Circular 41/2008 — Modifies Circular 2019/95

"2008, Year of Physical Education and Sport" CIRCULAR 41/2008 Mexico, D.F. on September 2, 2008. TO THE MULTIBANK INSTITUTIONS: SUBJECT: MODIFICATIONS TO CIRCULAR 2019/95

The Bank of Mexico, based on the provisions of Article 28 of the Political Constitution of the United Mexican States, sixth and seventh paragraphs; Article 24 of the Bank of Mexico Law; Article 22 of the Law for Transparency and Ordering of Financial Services; Article 8, third and sixth paragraphs, Article 10, as well as Articles 17, fraction I, and 19, fraction IX, which provide for the attribution of the Bank of Mexico, through the Directorate of Central Banking Regulations and the Directorate of Operations, respectively, all of the Internal Regulations of the Bank of Mexico; as well as the Sole Article of the Agreement on the Affiliation of the Administrative Units of the Bank of Mexico, fractions I and IV; with the objective of promoting the sound development of the financial system, by updating the procedure for determining the National Currency Interbank Equilibrium Interest Rate (TIIE) to make it more consistent with current debt market conditions, has resolved to modify paragraphs one of numeral 1.12.1; paragraphs one, three, and five of numeral 1.12.2; numeral 1.13.11; paragraphs one and two of numeral 1.13.12; paragraph one of numeral 1.13.2; numeral 1.21.2; paragraph three of numeral 1.21.4; paragraph two of numeral 1.21.5; and paragraph two of numeral 1.4, all of Annex 1 of Circular 2019/95, to remain as follows.

ANNEX 1 NATIONAL CURRENCY INTERBANK EQUILIBRIUM INTEREST RATE (TIIE)

1.1 DETERMINATION OF THE TIIE 1.11. Participating Institutions 1.12. Submission of Quotations

“1.12.1 The Bank of Mexico will inform participating institutions in writing, on banking business days, of the interest rate quotations it will receive in accordance with the provisions of this Annex, the terms and amounts for which they may present them, as well as the differential referred to in Appendix 2 of this Annex. Additionally, the Bank of Mexico may establish minimum and maximum limits for the aforementioned amounts, within which quotations may be presented, in multiples of a base amount designated for this purpose by the Bank of Mexico itself, which shall be referred to as the base amount. . .”

“1.12.2 Quotations must be submitted to the National Operations Department of the Bank of Mexico, no later than 12:00:00 hours on the corresponding banking business day. For this purpose, the Bank of Mexico will request at least six institutions chosen randomly to present, within the established schedule, quotations for each of the terms called for the banking business day in question. . . . Quoted interest rates must be expressed in percent, rounded to four decimal places. . . . In the event of failures in the SIAC-BANXICO system, quotations may be submitted via telephone or fax and must be confirmed in writing no later than 17:00:00 hours on the same banking business day, using the model attached as Appendix 1, in a closed envelope, accompanied by a cover letter. Both documents must be duly signed by the same authorized representatives of the participating institutions, and the letter must show the signature knowledge granted by the Cash Account Operations Office of the Bank of Mexico, so that the signatures must be registered in the aforementioned office.”

1.13. Procedure for Determining the TIIE

“1.13.11. In the event that by 12:00:00 hours on the banking business day indicated in numeral 1.12.2, the Bank of Mexico has obtained quotations from at least six participating institutions, it will proceed to calculate the corresponding TIIE, using the procedure referred to in Appendix 2.”

“1.13.12. In the event that by 12:00:00 hours on the banking business day in question, the Bank of Mexico has not received at least six quotations, it will again request the institutions chosen in accordance with numeral 1.12.2 to present their quotations no later than 12:15:00 hours.

In the event that, based on the new request, at least six quotations are not received, the Bank of Mexico will request the participating institutions that had presented quotations to quote rates again and will request one or more other participating institutions to present quotations, no later than 12:30:00 hours. In this last case, the Bank of Mexico will make the requests, for each of the required terms, sequentially and in the order corresponding to the respective institutions considering their names alphabetically, starting from the institution immediately following that to which the last presentation of quotations was requested in accordance with the provisions of this paragraph. . .”

“1.13.2 The general results will be available to participating institutions no later than 14:00:00 hours on the same day the rates are determined through the SIAC-BANXICO or any other electronic, computing, or telecommunications medium authorized by the Bank of Mexico for this purpose. . .”

1.2 FINANCING AND DEPOSITS RELATED TO THE DETERMINATION OF THE TIIE 1.21. Financing that the Bank of Mexico will grant to participating institutions

“1.21.2 Term to Formalize Operations On the next banking business day following the submission of quotations, institutions must make sufficient guarantees or securities available to the Bank of Mexico to formalize the financing through the celebration of credit and/or repo operations, within the term provided for this purpose in the Manual. The Bank of Mexico will attempt to formalize credit and/or repo operations up to the total amount of financing assigned in the schedules defined in the Manual, which may be consulted through the SAGAPL. For this purpose, the aforementioned financing will first be attempted to be formalized through credit operations and subsequently, if necessary, through repo operations in accordance with the terms provided in this Annex.”

“1.21.4 . . d) . . . . To formalize these repo operations, institutions must transfer the Securities Subject to the Repo to the securities deposit account that the S.D. Indeval, Institution for the Deposit of Securities, S.A. de C.V., (Indeval) maintains at the Bank of Mexico. Such transfer must be instructed through the SAGAPL. . .”

“1.21.5 Common Provisions . . In the event that an institution does not have sufficient deposits or securities to guarantee or carry out the credit and/or repo operations for the total amount of financing communicated to it, the Bank of Mexico will deposit the amount with respect to which the credit and/or repo operations could not be formalized until the moment the corresponding guarantees are constituted. The aforementioned institution may settle the pending credit and/or repo operations on any subsequent banking business day following the notification. The Bank of Mexico will charge, as a conventional penalty to the Single Account of the respective institution, the amount resulting from applying to the amount with respect to which the credit and/or repo operations could not be formalized, the corresponding interest rate for the number of natural days of non-compliance.”

“1.4 GENERAL PROVISIONS . . The corresponding refunds will be made upon maturity of the term of each operation for which such gains were obtained. The allocation of such gains will be made in proportion to the amount quoted by the institutions that participated in the respective auction. . .”

TRANSITORY SINGLE. This Circular will enter into force on September 5, 2008.