Circular 13/2010 — Modifies Circular 8/2010

CIRCULAR 13/2010 Mexico, D.F., April 14, 2010. TO CREDIT INSTITUTIONS: SUBJECT: MODIFICATIONS TO CIRCULAR 8/2010.

The Bank of Mexico, based on Articles 28 of the Political Constitution of the United Mexican States, sixth and seventh paragraphs; 7, fraction X, 8, first paragraph, 14, first paragraph, and 24 of the Bank of Mexico Law; 22 of the Law for Transparency and Ordering of Financial Services; 8, third and sixth paragraphs, 10, 17, fraction I, and 19, fraction IX of the Internal Regulations of the Bank of Mexico, which provide for the attribution of this Central Institute, through the Directorate of Central Banking Regulations and the Directorate of Operations, to issue provisions, as well as the Sole Article of the Agreement on the Assignment of Administrative Units of the Bank of Mexico, fractions I and IV, and with the objective of providing greater depth to the auctions of US dollar put options, deems it convenient to allow credit institutions that have obtained allocation in the aforementioned auctions, that when they enter into parallel put options on dollars with their clientele with the same characteristics, these shall benefit from the exception regimes applicable to operations conducted with this Central Bank, and therefore has resolved to modify section 9 of the “Rules for the Auctions of US Dollar Put Options” contained in Circular 8/2010 dated February 23, 2010, to read as follows:

“9. GENERAL PROVISIONS

In the event that, due to force majeure or fortuitous event, bids cannot be submitted through SUBCAM-BANXICO or the respective calls or results of the auctions cannot be disclosed in accordance with these Rules, the Bank of Mexico will inform the institutions of the applicable procedure for conducting such auctions or for disclosing such calls or the corresponding results, as appropriate.

Credit institutions that have obtained allocation in the auctions referred to in these Rules may enter into put option contracts on dollars with their clientele up to the amount of their current rights. Institutions must conduct the aforementioned operations under the same terms and conditions, with the exception of the Premium, as the Put Options assigned to them by the Bank of Mexico.

The Put Options, as well as the operations referred to in the preceding paragraph, shall not be counted to determine the foreign exchange risk positions of multiple and development banking institutions, provided for in sections M.61. of Circular 2019/95 and BD.4. of Circular 1/2006, respectively, nor for the Liability Admission Regimes and Investment contained in section M.13. of the aforementioned Circular 2019/95. Without prejudice to the foregoing, the sales and purchases of foreign exchange that these institutions conduct in connection with such contracts and the aforementioned operations must comply with the provisions of the aforementioned regulations.

The “Rules to which multiple banking institutions, brokerage houses, investment companies, and limited-purpose financial companies must adhere in the conduct of derivative operations” contained in Circular 4/2006 dated December 18, 2006, and section BD.72. of Circular 1/2006 directed at development banking institutions, shall not be applicable to Dollar Put Option operations nor to operations conducted under the terms of the second paragraph of this section.”

TRANSITIONAL PROVISIONS

FIRST. This Circular shall enter into force on April 14, 2010.

SECOND. For put option operations on US dollars that credit institutions have entered into with their clientele prior to the entry into force of this Circular, which have the same terms and conditions, with the exception of the Premium, as the Put Options assigned to them by the Bank of Mexico and up to the amount of their current rights with said Bank, the same exception regimes provided for in the “Rules for the Auctions of US Dollar Put Options” contained in Circular 8/2010 shall apply, provided that no administrative sanctioning procedure has been initiated with respect to such operations.