Fitch: Mexican Securities Firms Challenged by Market Volatility

MONTERREY, Mexico--()--Given their business model and relatively low diversification, Mexican securities firms are highly vulnerable to the operating environment, and their profitability could be weaker during volatile market periods, according to a new Fitch Ratings dashboard report. The report also discusses key factors affecting the credit profiles of these entities.

In Fitch's opinion, profitability among these securities firms is very sensitive to market condition due to their reliance on revenues generated by fixed income and equities trading. However, these entities have been reducing these income streams, including those originated by their proprietary positions, and increasing more stable revenues mainly by fees from asset management products.

Fitch considers that capitalization and leverage levels are adequate and aligned with the risk appetite framework and balance sheet usage of these securities firms. Repos are the main source of funding, and liquidity risk is mitigated by the access to sufficient facilities granted by banks and the high percentage of marketable securities within their portfolios.

Fitch also emphasizes that given their business model, securities firms are often exposed to operational, litigation and reputational risks. However, these companies have adequate operational risk infrastructure, are highly regulated, have been strengthening their processes and controls and have quickly adapted their technological platforms to comply with local regulations and international best practices

The 'Mexican Securities Firms Dashboard' is available on Fitch's website at 'www.fitchratings.com' or by clicking on the link.

Additional information is available on www.fitchratings.com

Mexican Securities Firms Dashboard

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=871322

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Contacts

Fitch Ratings
Alejandro Tapia
Director
+52 81 8399 9156
Fitch Mexico SA de CV
Prol. Alfonso Reyes 2612, Edificio Connexity Piso 8
Col. Del Paseo Residencial
64920 Monterrey, N.L., Mexico
or
Bertha Perez
Associate Director
+52 81 8399 9161
or
Media Relations:
Alyssa Castelli, +1 212-908-0540
alyssa.castelli@fitchratings.com

Contacts

Fitch Ratings
Alejandro Tapia
Director
+52 81 8399 9156
Fitch Mexico SA de CV
Prol. Alfonso Reyes 2612, Edificio Connexity Piso 8
Col. Del Paseo Residencial
64920 Monterrey, N.L., Mexico
or
Bertha Perez
Associate Director
+52 81 8399 9161
or
Media Relations:
Alyssa Castelli, +1 212-908-0540
alyssa.castelli@fitchratings.com