The initiative to reform the Securities Market Law (LMV) could be approved as soon as this Tuesday, April 25, after having been presented to the Senate for review and approval.
The proposal was delivered to the Committee on Finance and Public Credit of the Senate of the Republic on Wednesday, April 19, in a session in which its feasibility was discussed, revealed Ernesto Pérez Astorga, president of the Commission on Finance and Public Credit.
In order to strengthen the Mexican stock market system, we spoke with the Undersecretary of the Treasury, Gabriel Yorio, and with financial authorities to analyze and discuss the feasibility of reforming the Securities Market Law and the Investment Funds Law,” the legislator wrote. on his Twitter account.
After last week’s analysis, the expectation is that it can be approved at the meeting called for this Tuesday, April 25 in the Senate.
Among the changes contained in the reform project are creating a new simplified public offering scheme (of shares or debt) focused mainly on small and medium-sized companies. With this, we want to reduce the time, processes and costs of listing companies.
Under this proposal, the entry of medium-sized companies to public financing will be facilitated, but only institutional investors (such as Afores, investment funds, private banks, insurers) will be able to participate in these offers because they are the most “qualified” to take on this type of investment.
Today, a company can take between 6 and 12 months to complete the securities listing process and, in some cases, it can even mean more time and costs, according to Álvaro García Pimentel, president of the Mexican Association of Stock Market Institutions. (AMIB).
The initiative also proposes that Stock Investment Promotion Companies (SAPIB) no longer have the obligation to transform into Stock Market Companies. Another section refers to the issuance of different types of shares, not just common ones.
To increase liquidity in the stock market, the integration of the figure of multi-asset or specialized funds (hedge fund) is pushed.
On this last point, Senator Nuvia Mayorga Delgado said that along with the analysis of the reform of the Securities Market Law, the Investment Funds Law is also reviewed.
“This legislative project has been worked on together with all the financial authorities and related parties. We are working to improve the financial situation of the country”, added the legislator of the Parliamentary Group of the Institutional Revolutionary Party.
Financial authorities, market regulators, representatives of brokerage houses and stock exchanges, among other actors, have been working on the proposals for more than two years, as the president of the AMIB explained just last month in an interview. .
For the stock market union, if the senators authorize the proposed changes to the current legislation of the stock market, it will be one more step to promote its growth.
Under this assumption, the approval will come at a time of drought for Initial Public Offerings (IPO) in the local stock market. Since 2018 only one company has gone public in Mexico.
In contrast, at least 17 broadcasters have made the decision to leave the Stock Market. Some have finalized their delisting and others are advancing with the cancellation of the listing of their shares.
If the bill to reform the Securities Market Law is not approved at Tuesday’s meeting in the Senate, the treasury authorities could resend it again until September, in the next regular session of the Union Congress.
The meeting on Wednesday of last week was attended by María Ariza, general director of the Institutional Stock Exchange (Biva); Marcos Martínez Gavica, president of the Mexican Stock Exchange Group (BMV); as well as Efrén del Rosal Calzada, general director of the Mexican Association of Stock Market Institutions (AMIB); in addition to representatives of the National Banking and Securities Commission.
The Mexican stock market is still small, as well as shallow, with important delistings, stock market analysts in the country point out.
