September 21, 1994
TO: INTERNATIONAL COMMITTEE NO. 16-94
RE: STATUS OF INVESTMENT COMPANY REFORMS IN MEXICO
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During the NAFTA negotiations, the Institute was successful
in obtaining assurance that after NAFTA was implemented, a U.S.
fund would be able to advise and distribute Mexican mutual funds
through a wholly-owned subsidiary (a mutual fund operating
company) in Mexico. Prior to NAFTA, Mexican nationals had to
control the majority interest in any mutual fund operating
company and Mexican mutual funds were not permitted to invest in
non-Mexican securities.
The Mexican government is in the process of implementing the
changes required by NAFTA. The Comision Nacional de Valores also
expects to implement a number of amendments to Mexico's mutual
fund law that were adopted in December 1993, including a removal
of the prohibition on investing in non-Mexican securities.
To assure that the changes occurring in Mexico will allow
U.S. money managers a meaningful opportunity to participate in
the Mexican mutual fund market and to obtain more information
about access to the Mexican pension management market, Institute
staff met with Mexican officials for two days in July. We also
met with representatives of the U.S. Embassy in Mexico. In our
discussions, we stressed two points: (1) that the regulations
permitting U.S. owned mutual fund operating companies not be
applied in a manner that discriminates against foreign firms, and
(2) that elimination of the "foreign content" rule be implemented
in a manner that provides Mexican mutual funds with flexibility
to invest freely in a wide range of securities.
Attached is a memorandum summarizing these discussions. We
will keep you informed of further developments.
Mary S. Podesta
Associate Counsel - International
Attachment