Board Resolution No. 131/2014

BOARD RESOLUTION NO. 131/2014

SUBJECT: MONETARY OPERATIONS MANAGEMENT - APPROVES MODIFICATIONS TO THE OPEN MARKET OPERATIONS REGULATION.

HAVING SEEN:

Law No. 1670 of October 31, 1995 of the Central Bank of Bolivia (BCB) and its modifications.

Law No. 1834 of March 31, 1998 on the Securities Market and its modifications.

Law No. 1488 of April 14, 1993 on Banks and Financial Entities.

The Statute of the BCB approved by Board Resolution No. 128/2005 of October 21, 2005 and subsequent modifications.

The Open Market Operations Regulation (OMA), approved by Board Resolution No. 127/2003 of November 11, 2003 and its modifications approved by Board Resolutions No. 017/2004 of February 10, 2004, No. 070/2005 of May 24, 2005, No. 108/2007 of August 21, 2007, No. 130/2007 of October 16, 2007, No. 118/2009 of October 6, 2009, No. 094/2011 of August 2, 2011, No. 105/2011 of August 23, 2011 and No. 038/2013 of April 9, 2013.

The Report from the Monetary Operations Management BCB-GOM-SOMA-2014-87 of September 22, 2014.

The Report from the Legal Affairs Management BCB-GAL-SANO-INF-2014-425 of September 26, 2014.

CONSIDERING:

That Article 6 of Law No. 1670 empowers the BCB to execute monetary policy and regulate the amount of money and the volume of credit according to its monetary program, being able to issue, place, and acquire securities and carry out other open market operations for this purpose.

That Article 54 subsection d) of Law No. 1670 and numeral 4) of Article 11 of the BCB Statute empower the Board of Directors of the Issuing Entity to issue regulations for open market operations.

That Article 87 of Law No. 1670 establishes that within the scope of its functions as the monetary authority and, in its capacity as the government's financial agent, the BCB may carry out, under the conditions determined by its Board of Directors, the deposit, custody, registration, administration, transaction, clearing, and settlement of securities issued, guaranteed, or administered by the BCB and by the General Treasury of the Nation (TGN).

That Article 1 of Board Resolution No. 108/2007 of August 21, 2007 authorizes the sale of public securities issued by the BCB to natural and legal persons, with the exception of financial entities with a license of operation granted by the Superintendence of Banks and Financial Entities or by the Superintendence of Pensions, Securities, and Insurance.

That Article 7 of Law No. 1834 establishes that both issuances by the BCB and by the TGN are exempt from the authorization of public offering by the Superintendence of Pensions, Securities, and Insurance (SPVS), their own legal norms backing their issuance and public offering being sufficient.

That Law No. 1834 in its article 19 subsections a) and g) determines that Stock Agencies are empowered to carry out securities intermediation activities on behalf of third parties, as well as to carry out public offerings on behalf of issuers.

That article 3 numeral 2) of Law No. 1488 establishes that the issuance, discounting, or negotiation of securities and other documents representing obligations are financial intermediation activities and auxiliary services of the financial system.

That numeral 12) of article 39 of Law No. 1488 determines that banking financial entities are authorized to act as intermediaries on behalf of their clients in the subscription, placement, and purchase-sale of securities, prior to the deposit of funds.

That the last paragraph of article 39 of Law No. 1488 establishes that the activities mentioned in numeral 12) must be carried out through companies of which the entity holds the majority ownership.

That the Technical Report from the Monetary Operations Management BCB-GOM-SOMA-2014-87 concludes that in order to provide equal savings opportunities to all potential clients regardless of their time availability and the financial entity in which they have deposited their resources, it is necessary to expand the channels for the direct sale of BCB Bonds and recommends to the Board of Directors the approval of the modification of articles 12 and 13 of the Open Market Operations Regulation.

That in Report BCB-GAL-SANO-INF-2014-425, the Legal Affairs Management has no legal observations regarding the modification of articles 12 and 13 of the Monetary Operations Regulation proposed by the Monetary Operations Management, since they fall within the powers conferred upon the Issuing Entity by legal mandate, being the competence of the BCB Board of Directors to consider their approval by two-thirds of the votes of all its members, in accordance with what is established in Law No. 1670 and article 24 of the BCB Statute.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Modify article 12 of the Open Market Operations Regulation Board Resolution 127/2003 of November 11, 2003, in the following terms:

SAYS:

Article 12 (Mechanisms of Operation).

OMAs may be carried out through public auction, direct sale to natural or legal persons, creators of money desks authorized by the BCB Board of Directors.
(...)

V. Other Mechanisms. The BCB Board of Directors may authorize the execution of OMAs with mechanisms different from public auction, from money desk operations, and from direct sale.

SHOULD SAY:

"Article 12 (Mechanisms of Operation).

OMAs may be carried out through public auction, BCB money desk, direct sale to natural persons, sale through Placing Agents, direct sale of securities to natural persons through electronic means or other mechanisms authorized by the BCB Board of Directors.
(...)

V. Direct Sale of Securities to Natural Persons through Electronic Means. This is a mechanism for the placement of BCB securities to natural persons through electronic means. The conditions of this mechanism will be defined by a specific Regulation approved by the BCB Board of Directors.

BCB officials shall not acquire public securities under this mechanism.

VI. Other Mechanisms. The BCB Board of Directors may authorize the execution of OMAs with mechanisms different from public auction, from money desk operations, from direct sale to natural persons, from sale through Placing Agents, and from direct sale of securities to natural persons through electronic means."

Article 2.- Modify article 13 of the Open Market Operations Regulation Board Resolution 127/2003 of November 11, 2003, in the following terms:

SAYS:

Article 13 (Types of Operations).

The types of OMAs carried out by the BCB may be the following:

I. Primary Placement of Securities. The primary placement will be carried out with the securities issued by the BCB or placed by the BCB through the monetary regulation account. The placement or sale of securities will be carried out through public auction, money desk, direct sale to natural persons, sale through placing agents, or another mechanism defined by the Board of Directors, a public call for this purpose must be made beforehand, disseminated through written, oral, or electronic communication media. Such securities must be registered in the Securities Market Registry.
(...).

SHOULD SAY:

"Article 13 (Types of Operations).

The types of OMAs carried out by the BCB may be the following:

I. Primary Placement of Securities. The primary placement will be carried out with the securities issued by the BCB or placed by the BCB through the monetary regulation account. The placement or sale of securities will be carried out through public auction, money desk, direct sale to natural persons, sale through placing agents, direct sale of securities to natural persons through electronic means, or another mechanism defined by the Board of Directors, a public call for this purpose must be made beforehand, disseminated through written, oral, or electronic communication media. Such securities must be registered in the Securities Market Registry."

Article 3.- The modifications established in this Resolution will enter into force from the date of its approval.

Article 4.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, September 30, 2014