent Bloomberg LP event.

More than US$39 trillion in ETFs have been traded worldwide this year, and the rapid growth in Mexico is stimulating the need for new technology, said attendees of the Bloomberg ETF Forum: Strategies and Vision for the Future in Mexico. More than 140 executives with banks, brokerage firms, pension funds and asset management funds attended the recent event.

“Today there are approximately 5,800 ETFs listed globally, with an approximate 20% compound annual growth rate,” said Juan Pablo Medina-Mora, Head of JP Morgan Asset Management-Mexico. Joining in the discussion of ETF trends in Mexico, were Ulises Castro, Portfolio Manager at Infonavit, Luis García, Head of Private Wealth at BlackRock.

Garcia said, “The past few years have been exceptional for ETFs assets under management globally. Not many industries can boost a 5x growth since 2014. That clearly speaks of the interest investors have in the vehicle.”

In Mexico, ETFs are a fast-growing investment tool for pension savings. The Mexican Retirement Saving System (SAR) has seen an increase of almost 40% of assets under management from 2019 to 2024 in Structured Instruments, namely CKDs (Development Capital Certificates) and CERPIs (Investment Project Certificates).

“Efforts to collect, standardize, and manage information, such as the one presented by Bloomberg, will be of great use for the proper oversight of the System,” said Martha Alvarez, Financial Vice President of CONSAR (National Commission for the Retirement Savings System).

There is good opportunity in Mexico for ETFs since Mexico’s young population is seeking low-cost investment alternatives, agreed the panelists discussing Trading ETFs: Challenges and Opportunities. The speakers included Benito Baez, Head of Equities at Finamex; Miguel Ruiz from ETFs Sales & Trading at Jane Street, and Thor Solanes, Equity Portfolio Manager from Principal Asset Management.

Ruiz added, “Institutional desks are increasingly adopting RFQ platforms to streamline and scale their trading workflows. These platforms can efficiently source quotes from multiple liquidity providers, making them a natural choice for traders looking to put dealers in competition. Many RFQ platforms are also enhancing their offerings with functionality to allow for more complex ETF workflows such as contingent switch trades and list trading.

One of the challenges for the development and growth of the ETFs in Mexico was a limitation to trading because of  time zones. However, it is now possible to trade at all hours because liquidity is accepted after the close of the London market.

Mexico is at a pivotal moment, said the speakers giving a macroeconomic view of the country. Possibilities for nearshoring and foreign investment Is positioning the country for significant change, said David Galarza CEO of Operadora Actinver and Juan Hernández, Head of Vanguard Latin America. This panel was moderated by Susana Zendejas, Portfolio Manager from Afore XXI.

Hernández  added, “Following the Pension Reform of 2020 which significantly improves the savings rate for the workers in the mandatory system managed by the Afores, there is still an opportunity to incentivize savings for retirement for all the people that are not contemplated in this system such as independent workers, and an automatic enrollment with opt-out scheme could be an interesting solution to consider.”

New technology can help address the challenges of the expanding ETF market, said Liza Parlatore Lopez, Bloomberg’s Business Executive for Mexico and Central America. Bloomberg has created a function on the Bloomberg Terminal called Request for Quote that gives institutional investors a fully automated trading process, and risk reduction tools.

“Bloomberg RFQE provides clients with pricing and liquidity across multi-asset ETFs with more than 100 liquidity providers. RFQE is part of Bloomberg’s comprehensive product suite that supports the entire ETF lifecycle.” Lopez said.

About Bloomberg

Bloomberg is a global leader in business and financial information, delivering trusted data, news, and insights that bring transparency, efficiency, and fairness to markets. The company helps connect influential communities across the global financial ecosystem via reliable technology solutions that enable our customers to make more informed decisions and foster better collaboration. For more information, visit Bloomberg.com/company 

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This news is available in Spanish.