CLS adds first Mexican pension fund as third-party participant on FX settlement service

CLS, a market infrastructure group delivering settlement, processing and data solutions, has welcomed Afore Citibanamex as its first Mexican pension fund on its payment-versus-payment (PvP) FX settlement service, CLSSettlement, as a third-party participant.

Afore Citibanamex is Mexico’s second largest pension fund and a founding organisation in the Administration System for Retirement Funds. Their participation in CLSSettlement is a strong indicator of potential growth in CLSSettlement third-party participation in the Latin America region.

Mexico, along with Canada and the US, leads the way among the 22 largest pension funds globally in terms of growth in assets under management. In 2019, Mexican pension funds managed USD237 billion, up 7.3 per cent from USD117 billion in 2009. This growth has drawn the attention of regulators. For example, the proposed revisions to Mexico’s Retirement Savings Systems Law state that FX settlement operations should use PvP where possible, demonstrating an increased focus in the region on settlement risk mitigation and the adoption of industry best practices.

By participating in CLSSettlement, Afore Citibanamex is well-positioned to adopt the FX Global Code, a set of global principles which promote the highest ethical standards and best practices for the FX market among all market participants.

Commenting on this development, Gabriela Cueva, Treasury head, Afore Citibanamex, says: “CLSSettlement will enable us to mitigate risk and increase operational efficiency. By helping us to reduce operational costs and open access to a wider pool of counterparties, our decision to join CLSSettlement as a third-party participant ultimately will create opportunities for us to grow our business.”

Alan Marquard, chief business development officer, CLS, adds: “We are delighted that Afore Citibanamex has chosen to participate in CLSSettlement. The pensions industry globally, and in Mexico specifically, is undergoing significant growth. Pension fund managers are becoming increasingly aware of the growth in settlement-related risk and are using CLSSettlement to mitigate this risk, while at the same time benefitting from enhanced operational efficiencies.”