Circular 7/2007 — Modifies Circular-Telefax 2/2006

CIRCULAR 7/2007 Mexico City, August 20, 2007. TO CREDIT INSTITUTIONS: SUBJECT: PROCEDURE TO ACT AS MARKET MAKERS FOR GOVERNMENT SECURITIES.

The Bank of Mexico, in its capacity as the financial agent of the Federal Government, based on Articles 3, fraction III, 7, fraction I, and 10 of the Bank of Mexico Law; Articles 8, paragraphs third and fourth, 10, and 12 in relation to Article 19, fractions I, II, VI, and IX, which provide for the powers of the General Directorate of Central Bank Operations to negotiate and formalize, among others, operations with securities; to carry out the necessary acts for the issuance, placement, purchase, sale, and redemption of government securities; to operate mandates or commissions entrusted to the Bank related to the aforementioned powers; and to participate in the issuance of provisions; as well as Article 17, fraction I, which establishes the power of the Central Bank Provisions Directorate to issue provisions, all of the Internal Regulations of the Bank of Mexico published in the Official Gazette of the Federation on September 30, 1994, whose last modification was published in said Gazette on April 26, 2007, and at the request of the Ministry of Finance and Public Credit, attaches a copy of Office 305.088/2007 dated July 26, 2007, through which said Department modifies numerals 2.4 and 4.2.5 of Office 305.-038/2006, dated February 27, 2006, made known through our Circular-Telefax 2/2006, as well as adds to the aforementioned Office Annex 2 titled "Quantification of the Cost for the Loan of Securities to Market Makers by the Bank of Mexico." The foregoing, so that those institutions may be able to know it.

Sincerely, BANK OF MEXICO