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About MAE: Our history
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MAE as an Entity
M.A.E. - Mercado Abierto Electrónico S.A. - is the most important electronic securities and foreign-currency trading market in Argentina. It is based on a modular electronic platform running on specific IT supports, where both government and private fixed-income securities, foreign currencies and swaps are transacted, as well as currency and interest rate futures. In addition, this technological support is used to trade bills of exchange and bonds issued by Banco Central de la República Argentina (BCRA - Argentine Central Bank) and for the initial public offering of bonds issued by the National State.
This electronic environment has been set up considering market demands. Thanks to the latest technological advances, the traditional auction market system that brought security market transaction practices into context has nowadays turned into a virtual trading field that lets brokers perform their electronic transactions from different geographic sites, with absolute security and effectiveness, through the use of dedicated software.
As historical background, Mercado Abierto de Títulos Valores (the Open Securities Market) started its development in 1970, after the enactment of Law 17,811, and commenced to do business at mid-decade. However, it is only since 1980 when its operations expanded remarkably, reaching a broker count in excess of 450.
Then, in line with worldwide trends at that time, when the first electronic tools were already in use as a natural means to carry out transactions, Comisión Nacional de Valores (CNV for its acronym in Spanish)(the National Securities Commission) started to anticipate the obligation to use IT means as a transaction tool. To such end, the creation of a corporation that would operate as an electronic field to carry out over-the-counter transactions was promoted, through the enactment of Resolution No. 121 in 1988.
Such resolution stated that all brokers-dealers operating in the Market should be interconnected through an electronic system to carry out their transactions. That is how MAE was born.
MAE's Institutional Features
MAE started to operate in 1989. Thus, it has more than 18 years' experience in the field of electronic financial transactions.
At present, MAE is a self-regulated entity supervised by the National Securities Commission under the legal framework of General Resolution No. 9934 dated February 26, 1993, which set forth self-regulation attributes as from March of that same year.
MAE is composed by, among others, Private Banks with domestic capital, Foreign Banks, National Banks, Provincial Banks, Municipal Banks, Cooperative Banks, Financial Companies, Exchange Offices and individual Brokers.
Objectives:
MAE, in addition to complying with the rules in force regarding the use of information technology, and following the spirit of Resolution 121 by the National Securities Commission, from the beginning has set certain objectives that guide its activities:
- Reducing the risks of each transaction.
- Improving and making price information more transparent.
- Confirming and recording all daily transactions.
- Offering both the general public and brokers the best information available on prices and market volumes.
Main Products Traded:
With the coming years, MAE has added a wide variety of products to its transactional structure, with instruments and assets that need to have the public offer authority granted by the CNV and/or that of the competent regulatory authority.
The main products traded are:
- Government Bonds
- Fixed-Income Private Securities (Corporate Notes and other)
- Bills of Exchange and Notes issued by BCRA (LEBACs and NOBACs)
- Provincial and Municipal Bonds
- Financial trusts and closed investment funds certificates.
- Foreign currencies
- Currency of legal tender under "Call Money" trading conditions.
- Repurchase Agreement (Repos) with government bonds, LEBACs and NOBACs.
- Derivatives of foreign currency and interest rate (OCT).
- Interest rate swaps.
Transaction "settlement" is made after 72 hours, through ARGENCLEAR, an organization focused on settling and clearing all the transactions made in our Market. In the case of currency, interest rate and indices futures transactions, as well as swap transactions, the daily Mark to Market (MTM) and final fixing is made by MAE on the accounts held with BCRA, transacting with the rest of the parties involved through BCRA's MEP (Payment Means).
MAE Products Description
MAE's structure supports different transactions in accordance with the needs of the brokers involved, the public doing business in the market and the securities transacted.
To such end, MAE offers many possibilities adjusted to brokers' and investors' needs.
MAE - FIXED INCOME
This name encompasses purchase and sale transactions of government and private bonds, both cash and forward.
The trading hours range from 9.30 a.m. to 6 p.m. and the participants - MAE's brokers - may arrange their transactions through the usual telephone trading modality and/or by screen, using, in this case, the Virtual Trading Sessions enabled with a wide range of trading schedules, which include spot cash transactions, 24hs and 72hs and also forward transactions with minimum schedules of 30 days and without a maximum schedule.
The MAE1 Session supports arranging purchase and sale transactions of government and private bonds under the "blind" modality, ensuring the price-time priority in position matching. In this field, transactions related to Institutional Investors, such as the AFJPs (Private pension funds) or MF (Mutual Funds), are traded.
On the other hand, the LECE Session supports trading purchase and sale transactions exclusively related to securities issued by BCRA (Bills of Exchange and Notes), with the eventual participation of BCRA itself as the broker.
FOREX - MAE
Forex-MAE is MAE's electronic trading environment for exchange transactions. It is linked to Argentina's electronic wholesale exchange market, mainly to the United States Dollar market.
As a result of the 2002 devaluation and after the application of a currency exchange system based on the free float of the Peso vis a vis the main currencies, MAE submitted before the Central Bank's authorities its advanced electronic platform for currency exchange transactions, which was already in use in Uruguay. Its purpose was to allow the authorities gather all major brokers-dealers in this field in a single electronic spectrum and also allow the Central Bank get involved in daily transactions, by buying and/or selling foreign currencies, in accordance with the objectives of the monetary policy.
This modality is available for MAE's members (mainly financial entities) and for all the other entities authorized by BCRA to carry our foreign exchange activities, basically foreign exchange agencies, which may use the system as MAE's associate members.
At present, it is possible to carry out transactions in United States Dollars and in Euros, with spot cash, 24 and 48 hs trading schedules, from 10.00 a.m. to 3.00 p.m.
There are two trading environments:
- Wholesale Session: to carry out transactions for an amount equal to or exceeding US$500,000 and US$10,000 fractions.
- Retail Session: To carry out transactions for an amount smaller than US$500,000 and US$10,000 fractions.
REPOS - MAE
This electronic trading environment is aimed at facilitating the arrangement of simultaneous purchase/sale and forward purchase/sale transactions (swaps) of government bonds.
In particular, in the REPO Session, under blind transaction conditions, the participants - MAE's Brokers acting in their capacity as Financial Entities authorized by BCRA and BCRA acting as a broker itself - can enter simultaneous "short" purchase and "long" sale offers of securities when they want to offer funds to the market, stating the required interest rate, or else the opposite transaction when demanding funds.
Transactions can be carried out from 10.00 a.m. to 4.00 p.m. and the applicable trading schedules are 1, 7 and 30 days over a certain set of government bonds, including those issued by BCRA, which are traded with a 10% collateral security margin, a modality that reduces the price risk. In turn, credit limits among parties operate in the same sense.
OCT - MAE
The OCT-MAE environment is designed to arrange, record and settle forward transactions on several types of underlying assets, foreign currency, rates and indices, where the trading modality implies that no delivery of the underlying asset will be carried out at the time of the settlement, but delivery will be made through payment in cash of the difference between the forward price agreed-upon for the transaction and the price of the underlying asset on the settlement date.
Initially, the transactions allowed are related to financial assets, particularly foreign currency, for their forward purchase or sale as per different preset schedules. As it usually happens with future markets, during the life of the transaction the parties undertake to settle, on a daily basis, the open positions through the "mark to market" mechanism. This process helps control price and the credit risks associated to this type of products.
Additionally, MAE has added a Warranty System between parties, which contributes to meet risk control objectives.
The Trading Session within this environment OCT1 lets offers (quantity and price) be placed for the different instruments under the "blind session" modality, and their matching ensures the price-time priority.
Trading hours are from 10 a.m. to 3.00 p.m., with trading deadlines on the last business day of each month, up to 12 months. All MAE's brokers acting as Financial Entities authorized by BCRA can transact business here. BCRA, in turn, takes part in this Session as Broker, and uses these products as a monetary policy tool.
Swaps products with the BADLAR rate and the CER rate were recently incorporated to this Trading Session.
- With Private Badlar interest rate for deposits of more than Argentinean Pesos 1 million, for 30 to 35 days (as per SISCEN-0002 or whichever replaces it) against fixed rate in Argentinean Pesos.
- With the Variation of the Reference Stabilization Coefficient (CER) (o whichever replaces it) against fixed rate in Argentinean Pesos.
RUEDA LICI
MAE in time offered the Government its state-of-the-art electronic platform, MAESOP Public Trading System, for initial public offerings of Treasury Bonds, actively used by the Ministry of Economy through the National Public Lending Office within the domestic arena.
The auctions and public offering environment called LICI SESSION was born as an upgrade of the initial MAESOP trading system. This is an environment for private and government bond IPOs, within the SIOPEL technological platform.
Both the Ministry of Economy and BCRA place their debt through this module. BCRA does it on a weekly basis (Lebac and Nobac) and the Ministry of Economy according to the needs of its agenda. Additionally, other MAE brokers have started to use the system for public offers and private debt (negotiable instruments ("obligaciones negociables") and financial trusts).
This module supports an integrated IPO by means of auctions or public offerings, the complete setup of the bidding specs, market broker viewing, entry of positions, registration start and end dates, times when the offers received are available for viewing, and their opening, sorting, analysis and award. Moreover, the system supports defining different prorating systems (with several multiples and minimum values to be prorated) and position award methods; whether there is a price floor and whether such can be modified.
MAE - CALL
Money transactions between banks are in the heart of the financial system. Within this electronic trading field, participants can arrange call money transactions in Argentinean Pesos.
MAE brokers acting as financial entities authorized by BCRA have the authority for these transactions.
Trading hours are from 10.00 a.m. to 5.00 p.m. Trading takes place through the DIN Session with the blind transaction modality and the bid-offer approach. Funds offers and demands are entered on the screen, with the indication of the required or accepted interest rate. The system supports the placement or taking of funds at 1, 7, 14, 21 and 28 days for amounts equal to or higher than AR$500 thousand. These transactions are subject to the applicable rules issued by BCRA and to any further conditions that may be provided for by MAE. Settlement risk and price risk coverage is achieved by setting up limits.
Company's Organization
Board of Directors |
Executive Committee |
Chief Executive Officer |
Operations and Markets Department
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Legal Department
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Administration and Financial Department
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Technology and Systems Department
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The Electronic System
Mercado Abierto Electrónico provides its brokers with an in-house-developed electronic trading system called SIOPEL - Electronic Trading System. This software has been designed with state-of-the-art technology and considers the markets' operating modalities. It supports remote trading of any type of product in an agile, transparent, fair and safe manner, due to the operation facilities embedded in the system's design.
According to the needs of each market, SIOPEL has several trading environments. Therefore, this product is applicable to Stock Exchanges, Financial Markets, Central Banks, Brokers and Commodity, Goods and Services Markets.
SIOPEL offers seven clearly differentiated trading methods: Electronic matching, electronic matching with price correction (Competition), Transaction Official Acknowledgement (Direct Order), Free Offer Selection with or without confirmation (No Matching - Taking), Trading, Request for Quotations, Public Auctions (Subscriptions and Tenders) and Brokerage.
As an electronic trading platform, it is designed in a modular fashion and operates on a Windows environment, which supports operation from multiple workstations. SIOPEL emulates the physical session of traditional Stock Exchanges through a trading environment that lets a large number of participants "talk to each other" electronically in order to close their transactions. In this way, the system basically provides a huge quantity of information in a
minimum of visual space, operating simplicity and minimum response times.
It has a number of competitive advantages, among which we can highlight that it is a
parameter-driven, multi-market, multi-language and multi-currency system. That is to say, it supports defining the values that regulate system behavior from a central host, and supplying services to various markets on a transparent and independent basis.
Consequently, the system manager can define the options to be used and their specific behavior. This is an optimum scenario considering the present changing times and the need to find appropriate trading environments and methodologies to develop new businesses.
Advantages of an Electronic Market
Transparency, Impartiality and Equal Footing
When a market joins the electronic arena, it obtains all the benefits provided by transaction and settlement IT systems, out of which we can highlight the transparency, impartiality and equal footing.
- An electronic market nurtures the continuous development of new functionalities aimed at improving the operations of all parties involved.
The main advantages of the electronic system regarding the operation of a given market are the following:
1.In relation to the standardization of operating procedures and methods:
- It supports flexible operations and parameter setting.
- It supports defining mnemonic codes for easier instrument individualization.
- It promotes the definition of clear market operation rules, known and accepted by all the participants.
- It promotes the definition of the trading (market) type concept, within which instruments can be sorted out in groups.
- It forces brokers to get more professional competencies in order to make the best use of the market.
- It provides additional trading methods, apart from the traditional trading session, such as the Public Auction and Brokerage, which will make market operation easier in certain scenarios.
2.In relation to market operation:
- It promotes transparency.
- It generates a framework of opportunities for all the brokers in relation to a given offer.
- It allows to trade with the best counter-offer.
- It sets a totally anonymous operating mode, automatically controlling risks through a Risk Control system.
- It favors the direct involvement of brokers from terminals located in remote points either within or without the country.
- It supports continuous operation within the necessary time schedule.
- It provides the system with security and reliability.
- It supports the construction of a 100% configurable market, which may be customized to the relevant needs.
3. In relation to the market operational control:
- It improves the possibilities to control and trace the offers entered by each broker.
- It promotes the efficiency and dynamism of the market controls to be carried out by competent authorities.
- It provides the manager with reports regarding all the events at each broker's terminal during a given time interval (offers and closings logs and credit line activity log).
- It allows, based on these reports, to quickly solve any controversy that may have resulted from the operation.
- It generates statistical data regarding each instrument's transactions.
4.In relation to automatically fixing closing prices:
- It supports the existence of a market where the official closing price of each instrument is automatically fixed in accordance with a predefined mathematical algorithm.
5.In relation to distributed information:
- It provides brokers with transparent information regarding each transaction and each offer that have entered the market, in real time.
- It supports gathering all-time information regarding the market situation of any specific instrument.
- It facilitates the access, through each broker's terminal, to a wide range of market and transaction data.
- It supports the automated linking to in-house processes of trading and/or participating entities, who, therefore, obtain online information.
6. Broker's Training in a Simulation Environment:
- It supports broker training in a simulation environment, before real market access. In this way, brokers can become fully familiar with the system, as well as emulate real market operations by carrying out transactions with all available instruments (Business Game). Besides its implementation, the environment can still be used for tests and training.
Systems Integration
PATRÓN
MAE has also developed a software product for the administrative management of the participants.
PATRÓN is an integrated management software product that supports managing from the arrangement of business to the custody events in a single application, providing a single solution for multiple purposes.
Its flexibility supports an easy setup of any instrument, allocation of cash flows, real-time position information, measuring risk exposure and optimizing business processes, thus increasing the operational efficiency and improving their yield.
It features an accounting base designed to meet markets' changing and specific needs, created for the purpose of integrating trading, administration, management and accounting registration processes.
PATRÓN through its interaction with
SIOPEL, will allow you to capture transactions, prices, products, maturity dates and any market event, even new operations defined at the central Host.
Main Institutional Agreements
International agreements date back to 1999, when the
Uruguayan Electronic Stock Exchange -
BEVSA - gained access to the use of SIOPEL under an agreement that allowed, among other aspects, the technological complementation and joint operation of the software for electronic trading.
In 2000, an important agreement was signed with the
San Pablo Stock Exchange -
BOVESPA - through which a license to use this system was granted.
Two years later (2002) Argentinian MAE,
the Chilean Electronic Stock Exchange - BEC - and the Uruguayan Electronic Stock Exchange-
BEVSA - signed a
Master Agreement for the Information and Transaction Interconnection of their respective markets.
The interconnection of the Chilean, Argentinean and Uruguayan electronic markets has always been a goal, since these markets have transactional systems that operate over an open platform that lets them interconnect their systems and servers with other markets, regardless of the distance between them and the technology used.
In January 2004, MAE signed a technological cooperation agreement with
Mercado de Valores del Litoral -
MVL - , one of the most important markets of the interior of the country. Under this agreement, the SIOPEL trading platform was installed for all of its members, thus achieving an important regional integration.
In 2005, MAE executed an agreement with the
Colombian Stock Exchange BVC - and the Republic Colombian Bank -
BRC - under which the SIOPEL platform was used in the floating and fixed income markets as from the beginning of 2006 in that country.
That same year, the
Buenos Aires Forward Market -
MATba - signed an agreement with MAE to receive the necessary hosting to use the SIOPEL system as from April 2007 for its futures and options transactions.
At the end of 2006, an agreement with the
Costa Rica National Stock Exchange -
BNVCR - was signed to use the Electronic Trading System-
SIOPEL - which supported the consolidation of several screens into one, thus speeding up transactions and providing the security that will strengthen their markets.