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Mexico’s Movable Property Collateral Registry Jan R. Boker

Mexico’s Movable Property Collateral Registry Jan R. Boker General Director of National Commercial Regulation Ministry of Economy Financial Infrastructure Week Rio de Janeiro, March 2011. Index. The Registry Achieved Benefits ( before and after )

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Mexico’s Movable Property Collateral Registry Jan R. Boker

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  1. Mexico’sMovablePropertyCollateralRegistry Jan R. Boker General Director of National Commercial Regulation Ministry of Economy FinancialInfrastructureWeek Rio de Janeiro, March 2011

  2. Index • TheRegistry • AchievedBenefits(before and after) • Best practices adopted by the Registry • Challenges faced during its implementation • Impact (statistics) • TheFuture: Opportunities for improvement 2

  3. TheRegistry • Main purpose - financial inclusion • The Registry was designed by the Mexican Government to stimulate the use of movable property as security interest in order to increase SMEs´ access to credit. • It started operations on October 2010. • Concept - www.rug.gob.mx • 24/7 online registry where all security interests and liens over movable property are registered to gain publicity and legal effects before third parties. • Basic Transactions • Creditorsregister (modify, rectify, etc.) and cancelthesecurityinterestscreatedfortheirbenefit, obtaining-immediately- a certificatewithelectronicsignatures and time stamp. • Registrations can be searched and certifiedonlinebyanyone. 3

  4. AchievedBenefits 4

  5. Best practices adopted by the Registry • 1. Rule-baseddecisions • Mandatory and optionalfieldsaccordingtothe legal framework. • Advancedsearchenginewithdiversecriteria. • 2. Simplicity • Intuitive and simple data registration («copy-paste» method). • 3. Add-onlypolitic • Registrationsmustbemadewiththeregistrant’selectronicsignature. • Eachregistrationgets a file numberwith time stamp. • Allregistrations are allshowncronologically. • Correctionsormodificationsmustbemadevia a «rectificationregistration». • 4. CertificateIdentificationCode • SpecialsearchengineforcertificationsissedbytheRegistry. • 5. Full Connectivity • Aproximately32 M internet users. 5

  6. Challenges faced during its implementation (1/2) • A. Operation and Legal Challenges • Receivestakeholders’ input during the drafting of the Ruling. • Banks & notaries-at-law: Definition of types of security interests to be registered: • Pledges and similar securityinterestswheregrantorremains in possession of thesecutedassets. • Retentionrights and specialcreditor’sprivileges set forth in theLaw. • Special Registries: avoidance of double registry. • Resistance to change from local registry offices. 6

  7. Challenges faced during its implementation (2/2) • B. InformationTechnology(IT) Challenges • Translation of operation and legal requirements into IT requirements. • Meeting maximumsecurityrequirements. • Legacy data conversion. 7

  8. Impact (1/4) Thenumerof registrations has increasedx2.18 timesoverthesameperiod of thepreceedingyear (and x 4.25 times in Feb-11). 8

  9. Impact(2/4) 9

  10. Impact(3/4) * Notaries-at-law, federal and stateofficials and thejudiciarybranch 10

  11. Impact(4/4) Amounts in M USD. 11

  12. TheFuture: Opportunities for Improvement • 1. Clarification of security interests that can be registered vs those that cannot (for purposes of priority). • 2. Public awareness building and training, especially among judges (for purposes of foreclosure proceedings). • 3. Provide for a brief proceeding to resolve unlawful registrations in favor of the grantor of the security interest. 12

  13. Mexico’sMovablePropertyCollateralRegistry Jan R. Boker General Director of National Commercial Regulation Ministry of Economy FinancialInfrastructureWeek Rio de Janeiro, March 2011

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