(Bloomberg) -- New rules allowing for simplified issuance of equity and debt by smaller companies in Mexico are paving the way for a revival of the local securities markets, officials from the government and the local exchanges said on Thursday.
Most Read from Bloomberg
The long-awaited publication of secondary regulations to flesh out a reform passed in late 2023 is driving anticipation of more listings in the market, said Jorge Alegria, head of the Bolsa Mexicana de Valores at an event in Mexico City on Thursday. More than 900 people participated in a webinar on the new framework this week, and executives from 80 companies are taking a course to take advantage of the new regulations, he added.
“There is a lot of interest,” he said. “We must take advantage of this inertia.”
The new framework is part of effort to reinvigorate Mexican capital markets, where it’s been some six years since the last major initial public offering by a company. Discount retailer BBB Foods Inc. opted for an IPO in the US last year in a bid to tap higher valuations in a more liquid market. Even before the recent issuance drought, Mexico has long trailed more dynamic capital markets in countries like Brazil and Turkey, said Alvaro Garcia Pimentel, head of the country’s brokers association AMIB.
“The size of our stock market compared to the economy is ridiculous,” he said at the event, held at the British embassy alongside market regulators and stock exchange officials. Garcia Pimentel said only around one-third of the country’s companies have access to formal bank credit, while only a tiny fraction have tapped debt and capital markets.
The new rules provide a faster process for smaller companies to list debt or stock that sidesteps a cumbersome approval process by the country’s securities regulator. Officials touted a set of handbooks on the new rules that had been funded by the British government’s program Mobilising Institutional Capital Through Listed Product Structures, also known as MOBILIST.
In addition to the stock market reform’s regulations, officials have been working on secondary rules to a separate law passed in late 2023 that creates a new framework for hedge funds operating in the country, said Gerardo Garcia, head of operations at Mexico’s Central Bank. That project also aims to help stoke more demand for local securities.