Circular 43/2008 — Modifies Circular 2019/95

"2008, Year of Physical Education and Sport" CIRCULAR 43/2008 Mexico, D.F. on September 23, 2008. TO THE INSTITUTIONS OF MULTIPLE BANKING:
SUBJECT: MODIFICATIONS TO CIRCULAR 2019/95

The Bank of Mexico, based on what is provided in Article 28 of the Political Constitution of the United Mexican States, sixth and seventh paragraphs; Articles 24, 28, 29, 32, and 33 of the Bank of Mexico Law; Article 8, third and sixth paragraphs, Article 10, first paragraph, Article 14, first paragraph in relation with Article 25, fraction II, and Article 17, fraction I, of the Internal Regulations of the Bank of Mexico, which grant the Bank of Mexico the authority to issue provisions through the General Directorate of Analysis of the Financial System and the Directorate of Central Banking Provisions, respectively, as well as the Single Agreement on the Assignment of Administrative Units of the Bank of Mexico, fractions III and IV, with the objective of promoting the sound development of the financial system by incorporating into the definition of "Foreign Currency to be Received" in section M.13.1 of Circular 2019/95, under the headings of exchange and derivative operations, investment companies; specialized investment companies for retirement funds, and insurance companies that have a certain rating, has resolved to modify the aforementioned section M.13.1 in the definition "Foreign Currency to be Received," subsections a) and b), of Circular 2019/95, to read as follows.

M.1 PASSIVE OPERATIONS
M.13. ADMISSION REGIMES FOR LIABILITIES AND INVESTMENT FOR OPERATIONS IN FOREIGN CURRENCY

"M.13.1 DEFINITIONS
...
Foreign Currency to be Received: that to which one has a right by reason of the conclusion of:
a) Spot exchange operations concluded with the following Mexican financial entities: credit institutions; stock brokerage firms; investment companies; specialized investment companies for retirement funds; exchange houses and insurance companies, which have a short-term rating equal to or higher than mxA-2 on the Standard and Poor's Caval scale or the equivalent rating grade granted by other internationally recognized rating agencies, and with foreign financial entities and other persons, which have a Liquidity Requirement Rating, and b) Financial operations known as derivatives concluded in recognized markets, and financial operations known as derivatives concluded with the following Mexican financial entities: credit institutions; stock brokerage firms; investment companies; specialized investment companies for retirement funds; insurance companies that have a short-term rating equal to or higher than mxA-2 on the Standard and Poor's Caval scale or the equivalent rating grade granted by other internationally recognized rating agencies, and with foreign financial entities and other persons, which have a Liquidity Requirement Rating. All the aforementioned operations must have a maturity of up to one year. ..."

TRANSITORY PROVISIONS

FIRST. This Circular shall enter into force on September 26, 2008.

SECOND. For the determination of the liability admission limit provided in Circular 2019/95, section M.13.2, institutions that submit within 30 days following the entry into force of this Circular a request to the Management of Authorizations, Consultations, and Legal Control, may consider from January 2008 as "Foreign Currency to be Received," in addition to the regime in force at the time, that which arises from spot exchange operations and financial operations known as derivatives, concluded with Mexican investment companies and specialized investment companies for retirement funds, as well as with Mexican insurance companies that have a short-term rating equal to or higher than mxA-2 on the Standard and Poor's Caval scale or the equivalent rating grade granted by other internationally recognized rating agencies. In the case of financial operations known as derivatives, these must have a maturity of up to one year.