Circular 14/2022 — Modifications to the Repo Rules

Tuesday, November 8, 2022 OFFICIAL GAZETTE

CIRCULAR 14/2022 addressed to Credit Institutions, Brokerage Houses, Investment Funds, Specialized Investment Societies for Retirement Funds, General Warehouse Receipt Institutions, Insurance Institutions, Surety Institutions, Regulated Multiple-Object Financial Societies that maintain equity links with a credit institution, and the National Financial Development Institution for Agriculture, Rural, Forestry and Fisheries, regarding the Modifications to the Rules to which Credit Institutions, Brokerage Houses, Investment Funds, Specialized Investment Societies for Retirement Funds, General Warehouse Receipt Institutions, Insurance Institutions, Surety Institutions, Regulated Multiple-Object Financial Societies that maintain equity links with a credit institution, and the National Financial Development Institution for Agriculture, Rural, Forestry and Fisheries, must adhere in their repo operations (FONADIN Certificates).

A logo appears at the margin, stating: Bank of Mexico.- “2022, Year of Ricardo Flores Magón”.

CIRCULAR 14/2022

CREDIT INSTITUTIONS, BROKERAGE HOUSES, INVESTMENT FUNDS, SPECIALIZED INVESTMENT SOCIETIES FOR RETIREMENT FUNDS, GENERAL WAREHOUSE RECEIPT INSTITUTIONS, INSURANCE INSTITUTIONS, SURETY INSTITUTIONS, REGULATED MULTIPLE-OBJECT FINANCIAL SOCIETIES THAT MAINTAIN EQUITY LINKS WITH A CREDIT INSTITUTION AND THE NATIONAL FINANCIAL DEVELOPMENT INSTITUTION FOR AGRICULTURE, RURAL, FORESTRY AND FISHERIES:

SUBJECT: MODIFICATIONS TO THE RULES TO WHICH CREDIT INSTITUTIONS, BROKERAGE HOUSES, INVESTMENT FUNDS, SPECIALIZED INVESTMENT SOCIETIES FOR RETIREMENT FUNDS, GENERAL WAREHOUSE RECEIPT INSTITUTIONS, INSURANCE INSTITUTIONS, SURETY INSTITUTIONS, REGULATED MULTIPLE-OBJECT FINANCIAL SOCIETIES THAT MAINTAIN EQUITY LINKS WITH A CREDIT INSTITUTION AND THE NATIONAL FINANCIAL DEVELOPMENT INSTITUTION FOR AGRICULTURE, RURAL, FORESTRY AND FISHERY MUST ADHERE IN THEIR REPO OPERATIONS (FONADIN CERTIFICATES)

The Bank of Mexico, with the purpose of continuing to promote the sound development and stability of the financial system, as well as to foster the proper functioning of payment systems and the protection of public interests, has considered it necessary to update the regulatory framework for repo operations carried out by financial entities, for the sake of clarity, to explicitly recognize fiduciary stock certificates issued by the National Infrastructure Fund (FONADIN), as well as any other series of fiduciary stock certificates that are issued by the aforementioned trust, among the eligible government securities as titles subject to the repo operations governed by these Rules, without prejudice to the different treatment given to said titles in other regulations.

Therefore, based on Articles 28, sixth and seventh paragraphs, of the Political Constitution of the United Mexican States, 24 and 26 of the Bank of Mexico Law, 46 Bis 5, section IV, 54, sections I and III, and 81, second paragraph, of the Credit Institutions Law, 176 of the Securities Market Law, 15 of the Investment Funds Law, 48, section VI, of the Savings for Retirement Law, 11 Bis 2, section XI, and 87-D, fourth paragraph, of the General Law of Organizations and Auxiliary Credit Activities, 132 and 157 of the Insurance and Surety Institutions Law, 4th, first paragraph, 8th, fourth and eighth paragraphs, 10, first paragraph, 12, first paragraph, in relation to 19 Bis, section V, and 14 Bis, first paragraph, in relation to 17, section I, 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 and the General Legal Directorate, respectively, as well as Second, sections VI and X, of the Agreement on the Assignment of Administrative Units of the Bank of Mexico, it has resolved to modify the first paragraph, as well as the definition of “Government Securities”, in numeral 1, and to add the definition of “FONADIN Certificates”, to the same numeral 1, of the “Rules to which Credit Institutions, Brokerage Houses, Investment Funds, Specialized Investment Societies for Retirement Funds, General Warehouse Receipt Institutions, Insurance Institutions, Surety Institutions, Regulated Multiple-Object Financial Societies that maintain equity links with a credit institution and the National Financial Development Institution for Agriculture, Rural, Forestry and Fisheries must adhere in their repo operations”, issued by the Bank of Mexico on January 12, 2007, as modified by virtue of subsequent resolutions, to remain as follows:

RULES TO WHICH CREDIT INSTITUTIONS, BROKERAGE HOUSES, INVESTMENT FUNDS, SPECIALIZED INVESTMENT SOCIETIES FOR RETIREMENT FUNDS, GENERAL WAREHOUSE RECEIPT INSTITUTIONS, INSURANCE INSTITUTIONS, SURETY INSTITUTIONS, REGULATED MULTIPLE-OBJECT FINANCIAL SOCIETIES THAT MAINTAIN EQUITY LINKS WITH A CREDIT INSTITUTION AND THE NATIONAL FINANCIAL DEVELOPMENT INSTITUTION FOR AGRICULTURE, RURAL, FORESTRY AND FISHERY MUST ADHERE IN THEIR REPO OPERATIONS

“1. DEFINITIONS For the purposes of these Rules, the terms used in them, in singular or plural, shall have the meanings indicated below, without prejudice to the different treatment given to similar terms in other regulations: … FONADIN Certificates: fiduciary stock certificates issued by the National Bank of Public Works and Services, S.N.C, a development banking institution, in its capacity as trustee of the trust named “National Infrastructure Fund”, which have the guarantee of the Federal Government since their issuance. … Government Securities: securities registered in the National Securities Registry provided for in the Securities Market Law, issued or guaranteed by the Federal Government of the United Mexican States, including FONADIN Certificates, among others, except: Certificates of the Treasury of the Federation issued under credit restructuring programs in investment units (Special Certificates), as well as any other that is not negotiable or does not have a secondary market. …”

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

Mexico City, October 31, 2022.- BANK OF MEXICO: General Director of Central Banking Operations, Gerardo Israel García López.- Signature.- General Legal Director, Luis Urrutia Corral.- Signature.

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