Circular 9/2014 — Monetary Regulation Deposits

(First Section) OFFICIAL GAZETTE Monday, June 9, 2014 BANK OF MEXICO CIRCULAR 9/2014, addressed to Credit Institutions, regarding Monetary Regulation Deposits. A logo appears at the margin, stating: Bank of Mexico. CIRCULAR 9/2014 TO CREDIT INSTITUTIONS: SUBJECT: MONETARY REGULATION DEPOSITS The Bank of Mexico, with the objective of promoting the sound development of the financial system and improving the implementation of monetary policy, considers it convenient to modify the interest rate paid on monetary regulation deposits, through which it regulates the excess liquidity in the money market, with the aim of linking it to the objective that its Board of Directors determines for the One-Day Interbank Interest Rate; to establish that monetary regulation deposits may be composed of cash, securities, or both, in the proportions and with the characteristics determined by the Central Institute; and finally, to maintain more precisely the other characteristics of the deposits currently constituted. For the foregoing, based on Articles 28, paragraphs sixth and seventh, of the Political Constitution of the United Mexican States, 14, 24 and 28, of the Bank of Mexico Law, 22 of the Law for Transparency and Ordering of Financial Services, as well as 4, first paragraph, 8, first, fourth and seventh paragraphs, 10, first paragraph, 12, first paragraph, in relation to 19 Bis, fraction V, and 14 Bis, in relation to 17, fraction I, of the Internal Regulations of the Bank of Mexico, which grant it the authority to issue provisions through the General Directorate of Central Banking Operations and the General Legal Directorate, respectively, as well as Second, fractions VI and X, of the Agreement on the Assignment of Administrative Units of the Bank of Mexico, it has resolved to issue the following:

RULES APPLICABLE TO MONETARY REGULATION DEPOSITS

1. DEFINITIONS For the purposes of these Rules, the following shall be understood, in singular or plural: Bank: the Bank of Mexico. Single Account: the national currency deposit account that each Credit Institution maintains at the Bank, in accordance with Article 113 of Circular 3/2012, issued by the Bank. Banking Business Days: the days on which Credit Institutions are not obligated to close their doors or suspend operations, in accordance with the general provisions issued for such effect by the National Banking and Securities Commission. Monetary Regulation Deposit: the monetary regulation deposit that Credit Institutions are obligated to constitute in accordance with the provisions of Article 28 of the Bank of Mexico Law. Development Banking Institutions: the National Foreign Trade Bank, S.N.C., Development Banking Institution; the National Bank of the Army, Air Force and Navy, S.N.C., Development Banking Institution; the National Savings Bank and Financial Services, S.N.C., Development Banking Institution; Nacional Financiera, S.N.C., Development Banking Institution; the Federal Mortgage Society, S.N.C., Development Banking Institution; and the National Bank of Public Works and Services, S.N.C., Development Banking Institution. Multiple Banking Institutions: legal persons authorized to act with such status in accordance with the provisions of the Credit Institutions Law. Credit Institutions: the Multiple Banking Institutions and the Development Banking Institutions. Financial Network: the Bank's website at address http://webdgobc or, as applicable, the electronic, computing or telecommunications medium determined for such effect by the Bank itself.

Monday, June 9, 2014 OFFICIAL GAZETTE (First Section) SIAC-BANXICO: the System for Attention to Bank Account Holders.

2. PROCEDURE FOR THE TERMINATION OF EXISTING MONETARY REGULATION DEPOSITS The Bank shall terminate the Monetary Regulation Deposits that Credit Institutions have constituted in accordance with the provisions of Circular 30/2008, issued by the Bank on July 9, 2008, and its modification made known through Circular 36/2008 issued on August 1, 2008. The aggregate balance of the principal amount of the aforementioned Monetary Regulation Deposits, as of the date of issuance of these Rules, amounts to $278,529,019,107.00 (TWO HUNDRED SEVENTY-EIGHT MILLION FIVE HUNDRED TWENTY-NINE MILLION ONE HUNDRED NINE THOUSAND ONE HUNDRED SEVEN PESOS 00/100 M.N.). For the purposes of the preceding paragraph, on June 19, 2014, at the opening of operations of the SIAC-BANXICO, the Bank will make the necessary credits to the Single Account maintained for each Credit Institution. Likewise, on the same date, the Bank will credit the amount for interest accrued on the Monetary Regulation Deposits maintained during the last interest period. The interest accrued during this last period will be calculated by applying the rate resulting from the formula specified in the provisions of the aforementioned Circular 30/2008 in effect on the date of issuance of the present, using the weighted banking funding rate determined and published by the Bank each Banking Business Day, from the beginning of said interest period, that is, from May 22, 2014, until June 18, 2014.

3. PROCEDURE FOR THE CONSTITUTION OF MONETARY REGULATION DEPOSITS Credit Institutions are obligated to constitute Monetary Regulation Deposits at the Bank for a total amount of $278,529,019,107.00 (TWO HUNDRED SEVENTY-EIGHT MILLION FIVE HUNDRED TWENTY-NINE MILLION ONE HUNDRED NINE THOUSAND ONE HUNDRED SEVEN PESOS 00/100 M.N.). This amount must be deposited on June 19, 2014 and will be automatically charged by the Bank to the Single Account of each Credit Institution, using the resources derived from the cancellation of the deposits mentioned in item 2 above. The Monetary Regulation Deposits that each Credit Institution must make will have the following characteristics:

3.1 Amount The amount that each Credit Institution must deposit on June 19, 2014 into the Single Account maintained by the Bank for it will be equal to the amount of its respective existing Monetary Regulation Deposit as of June 18 of the current year. Credit Institutions may consult the referred amount of their Monetary Regulation Deposit existing as of June 18, 2014, in the account statement of that date, which the Bank provides to them through their extranet page accessible from the Financial Network.

3.2 Term The Monetary Regulation Deposits constituted under these Rules will have an indefinite duration. In any case, the Bank will inform in advance the date and procedure for the withdrawal of the balance of said Monetary Regulation Deposits.

3.3 Returns Monetary Regulation Deposits will accrue interest for periods that will begin from the date on which the Monetary Regulation Deposit is constituted (in the case of the first interest period) or on the last day of the immediately preceding interest period (for subsequent interest periods). These interest calculation periods may be 27, 28, 29 or 30 days, such that the last day of the period coincides with a Thursday. In the event that the Thursday in question corresponds to a non-banking business day, the last day of said period will be adjusted to the nearest preceding or following Banking Business Day, giving preference in case of equality to the preceding day. The payment of these interests will be carried out by credits to the Single Account that the Bank maintains for the credit institutions, on the last day of the interest calculation period in question. Monetary Regulation Deposits will accrue interest for the days effectively elapsed in each interest calculation period, including the first of said days but excluding the last, at the rate resulting from applying the formula referred to in this item.

(First Section) OFFICIAL GAZETTE Monday, June 9, 2014 For each interest calculation period, the rate resulting from the following formula, expressed in percent, rounded to two decimal places, will be applied: ri = A The one-day interbank interest rate that the Bank's Board of Directors has determined as the target rate for monetary policy purposes, expressed in annual form and in percent with rounding to two decimal places (for example, for illustrative and hypothetical purposes, if the value of the said target rate were to be equal to 3.5%, then the value of ri must be equal to 3.50 in this formula), in effect on each of the days of the interest calculation period (each day “i”) according to the most recent monetary policy bulletin published by the Bank, through its internet website identified with the domain name: www.banxico.org.mx or through any other electronic, computing or telecommunications medium authorized for such effect by the Bank itself. In the latter case, the Bank will promptly inform the medium through which said rate will be disseminated. In the event that, for any cause, the publication of the monetary policy bulletin cannot be made, the target rate made known in the monetary policy bulletin published on the date closest to the interest calculation period will be taken as reference for the interest calculation. In the event that this rate ceases to be made known permanently, the Bank will make known the rate that replaces it for the purposes of calculating the interest referred to in these Rules. Interest will be calculated by multiplying the daily average balance of the Monetary Regulation Deposit in each interest period, from and including the first day of that period until but excluding the last day of the period, by the rate resulting in accordance with this item, divided by thirty-six thousand and multiplied by the number of days effectively elapsed during the interest period in question.

4. COMPOSITION OF THE MONETARY REGULATION DEPOSIT The amount that Credit Institutions are obligated to maintain deposited at the Bank for the concept of Monetary Regulation Deposit in terms of the first paragraph of item 3 of these Rules, may be composed of cash, securities, or both, in the proportions and with the characteristics determined by the Bank itself.

TRANSITIONAL PROVISIONS FIRST. These Rules will enter into force on June 17, 2014. SECOND. From June 19, 2014, Circular 30/2008 of July 9, 2008, as modified by Circular 36/2008 of August 1, 2008, is repealed. The Monetary Regulation Deposits constituted under the authority of the Circular being repealed will be settled in accordance with the provisions of item 2 of these Rules. Mexico, D.F., June 5, 2014.- The General Director of Central Banking Operations, Jaime José Cortina Morfín.- Rubric.- The General Legal Director, Luis Urrutia Corral.- Rubric.

Monday, June 9, 2014 OFFICIAL GAZETTE (First Section) For any inquiries regarding the content of this Circular, please contact the Department of Authorizations, Inquiries and Legal Control, at the phone numbers (55) 5237-2308, (55) 5237-2317 or (55) 5237-2000 Ext. 3200.