Profit & Loss sat down with Javier Alvarado, Monex Casa de Bolsa CEO, and Eduardo Gomez, Subdirector of Operations for FX at Monex, to discuss the group’s acceptance by CLS as the first Mexican member firm.
Profit & Loss: Can you give me a brief history of Monex?
Javier Alvarado: Monex started 32 years ago and has evolved from a very small FX house into a bank with the biggest international payments for private companies in Mexico. Monex is a public company that has close to 20% market share of international private payments in Mexico, with a base of close to 70,000 active customers around the world, 45,000 of which are private corporates and companies in Mexico. Our FX business has nationwide coverage and presence in key international markets, with a network that includes offices in 35 cities in Mexico, plus London, Washington, New York, Los Angeles, Houston, San Antonio, Toronto, Amsterdam and Madrid. The group has diversified both geographically and in other products. While 10 years ago as much as 84% of our total revenues were coming from the domestic FX business, it only represents 40% of our current business.
P&L: I understand Monex has been accepted as the first Mexican member of CLS. How do you anticipate Monex benefiting from the CLS membership?
JA: Joining CLS is very good news for us – it's going to help us substantially, not only in our liquidity management, but also in terms of settlement management.
Eduardo Gomez: This should be a very important step for Monex since it will allow us to increase our operational efficiency and therefore the possibility to offer a better service to our clients and counterparties, as well as to have more liquidity. We operate as a regulated entity with best practices in terms of AML and KYC and we believe our inclusion as the first Latin American commercial bank which participates as a direct member of CLS is going to open up many more possibilities to deal with other counterparties, not only in the US and Europe, but also around the world. We are one of the largest FX providers in Latin America, and the largest in Mexico, so this is very important for us. If we're good enough for CLS, we should be good enough or many other counterparties.
P&L: Tell me about your ambitions beyond Mexico.
JA: Close to 30% of our total revenue comes from our international operations and we want to grow this, because we are not only leaders in Mexico, we are competing face-to-face with some of the main providers in London, where we do FX and derivatives. We would also like to expand our payments operations in the US. Monex is the main provider of payments in Mexico, so this should be a natural extension.
P&L: I understand you will also be working with 360T?
JA: Yes – we will be using their solution as aggregator for our trading desks, and we may consider white labelling their platform in the future. We are trying to expand both the number of counterparties we deal with and the ways in which we trade with them, so we have partnered with 360T because we want to move from the traditional voice/manual trading towards electronic platforms and aggregators and be pioneers in Mexico in this area. Eduardo is going to be leading the electronic trading project for Monex. We are already using 360T, but we want to expand our operations with them as a strategic partner. 360T will enable us to distribute our pricing domestically and internationally while enabling Monex to access global liquidity, using their innovative eFX trading, aggregation, smart order routing and credit mitigation capabilities.
P&L: Banxico started an FX Committee last September, and I understand that much of its early work is focusing on the FX Global Code of Conduct. Is Monex involved in this?
JA: We are members of the Mexican FX committee and have expressed our intention to adhere to the Code. In May, we'll officially adhere to the Code once our Board approves it. We are strong believers in the Code of Conduct and we are working with banks and other market participants in Mexico helping to implement it.
P&L: This is unrelated, but is Monex involved in bitcoin at all?
JA: Monex is an investor in Bitso, which is a bitcoin company in Mexico,
P&L: Any additional comments about the FX market?
Mexico is a very competitive market in terms of FX, it's an open economy with a free exchange rate regime and a very liquid FX market, in which most people in general are very aware of the price of the US dollar in terms of pesos. So, this is a market with great potential for international participants that will keep growing during the following years.