Euroclear has teamed up with Mexico’s stock exchange operator to form a joint venture aimed at modernising the country’s €100bn mutual funds market.

The Brussels-based post trade group says the tie-up with Grupo BMV will boost liquidity and promote greater levels of electronic and automated processing.

Inefficiencies, costs and risks associated with the high levels of manual processing and the reliance on phones and faxes remain regular features of Mexico’s investment fund industry.

Dubbed BMV Fondos, pair’s new joint venture aims to reshape the market by connecting the 28 active fund managers with the current 70 distributor houses using standardised messaging for order routing, unit settlement and related cash movements.

Euroclear’s fund processing technology, FundSettle, is being used as part of the collaboration.

It means fund managers can simply link to BMV Fondos to access an ecosystem of distributors. Likewise, distributors will have a single point of contact to access all funds for their clients.

“Greater distribution capabilities are a key part of our strategy to attract more investors,” said José Oriol Bosch, BMV chief executive. 

“Allowing Mexican investors easier access into investment funds will improve liquidity and develop the local market."

Valerie Urbain, chief executive of Euroclear Bank, said the collaboration “strips away excess risk and cost by creating a one-stop-shop for all domestic investment fund needs”.

“There is no reason why investment fund processing should lag behind other asset classes when it comes to placing buy- or sell-orders through to final trade settlement,” said Urbain.

“As of early next year, one simple electronic order from the distributor will automatically trigger the end-to-end, delivery-versus-payment settlement process, eliminating heavy cash reconciliation and generating significant savings.”