Circular 3/2005 — Modifications to Circular 115/2005

CIRCULAR 3/2005 Mexico City, D.F., May 13, 2005. TO BROKERAGE HOUSES: SUBJECT: MODIFICATIONS TO CIRCULAR 115/2002.

The Bank of Mexico, based on articles 24 and 32 of its Law, in order to address various requests from these brokerage houses seeking regulations under which they may conduct operations with minted fine metals, has resolved, effective May 16 of this year, to add the definition of "Minted Fine Metals" to section CB.3.1.1, add a second paragraph to section CB.3.1.2 (shifting the current second paragraph to become the third) and point 9 to Annex 2; modify the definition of "Spot Operations" in the aforementioned section CB.3.1.1, the first paragraph of the referenced section CB.3.1.2, as well as the second and third paragraphs of section CB.3.1.3, all of Circular 115/2002, to read as follows:

CB.3 OPERATIONS WITH CURRENCIES, MINTED FINE METALS, FOREIGN EXCHANGE RISK POSITIONS AND POSITIONS FROM OPERATIONS WITH TITLES DENOMINATED IN CURRENCIES.

CB.3.1 OPERATIONS WITH CURRENCIES AND MINTED FINE METALS.

"CB.3.1.1 DEFINITIONS. For brevity in CB.3.1, the following shall be understood: ... Minted Fine Metals: those gold and silver coins whose minting and issuance are determined by the Bank of Mexico, in accordance with the characteristics established in the corresponding decrees, as well as those national pieces that have had the character of coins.

Spot Operations: those in which the delivery of the Currencies or the Minted Fine Metals and their counter-value is carried out no later than two Business Days after the agreement of the corresponding operation."

"CB.3.1.2 OPERATIONS. Brokerage houses may conduct Spot Operations for the purchase and sale of Currencies and Minted Fine Metals, against national currency or against other Currencies.

Brokerage houses may also conduct Spot Operations for the swap of Minted Fine Metals. ..."

"CB.3.1.3 INFORMATION TO THE PUBLIC. .... Furthermore, brokerage houses shall make known the exchange rates or maximum selling and minimum buying prices at which they are willing to conduct Spot Operations, through signs, boards, or displays that prominently show the respective quotes or prices alongside the windows or counters where they conduct their operations, without prejudice to the exchange rates or prices also being displayed in other areas of the aforementioned premises.

The operations conducted must be carried out at exchange rates equal to or more favorable to the public than those announced. This is without prejudice to the fact that in Spot Operations of Minted Fine Metals where brokerage houses act as buyers, they may apply discounts to the cited prices due to the quality of the Minted Fine Metals subject to the operation."

"ANNEX 2 FOREIGN CURRENCY OPERATIONS THAT, UNDER SECTION CB.3.2, DO NOT COUNT TOWARD THE FOREIGN EXCHANGE RISK POSITION. ... 9. OPERATIONS OR THAT PART OF THEM, REFERRED TO MINTED FINE METALS. ..."