Circular 11/2024 — Modifications to Circular 4/2012 (Cross-Border Information Exchange)

Friday, October 11, 2024 OFFICIAL GAZETTE 1
BANCO DE MEXICO
CIRCULAR 11/2024 addressed to credit institutions, brokerage houses, investment funds, multiple-object financial societies that have equity links with a multiple banking institution, general warehouse receipts institutions, insurance institutions, and the National Financial Institution for Agricultural, Rural, Forestry and Fisheries Development, regarding Modifications to Circular 4/2012 (Cross-Border Information Exchange).

At the margin a logo, which says: Bank of Mexico.- "2024, Year of Felipe Carrillo Puerto, Meritorious of the Proletariat, Revolutionary and Defender of the Mayab".
CIRCULAR 11/2024
TO CREDIT INSTITUTIONS, BROKERAGE HOUSES,
INVESTMENT FUNDS, MULTIPLE-OBJECT FINANCIAL SOCIETIES THAT HAVE EQUITY LINKS WITH A MULTIPLE BANKING INSTITUTION, GENERAL WAREHOUSE RECEIPTS INSTITUTIONS, INSURANCE INSTITUTIONS AND THE NATIONAL FINANCIAL INSTITUTION FOR AGRICULTURAL, RURAL, FORESTRY AND FISHERIES DEVELOPMENT:
SUBJECT: MODIFICATIONS TO CIRCULAR 4/2012
( CROSS-BORDER INFORMATION EXCHANGE )

The Bank of Mexico, with the purpose of continuing to promote the sound development of the financial system and considering the recommendations of the Swiss association that groups financial authorities from various countries, known as the Financial Stability Board (FSB, in English), regarding the reduction of regulatory barriers that prevent or limit the cross-border flow of information to institutions that provide registration and custody services for information on derivative contracts (also known as trade repositories or TR, in English), has determined to clarify the regulatory framework under which financial entities may provide information on derivative operations with foreign trade repositories recognized by the Bank itself, without prejudice to its authority to share such information with foreign financial authorities with which it has formalized agreements for the reciprocal exchange of information.

For the above, based on articles 28, paragraphs sixth and seventh, of the Political Constitution of the United Mexican States, 2, 3, fraction I, 24, 26 and 36 of the Bank of Mexico Law, 46, fraction XXV, and 48 of the Credit Institutions Law, 176, first paragraph, of the Securities Market Law, 15, second paragraph, of the Investment Funds Law, 11 Bis 2, fraction XII, and 87-D, fourth paragraph, of the General Law of Organizations and Auxiliary Credit Activities, 133 of the Insurance and Surety Institutions Law, 9, second paragraph, of the Organic Law of National Financiera, 6, second paragraph, of the Organic Law of Federal Mortgage Society, 9, second paragraph, of the Organic Law of the Bank of Well-being, 9, second paragraph, of the Organic Law of the National Bank of Foreign Trade, 10, second paragraph, of the Organic Law of the National Bank of Public Works and Services, 8, second paragraph, of the Organic Law of the National Bank of the Army, Air Force and Navy, 22 of the Law for Transparency and Ordering of Financial Services, 4, first paragraph, 8, paragraphs fourth and eighth, 10, first paragraph, 12, first paragraph, in relation to 19 Bis, fraction V, 14 Bis 1, first paragraph, in relation to 25 Bis 1, fraction IV, 17, fraction I, 20 Quáter, fraction IV, and 25 Bis, fraction VII, of the Internal Regulations of the Bank of Mexico, which grant it the authority to issue provisions through the General Directorate of Central Banking Operations, the General Directorate of Financial System Affairs, the Directorate of Central Banking Provisions, the Directorate of Financial System Information and the Management of Regulatory Policy for Payment Systems and Market Infrastructures, as well as Second, fractions I, IV, VI, X, and XVII, of the Agreement on the Attachment of Administrative Units of the Bank of Mexico, has resolved to modify the

2 OFFICIAL GAZETTE Friday, October 11, 2024 numerals 12.2 and 12.3 of the "Rules for the Execution of Derivative Operations", issued by the Bank of Mexico through Circular 4/2012, to remain in the following terms:
RULES FOR THE EXECUTION OF DERIVATIVE OPERATIONS
12. INFORMATION
…
“12.2 The Bank of Mexico may grant recognition to foreign institutions that perform central information registration functions, taking into account the following:
a) … b) That the applicable regulatory framework for said foreign institutions produces results similar or equivalent to those of the provisions issued by the Mexican authorities applicable to those who provide central information registration services for Derivative Operations in Mexico, or that they comply with the Principles applicable to financial market infrastructures issued by the Committee on Payment and Settlement Systems of the Bank for International Settlements and the Technical Committee of the International Organization of Securities Commissions (IOSCO, in English) in 2012 or those that, in their case, replace them, including, without limitation, principles related to i) the measurement, monitoring and effective management of business, legal and operational risk; ii) the disclosure of accurate and timely market data to relevant authorities and the public according to their needs; iii) clear and transparent good governance mechanisms; iv) access and participation criteria, and v) efficiency and transparency; c) and d) … The Bank of Mexico may revoke the previously mentioned recognition, in those cases where, in its judgment, the criteria or requirements established at the time of granting the said recognition are no longer met.” “12.3 Entities, Investment Funds, General Warehouse Receipts Institutions, Sofomes and Insurance Institutions may provide information on the Derivative Operations they carry out, to any of the clearing houses indicated in numeral 7.5, or to any of the foreign institutions that perform central information registration functions and that are recognized by the Bank of Mexico in accordance with numeral 12.2, for which they must have prior written authorization from their counterparties granted in such a way that it does not contravene the applicable confidentiality and secrecy provisions. In the event that the aforementioned subjects do not have the aforementioned authorization, they must refrain from providing the information corresponding to their Derivative Operations.” … TRANSITIONAL UNIQUE. - What is established in this Circular shall enter into force on January 9, 2025. Mexico City, October 3, 2024.- BANK OF MEXICO: General Director of Central Banking Operations, Gerardo Israel García López.- Rubric.- General Director of Financial System Affairs, José Luis Negrín Muñoz.- Rubric.- Director of Central Banking Provisions, María Teresa Muñoz Arámburu.- Rubric.- Director of Financial System Information, Juan Fernando Ávila Embriz.- Rubric.- Manager of Regulatory Policy for Payment Systems and Market Infrastructures, Daniel Garrido Delgadillo.- Rubric.

Friday, October 11, 2024 OFFICIAL GAZETTE 3
For any inquiries regarding the content of this Circular, the Bank of Mexico is at your disposal through the Directorate of Authorizations and Sanctions of Central Banking at telephone (55) 5237-2000 extension 3200.