Bolsa Mexicana De Valores

From TIIE28 to Funding Rate TIIE New rate for debt and derivatives markets

What is the Funding rate TIIE?

The Funding Rate TIIE (Tasa de Interés Interbancaria de Equilibrio) is a new reference rate for the Mexican debt and derivatives markets. It is calculated as the average of the rates at which banks lend to each other overnight secured by Mexican government bonds. The Funding Rate TIIE was introduced on January 1, 2023, and is intended to replace the TIIE28 as the benchmark rate for these markets.

Why was the Funding Rate TIIE created?

The Funding Rate TIIE was created in response to a number of concerns about the TIIE28. First, the TIIE28 is calculated using a panel of banks that is not representative of the entire Mexican banking system. This can lead to the TIIE28 being biased towards the rates at which large banks lend to each other. Second, the TIIE28 is calculated using a methodology that is not transparent. This makes it difficult for market participants to understand how the TIIE28 is determined. Third, the TIIE28 is not aligned with international best practices for reference rates. This can make it difficult for Mexican market participants to participate in global markets.

How is the Funding Rate TIIE calculated?

The Funding Rate TIIE is calculated using a broad panel of banks that is representative of the Mexican banking system. The methodology used to calculate the Funding Rate TIIE is transparent and is based on international best practices. The Funding Rate TIIE is published daily by the Mexican Central Bank.

What are the benefits of the Funding Rate TIIE?

The Funding Rate TIIE has a number of benefits over the TIIE28. First, the Funding Rate TIIE is more representative of the Mexican banking system. This makes it a more reliable benchmark for the Mexican debt and derivatives markets. Second, the Funding Rate TIIE is calculated using a transparent methodology. This makes it easier for market participants to understand how the Funding Rate TIIE is determined. Third, the Funding Rate TIIE is aligned with international best practices. This makes it easier for Mexican market participants to participate in global markets.