Circular 1/2018 — Modifications to Circular 7/2011

Friday, January 26, 2018 OFFICIAL GAZETTE (First Section) 63 BANK OF MEXICO CIRCULAR 1/2018 addressed to Credit Institutions and Brokerage Houses, regarding Modifications to Circular 7/2011.

A logo appears at the margin, stating: Bank of Mexico.

CIRCULAR 1/2018 TO CREDIT INSTITUTIONS AND BROKERAGE HOUSES: SUBJECT: MODIFICATIONS TO CIRCULAR 7/2011

The Bank of Mexico, in its capacity as the financial agent of the Federal Government, with the purpose of continuing to promote the sound development of the financial system—in light of the modifications that the Ministry of Finance and Public Credit, through official letter number 305.-156/2017 made known by this Central Bank through Circular 26/2017 published in the Official Gazette of the Federation on January 5, 2018, has resolved to carry out regarding the procedure to which credit institutions and brokerage houses acting as market makers for government securities referred to in official letter number 305.-027/2011 of said Ministry must adhere—considers it appropriate to make adjustments to the procedure so that market makers and UDIBONOS market makers exercise the right to purchase BONOS, CETES, and UDIBONOS, as applicable, and conduct loan operations on such securities with the Bank of Mexico in its capacity as the financial agent of the federal government.

Therefore, based on Articles 28, paragraphs sixth and seventh, of the Political Constitution of the United Mexican States; 3, fraction III; 7, fraction I; and 10 of the Bank of Mexico Law; 22 of the Law for Transparency and Order of Financial Services; 8, paragraphs fourth and seventh; 10, first paragraph; 12, first paragraph, in relation to 19 Bis, fraction V; and 17, fraction I, of the Internal Regulations of the Bank of Mexico, which grant the authority to issue provisions through the General Directorate of Central Bank Operations and the Directorate of Central Bank Provisions, respectively; as well as Second, fractions VI and X, of the Agreement on the Affiliation of the Administrative Units of the Bank of Mexico, it has resolved to modify numeral 1 in the definition of “UDIBONOS Market Makers” and numeral 3.1, second paragraph, of the “Procedure for Market Makers and UDIBONOS Market Makers to Exercise the Right to Purchase BONOS, CETES, and UDIBONOS, as Applicable, and Conduct Loan Operations on Such Securities with the Bank of Mexico in its Capacity as the Financial Agent of the Federal Government,” contained in Circular 7/2011, to read as follows:

PROCEDURE FOR MARKET MAKERS AND UDIBONOS MARKET MAKERS TO EXERCISE THE RIGHT TO PURCHASE BONOS, CETES, AND UDIBONOS, AS APPLICABLE, AND CONDUCT LOAN OPERATIONS ON SUCH SECURITIES WITH THE BANK OF MEXICO IN ITS CAPACITY AS THE FINANCIAL AGENT OF THE FEDERAL GOVERNMENT

“1. DEFINITIONS … UDIBONOS Market Makers: credit institutions and brokerage houses that the Ministry determines may act as such in accordance with applicable provisions. …”

“3. LOAN OF SECURITIES BETWEEN MARKET MAKERS AND UDIBONOS MARKET MAKERS, AND THE BANK OF MEXICO IN ITS CAPACITY AS THE FINANCIAL AGENT OF THE FEDERAL GOVERNMENT 3.1 … Market Makers and UDIBONOS Market Makers must pay the Bank of Mexico daily the premium corresponding to each of said operations, in accordance with what is provided in numeral 4.2.6 and in Annex 4. 3.2 … 3.3 …”

TRANSITIONAL PROVISION SINGLE. This Circular shall enter into force on the next banking day following its publication in the Official Gazette of the Federation.

Mexico City, January 22, 2018.- The General Director of Central Bank Operations, Jaime José Cortina Morfín.- Signature.- The Director of Central Bank Provisions, Mario Ladislao Tamez López Negrete.- Signature.

64 (First Section) OFFICIAL GAZETTE Friday, January 26, 2018 For any inquiries regarding the content of this Circular, please contact the Department of Authorizations, Inquiries, and Legal Control, at telephone numbers (55) 5237-2308, (55) 5237-2317, or (55) 5237-2000 Ext. 3200.