Circular 14/2008 — Information that securities central counterparties must provide to the Bank of Mexico

Wednesday, April 23, 2008 OFFICIAL GAZETTE (First Section) 1

CIRCULAR 14/2008 Provisions to which securities central counterparties must adhere to contract credits and loans for the achievement of their corporate purpose, as well as to provide information to the Bank of Mexico.

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

CIRCULAR 14/2008

TO THE SECURITIES CENTRAL COUNTERPARTIES:

SUBJECT: APPLICABLE PROVISIONS TO SECURITIES CENTRAL COUNTERPARTIES REGARDING CREDITS, LOANS, AND INFORMATION TO THE BANK OF MEXICO.

The Bank of Mexico, based on the provisions of Articles 28, sixth and seventh paragraphs of the Political Constitution of the United Mexican States; 24 of the Bank of Mexico Law; 307, fraction VII and 316, last paragraph of the Securities Market Law; 22 of the Law for Transparency and Orderly Regulation of Financial Services; as well as 8th, third and fourth paragraphs, 10, 17, fraction I and 20, fraction IV, which grant the Directorate of Central Bank Provisions and the Directorate of Operational and Payment Systems, respectively, the authority to participate in the issuance of provisions, all of them from the Internal Regulations of the Bank of Mexico published in the Official Gazette of the Federation on September 30, 1994, whose last modification was published in said Official Gazette on April 26, 2007, and with the objective of promoting the proper functioning of payment systems and encouraging the sound development of the financial system, considering that:

a) It is convenient to update the regulation issued by the Bank of Mexico directed at Securities Central Counterparties, in accordance with what is established in the Securities Market Law, and

b) In terms of what is provided in said Law, the Bank of Mexico must establish through general provisions the information and documents that Securities Central Counterparties must deliver to it.

It has resolved to issue the:

PROVISIONS TO WHICH SECURITIES CENTRAL COUNTERPARTIES MUST ADHERE TO CONTRACT CREDITS AND LOANS FOR THE ACHIEVEMENT OF THEIR CORPORATE PURPOSE, AS WELL AS TO PROVIDE INFORMATION TO THE BANK OF MEXICO.

1. DEFINITIONS

For the purposes of these Provisions, the following terms shall be understood, in singular or plural:

Securities Central Counterparties: the anonymous companies to which the concession to act as such has been granted, in terms of Article 301 of the Securities Market Law.

Credit Institutions: the legal entities that have the status of multiple banking institutions or development banking institutions, in terms of what is provided in the Credit Institutions Law.

2. CONTRACTING OF CREDITS AND LOANS

2.1 GRANTORS AND PURPOSES

Securities Central Counterparties may only contract credits and loans with Credit Institutions with the objective of obtaining resources to timely fulfill their obligations.

2.2 AMOUNT AND TERM

Securities Central Counterparties may freely agree with Credit Institutions on the amounts and terms of the credits and loans they require.

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2.3 DENOMINATION

Credits and loans must be denominated in national currency.

2.4 TERMINATION

In the contracts documenting the credits and loans referred to in section 2.1 above, it must be agreed that in the event of early termination, the corresponding notification must be made in writing and with at least 5 business banking days prior notice to the date on which it is intended to take effect.

2.5 OTHER PROVISIONS

When Securities Central Counterparties need to contract credits and loans under terms different from those provided in these Provisions, they must obtain prior and written authorization from the Directorate of Authorizations, Consultations, and Legal Control of the Bank of Mexico.

3. INFORMATION TO THE BANK OF MEXICO

Securities Central Counterparties must provide the Directorate of Operational and Payment Systems of the Bank of Mexico, in the terms indicated by it, the information and documentation related to:

a) Methodologies and processes for risk management derived from their operations;

b) Policies and schemes to control costs and establish tariffs;

c) Policies and processes to promote good corporate governance;

d) Figures related to their operations broken down by participant, and

e) Their internal regulations.

TRANSITIONAL PROVISIONS

FIRST.- These provisions shall enter into force on April 25, 2008.

SECOND.- Upon the entry into force of these Provisions, the "Provisions to which central counterparties must adhere to receive credits and loans for the achievement of their corporate purpose," made known by this Central Institute on February 2, 2004, are hereby repealed.

Respectfully,

Mexico, D.F., April 21, 2008.- BANK OF MEXICO: The Director of Operational and Payment Systems, Ricardo Medina Alvarez.- Signature.- The Director of Central Bank Provisions, Fernando Luis Corvera Caraza.- Signature.

For any inquiries regarding the content of this Circular, please contact the Directorate of Authorizations, Consultations, and Legal Control, located at Avenida 5 de Mayo number 2, sixth floor, Centro Neighborhood, Mexico City, D.F., C.P. 06059, or at the phones 5237.2308, 5237.3200 or 5237.2317.