CIRCULAR 9/2007

Mexico, D.F., August 31, 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 the provisions of Articles 3, fraction III, 7, fraction I, and 10 of the Bank of Mexico Law, paragraphs 3 and 4 of Article 8, Articles 10 and 12 in relation to fractions I, II, VI, and IX of Article 19, which establish the powers of the General Directorate of Central Bank Operations to negotiate and formalize, among others, operations with securities; carry out the necessary acts for the issuance, placement, purchase, sale, and redemption of government securities; operate mandates or commissions entrusted to the Bank related to the aforementioned powers; and participate in the issuance of provisions, as well as in Article 17, fraction I, which establishes the power of the Directorate of Central Bank Provisions to issue provisions, all of the Internal Regulations of the Bank of Mexico published in the Official Journal of the Federation on September 30, 1994, whose last modification was published in said Journal on April 26, 2007, and at the request of the Secretariat of Finance and Public Credit, attached to this copy of Office 305.110/2007 dated August 28, 2007, through which the aforementioned Secretariat: i) Establishes the procedure for the collection of the premium that Market Makers must pay to the Bank of Mexico for each securities lending transaction they conclude; ii) Modifies section 4.2.5 of Office 305-038/2006, dated February 27, 2006, made known through our Circular-Telefax 2/2006; and iii) Modifies the transitional provisions FIRST, second paragraph, and SECOND of Office 305-088/2007, dated July 26, 2007, made known through our Circular-Telefax 7/2007. The foregoing, so that these institutions may be aware of it.

Sincerely,

BANK OF MEXICO