Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 165/2015

SUBJECT: MONETARY OPERATIONS MANAGEMENT - APPROVES THE REGULATION FOR THE PURCHASE OF PUBLIC AND/OR PRIVATE SECURITIES IN THE SECONDARY MARKET OF THE BOLIVIAN STOCK EXCHANGE S.A. THROUGH A BROKERAGE AGENCY

VISTOS (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 No. 128/2005 of October 21, 2005 and its subsequent modifications.
• The Open Market Operations (OMO) Regulation, approved by Board Resolution No. 149/2015 of August 25, 2015.
• 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 by Board Resolution No. 150/2015 of August 25, 2015.
• Report BCB-GOM-SOMA-INF-2015-49 of September 1, 2015, from the Monetary Operations Management.
• Report BCB-GAL-SANO-INF-2015-349 of September 1, 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 items 1), 4), and 29) of Article 11 of the BCB Statute, the BCB Board of Directors 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 vote of all its members.

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• That Article 3 of Law No. 1834 establishes that authorized intermediaries to participate in the stock and over-the-counter markets are only brokerage agencies, which may act on their own account or for third parties in said markets.
• That Article 4 of the OMO Regulation states that the BCB Board of Directors defines monetary policies in general and open market operation policies in particular. Likewise, in its Article 13, it empowers the BCB Board of Directors to authorize other mechanisms to carry out open market operations. On the other hand, item II of Article 14 states that operations in the secondary market may be carried out with securities from private issuers expressly authorized by the BCB Board of Directors.
• That Article 6 of 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 establishes among the attributions of the COMA to define the form of issuance, the cut-off rates or prices, the quantities offered, the terms, the currencies, the minimum and/or maximum amounts, and other characteristics of the securities for operations authorized by the Board.
• That Report BCB-GOM-SOMA-INF-2015-49 from the Monetary Operations Management recommends to the BCB Board of Directors approve the mechanism for the Purchase of Public and/or Private Securities in the Secondary Market of the Bolivian Stock Exchange S.A. through a Brokerage Agency, in order to provide the BCB with an attractive alternative to inject liquidity, which accompanies the set of monetary regulation measures executed.
• That Report BCB-GAL-SANO-INF-2015-349 from the Legal Affairs Management establishes that there is no legal impediment for the BCB Board of Directors to approve the mechanism for the Purchase of Public and/or Private Securities in the Secondary Market of the Bolivian Stock Exchange S.A. through a Brokerage Agency, as well as its respective regulation.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Approve the implementation of the mechanism for the Purchase of Public and/or Private Securities in the Secondary Market of the Bolivian Stock Exchange S.A. through a Brokerage Agency.

Article 2.- Approve the Regulation for the Purchase of Public and/or Private Securities in the Secondary Market of the Bolivian Stock Exchange S.A. through a Brokerage Agency, in its 4 Chapters and 9 Articles, which shall enter into force from the date of its approval.

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

La Paz, September 1, 2015

Signatures:

• Marcelo Zabala Estrada
• Reynaldo Yujra Segales
• Álvaro Rodríguez Rojas
• Abraham Pérez Alandia
• Ronald Polo Rivero
• Sergio Velarde Vera

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ANNEX

REGULATION FOR THE PURCHASE OF PUBLIC AND/OR PRIVATE SECURITIES IN THE SECONDARY MARKET OF THE BOLIVIAN STOCK EXCHANGE S.A. THROUGH A BROKERAGE AGENCY

CHAPTER I

Generalities

Article 1. (Object).- This Regulation aims to establish the conditions, procedures, and accounting operations for the Purchase of Public and/or Private Securities in the Secondary Market of the Bolivian Stock Exchange S.A. (BBV) through a Brokerage Agency.

Article 2. (Definition).- The Purchase of Public and/or Private Securities in the Secondary Market of the BBV through a Brokerage Agency is a mechanism by which the BCB can acquire securities issued by the TGN or the BCB, or securities from private issuers, with the objective of injecting liquidity in situations where an expansionary monetary policy is required.

CHAPTER II

Operational Procedure for the Purchase of Public and/or Private Securities in the Secondary Market of the BBV through a Brokerage Agency

Article 3. (Purchase of public securities).- To purchase public securities in the secondary market of the BBV, the following operation must be followed:

I. The COMA, based on the orientation of monetary policy, will determine the following conditions for the purchase of public securities: a. The period in which the purchase will be executed. b. The quantity of titles to be acquired. c. The issuers of the securities to be purchased (BCB and/or TGN). d. The remaining term of the securities. e. The specific series and the maximum purchase price for each series.

Likewise, it will instruct the Monetary Operations Management (GOM) to comply.

II. The GOM will prepare a Purchase Order addressed to the Brokerage Agency contracted for this effect, specifying the securities that must be acquired subject to what is established by the COMA. Parallel to this, it will transfer the necessary funds to the Brokerage Agency, as established in Article 6 of this Regulation.

III. The Brokerage Agency will execute the purchase, carry out the settlement and clearing procedures established by current Regulation, transfer

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the acquired securities to the master account of the BCB at the Bolivian Securities Depository Entity S.A. (EDV) and inform the BCB about the quantity of securities effectively acquired.

IV. Once they are in the master account of the BCB, BCB securities will be redeemed early, canceling the obligation. In the case of titles issued by the TGN, these will remain until maturity.

Article 4. (Purchase of securities from private issuers).- To purchase securities from private issuers in the secondary market of the BBV, the following operation must be followed:

I. The BCB Board of Directors will define and authorize the type and series of securities issued by private issuers to be acquired.

II. The COMA, based on the orientation of monetary policy and subject to the express authorization of the Board, will determine the following conditions for the purchase of securities from private issuers: a. The period in which the purchase will be executed. b. The quantity of titles to be acquired. c. The remaining term of the securities. d. The maximum purchase price for each series.

Likewise, it will instruct the GOM to comply.

III. The GOM will prepare a Purchase Order addressed to the Brokerage Agency contracted for this effect, specifying the securities that must be acquired subject to what is established by the COMA. Parallel to this, it will transfer the necessary funds to the Brokerage Agency, as established in Article 7 of this Regulation.

IV. The Brokerage Agency will execute the purchase, carry out the settlement and clearing procedures established by current Regulation, transfer the acquired securities to the master account of the BCB at the Bolivian Securities Depository Entity S.A. (EDV) and inform the BCB about the quantity of securities effectively acquired.

V. Once the securities are in the master account of the BCB at the EDV, they will remain in this account until maturity.

Article 5. (Other Operational Aspects).- The COMA may define and implement any operational aspect not foreseen in this Regulation.

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CHAPTER III

ACCOUNTING OPERATIONS

Article 6. (Purchase of Public Securities).- The BCB may purchase public securities with resources from the Monetary Regulation accounting accounts, under the following operation:

I. Upon submission of the Purchase Order and up to 15 minutes before the start time of the trading session at the BBV, the BCB will make a transfer for the payment of the purchase operations.

II. To make the transfer, the BCB will debit the Monetary Regulation accounting accounts and credit the current and/or reserve account of the liquidating entity of the Brokerage Agency.

III. The difference between the curve price recorded on the date of purchase and the price to be paid will be covered by the difference between the accrued yields and the provisioned yields in the budgetary items until the maturity date of the securities, affecting the expense account opened for this purpose.

IV. At the conclusion of each trading session, the Brokerage Agency will send a report with the detail of purchase orders made and the amount executed. If the purchase amount was used in its entirety, no accounting entries will be required for the return of cash.

In the event that the executed amount is less than the amount transferred by the BCB, the latter will debit the current and/or reserve account of the liquidating entity of the Brokerage Agency for the excess funds and credit the Monetary Regulation accounts from which the withdrawal was made.

In the event that the executed amount is greater than the amount transferred by the BCB, the latter will credit the difference to the current and/or reserve account of the liquidating entity of the Brokerage Agency, debiting the Monetary Regulation accounts.

Once the securities purchase operations are carried out at the BBV, the necessary accounting entries will be made to regulate the generated movements and the corresponding balance reconciliations.

Article 7. (Purchase of Private Securities).- The BCB may purchase private securities at the BBV using resources from budgetary items and recording them in the accounting accounts enabled in the GOM budget, designated for this objective, under the following operation:

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## Board of Directors

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I. Upon submission of the Purchase Order and up to 15 minutes before the start time of the trading session at the BBV, the BCB will make a transfer for the payment of the purchase operations.

II. To make the transfer, the BCB will debit the accounting accounts enabled for this effect and credit the current and/or reserve account of the liquidating entity of the Brokerage Agency.

III. At the conclusion of each trading session, the Brokerage Agency will send a report with the detail of purchase orders made and the amount executed. If the purchase amount was used in its entirety, no accounting entries are required for the return of cash.

In the event that the executed amount is less than the amount transferred by the BCB, the latter will debit the current and/or reserve account of the liquidating entity of the Brokerage Agency for the excess funds and credit the accounting accounts enabled for the purchase of securities from private issuers.

In the event that the executed amount is greater than the amount transferred by the BCB, the latter will credit the deficiency amount to the current and/or reserve account of the liquidating entity of the Brokerage Agency, debiting the accounting accounts enabled for the purchase of securities from private issuers.

Once the securities purchase operations are carried out at the BBV, the necessary accounting entries will be made to regulate the generated movements and the corresponding balance reconciliations.

**Article 8. (Payment of the Brokerage Agency Service Commission).**- On the last business day of the month, for reconciliation purposes, the Brokerage Agency will send the BCB the list of operations carried out during the month. Once the amount has been reviewed and agreed upon, the BCB will calculate the amount to be paid, based on the commission defined in the Service Provision Contract, accruing the respective amount.

In the first business days of the following month, the Brokerage Agency will send the BCB the invoice corresponding to the payment of this service with the accrued amount. Subsequently, the BCB will proceed to pay the amount by debiting the expense accounts enabled in the GOM and crediting the current and/or reserve account of the liquidating entity of the Brokerage Agency.

## CHAPTER IV
## ACTIVITY REPORT

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**Article 9.- (Activity Report).**- The COMA, through the GOM, will keep the Board of Directors informed about the Purchase Operations of Public and/or Private Securities in the Secondary Market of the Bolivian Stock Exchange S.A. that the Brokerage Agency, contracted by the BCB for this effect, carries out.