Banco Central de Bolivia

Directorio

BOARD RESOLUTION NO. 149/2015

SUBJECT: MONETARY OPERATIONS MANAGEMENT - APPROVAL OF THE OPEN MARKET OPERATIONS REGULATION

VIEWED:

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

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

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

The Open Market Operations Regulation, approved by B.R. No. 127/2003 of November 11, 2003 and modified by B.R. No. 017/2004 of February 10, 2004, B.R. No. 070/2005 of May 24, 2005, B.R. No. 108/2007 of August 21, 2007, B.R. No. 130/2007 of October 16, 2007, B.R. 118/2009 of October 6, 2009, B.R. No. 94/2001 of August 2, 2011, B.R. No. 105/2011 of August 23, 2011, B.R. No. 038/2013 of April 9, 2013 and B.R. No. 131/2014 of September 30, 2014.

Report BCB-GOM-SOMA-INF-2015-45 of August 18, 2015, from the Monetary Operations Management.

Report BCB-GAL-SANO-INF-2015-323 of August 21, 2015, from the Legal Affairs Management.

CONSIDERING:

That Article 6 of Law No. 1670 empowers the BCB to execute monetary policy and regulate the quantity 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 in virtue of the attributions conferred by subsections a), d) and o) of Article 54 of Law No. 1670 and numerals 1), 4) and 29) of Article 11 of the BCB Statute, the BCB Board is empowered to issue norms and adopt general decisions so that the BCB fulfills the functions, competencies and powers assigned by Law, as well as to issue norms for the open market operations carried out by the BCB and approve the BCB Regulations, by two-thirds of the votes of all its members.

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

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That the Report BCB-GOM-SOMA-INF-2015-45 of the Monetary Operations Management (GOM), recommends replacing the current Open Market Operations Regulation with a new one that has a broader and more flexible character.

That the Report BCB-GAL-SANO-INF-2015-323 of the Legal Affairs Management, establishes that there is no legal impediment for the BCB Board to approve the new Open Market Operations Regulation proposed by the GOM.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve the new Open Market Operations Regulation in its 5 Chapters and 16 articles, which will enter into force from the date of its approval.

Article 2.- Repeal, from the approval of this Resolution, the Open Market Operations Regulation, approved by Board Resolution No. 127/2003, of November 11, 2003 and its subsequent modifications.

Article 3.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, August 25, 2015

Marcelo Zabalaga Estrada

Reynaldo Yujra Segales

Abraham Pérez Alandia

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Ronald Polo Rivero

Sergio Velarde Vera

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ANNEX

OPEN MARKET OPERATIONS REGULATION

CHAPTER I

OBJECT AND SCOPE OF THE REGULATION

Article 1 (Object).-

This Regulation aims to establish the norms for Open Market Operations (OMA) carried out by the Central Bank of Bolivia (BCB) with financial entities, natural persons and other entities authorized by the BCB Board, in compliance with its functions as a monetary authority.

Article 2 (Definition of OMA).-

They are operations with securities carried out by the BCB on its own account, with monetary policy objectives, in the primary and/or secondary market. These consist of the purchase, sale, repurchase or other securities operations carried out through the operation mechanisms authorized by the BCB Board, described in Article 13 of this Regulation.

Article 3 (Characteristics of Securities).-

The securities covered by this regulation are the Letters and Bonds of the BCB, the Certificates of Deposit and other securities authorized and issued by the BCB or other securities issued by the TGN. In case they are issued by the TGN, their characteristics will be determined jointly between the TGN and the BCB.

These securities will be awarded by the BCB through Public Auction, Money Desk or other mechanism authorized by the BCB Board.

CHAPTER II

POLICIES AND OBJECTIVE

Article 4 (Definition of Policies).-

The BCB Board defines monetary policies in general and open market operations policies in particular.

At the beginning of each quarter, the Board will define general guidelines for the OMA taking into account the recommendations of the Economic Policy Advisory.

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Article 5 (Objective of OMA).-

The main objective of the OMA is the fulfillment of monetary policy.

CHAPTER III

AREAS RESPONSIBLE FOR EXECUTION, EVALUATION AND CONTROL

Article 6 (Open Market Operations Committee).-

The Open Market Operations Committee (COMA), constituted in the manner established by the BCB Statute, has the function of applying the policies and guidelines approved by the BCB Board regarding the OMA. The attributions of the COMA are defined in a specific regulation.

Article 7 (Application of OMA Policies).-

With the periodicity decided by the COMA, it will determine the securities to be traded, their amounts, rates or prices, negotiation modality and other characteristics based on the analysis of the market liquidity situation and the fulfillment of monetary policy targets and OMA guidelines defined by the Board.

Exceptionally, the COMA may modify the weekly supply of securities with respect to the guidelines approved by the Board, being able to include surpluses on the weekly supply of securities that may be generated by amounts sent to the money desk.

The president of the COMA must inform in writing at the next Board meeting the reasons for that decision.

Whenever the set of COMA actions differs from the quarterly limit approved by the Board, the new limit must be submitted for consideration by this instance.

Article 8 (Resolution of Unforeseen Operational Aspects).-

The COMA may resolve any operational aspect not foreseen in this Regulation.

Article 9 (Area responsible for Execution).-

Subject to the determinations of the COMA, the Monetary Operations Management (GOM) of the BCB is responsible for the execution of the OMA in the BCB and for the formulation of recommendations on securities, amounts, terms, rates or prices and classes of OMA. The GOM may carry out daily operations, using the different types of securities, amounts, rates or prices and other modalities defined by the COMA. The GOM must present a quarterly report to the Board on the behavior of the OMA.

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Article 10 (Autonomy Margins).-

The GOM may operate autonomously within the ranges of amounts, terms and rates or prices approved for that purpose by the COMA. If due to situational circumstances the GOM considers it necessary to carry out operations outside the approved ranges, it must obtain prior and express authorization from the President of the COMA, who must inform the Committee at its next meeting.

Article 11 (Area responsible for Evaluation).-

The Economic Policy Advisory is responsible for evaluating the behavior of the OMA in relation to the Monetary Program, must present a quarterly report to the Board.

Article 12 (Audit).-

The OMA are subject to Internal and External Audit. The Internal Audit Unit of the BCB must present reports to the Board according to its Annual Audit Plan.

CHAPTER IV

CHARACTERISTICS OF OPEN MARKET OPERATIONS

Article 13 (Operation Mechanisms).-

The OMA may be carried out through the operation mechanisms authorized by the BCB Board, among which are:

I. Public Auction. It is a competitive mechanism for the award of securities, issued by the BCB or the TGN, to authorized institutions. The award in auction may be carried out under the modality of explicit proposals (competitive auction) or another modality defined by the COMA with the approval of the Monetary and Exchange Policy Committee.

II. Money Desk. It is a mechanism through which the GOM carries out purchase, sale, repurchase or other operations with public securities issued by the TGN or the BCB, with authorized institutions. In the money desk, economic agents also have the possibility to redeem their public securities in advance and carry out operations and transactions with securities, under the conditions determined by the COMA.

III. Direct Sale to Natural Persons. It is a mechanism for the direct placement of securities to natural persons. The characteristics of the securities, the prices, the

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quantities offered, the minimum and maximum amounts to be placed, as well as the channels and requirements to carry out these sales, will be determined by the COMA.

The cost for Registry Maintenance in the Entity of Securities Deposits of Bolivia S.A. (EDV) of the dematerialized securities placed through this mechanism will be assumed by the BCB.

BCB public servants may not acquire public securities under this mechanism nor maintain them in case their acquisition was prior to the incorporation of the official into the BCB.

IV. Sale through Placement Agents. It is a mechanism through which authorized financial entities receive securities from the BCB to then sell them to natural persons. The conditions of this mechanism will be defined through a specific Regulation approved by the BCB Board.

The cost for Registry Maintenance in the EDV of the dematerialized securities placed through this mechanism will be assumed by the BCB.

BCB public servants may not acquire public securities under this mechanism nor maintain them in case their acquisition was prior to the incorporation of the official into the BCB.

V. Direct sale of securities to natural persons through electronic means. It is a mechanism for the placement of BCB securities to natural persons through electronic means. The conditions of this mechanism will be defined through a specific Regulation approved by the BCB Board.

The cost for Registry Maintenance in the EDV of the dematerialized securities placed through this mechanism will be assumed by the BCB.

BCB public servants may not acquire public securities under this mechanism nor maintain them in case their acquisition was prior to the incorporation of the official into the BCB.

VI. Other Mechanisms. The BCB Board may authorize the execution of the OMA with mechanisms different from those previously established.

Article 14 (Markets of Operations).-

The markets in which the BCB may participate are the following:

I. Operations with Securities in the Primary Market. Primary placement will be carried out with the securities issued by the BCB or the TGN. The issuance, placement or

Banco Central de Bolivia
Directorio

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sale of securities will be carried out through the operation mechanisms established in Article 13 of this regulation, a public call to that effect must be made previously, disseminated through at least one written communication medium or electronic means. These securities must be registered in the Securities Market Registry.

II. Operations with Securities in the Secondary Market. Operations in the secondary market can be carried out with any security issued by the TGN, the BCB or with securities from private issuers expressly authorized by the BCB Board, through repurchase operations, swaps, purchase, sale and others authorized by the BCB Board and by the COMA, when applicable.

CHAPTER V
REQUIREMENTS REQUIRED OF PARTICIPANTS

Article 15 (Requirements to participate in Auction and Money Desk).-
Financial entities with a license of operation granted by the Supervisory Authority of the Financial System or by the Supervisory and Control Authority of Pensions and Insurance may participate in public auctions and in the money desk, prior to signing the Electronic Securities and Repurchase Auction Contract. Natural persons and non-financial entities of the private sector may participate in securities auctions through authorized financial entities.

Article 16 (Requirements to participate in the mechanisms of direct sale to natural persons, sale through placement agents and direct sale of securities to natural persons through electronic means).-
Any natural person over 18 years old in the country or minors in joint operations with a person over 18 years old may participate. To participate in these mechanisms, natural persons must prove their identity with some valid document issued in the country.

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