Circular 4/2003 — Amends Circular 115/2002

CIRCULAR 4/2003 Mexico City, D.F., July 3, 2003. TO SECURITIES COMPANIES: SUBJECT: FOREIGN EXCHANGE OPERATIONS. The Bank of Mexico, based on articles 24 and 32 of its Law and considering that from the analysis of the various requests submitted by the Mexican Association of Stock Market Intermediaries, A.C., as well as current financial market conditions, it is deemed appropriate to authorize securities companies to enter into foreign exchange operations with the public, has resolved that, effective July 4, 2003, to modify paragraph CB.3.1 of its Circular 115/2002 dated October 31, 2002, to read as follows:

CB.3.1 FOREIGN EXCHANGE OPERATIONS.

CB.3.1.1 DEFINITIONS. For brevity in CB.3.1, the following shall be understood:

Business Days: the days that are business days both in the United Mexican States, as well as in the place or places where the Foreign Exchange subject to the operation is delivered or received.

Spot Operations: those in which the delivery of the Foreign Exchange and its counter-value are carried out no later than two Business Days after the agreement of the corresponding operation.

CB.3.1.2 OPERATIONS. Securities companies may carry out Spot Operations for the purchase and sale of Foreign Exchange, against national currency or against other Foreign Exchange.

Securities companies may not charge commissions for the Spot Operations they enter into.

CB.3.1.3 INFORMATION TO THE PUBLIC. Securities companies must inform the public about the Spot Operations they are willing to perform.

Likewise, securities companies will make known the exchange rates at which they are willing to carry out Spot Operations, through signs, boards, or panels that, in a prominent manner, show the respective quotations next to the windows or counters where they conduct their operations, without prejudice to the fact that the exchange rates may also be displayed in other areas of the aforementioned premises.

The operations they carry out must be executed at exchange rates equal to or more favorable to the public than those announced.

CB.3.1.4 DOCUMENTATION, RECEIPTS, AND REGISTRY. The Spot Operations that securities companies carry out with national or foreign financial entities must be documented under master contracts entered into in writing by the parties prior to the agreement of any of these operations. Securities companies will be responsible for ensuring that the contracts they use and the operations they enter into comply with this circular and other applicable provisions.

They must also be documented through master contracts as stated in the preceding paragraph, the Spot Operations that they carry out habitually with clients other than financial entities.

Regarding clients with whom securities companies have entered into a stock market intermediation contract, in substitution of the aforementioned master contract, they may enter into a modifying agreement to said stock market intermediation contract in order to foresee the conditions and other characteristics according to which they will carry out the Spot Operations. In this regard, what is provided in article 91 of the Securities Market Law shall apply, insofar as relevant.

In the cases mentioned, each operation must be agreed upon through the forms that the master contract or the stock market intermediation contract establish. The foregoing, understanding that the operations must be confirmed on the same day of their agreement, through some means that leaves a written record of said operations.

Securities companies must issue receipts for the Spot Operations they carry out with clients with whom they do not operate habitually and, therefore, do not have a master contract or the carrying out of said operations is not foreseen in a stock market intermediation contract.

Likewise, in all cases, securities companies must carry out the records that correspond to the Spot Operations they enter into, on the same day of their agreement.

TRANSITORY PROVISION SINGLE.- During a period of 180 days counted from the entry into force of this Circular, securities companies may continue to carry out Spot Operations in which the Foreign Exchange and its counter-value are delivered no later than three Business Days after the agreement of the corresponding operation and without necessity, if applicable, to document them through master contracts or stock market intermediation contracts.