The following is a translation of “Mercado de dinero sigue creciendo pese a tormentas por Trump,” which was published by Forbes Mexico and written by Gerardo Villafranco.
The world’s stock markets traded $ 114 trillion in 2016, compared to $ 1.4 trillion in the same period, according to MarketFactory, a firm specializing in software for financial markets. “Despite Trump, the currency market has increased. Eventually people will get used to the things they say and do and then they will not see a stronger reaction in terms of volatility, ” commented Darren Jer, CEO of MarketFactory.
The three main engines of money transaction are: foreign direct investment, international trade and speculation. “Donald Trump’s policy may affect investment, but Mexico remains a very important place for trade and manufacturing,” Jer told Reuters.
Donald Trump already affected the banks in Mexico and can be seen with the volatility that in recent months has suffered the exchange rate. “Volatility is beneficial to banks, because it generates profit. But the more time passes, that volatility is going to go, so you have to take the opportunities in time to invest, “Darren said.
Faced with the volatility of the Mexican currency, the Bank of Mexico (Banxico) used $ 1.816 million of its international reserves as of January 6, because those currencies were used for a peso intervention. “The weekly variation in the international reserve was a result of a reduction of 2,000 million dollars as a result of direct sales of dollars to the market, according to the determination of the Exchange Commission,” Banxico said.
In Mexico shares are traded in one or perhaps two markets and in the United States, perhaps in five markets. On the contrary, the currency market in more than 100 different markets, said the CEO of Market Factory.
Over the next five years, about 30 percent of consumers will proactively seek banking products through online platforms, according to a McKinsey study. “In such a fragmented market, banks need the technology to access all markets,” said Darren.
MarketFactory currently works with 15 of the world’s top 50 banks. “The Mexican peso is one of the most important currencies in the world. It is among the 10 most quoted globally, “commented the CEO of MarketFactory.
For Darren Mexico must learn that the market is dominated by trades that act in buy-sell through algorithms and that if you want to compete you must adapt the best technology that allows customers to access the best prices.
“Even though Mexican banks do all the work, the whole service does not offer a better price to its customers. Even when they do the hard work, the profits are leaving it to a fund in Chicago, “Darren said. Mexico is lagging behind in technology compared to major banks. The good thing, argues Darren, “is that the country can skip step 1 and step 2, step 1 and step 3 directly. We have to see forward in the next 10 years.”