DCC Product Team

Mauricio Schwartzmann – Securities Country Manager

Gabriela Jimenez – Client and Market Manager

Maria Gilardi – Product Manager

Macroeconomic Overview

Source: Citibanamex

10

11

12

13

14

15

16

17

18

19

20

21

22

23

2010 2011 2012 2013 2015 2016

Exchange Rate (MXN / USD)

Feb’17

19.8302

Nov’16

Exchange rate performance Depreciation vs USD January 2017

Macroeconomic Overview

Foreign Investors Holdings

2.00

2.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00

6.50

Cetes 28 Inflation

Feb’17

6.06 Interest Rates

Feb’17

4.86

Foreign Direct Investment (US$ in Bn)

2016 2017f 2018f

GDP Growth 2.1% 1.2% 2.2%

Banxico’s Rate 5.75% 7.50% 7.50%

Inflation 3.40% 5.20% 4.20%

Exchange rate 20.50 22.70 22.10

Intl. Reserves 175 179 184

Unemployment 3.9 5.0 4.3

Forecast

0

10

20

30

40

2009 2010 2011 2012 2013 2014 2015 2016 2017f 2018f

22 22 23.7

17.8

39.2

20.7

28.4 29.6 25

27

Jan-16 Mar-16 June-16 Sept-16 Dec-16

Source: Citibanamex

Our Services

• Securities Solutions

• Direct Custody & Clearing

• Global Custody

• Securities Lending

• Account Operator

• Treasury Solutions

• MXN Peso Clearing

• CLS Clearing

• Foreign Exchange

Our Business

Custody and clearing, complemented by a wide array of products

and services, constitute an important part of our core businesses

in Mexico. Citibank Mexico was established in 1929 and on 2001

Citibank Mexico and Banco Nacional de Mexico (Banamex)

merged into a single institution, now known as Citibanamex.

Our Footprint

• DCC clearing services were locally established in 1988

• Our Market Share (Foreign Clients): 75%

• AUC’s (Foreign Clients): $350bn

Local Clients

– Pension Funds

– Insurance Companies

– Government entities

– Fund Managers / Mutual

Funds

– Corporations

Our Business (cont.)

Client Information

Citibanamex manages two client bases and offers multiples services:

Strengths

Strong market presence

Strong DCC product offering, Peso clearing and CLS Services

Robust and consistent Product and Client Services teams, operational and

technology model, delivering service and quality to all our clients

Challenges

FX and rates

Tax, KYC and compliance/ AML requirements

Competitors

Solutions Implemented

Securities Market Interface (SMI)

Link a group of transactions to settle upon reference

CitiFX Pulse

Foreign Clients

– Global Brokers

– Global Custodians

– Banks

– Financial Institutions

– Government entities

– Local Brokerage Houses

Key Highlights Summary Client Benefit

• Early Book • Clearing of all book to book transactions prior to Market

opening

• Earlier transaction clearing, notifications, liquidity and

holdings

• Shadow Posting Services for Lent

positions.

• Provide additional regular reporting for positions out on

loan

• Enhanced securities holding report supporting off-shore

Securities Lending

• Withholding Tax Process • Enhanced processing allowing same day withholding

and notification

• Tax withholding and client notification, for coupon and

dividend payments

• Reduced Proxy Voting Deadlines • Improved instructions deadline for common events, of

2 business days prior to meeting day

• Wider window for event participation

• Trade Prioritization • Capability to prioritize trades based on counterparty • Potential fails reduction

Service highlights

Key Highlights Summary Client Benefit

• CSD (Indeval) live trade status • Clients will experience an improved online trade status for

Indeval’s transactions. The new MT548 will reflect the

status of the transactions once uploaded to Indeval

• The Indeval trade status will allow the clients to monitor

the transactions’ life cycle and timely identify and fix

discrepancies

• Enhanced Income notifications • Notification’s enhancements on SWIFT messages

including tax breakdown (MT566)

• Additional and more detailed information

• Enhanced income reporting for money

market instruments

• Event notification message via an MT564 sent to holders

five days prior to Pay Date

• Improve cash flow and repatriation management

• Dividends Tax Platform • Tax platform enhancements to comply with new tax

process on dividends

• Improved reporting and withholding process

Service highlights (Cont.)

Key Highlights Summary Client Benefit

• FX Pulse • CitiFX Pulse is a global end-to-end electronic FX

solution

• Allows our clients to close their own FX using a Citi web-

based platform with features such as real-time portfolio

analysis, an integrated exposure management tool, and

automated straight-through processing directly into your

Treasury Management System (TMS). Completed 3Q’16

• Securities Market Interface (SMI) • Banamex to migrate its CSD’s interface to a global

proprietary tool - SMI

• Clients will benefit from an enhanced and new platform

with global settlement standards, more agile and flexible,

for new requirements. Completed 4Q’16

• Linked transactions • Link a group of transaction to settle upon reference • For omnibus account structures the client is able to link a

reference and manage their settlement flows. Completed

4Q 2016

Service Enhancements and Initiatives

Updates Summary

• T+2 • T+2 migration along with the US Market - Sep’17

• BIVA • New stock exchange to enter the Mexican Market – May’17

• International Quotation System (SIC) – DB • Deutsche Bank to exit SIC in 2017, Indeval expected to take over as agent

• SPID • SPID (Dollars Interbank Payment System) will allow local bank-to-bank USD

currency payments in the market – Jan’17

• Derivatives • Mandatory for local Banks and Brokers to trade and clear TIIE Swaps in

recognized markets and clearing houses for operations performed – Apr’16

Market Updates

BIVA Bolsa Institucional de Valores Mexico

• 15th economy worldwide

• Stock market:

#44 in LISTED COMPANIES

#25 in TRADED AMOUNT

#8 in OTC SECURITIES such as FX, IRS, and bonds

Why now? BIVA recognizes the historic opportunity of contributing to the country’s economy growth

• Stock exchanges’ dynamic evolution around the world

• Mexico’s lag on equities market growth

• New financial regulation

• CENCOR’s experience developing financial market infrastructure

BIVA Bolsa Institucional de Valores

BIVA’s contribution to the stock market

• BIVA has triggered regulatory changes that will modernize the Mexican stock market

• Market promotion is stimulated

• Continuous innovation in trading models (blocks and auctions)

• State of the art systems provided by Nasdaq that use world standards in connection

protocols

• Boosts the securities lending market

• New inclusive and representative indexes

• Attracting and including new and smaller companies into the public market

BIVA Bolsa Institucional de Valores

T+2 Settlement Cycle

Migration date announced by the MSE September 5, 2017

• MSE officially confirmed the migration date on February 16, 2017

• Low Corporate Action season

• Align the settlement cycle with US and Canada

• Reduce counterparty and operational risk in the market

Impacted Securities:

• Mexican and foreign equities

• Fibras (REITs) and Fibra E (Energy and Infrastructure Certificates)

• Exchange Traded Funds and Debt Exchange Traded Funds

• Equity warrants

Regulatory / Documentation changes required

• No regulatory changes are required from the CNBV for T+2 for CCV and Indeval

• Grace Period changes for fail transactions need CNBV approval

• No documentation changes have been identified

T+2 Settlement Cycle

Affected Local Market Participants

• Mexican Stock Exchange

• Central Counterparty

• Brokerage houses and banks executing trading and settlement

• Central Securities Depository Indeval

• Issuers

Corporate Actions process changes

• Corporate Actions Dates: Record Date will change to Ex-date + 1

Liquidity Considerations

• Guarantees paid to the Central Counterparty

• Market and Citi liquidity needs on Thursday September 7

Testing • Grupo Bolsa to support testing with market participants starting in July

• Citibanamex will support testing with clients upon request

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