Circular 2/2004 — Segregation and Reconstitution of Securities

CIRCULAR 2/2004 Mexico City, D.F., November 3, 2004.

TO CREDIT INSTITUTIONS, BROKERAGE HOUSES, INVESTMENT COMPANIES AND SPECIALIZED INVESTMENT COMPANIES FOR RETIREMENT FUNDS:

SUBJECT: RULES FOR THE SEGREGATION AND RECONSTITUTION OF SECURITIES.

The Bank of Mexico, in its capacity as the financial agent of the Federal Government, based on the provisions of Articles 3, fraction III, and 10 of its Law, attaches hereto for your information a copy of Official Letter 305.-186/2004 dated October 18, 2004, through which the Ministry of Finance and Public Credit issues the “Rules for the Segregation and Reconstitution of Securities.”

The aforementioned Rules aim to allow market participants to separate the interest to be paid and the principal of Federal Government Development Bonds with fixed interest rates, as well as Federal Government Development Bonds denominated in Investment Units, so that the corresponding segregated coupons can be traded separately, thereby providing the investing public with new investment alternatives. Likewise, they indicate the procedure for reconstituting said securities.

To carry out the segregation and reconstitution of the aforementioned securities in a secure and automated manner, changes are required in the systems of S.D. Indeval, S.A. de C.V., Institution for the Deposit of Securities, and of this Central Bank; therefore, such operations may begin to be carried out starting March 1, 2005.

Finally, it is requested that you promptly inform your clients of the possibility of carrying out the segregation and reconstitution of the aforementioned securities, as well as the characteristics and terms of such operations, making them aware of the content of the aforementioned Rules.