Circular 11/2009 — Modifies Repo Rules

CIRCULAR 11/2009 Mexico, D.F., May 8, 2009. TO CREDIT INSTITUTIONS, BROKERAGE HOUSES, INVESTMENT COMPANIES, SPECIALIZED INVESTMENT COMPANIES FOR RETIREMENT FUNDS, AND THE RURAL FINANCIAL INSTITUTION: SUBJECT: RESOLUTION MODIFYING THE REPO RULES

The Bank of Mexico, based on Articles 28 of the Political Constitution of the United Mexican States, sixth and seventh paragraphs; 24 and 26 of the Bank of Mexico Law; 53 section II and 81 of the Credit Institutions Law; 176 of the Securities Market Law; 15 second paragraph of the Investment Companies Law; 48 section VI of the Retirement Savings Systems Law; 19 of the Organic Law of the Rural Financial Institution; 22 of the Law for Transparency and Ordering of Financial Services, as well as Articles 8 ter third and sixth paragraphs, 10, 12 in relation to 19 section IX; 14 in relation to 25 relation II and 17 section I, which provide for the powers of the Bank of Mexico to issue provisions, through the General Directorate of Central Banking Operations, the General Directorate of Financial System Analysis, and the Central Banking Provisions Directorate, respectively, all of the Internal Regulations of the Bank of Mexico, as well as the Single Article of the Agreement on the Affiliation of the Administrative Units of the Bank of Mexico, sections I, III and IV, considering that it is convenient to modify the regulation regarding repo operations to expand the universe of titles that can be subject to such operations, with the purpose of promoting the sound development of the financial system and protecting the interests of the public, has resolved to modify the first paragraph of section 2.1 as well as add a second paragraph to it, shifting the second and third paragraphs in their order, of the "Rules to which credit institutions; brokerage houses; investment companies, specialized investment companies for retirement funds and the Rural Financial Institution must adhere in their repo operations", to remain in the following terms:

2. AUTHORIZED OPERATIONS AND COUNTERPARTIES

"2.1 Credit Institutions and Brokerage Houses may act as Repo Sellers with any person.

When acting as Repo Sellers with other entities of the same financial group to which they belong, Qualified Investors, and with natural persons, and the securities subject to the repo are Titles or Foreign Securities, they must adhere to the following: a) The Titles must be rated in terms of Annexes 1, 2 and 3 of these Rules, as applicable, by at least two internationally recognized rating agencies, or, alternatively, have the payment guarantee of the Federal Mortgage Society S.N.C., of at least 65% on the principal, interest and other accessories of the Title in question, and b) Foreign Securities must be rated in terms of what is provided in the previous subsection. …"

TRANSITORY SINGLE. This Resolution shall enter into force on May 8, 2009.