Circular 20/2009 — Amending Securities Lending Rules

CIRCULAR 20/2009 Mexico, D.F., August 31, 2009. TO CREDIT INSTITUTIONS, SECURITIES COMPANIES, INVESTMENT COMPANIES, SPECIALIZED INVESTMENT COMPANIES FOR RETIREMENT FUNDS AND THE RURAL FINANCIAL INSTITUTION: SUBJECT: RESOLUTION AMENDING THE RULES FOR SECURITIES LENDING

The Bank of Mexico, based on Article 28 of the Political Constitution of the United Mexican States, paragraphs sixth and seventh; Articles 24 and 26 of the Bank of Mexico Law; Article 53, section II and Article 81 of the Credit Institutions Law; Article 176 of the Securities Market Law; Article 15, second paragraph of the Investment Companies Law; Article 48, section VI of the Retirement Savings Systems Law; Article 19 of the Organic Law of the Rural Financial Institution; Article 22 of the Law for the Transparency and Ordering of Financial Services; as well as Articles 8, third and sixth paragraphs, 10, 12 in relation to Article 19, section IX; 14 in relation to Article 25, relation II and 17, section I, which establish the powers of the Bank of Mexico to issue provisions through the General Directorate of Central Bank Operations, the General Directorate of Financial System Analysis, and the Directorate of Central Bank Provisions, respectively, all of the Internal Regulations of the Bank of Mexico, as well as the Single Agreement on the Assignment of Administrative Units of the Bank of Mexico, sections I, III and IV, with the objective of promoting the sound development of the financial system and protecting the interests of the public, considering that it is convenient to incentivize the celebration of securities lending operations by allowing the agreed premium to be freely denominated, in order to reduce transaction costs and market segregation, taking into account that exchange rate risk can be efficiently managed through appropriate margin calls and limits, has resolved to modify section 6.1 of the "Rules to which credit institutions; securities companies; investment companies, specialized investment companies for retirement funds and the Rural Financial Institution must adhere in their securities lending operations", to read as follows:

6. PREMIUM

"6.1 The agreed premium in Securities Lending operations that the borrower is obligated to pay as consideration for such operations may be freely denominated in national currency, Foreign Exchange or UDIS, independent of the denomination of the Shares and Securities subject to the operation.

In the case of Securities Lending operations with persons other than Entities, where the currency in which the premium is denominated is different from that of the Shares and Securities, the Entities will be responsible for keeping a record of the counterparty's consent to enter into the operations on these terms."

TRANSITORY

SINGLE. This Resolution shall enter into force on August 31, 2009.