Circular 16/2023 — Modifications to Circular 3/2012 (Forward-Compounded Interbank Equilibrium Rate for National Currency at 28, 91, and 182 Days)

Wednesday, December 13, 2023 OFFICIAL GAZETTE 1 BANCO DE MEXICO CIRCULAR 16/2023, addressed to credit institutions, regulated multiple-object financial societies that maintain equity links with credit institutions and the National Financial Development Agency for Agriculture, Rural, Forestry and Fisheries, regarding Modifications to Circular 3/2012 (Forward-Compounded Interbank Equilibrium Rate for National Currency at 28, 91, and 182 Days).

At the margin a logo, which says: Bank of Mexico.- “2023, Year of Francisco Villa, the revolutionary of the people”.

CIRCULAR 16/2023 TO CREDIT INSTITUTIONS, REGULATED MULTIPLE-OBJECT FINANCIAL SOCIETIES THAT MAINTAIN EQUITY LINKS WITH CREDIT INSTITUTIONS AND THE NATIONAL FINANCIAL DEVELOPMENT AGENCY FOR AGRICULTURE, RURAL, FORESTRY AND FISHERIES: SUBJECT: MODIFICATIONS TO CIRCULAR 3/2012 (FORWARD-COMPOUNDED INTERBANK EQUILIBRIUM RATE FOR NATIONAL CURRENCY AT 28, 91 AND 182 DAYS)

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), as well as the grouping of banking supervisory authorities, known as the Basel Committee on Banking Supervision, and the International Organization of Securities Commissions (IOSCO), regarding the characteristics that reference interest rates used in financial markets must meet, has decided to begin publishing the Forward-Compounded Interbank Equilibrium Rate for National Currency (TIIE) at tenors of 28, 91, and 182 days, so that this rate can be used by institutions as a reference in national currency passive operations, in congruence with the transition to new reference rates that meet best practices and standards globally.

For the above, based on articles 28, paragraphs sixth and seventh, of the Political Constitution of the United Mexican States, 24 and 26 of the Bank of Mexico Law, 48 of the Credit Institutions Law, 87-D, paragraph fourth, of the General Law of Organizations and Auxiliary Credit Activities, 22 of the Law for Transparency and Ordering of Financial Services, 1, 4, first paragraph, 8, paragraphs fourth and eighth, 10, first paragraph, 12, first paragraph, in relation to 19 Bis 1, fraction XI, and 17, fraction 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 Directorate of Central Banking Provisions, respectively, as well as Second, fractions VI and X, of the Agreement on the Affiliation of the Administrative Units of the Bank of Mexico, it has resolved to modify the Index and article 38, paragraph second, as well as add the definition “Forward-Compounded Interbank Equilibrium Rate for National Currency” to article 2, fraction I Ter to article 38, paragraph fourth to article 38, renumbering the current paragraphs fourth and fifth to become paragraphs fifth and sixth of said article, Section V “Procedure for the determination of the Forward-Compounded Interbank Equilibrium Rate for National Currency” to Chapter IV of Title Third, articles 163 Bis 6, 163 Bis 7 and 163 Bis 8, as well as Annex 11 Bis, of the “Provisions applicable to the operations of credit institutions, regulated multiple-object financial societies that maintain equity links with credit institutions and the National Financial Development Agency for Agriculture, Rural, Forestry and Fisheries”, contained in Circular 3/2012, to remain in the following terms:

PROVISIONS APPLICABLE TO THE OPERATIONS OF CREDIT INSTITUTIONS, REGULATED MULTIPLE-OBJECT FINANCIAL SOCIETIES THAT MAINTAIN EQUITY LINKS WITH CREDIT INSTITUTIONS AND THE NATIONAL FINANCIAL DEVELOPMENT AGENCY FOR AGRICULTURE, RURAL, FORESTRY AND FISHERIES

“INDEX … TITLE THIRD OPERATIONS WITH THE BANK OF MEXICO … CHAPTER IV DETERMINATION OF THE INTERBANK EQUILIBRIUM RATE FOR NATIONAL CURRENCY … Section V. Procedure for the determination of the Forward-Compounded Interbank Equilibrium Rate for National Currency Article 163 Bis 6.- Determination of the Forward-Compounded Interbank Equilibrium Rate for National Currency Article 163 Bis 7.- Daily publication of the Forward-Compounded Interbank Equilibrium Rate for National Currency Article 163 Bis 8.- Cessation of publication of the Forward-Compounded Interbank Equilibrium Rate for National Currency … ANNEXES … Annex 11 Bis Procedure for the calculation of the Forward-Compounded Interbank Equilibrium Rate for National Currency …”

“Definitions Article 2.- … … Forward-Compounded Interbank Equilibrium Rate for National Currency: the Interbank Equilibrium Rate for National Currency compounded forward at tenors of 28, 91 and 182 Days, published by the Bank of Mexico in accordance with what is provided in Section V of Chapter IV of Title Third of these Provisions. …”

“Reference interest rates Article 38.-… I. and I Bis. … I Ter. The Forward-Compounded Interbank Equilibrium Rate for National Currency; II. to V. … The rates provided for in fractions I, I Ter, IV and V of this article will be those that the Bank of Mexico makes known on its internet electronic page identified with the domain name www.banxico.org.mx.

Wednesday, December 13, 2023 OFFICIAL GAZETTE 3 … In addition to what is stated in the preceding paragraph, in operations where the Forward-Compounded Interbank Equilibrium Rate for National Currency is used, the tenor to which said rate refers must be indicated. …”

“Section V Procedure for the determination of the Forward-Compounded Interbank Equilibrium Rate for National Currency”

“Determination of the Forward-Compounded Interbank Equilibrium Rate for National Currency Article 163 Bis 6.- The Bank of Mexico will calculate, for each Banking Business Day, the Forward-Compounded Interbank Equilibrium Rate for National Currency that can be used by Institutions as a reference rate and that will be known from the start of the interest calculation period. For each Banking Business Day, the Forward-Compounded Interbank Equilibrium Rate for National Currency at a 28-Day tenor will consider the composition of the TIIE published by the Bank of Mexico during the 28 immediately preceding Days prior to its determination. The result of the composition of the 28 Days prior to the determination of the Forward-Compounded Interbank Equilibrium Rate for National Currency will be adjusted by the Bank of Mexico to equivalent tenors of 91 and 182 Days to obtain the Forward-Compounded Interbank Equilibrium Rate for National Currency at these last two tenors, respectively. The foregoing, in accordance with the procedure established in Annex 11 Bis of these Provisions. The Forward-Compounded Interbank Equilibrium Rate for National Currency will be expressed in annual percentage terms to four decimal places.”

“Daily publication of the Forward-Compounded Interbank Equilibrium Rate for National Currency Article 163 Bis 7.- The Bank of Mexico, through the SIAC-BANXICO or the electronic, computing or telecommunications medium authorized for this purpose, will publish the Forward-Compounded Interbank Equilibrium Rate for National Currency, applicable to the next Banking Business Day, starting at 17:00:00 hours of the same Banking Business Day on which it is determined in accordance with these Provisions.”

“Cessation of publication of the Forward-Compounded Interbank Equilibrium Rate for National Currency Article 163 Bis 8.- In the event that the Bank of Mexico decides to terminate the determination and publication of the Forward-Compounded Interbank Equilibrium Rate for National Currency, it will inform promptly through the communication media it determines. In this case, the Bank of Mexico will indicate the rate that will replace the aforementioned Forward-Compounded Interbank Equilibrium Rate for National Currency, for the corresponding effects.”

“ANNEX 11 BIS Procedure for the calculation of the Forward-Compounded Interbank Equilibrium Rate for National Currency The Bank of Mexico will determine the Forward-Compounded Interbank Equilibrium Rate for National Currency applicable to the next Banking Business Day in accordance with the following formula:

Where: = Banking Business Day corresponding to the date of application of the Forward-Compounded Interbank Equilibrium Rate for National Currency. = Day corresponding to the result of subtracting 28 Days from , which may be a Banking Business Day or an Inactive Day. = Tenor of the Forward-Compounded Interbank Equilibrium Rate for National Currency; that is, 28, 91 or 182 Days. = Index of TIIE with composition in Banking Business Days to four decimal places applicable on Banking Business Day , made known by the Bank of Mexico through the internet electronic page identified with the domain name www.banxico.org.mx.

Wednesday, December 13, 2023 OFFICIAL GAZETTE 4 = Index of TIIE with composition in Banking Business Days to four decimal places applicable on Day , made known by the Bank of Mexico through the internet electronic page identified with the domain name www.banxico.org.mx.

The Bank of Mexico will calculate the Index of TIIE with composition in Banking Business Days to four decimal places referred to in the previous formula, both for Banking Business Days and for Inactive Days, as follows:

Formula for Banking Business Days: The Index of TIIE with composition in Banking Business Days to four decimal places applicable on Banking Business Day and incorporating as the last rate the TIIE published by the Bank of Mexico on the immediately preceding Banking Business Day, will be calculated using the following formula:

Where: = The date corresponding to the Banking Business Day on which the TIIE Index is applicable. = The date corresponding to the Banking Business Day immediately preceding . = TIIE published on Banking Business Day by the Bank of Mexico through the internet electronic page identified with the domain name www.banxico.org.mx, expressed in percentage points. = Number of Days on which the TIIE published on Banking Business Day is applicable; that is, the result of the sum of the number of Days between the Day of publication of the , including said Day, and the immediately next Banking Business Day, excluding the latter.

Formula for Inactive Days: The Index of TIIE with composition in Banking Business Days to four decimal places applicable to an Inactive Day will be calculated using the following formula:

Where: = The date of the Inactive Day for which the TIIE Index is applicable. = The date corresponding to the Banking Business Day immediately preceding the Inactive Day . = The Index of TIIE with composition in Banking Business Days to four decimal places applicable on Banking Business Day . = The TIIE published on Banking Business Day by the Bank of Mexico through the Internet electronic page identified with the domain name www.banxico.org.mx, expressed in percentage points. = The difference in Days between and .”

TRANSITORY SOLE.- This Circular will enter into force on the next Banking Business Day following its publication in the Official Gazette of the Federation.

Wednesday, December 13, 2023 OFFICIAL GAZETTE 5 Mexico City, December 5, 2023.- BANK OF MEXICO: Director General of Central Banking Operations, Gerardo Israel García López.- Signature.- Director of Central Banking Provisions, María Teresa Muñoz Arámburu.- Signature.

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