Circular 20/2008 — Procedure for Acting as Market Makers for Government Securities

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The present Circular consists of 27 pages, including its Annex. For any clarification regarding its transmission, please contact our International Telecommunications Office at phones 5227.8797 or 5227.8798. For any inquiry regarding the content of this Circular, please visit the General Manager of Authorizations, Inquiries and Legal Control, located at Avenida 5 de Mayo number 2, sixth floor, Colonia Centro, Mexico City, D.F., C.P. 06059, or at phones 5237.2308, 5237.3200 or 5237.2317.

CIRCULAR 20/2008
Mexico City, May 7, 2008.

TO CREDIT INSTITUTIONS
AND BROKERAGE HOUSES:

SUBJECT: PROCEDURE FOR ACTING AS MARKET MAKERS FOR GOVERNMENT SECURITIES.

The Bank of Mexico, in its capacity as financial agent of the Federal Government, based on the provisions of Article 28, sixth and seventh paragraphs, of the Political Constitution of the United Mexican States; Article 3, fraction III, Article 7, fraction I, and Article 10 of the Bank of Mexico Law; Article 22 of the Law for Transparency and Orderly Regulation of Financial Services; Article 8, third and fourth paragraphs, Article 12 in relation to Article 19, fractions I, II, VI and IX, which provide for the powers of the General Directorate of Central Bank Operations to negotiate and formalize, among others, operations with securities; to carry out the necessary acts for the issuance, placement, purchase, sale and redemption of government securities, to operate mandates or commissions entrusted to the Bank related to the aforementioned powers, and to participate in the issuance of provisions; as well as Article 17, fraction I, which establishes the power of the Central Bank Provisions Directorate to issue provisions, all of 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 Gazette on April 26, 2007, and at the request of the Ministry of Finance and Public Credit, attached hereto is a copy of Office No. 305.-065/2008 and its Annexes, dated April 30, 2008, which will enter into force on September 1, 2008, through which said Department establishes the procedure to which credit institutions and brokerage houses acting or intending to act as market makers for government securities must adhere, and renders ineffective its Office No. 305.-038/2006 dated February 27, 2006, made known through Circular-Telefax 2/2006 and Circular 1/2006, issued by this Central Bank, addressed to credit institutions and brokerage houses, respectively, modified by Offices 305.-088/2007 and 305.-110/2007 dated July 26 and August 28, 2007, made known by our Circulares 7/2007 and 9/2007 addressed to credit institutions, as well as 2/2007 and 3/2007 addressed to brokerage houses. The foregoing, so that these institutions and companies may be able to know it.

Likewise, from the entry into force of the aforementioned Office 305.-065/2008, Appendix 1 of Annex 5 of Circular 115/2002 addressed to brokerage houses is repealed.

Sincerely,

BANK OF MEXICO

ACT. DAVID AARÓN MARGOLÍN SCHABES
General Director of Central Bank Operations

LIC. FERNANDO LUIS CORVERA CARAZA
Director of Central Bank Provisions

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