Board Resolution No. 103/2020 Approving the Repo Operations Regulation

BOARD RESOLUTION No. 103/2020
SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVES THE REPO OPERATIONS REGULATION HAVING SEEN:
The Political Constitution of the State of February 7, 2009.
Law No. 1670 of the Central Bank of Bolivia (BCB) of October 31, 1995.
Law No. 1834 of the Securities Market of March 31, 1998.
Law No. 1883 of Insurance of the Plurinational State of Bolivia of June 25, 1998, modified by Laws No. 365 of April 23, 2013 and No. 737 of September 21, 2015.
Law No. 393 of Financial Services of August 21, 2013.
Supreme Decree No. 71 of April 9, 2009.
The BCB Statute approved via Board Resolution No. 128/2005 of October 21, 2005 and its subsequent modifications.
The Open Market Operations Regulation approved via Board Resolution No. 149/2015 of August 25, 2015 and its subsequent modifications.
The Open Market Operations Regulation for Monetary Regulation Purposes with Securities Issued by the Central Bank of Bolivia or by the General Treasury of the Nation, approved via Board Resolution No. 150/2015 of August 25, 2015 and its subsequent modifications.
The Repo Operations Regulation approved via Board Resolution No. 130/2003 of November 11, 2003.
Report BCB-GOM-SOMA-INF-2020-65 of September 28, 2020, from the Monetary Operations Management.
Report BCB-GAL-SANO-DLBCI-INF-2020-97 of September 28, 2020, from the Legal Affairs Management.

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CONSIDERING:
That the Political Constitution of the State in its articles 327 and 328 determines that the BCB has the function of maintaining the stability of the internal purchasing power of the currency to contribute to economic and social development and that among its attributes in coordination with the economic policy determined by the Executive Branch, in addition to those indicated by law, it has that of determining and executing monetary policy. That Law No. 1670 in its article 3 provides that the BCB formulates policies of general application in monetary matters for the fulfillment of its object, for which through article 6 the BCB is empowered to execute monetary policy and regulate the quantity of money and the volume of credit according to its monetary program, being able to this effect, issue, place and acquire securities and carry out other open market operations, such as all those repo operations. That the cited Law, in paragraphs d) and o) of its article 54 determines that the Board has the attributes of dictating the norms for the open market operations carried out by the BCB and approving, modifying and interpreting the Statute and Regulations of the BCB, by two thirds of votes of the totality of its members, without need of any additional administrative act. That Law No. 1834 in its article 3 defines as over-the-counter market that which is carried out outside the stock exchanges, with the participation of authorized intermediaries, with securities registered in the Securities Market Registry and authorized by the Securities Superintendence currently Financial System Supervision Authority (ASFI). That Law No. 1883 in its article 41 determines that the Pension and Insurance Supervision and Control Authority is the body that supervises and controls the persons, entities and activities of the insurance sector of the Plurinational State of Bolivia. That Law No. 393 in its article 5, paragraph III provides that the BCB will be governed by its own provisions. Likewise, in its article 16 it determines that ASFI has the object of regulating, controlling and supervising financial services within the framework of the Political Constitution of the State, this Law and the regulatory Supreme Decrees, as well as the activity of the securities market, intermediaries and auxiliary entities thereof. That Supreme Decree No. 71 in its article 34 determines that the attributes, competencies, rights and obligations in pension matters of the Superintendence of Pensions, Securities and Insurance, established in current regulations, will be assumed by the Social Control and Supervision Authority of Pensions and in matters of securities and insurance of the Superintendence of Pensions, Securities and Insurance, established in current regulations, will be assumed by ASFI.

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That the BCB Statute, in numbers 4) and 29) of article 11 of the BCB Statute, the Board of Directors of the BCB is empowered to dictating the norms for the open market operations carried out by the BCB and approve the Regulations of the BCB, by two thirds of votes of the totality of its members, without need of additional administrative act. That the Open Market Operations Regulation in its article 4 indicates that the Board of Directors of the BCB defines monetary policies in general and open market operations policies in particular. Likewise, in its article 14, number II, it indicates that operations in the secondary market can be carried out with any security issued by the TGN, the BCB or with securities of private issuers expressly authorized by the Board of Directors of the BCB, through repo operations and others authorized. That the Open Market Operations Regulation for Monetary Regulation Purposes with Securities Issued by the BCB or by the General Treasury of the Nation (TGN) in its article 6 establishes among the attributes of the Open Market Operations Committee to define the form of issuance, the rates or cut-off prices, the quantities offered, the terms, the currencies, the minimum and/or maximum amounts and other characteristics of the securities for the operations authorized by the Board. CONSIDERING:
That Report BCB-GOM-SOMA-INF-2020-65 from the Monetary Operations Management, indicates that since the approval of the Repo Operations Regulation through Board Resolution No. 130/2003, the repo operations carried out by the BCB suffered various modifications in their operation, so it is necessary to replace the current Regulation with a new one that has a broader character, so it recommends approving the Repo Operations Regulation. That Report BCB-GAL-SANO-DLBCI-INF-2020-97 from the Legal Affairs Management, concludes that within the framework of what is indicated in Report BCB-GOM-SOMA-INF-2020-65, the proposal of a new Repo Operations Regulation elaborated by the GOM, does not contravene the legal order, being therefore legally procedent and corresponding to the Board of Directors of the BCB to consider its approval in accordance with what is established in paragraphs d) and o) of article 54 of Law No. 1670 and numbers 4) and 29) of article 11 of the Statute of the Issuing Entity. That by virtue of the attributes conferred by paragraphs d) and o) of article 54 of Law No. 1670 and numbers 4) and 29) of article 11 of the BCB Statute, the Board of Directors of the BCB is empowered to dictating the norms for the open market operations carried out by the BCB and approve the Regulations of the BCB, by two thirds of votes of the totality of its members, without need of additional administrative act.

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THEREFORE,
THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:
Article 1.- To approve the Repo Operations Regulation which in annex forms part of this Resolution, which will enter into force from the date of its approval.
Article 2.- To render without effect from the approval of this Resolution, the Repo Operations Regulation approved via Board Resolution No. 130/2003 of November 11, 2003.
Article 3.- The Presidency and the General Management are entrusted with the execution and compliance of this Resolution.
La Paz, September 29, 2020
Signed: Armando Pinell Siles
Signed: Walter Morales Carrasco Signed: Alejandro Banegas Rivero Signed: José Gabriel Espinoza Yañez ________________________

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ANNEX
REPO OPERATIONS REGULATION
CHAPTER I
GENERAL PROVISIONS
Article 1. (Object). This Regulation has the object of norming the Repo Operations carried out by the Central Bank of Bolivia (OR-BCB) with entities that make up and participate in the Financial System.
Article 2. (Definition). An OR-BCB consists of the sale carried out by an agent (repoed), at a certain price (outbound value) calculated on the basis of unit values, of securities issued by the BCB, the TGN and/or securities of private issuers, to a second agent (repoer), with the commitment of the repoed to repurchase the securities, or others equivalent, in a term and at a price (return value) pre-established on the date of the transaction. The date of the repurchase may not be later than the expiration date of the repoed security.
Article 3. (Calculation of the Unit Return Value). The unit return value must incorporate a premium rate in benefit of the repoer, according to what is determined with the following formula:
VUV = VUI [1 + TP * PL / 360]
Where:
VUV = Unit return value of the repo;
VUI = Unit outbound value of the repo;
TP = Premium rate; and
PL = Term of the repo operation in days.
Article 4. (Eligible Entities). I. The entities that are regulated by the Financial System Supervision Authority (ASFI) or the Pension and Insurance Supervision Authority (APS) are enabled to carry out OR-BCB, prior compliance with what is determined in Chapter III of this Regulation.
II. The Open Market Operations Committee (COMA) will determine the modality of participation of these entities.
III. In all cases, the settlement of the operations must be carried out exclusively in the Current Account and/or Reserve Account that the financial entities possess in the BCB, in the hours that it determines.

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Article 5. (Modalities of OR-BCB). I. The BCB may act in OR-BCB as repoed or repoer.
II. The OR-BCB is denominated direct when the BCB is the repoer and reverse when it acts as repoed.
III. OR-BCB are carried out indistinctly in any currency authorized by COMA, being able to execute the operation in a currency different from that of the security (crossed repo).
CHAPTER II
EXECUTION, REPORTS AND CONTROL
Article 6. (Attributes of COMA). COMA applies in OR-BCB the quarterly guidelines approved by the Board of Directors of the BCB. To said effect, COMA has the following attributes:
a) Define weekly or with the periodicity it decides, global amounts, premium rate, minimum and maximum terms, currencies and all characteristics of OR-BCB, as well as the autonomous negotiation ranges that the Monetary Operations Management (GOM) must apply; b) Define, authorize and modify with the periodicity it decides, the following:
i) The specific characteristics of the securities of the BCB, of the TGN and of private issuers that can be accepted in OR-BCB; ii) The entities enabled to carry out OR-BCB, as well as the modality and additional requirements of participation, prior verification of compliance with what is established in Chapter III of this Regulation; iii) The adjudication mechanisms, competitive or not, for these operations, including their hours and other characteristics; iv) The limitation of the collaterals admitted in repos of the enabled participants, when it considers it necessary; v) The form of calculation of the unit outbound value, which may consider coverage mechanisms ("haircuts") that allow decreasing the risk of loss for the BCB of fluctuations in the market price of the repoed securities; vi) The early redemption of OR-BCB and its modality;

//7. R.D. No. 103/2020 c) Establish applicable sanctions that will be contemplated in the Operational Guide that is an integral and indissoluble part of the Electronic Auction Contract for Securities and Repos.
Article 7. (Attributes of the Execution Body). I. The GOM is the responsible body within the BCB for the execution of OR-BCB, being able to carry out the same within the autonomous negotiation ranges approved by COMA.
II. If due to situational circumstances it were necessary to carry out operations outside the approved ranges of autonomous negotiation, the GOM must obtain prior and express authorization from the President of COMA, which must be made known to COMA in its next meeting.
Article 8. (Reports to the Board). The Economic Policy Advisory is responsible for evaluating the behavior of OR-BCB and its impacts on the Monetary Program, having to present reports to the Board every quarter.
CHAPTER III
CONTRACT SUBSCRIPTION AND REQUIREMENTS
Article 9. (Contract Subscription and Requirements). I. The entities established in article 4 that wish to participate in OR-BCB must previously subscribe the Electronic Auction Contract for Securities and Repos with the BCB, which enables them to access the system provided to carry out operations remotely through electronic transactions.
II. The requirements to subscribe the Electronic Auction Contract for Securities and Repos with the BCB will be communicated via External Circular, without prejudice to other means authorized by COMA.
Article 10. (Additional Requirements). I. In the case of direct OR-BCB, the enabled entities must register, as corresponds, the securities represented by book entries repoed in favor of the BCB in the system in charge of the Securities Deposit Entity of Bolivia S.A. (EDV), or in its case, comply with the procedure that the BCB determines for repo of physical securities.
II. In the case of reverse OR-BCB, COMA may implement the same according to the guidelines for placement of securities established in the Open Market Operations Regulation.

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CHAPTER IV
OTHER PROVISIONS
Article 11. (Certification). The BCB at request of the enabled entities, will extend certifications on the OR-BCB carried out with the BCB by the requesting entity.
Article 12. (Other operational aspects). COMA may define any operational aspect not provided for within the framework of this Regulation.
Article 13. (Custody of Cartular Securities). In all cases, the cartular securities object of OR-BCB, during the validity of the operations must remain in deposit and custody of the BCB or of another entity authorized by the Issuing Entity.
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