Regulatory Alerts2010-10-25 | Circular 32/2010Added
Circular 32/2010 — Modifies Circular 4/2006
The Bank of Mexico amends Circular 4/2006 to authorize multiple banking institutions, brokerage houses, investment companies, and limited-purpose financial companies to conduct derivative operations with commodity underlyings, specifically yellow corn, wheat, soy, sugar, pork, natural gas, aluminum, and copper. The amendment permits physical delivery for third-party accounts but prohibits entities from settling these specific commodity derivatives in kind when acting for their own account or for own-risk hedging. The regulation also clarifies that such activities do not violate prohibitions on commercial trading of goods under the Credit Institutions Law, provided settlement is cash-based or physically settled via position closure rather than actual goods transfer.
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