With an estimated population of nearly 130 million, Mexico is the most populous Spanish-speaking country in the world. Its economy, although still considered a developing one, is among the largest and strongest Latin American economies right now. It has a stable financial sector, as well as rapidly developing financial markets while the national currency, the Mexican peso (MXN) ranks eighth in the world for global liquidity behind major currencies such as the USD, EUR, JPY, and GBP.
Mexican investors can easily access the foreign exchange market as trading Forex pairs is completely legal in the country. However, most local brokers focus on giving their clients access to the equities markets rather than offering Forex trading. As an alternative, Mexican traders can register with foreign FX and CFD brokerage firms, which can operate freely in the country without a license or other type of authorization from local regulators. Still, several authorities are responsible for the Forex market oversight in Mexico, including the Central Bank.
Best Forex Brokers for United States
Overall, Mexico does not have the largest or most advanced foreign exchange market in the Americas, but Forex trading is quickly growing in popularity among local investors. In addition, the Mexican Stock Exchange, commonly known as Mexican Bolsa (BMV), is the second-largest Latin American stock exchange after the São Paulo-based B3.
Mexican Forex Legislation
Before looking at the legislation that controls and regulates the foreign exchange trade in Mexico, we should know that trading Forex is linked with relatively few restrictions. In contrast, the country has tough regulations when it comes to the securities markets and the stock exchanges, in particular. There are only two stock exchanges in Mexico, namely the Mexican Stock Exchange (BMV) and the Institutional Stock Exchange (BIVA).
The main legal framework is the Securities Market Law (Ley del Mercado de Valores), although it does not include detailed language regarding the regulation of the Forex trading in the country. The law was passed in December 2005 by the House of Representatives of Mexico and by the Senate and it came into effect soon after that upon publication in the Official Gazette of the Federation. It updated the legal framework applicable to all market participants, including stock exchanges, clearing agencies, securities depository institutions, and broker-dealer firms.
The Securities Market Law also defines the main requirements for a primary listing on the main markets/exchanges – for instance, two types of companies may be listed on the stock exchange, i.e. incorporated as a limited liability corporation (Sociedad Anónima Bursátil, SAB) or Incorporated as a more flexible limited liability corporation created to support new business and ventures (Sociedad Anónima Promotora de Inversión Bursátil, SAPIB). In addition, the law provides definitions of institutional and qualified investors.
According to the current legislation, only authorized broker-dealers established in Mexico can offer registered securities in the country. There is no such restriction when it comes to Forex trading, however. Most brokers in the country do offer access to the foreign exchange market but often, their offering is limited to just a few major currency pairs. Foreign online brokers, on the other hand, usually offer between 40 and 80 currency pairs.
Moreover, offshore brokers are not required to obtain a local license in order to accept clients from Mexico. Still, local investors are advised to always work with only licensed brokers that comply with international Forex market regulations. Usually, these are brokers registered and licensed by major regulators, including the Financial Conduct Authority in the UK or the Cypriot CySEK (Cyprus Securities and Exchange Commission).
In addition, Mexico is a participant of the Global Foreign Exchange Committee (GFEC), an international organization established in 2017 with the purpose of promoting a fair, liquid, and transparent Forex market. It includes multiple central banks, as well as private sector Forex market participants who comply with the FX Global Code, a code of conduct that lays out the good practices in the sector.
The Mexican Foreign Exchange Committee (MFXC) was founded in Mexico to promote the adoption of the Global Code and it keeps a registry of all banks and companies that commit to following the code. The public registry can be found on the website of the Central Bank of Mexico (Banco de México, abbreviated BdeM or Banxico). It includes dozens of banks, brokers and investment advisors, asset managers, insurance companies, pension funds, and e-trading platforms that are registered and licensed in Mexico.
Mexican Financial Regulators
The Central Bank of Mexico (Banxico) oversees all Forex-related activities in the country. The bank is responsible for implementing all monetary policies of the country and maintaining stability in the purchasing power of the national currency, the Mexican peso. Its main objective is to keep low and stable inflation and it manages to achieve that since the peso is currently the strongest and most stable currency in Latin America.
Another authority that supervises the finance sector in the country is the National Banking and Securities Commission or Comisión Nacional Bancaria y de Valores (CNBV). It regulates various financial institutions such as banks, financial companies, brokerages, and advisors, as well as mutual fund companies. The main function of the CNBV is monitoring but it also strengthens the preventive measures for combating organized crime and fraud. The commission also investigates any breaches of the current regulations.
Mexican Forex Payment Methods
The vast majority of online Forex brokers available to Mexican investors are fully regulated in other jurisdictions, usually in Europe, Australia, or the UK. This is why Forex traders would probably want to find a broker that accepts deposits in Mexican peso (MXN). Some of the world’s leading brokers even allow their clients to register the MXN as a base account currency. This is extremely important for those investors who want to avoid additional currency conversion fees.
Another thing to consider is the payment options offered by different online Forex brokers. In some cases, the broker would simply not be suitable for investors based in Mexico. It is important to know that although the country is home to the second-largest e-commerce and digital payments market in Latin America, most Internet users still prefer cash and cash-on-delivery options, including Oxxo. They are, however, not available for Forex trading online.
The digital payments market is clearly dominated by credit and debit cards – usually, these are Visa and Mastercard-branded cards but American Express is also found in Mexico. However, local debit cards are much more popular than credit cards – practically everyone in the country has at least one debit card by either HSBC, Banamex, Banorte, BBVA Bancomer, or Santander. Investors should know, however, that most local debit cards do not support payments in foreign currencies.
Another interesting fact is that roughly a fourth of all Mexicans have an online bank account and online banking is still not very popular. Wire transfers, on the other hand, are often offered by Forex brokers but they usually take longer to process and are associated with high fees. A great alternative to this traditional payment method is using a digital wallet. E-wallets, as they are also known, are incredibly secure and convenient, fast and cost-effective, which make them a preferred option for many people around the world.
Mexico is not an exception and here, an increasing number of online shoppers and Forex traders are opening accounts with PayPal. Other e-wallets such as Neteller and Skrill are also available although they are less popular. The Latin American digital wallet MercadoPago can also be found on the websites of certain Forex brokers. Originating in Argentina, this service is rapidly growing in Central and South America and can be used from mobile devices, as well.
Popular Trading Software in Mexico
To trade in the foreign exchange market, investors need to use the professional services of a Forex broker but also of suitable trading software. The good software platform should come with all the features a trader would want, based on his or her level of experience and understanding of the Forex market. This would include good charting capabilities, a great number of technical indicators, fast performance, position management, a non-stop financial news feed, etc.
Of course, traders interested in Forex should look for platforms that give them access to a huge number of major and minor currency pairs. For instance, software systems designed for stock trading usually offer only a handful of Forex pairs. There are, on the other hand, platforms that were specifically made to cater to Forex traders – there, you can usually trade up to 90 pairs, including the most exotic ones. Last, but not least, Mexican traders should look for a platform that is available in Spanish.
Many of the leading Forex brokers online offer their clients proprietary software. This may be a great idea since most systems of this type come with tons of useful options and functionalities. The majority of traders, however, prefer more standard options, namely the platform called MetaTrader 4 or MT4. Released 15 years ago by Russian developer MetaQuotes Software, MT4 has become the most widely used Forex trading system in the world – over 90% of all Forex traders have MT4 accounts. The platform has three trade execution modes, including Instant Execution, 30 built-in indicators, trading robots, advanced trading operations, and copy trading.
MetaTrader 5 is another powerful platform by the same company but it was designed for trading stocks, futures, and other instruments, along with Forex pairs. It features advanced tools for technical and fundamental analysis, superior trading functions, 80 built-in technical indicators and analytical objects, and many more. Other popular types of trading software for Forex include cTrader and NinjaTrader.
Mobile Trading in Mexico
Mobile phones are not what they used to be just a decade or so ago – compared to 20 years ago, they are even more different. Rather than using them for talking with friends and family, we now use them for connecting with others, shopping, doing business or for entertainment. The rapid development in technologies has allowed us to play mobile games, stream live content and access sophisticated software on our devices.
The modern mobile technologies have been quickly revolutionizing the Forex market in the past few years, as well, and Mexico follows this global trend. More and more people access their trading accounts, deposit and withdraw funds, and open and close positions directly from their mobile devices. With Forex, a highly liquid and volatile market, the convenience and flexibility of mobile trading apps have become essential to investors. With a good, reliable trading app, they have 24/7 access to their trades, to high-quality financial news feeds and customized notifications and trading signals.
Most Forex brokers available in Mexico offer fully functional mobile trading applications for Android and iOS. To get them, investors simply need to download and install them on their devices, sign up, and start trading. Practically all trading apps can be found for free at Apple’s App Store or on Google Play. To be used for actual, live trading, however, they must be linked with live accounts – rather than a demo account, traders need to make a deposit and trade with their actual funds.