Central Bank of Bolivia

Board of Directors

BOARD RESOLUTION NO. 222/2016

SUBJECT: MONETARY OPERATIONS MANAGEMENT – UPDATES THE REGULATION FOR THE DIRECT SALE OF SECURITIES TO NATURAL PERSONS THROUGH ELECTRONIC MEANS.

VISTOS (SEEING):

• 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 Regulation for the Direct Sale of Securities to Natural Persons through Electronic Means approved by Board Resolution No. 130/2014 of September 30, 2014.
• The Open Market Operations (OMO) Regulation approved by Board Resolution No. 149/2015 of August 25, 2015.
• The Report from the Monetary Operations Management BCB-GOM-SOMA-INF-2016-93 of November 22.
• The Report from the Legal Affairs Management BCB-GAL-SANO-DLBCI-INF-2016-327 of November 29, 2016.

CONSIDERING:

• That numeral 1) of article 328 of the Political Constitution of the State establishes that it is an attribute of the Central Bank of Bolivia, in coordination with the economic policy determined by the Executive Branch, in addition to those indicated by Law, to determine and execute monetary policy.
• That article 3 of Law No. 1670 states that the BCB, within the framework of the present Law, will formulate policies of general application in monetary, exchange, and payment system matters to fulfill its object.
• That article 6 of the aforementioned Law 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.

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• That article 7 of Law No. 1834 establishes that both issuances of the BCB and the General Treasury of the Nation (TGN) 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.
• That the Regulation for the Direct Sale of Securities to Natural Persons through Electronic Means, approved by Board Resolution No. 130/2014 of September 30, 2014, aims to establish the conditions for the direct sale of securities to natural persons through electronic means implemented by the BCB. In its article 3, it establishes that access to this mechanism by virtue of its purpose is restricted solely to natural persons who acquire securities on their own behalf and are holders of an account in a financial entity participating in an Electronic Funds Transfer Clearing House ACH in which the BCB also participates.
• That the Open Market Operations Regulation, approved by Board Resolution No. 149/2015, renders ineffective Board Resolution No. 127/2003 of November 11, 2003, which aims to establish the rules for Open Market Operations (OMO) carried out by the BCB with financial entities, natural persons, and other entities authorized by the BCB Board, in compliance with its functions as a monetary authority.
• That article 12 of the OMO Regulation empowers the BCB Board to authorize other mechanisms to carry out open market operations; and in numeral V of article 13, it establishes as an authorized operating mechanism, the direct sale of securities to natural persons through electronic means.
• That the Report BCB-GOM-SOMA-INF-2016-93 from the Monetary Operations Management recommends the BCB Board approve the proposed modification to the Regulation for the Direct Sale of Securities to Natural Persons through Electronic Means, approved by Board Resolution No. 130/2014 dated September 30, 2014, considering the versatility of the Direct Sale of Securities to Natural Persons through Electronic Means mechanism, as well as the possibility of expanding its target audience by eliminating the obligation to hold an account in the Bolivian financial system, allowing persons who do not reside in the country to acquire the instruments offered by the BCB.
• That the Report BCB-GAL-SANO-DLBCI-INF-2016-327 from the Legal Affairs Management states that there are no legal observations, considering that the modifications introduced to the Regulation for the Direct Sale of Securities to Natural Persons through Electronic Means correspond to technical and operational aspects that the GOM requires to be incorporated in order to allow the acquisition of securities by Bolivian residents abroad. Regarding this and considering that the BCB has the attribute to determine and execute monetary policy and that through its

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Board approves the policies and rules for open market operations, no element has been identified that violates the applicable regulations preventing the approval of the modification of the aforementioned Regulation.

That the Legal Affairs Management concludes that the approval of the modification of the Regulation for the Direct Sale of Securities to Natural Persons through Electronic Means is legally procedible, as it does not contravene the current legal framework, being the competence of the Board to approve it by two-thirds of the votes of all its members, in accordance with what is established in subsection o) of article 54 of Law No. 1670, and numeral 29 of article 11 of the BCB Statute.

THEREFORE,

THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA

RESOLVES:

Article 1.- Modify the fifth paragraph of the VISTOS section of Board Resolution No. 130/2014 of September 30, 2014 in the following terms:

IT SAYS:

VISTOS:
The Open Market Operations Regulation approved by Board Resolution No. 127/2003 of November 11, 2003 and its subsequent modifications.

IT MUST SAY:

“VISTOS:
The Open Market Operations Regulation approved by Board Resolution No. 149/2015 of August 25, 2015 and its subsequent modifications.”

Article 2.- Modify the fifth paragraph of the CONSIDERING section of Board Resolution No. 130/2014 of September 30, 2014 in the following terms:

IT SAYS:

CONSIDERING:
That article 12 of the Open Market Operations Regulation empowers the BCB Board to authorize other mechanisms to carry out open market operations.

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IT MUST SAY:

“CONSIDERING:
That article 13 of the Open Market Operations Regulation empowers the BCB Board to authorize other mechanisms to carry out open market operations.”

Article 3.- Modify article 3 of the Regulation for the Direct Sale of Securities to Natural Persons through Electronic Means approved by Board Resolution No. 130/2014 of September 30, 2014 in the following terms:

IT SAYS:

Article 3. (Access Restrictions to the Mechanism).- Access to this mechanism by virtue of its purpose is restricted solely to natural persons who acquire securities on their own behalf and are holders of an account in a financial entity participating in an Electronic Funds Transfer Clearing House ACH in which the BCB also participates.

IT MUST SAY:

“Article 3. (Access Restrictions to the Mechanism).- Access to this mechanism by virtue of its purpose is restricted solely to natural persons who acquire securities on their own behalf and can transfer resources in favor of the BCB through the channels established by the BCB in the web sales system referred to in article 2.”

Article 4.- Modify article 4 of the Regulation for the Direct Sale of Securities to Natural Persons through Electronic Means approved by Board Resolution No. 130/2014 of September 30, 2014 in the following terms:

IT SAYS:

Article 4. (Securities Offered).- The securities offered through this mechanism will be the same as those offered through the Direct Sale to Natural Persons and Sale through Placement Agents mechanisms.

IT MUST SAY:

“Article 4. (Securities Offered).- The securities offered through this mechanism will be defined by the BCB Open Market Operations Committee.”

Article 5.- Modify article 5 of the Regulation for the Direct Sale of Securities to Natural Persons through Electronic Means approved by Board Resolution No. 130/2014 of September 30, 2014 in the following terms

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IT SAYS:

Article 5. (Conditions).- The conditions regarding terms, rates, minimum and maximum sale amounts, and others inherent to the securities will be those determined by the Open Market Operations Committee for the offer of securities for Direct Sale to Natural Persons and Sale through Placement Agents.

IT MUST SAY:

“Article 5. (Conditions).- The conditions regarding terms, rates, minimum and maximum sale amounts, and others inherent to the securities will be those determined by the Open Market Operations Committee.”

Article 6.- This Board Resolution will enter into force on the day of its approval.

Article 7.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, November 29, 2016

Marcelo Zabalaga Estrada

Sergio Velarde Vera

Ronald Polo Rivero

Abraham Pérez Alandia

Luis Baudoin Olea