Circular 20/2022 — Modifies Circular 4/2012

Wednesday, December 14, 2022 OFFICIAL GAZETTE 153 BANCO DE MEXICO CIRCULAR 20/2022 addressed to Credit Institutions, Brokerage Houses, Investment Funds, Multiple-Object Financial Societies that have equity links with Multiple Banking Institutions, General Warehouses of Deposit, and the National Financial Institution for Agricultural, Rural, Forest and Fisheries Development, regarding the Modifications to Circular 4/2012 (Unique Product Identifier and Unique Transaction Identifier).

At the margin a logo, which says: Bank of Mexico.- “2022, Year of Ricardo Flores Magón”.

CIRCULAR 20/2022 TO CREDIT INSTITUTIONS, BROKERAGE HOUSES, INVESTMENT FUNDS, MULTIPLE-OBJECT FINANCIAL SOCIETIES THAT HAVE EQUITY LINKS WITH MULTIPLE BANKING INSTITUTIONS, GENERAL WAREHOUSES OF DEPOSIT, AND THE NATIONAL FINANCIAL INSTITUTION FOR AGRICULTURAL, RURAL, FOREST AND FISHERIES DEVELOPMENT:

SUBJECT: MODIFICATIONS TO CIRCULAR 4/2012 (UNIQUE PRODUCT IDENTIFIER AND UNIQUE TRANSACTION IDENTIFIER)

The Bank of Mexico, in order to continue promoting the sound development of the financial system, has decided to issue rules applicable to the Unique Product Identifier and the Unique Transaction Identifier in over-the-counter derivative operations, in order to allow the data of said operations to be aggregated and improve the quality of the information in the corresponding reports, facilitating, in turn, international coordination to identify risk concentrations.

For the above, based on articles 28, sixth and seventh paragraphs, of the Political Constitution of the United Mexican States, 2nd, 3rd, fraction I, 24, 26, first paragraph, and 36 of the Bank of Mexico Law, 46, fraction XXV, and 48 of the Credit Institutions Law, 176, first paragraph, of the Securities Market Law, 15, second paragraph, of the Investment Funds Law, 11 Bis 2, fraction XII, and 87-D, fourth paragraph, of the General Law of Organizations and Auxiliary Credit Activities, 9, of the National Financiera Law, 7, fraction X, and 19 of the Organic Law of the National Financial Institution for Agricultural, Rural, Forest and Fisheries Development, 6, second paragraph, of the Organic Law of the Federal Mortgage Society, 9, second paragraph, of the Organic Law of the National Bank of Foreign Trade, 9, second paragraph, of the Organic Law of the Bank of Well-being, 8, second paragraph, of the Organic Law of the National Bank of the Army, Air Force and Navy, 10, second paragraph, of the Organic Law of the National Bank of Public Works and Services, 22, first paragraph, of the Law for Transparency and Ordering of Financial Services, 4th, first paragraph, 8th, fourth and eighth paragraphs, 10, first paragraph, 14, first paragraph, in relation to 25 Bis, fraction VII and 14 Bis, first paragraph, in relation to article 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 Financial Stability and the General Legal Directorate, respectively, as well as Second, fractions IV and X, of the Agreement on the Assignment of Administrative Units of the Bank of Mexico, it has resolved to add the definitions of UPI and UTI, in numeral 1.1, a fourth, fifth and sixth paragraphs, moving in order the current fourth, fifth, sixth and seventh paragraphs, in numeral 5.1, and a second paragraph in numeral 12.4, of the “Rules for the Conduct of Derivative Operations”, contained in Circular 4/2012, to remain in the following terms:

RULES FOR THE CONDUCT OF DERIVATIVE OPERATIONS

1. GENERAL PROVISIONS

“1.1. For the purposes of these Rules, the following shall be understood, in singular or plural, as:

…

UPI: the identifier referred to in the “Rules applicable to the Unique Product Identifier (UPI) and the Unique Transaction Identifier (UTI) in over-the-counter derivative operations”, issued by Circular 19/2022 of the Bank of Mexico, or any other provisions that, in their case, replace them.

UTI: the identifier referred to in the “Rules applicable to the Unique Product Identifier (UPI) and the Unique Transaction Identifier (UTI) in over-the-counter derivative operations”, issued by Circular 19/2022 of the Bank of Mexico, or any other provisions that, in their case, replace them.

…”

5. INSTRUMENTATION AND NEGOTIATION

“5.1 …

…

…

Entities, Investment Funds, General Warehouses of Deposit and Sofomes, shall include the corresponding UPI in the information reports of Derivative Operations they enter into in over-the-counter markets, in the terms established in numeral 12.4 of these Rules.

Entities, Investment Funds, General Warehouses of Deposit and Sofomes, shall include the corresponding UTI in the Confirmation of Derivative Operations they enter into in over-the-counter markets.

The identifiers referred to in the two preceding paragraphs shall comply with the terms and conditions provided in the “Rules applicable to the Unique Product Identifier (UPI) and the Unique Transaction Identifier (UTI) in over-the-counter derivative operations”, issued by Circular 19/2022 of the Bank of Mexico or any other provisions that, in their case, replace them.

…

…

…

…

a) … b) … c) …”

12. INFORMATION

“12.4 …

With regard to the identification of transactions and products on Derivative Operations in over-the-counter markets, Entities, Investment Funds, Sofomes and General Warehouses of Deposit, shall report the corresponding UPI and UTI.”

TRANSITORY PROVISIONS

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

SECOND.- The requirements related to the UTI identifier referred to in numerals 5.1 and 12.4 of these Rules shall enter into force on December 1, 2023.

THIRD.- The requirements related to the UPI identifier referred to in numerals 5.1 and 12.4 of these Rules, shall enter into force within a period of 360 natural days counted from the first recognition published by the Bank of Mexico, in accordance with what is established in Rule 4.2 of the “Rules applicable to the Unique Product Identifier (UPI) and the Unique Transaction Identifier (UTI) in over-the-counter derivative operations”, issued by Circular 19/2022.

Wednesday, December 14, 2022 OFFICIAL GAZETTE 155 Mexico City, December 6, 2022.- BANCO DE MEXICO: General Director of Financial Stability, Fabrizio López Gallo Dey.- Signature.- General Legal Director, Luis Urrutia Corral.- Signature.

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