Retail Investors to Benefit from New Mexican Mini IPC Index Futures Contract

Mexico's main financial derivatives exchange has enhanced its product offering for individual investors, the venue launches a new mini futures

Financial traders in one of South America’s largest economies will benefit from a new instrument aiming to bolster the number of retail traders investing in financial derivatives. The trading venue, the Mexican Derivatives Market (MexDer), will offer a mini version of its benchmark IPC futures contract.

MexDer has reported the launch of its new contract that aims to increase the number of retail traders. The venue stated that the underlying instrument is the IPC, which is the main Mexican stock market performance index. It is a capitalization weighted index of the 35 leading companies traded on the country’s equities bourse, the Mexican Stock Exchange.

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The new contract comes with flexible trading conditions, the IPC mini future will have an initial margin of $5,400, giving investors cost advantages in comparison to traditional cash-based instruments. Transaction costs are lower compared to those on the cash market.  As with futures, by using the mini, investors can implement a leverage strategy that maximizes returns on portfolios, as well as conduct arbitrage between the mini and the IPC Future or against the Naftrac (ETF). The mini and the future are also the most efficient options to take short positions in the capitals market.

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Mexico is one of the fastest growing economies in the Latam region, with consistent growth since the 1994 crisis, its 2014 estimates show that the country should achieve 2.99% GDP growth. Mexico is home to one of the most advanced financial markets environments in the continent, the country benefits from having close ties with leading trading venues such as the CME.

The Chicago-based exchange offered Mexican investors access to CME products via the Globex platform, the relationship was extended to offer a direct two-way arrangement with non-Mexican traders having access to the markets via the same platform.

MexDer wa established in 1998 to facilitate the growth in Mexico’s financial and capital markets. The exchange was recognized as the 33rd most liquid according to a FIA survey in 2012, the exchange has seen a slight decline in trading volumes since 2012 as the slowdown in global markets trading impacted the domestic exchange.

The Mexican Stock Exchange recently reported that its long standing CEO, Luis Téllez, was stepping down from his position, a replacement hasn’t been named and Mr. Tellez will complete his tenure until the end of 2014.

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