General Provisions Applicable to International Quotation Systems — SHCP — MX

DOF: 22/12/2016

GENERAL PROVISIONS APPLICABLE TO INTERNATIONAL QUOTATION SYSTEMS

A seal with the National Coat of Arms appears on the margin, which reads: United Mexican States.- Ministry of Finance and Public Credit.- National Banking and Securities Commission.

The National Banking and Securities Commission, based on the provisions of Article 263, fraction II and the last paragraph of the Securities Market Law, as well as Articles 4, fractions XXXVI and XXXVIII, and 16, fraction I of the National Banking and Securities Commission Law, and

CONSIDERING

That it is convenient to determine the circumstances for listing foreign securities in the international quotation system established by stock exchanges, considering for such purposes the participation of brokerage houses and credit institutions, the characteristics of the securities themselves, and whether they are regulated in their market of origin in accordance with the principles established in the Securities Market Law, in order that investors have a diversity of investment options and the protection of their interests and adequate disclosure of information to the market are safeguarded;

That in this regard, it is necessary to provide for those securities that cannot be listed in the international quotation system established by stock exchanges, taking into account their issuance structure and in order to promote fair competition among securities that can serve as investment instruments;

That at the same time, it is convenient to establish the circumstances for the cancellation of securities in such listing, in line with what happens in the markets where they are originally quoted, in order that in the international quotation system, securities of issuers that comply with the regulation applicable to them in their market of origin are quoted;

That it is important to establish that the National Banking and Securities Commission will not exercise supervisory powers over the issuers of the securities subject to recognition for listing in the international quotation system and that listing in the aforementioned international quotation system does not imply certification regarding the quality of such securities, or the solvency, liquidity, or credit quality of the issuer, and

That in order to have a single legal instrument applicable to international quotation systems that systematizes their integration and homogenizes the terminology used in order to provide legal certainty, which will also facilitate consultation, compliance, and observance of the applicable provisions, it has resolved to issue the following:

GENERAL PROVISIONS APPLICABLE TO

INTERNATIONAL QUOTATION SYSTEMS

Chapter One

On the Recognition of Foreign Securities

First Section

Direct Recognition

Second Section

Promoted Recognition

Chapter Two

On the Listing of Securities in the SIC

Chapter Three

Final Provisions

Article 1.- For the purposes of these provisions, the following shall be understood:

I.
Commission, the National Banking and Securities Commission.

II.
Registry, the National Securities Registry.

III.
SIC, the international quotation system established by stock exchanges.

IV.
Securities, the shares, certificates, credit instruments, and other documents issued in series or in mass under foreign laws or provisions, which grant their holders property or participation rights in the capital of legal entities or credit rights against them, which are subject to negotiation in some foreign securities market.

V.
Structured Securities, those considered as such under the terms of the "General Provisions Applicable to Securities Issuers and Other Market Participants," published in the Official Journal of the Federation on March 19, 2003, and its respective modifications, or those that replace them.

Chapter One

On the Recognition of Foreign Securities

First Section

Direct Recognition

Article 2.- The Commission shall consider the following Securities as directly recognized, for the purposes of their listing and operation in the SIC:

I.
Those issued in the United Mexican States or by Mexican legal entities, directly or through trusts or similar or equivalent figures, whose public offering abroad has been notified to the Commission in terms of what is established in Article 7, second paragraph of the Securities Market Law, provided that such Securities are not registered in the Registry and comply with any of the following circumstances:

a)
The issuers maintain registered in the aforementioned Registry the shares representing their share capital, credit instruments representing them, or debt instruments with a term equal to or greater than one year.

b)
They are Securities eligible for registration in the aforementioned Registry in accordance with what is provided in Article 93 of the aforementioned Law.

Securities that do not have a prospectus of information to the public or debt-representative Securities that do not have a rating granted by any national or international securities rating agency shall be excluded from such recognition.

II.
Those issued by central banks of countries that are "Nominated Members" of the Council of the International Organization of Securities Commissions, or the body that replaces it, and of those that are part of the European Union, including the European Central Bank, which can be acquired by the general public.

III.
Those registered, authorized, or regulated for their sale to the general public by the Securities Commissions or equivalent bodies of the countries that are "Nominated Members" of the Council of the International Organization of Securities Commissions or the body that replaces it, or of those that are part of the European Union, and that are distributed in any of said countries, in terms of what is provided in Article 9, fraction II of these provisions, or the Securities issued by the governments of those nations, including those local, municipal, or their equivalents.

Regarding Securities that are issued by collective investment vehicles, listed and quoted throughout the stock exchange sessions on stock exchanges, they shall only be recognized directly when their primary objective consists of seeking to reproduce the behavior of one or more indices, financial assets, or benchmark parameters, or to reproduce mathematically or statistically in an inverse or exponential manner, said indices, financial assets, or benchmark parameters, and provided that the person responsible for the administration and management of the managed assets expresses their consent to list and operate such Securities in the SIC. In these cases, the stock exchange on which such Securities are listed must have the aforementioned consent.

IV.
Those registered, authorized, or regulated for their sale to the general public by the Securities Commissions or equivalent bodies of the countries referred to in the previous fraction III and that are distributed in said countries, representative of the capital or equity of foreign investment funds or collective investment mechanisms, similar or analogous to the closed-end investment funds referred to in the Investment Funds Law, provided that they meet the following requirements:

a)
The assets that make up the investment portfolio must be formed exclusively by Securities issued in accordance with foreign laws and by legal entities of foreign nationality, or well be referred to indices, interest rates, or rights and assets, which are negotiated in foreign financial markets.

b)
They are deposited in entities that have authorization to carry out the centralized deposit, custody, administration, clearing, settlement, and transfer of securities services or to provide deposit and custody services for securities, as well as that such entities are subject to the supervision, inspection, and oversight of specialized financial authorities.

c)
They only seek to reproduce the behavior of one or more indices, interest rates, rights, and assets, or to reproduce mathematically or statistically in an inverse or exponential manner, said indices, interest rates, rights, and assets.

Second Section

Promoted Recognition

Article 3.- Stock exchanges, on their own or at the request of brokerage houses or credit institutions, may promote before the Commission the recognition of foreign Securities for the purposes of their listing and operation in the SIC.

Article 4.- The Commission shall grant the promoted recognition to foreign Securities that comply with the following, for the purposes of their listing and operation in the SIC:

I.
They are not located in the circumstances contemplated in the previous Article 2.

II.
They are registered, authorized, or regulated for their sale to the general public by any Securities Commission or equivalent body of the countries that are "Ordinary Members" of the International Organization of Securities Commissions, or the body that replaces it, and that have signed any of the multilateral cooperation instruments established by said Organization.

III.
The issuer of such Securities is subject to norms, in accordance with which:

a)
It is subject to the supervision and oversight of an authority or a self-regulatory entity and also has a legal regime that includes provisions to protect the interests of investors, ensure the order and transparency of the operations it carries out, prevent and sanction the improper use of insider information, market manipulation, as well as to avoid conflicts of interest.

b)
It has the obligation to disclose in a periodic, sufficient, and timely manner information regarding its financial, economic, accounting, legal, and administrative situation, including that audited at least once a year by an independent external auditor, as well as that related to the offering of Securities and, in general, to facts and acts capable of influencing investors' decisions, and provided that there are mechanisms that allow the dissemination to the public of such information in an accessible, expeditious, and continuous manner.

Regarding Securities representative of the capital or equity of foreign investment funds or collective investment mechanisms, promoted recognition shall only be granted with respect to funds or mechanisms similar or analogous to the closed-end investment funds referred to in the Investment Funds Law, provided that they meet the requirements established in items a), b), and c) of fraction IV of Article 2 of these provisions.

Promoted recognition shall only be granted to Securities that are issued by collective investment vehicles, listed and quoted throughout the stock exchange sessions on stock exchanges whose primary objective consists of seeking to reproduce the behavior of one or more indices, financial assets, or benchmark parameters, or to reproduce mathematically or statistically in an inverse or exponential manner, said indices, financial assets, or benchmark parameters.

For the case of Securities that are deposit receipts commonly known as "American Depositary Receipts" (ADRs), the Commission shall only grant the promoted recognition when the underlying shares of such receipts are Securities that fall under any of the circumstances indicated in Article 2 of these provisions.

Article 5.- Stock exchanges that, on their own or at the request of brokerage houses or credit institutions, intend to obtain the promoted recognition of foreign Securities, must submit in writing to the Commission the recognition request accompanied by the following information and documentation:

I.
That relating to compliance with the requirements referred to in Article 4 of these provisions. Among other data, evaluations or studies carried out by international financial bodies regarding the level of regulatory adequacy to international standards of the country to which the issuer of the foreign security subject to recognition belongs may be provided.

II.
A copy of the placement prospectus of the respective Securities or the annual report or that prepared at interim dates, which contains the financial, economic, accounting, legal, and administrative information of the issuer and the Securities, most recent as of the date of the respective request.

III.
Opinion of the stock exchange regarding compliance with the listing and maintenance requirements provided in its internal regulations for the Securities to be listed in the SIC.

IV.
Description of the means and mechanisms by which investors who carry out operations through the SIC will have access to the financial, economic, accounting, legal, and administrative information of the issuers whose Securities are listed in such exchanges, including that relating to relevant events, with the same opportunity and frequency as it is disseminated in the country of origin or in its primary quotation market, including the microsite of the Internet page through which such information can be obtained.

Article 6.- The recognitions granted by the Commission shall in no case constitute certification regarding the quality of the Security intended to be listed in the SIC or the solvency of the issuer.
The Commission shall not exercise supervisory powers over foreign Securities. This is without prejudice to the powers that correspond to it in the scope of its competence in accordance with the applicable legal and administrative provisions, to preserve the order and transparency of the SIC.

Article 7.- In the case of structured Securities or well, Securities issued by collective investment vehicles listed and quoted throughout the stock exchange sessions on stock exchanges, whose primary objective consists of seeking to reproduce the behavior of one or more indices, financial assets, or benchmark parameters, or to reproduce mathematically or statistically in an inverse or exponential manner said indices, financial assets, or benchmark parameters, the Commission shall only grant the promoted recognition when, in addition to complying with the requirements contained in Article 4 of these provisions, the stock exchanges demonstrate that the legal regime of the market of origin incorporates the principles issued by the International Organization of Securities Commissions for the regulation of Securities known as "Exchange Traded Funds" (ETFs).

Additionally, regarding foreign Securities issued by collective investment vehicles, listed and quoted throughout the stock exchange sessions on stock exchanges, whose primary objective consists of seeking to reproduce the behavior of one or more indices, financial assets, or benchmark parameters, or to reproduce mathematically or statistically in an inverse or exponential manner said indices, financial assets, or benchmark parameters, it must be demonstrated that the person responsible for the administration and management of the managed assets expresses their consent to list and operate such Securities in the SIC. In all cases, the aforementioned consent must be attached to the respective recognition request.

Article 8.- In no case shall brokerage houses or credit institutions that participate in the sale or distribution of Securities listed in the SIC receive payments, commissions, fees, or consideration for any concept from any issuer or from persons related to these, in order for such entities to carry out sales or distribution activities.

Chapter Two

On the Listing of Securities in the SIC

Article 9.- Stock exchanges, with respect to listing Securities in the SIC, must be subject to the following:

I.
Regarding Securities that fall under the circumstances for direct recognition provided in Article 2 of these provisions, they must send to the Commission a report that demonstrates compliance with what is contained in such article, within five business days following the listing.
Additionally, they must establish in their internal regulations additional requirements to be able to list them.

II.
For the case of Securities referred to in Article 2 of these provisions, in addition to what is provided in the previous fraction I, as well as regarding the Securities referred to in Article 3 of these provisions, they must verify that one hundred percent of the respective issuance has been placed abroad through a public offering and that such placement is more than three months old at the time of listing in the SIC. Stock exchanges may require any necessary information from the brokerage houses or credit institutions referred to in Article 3, in order to verify what is provided in Articles 4 and 7, as well as what is stipulated in this article.

The percentage mentioned above shall not be applicable regarding Securities whose placement abroad was carried out at least one year before the date on which their listing in the SIC is requested, as well as for those Securities that are issued by collective investment vehicles, listed and quoted throughout the stock exchange sessions on stock exchanges, whose primary objective consists of seeking to reproduce the behavior of one or more indices, financial assets, or benchmark parameters, or to reproduce mathematically or statistically in an inverse or exponential manner said indices, financial assets, or benchmark parameters.

III.
Prior to listing in the SIC the Securities referred to in Article 3 of these provisions, they must ensure that issuers prepare their financial statements, using accounting principles in accordance with any of the following options:

a)
International Financial Reporting Standards, issued by the International Accounting Standards Board or generally accepted accounting principles in the United States of America commonly known as "US GAAP".

b)
Accounting principles applicable in the country of origin or of primary quotation of the issuer or others, provided that they disclose in the supplementary notes to the financial statements the relevant differences between the accounting principles and methods used to prepare their financial statements and the norms or principles referred to in the previous item a).

Stock exchanges prior to listing foreign Securities in the SIC must have a report from a securities depository institution, regarding the feasibility of implementing agreements that it determines with securities depository institutions or other entities that provide such services abroad, through which the fulfillment of custody, administration, clearing, settlement, and transfer functions of Securities at the international level is ensured.

Article 10.- Stock exchanges that list Securities in the SIC must make available to investors the information regarding such Securities that is revealed in the market of the country of origin or primary quotation, necessary to know the financial, economic, accounting, legal, and administrative situation of the issuer, including that relating to relevant events, with the same opportunity and frequency as it is disseminated in the securities market of the country of origin or in its primary quotation market, as well as that relating to the main characteristics of the referred Securities.

This obligation may be fulfilled by specifying on their Internet page, the microsite through which such information can be obtained. For such purposes, the aforementioned stock exchanges must carry out the necessary acts that allow them to provide the investing public with the aforementioned information with the same opportunity and frequency.

Regarding information related to the exercise of rights, stock exchanges, with the information provided to them by securities depository institutions, must make it known to the investing public as soon as they become aware of it. The information referred to in this paragraph includes the payment of dividends or distributions, increases or decreases in share capital or the number of Securities, among others.

Stock exchanges shall not be responsible for the content or timeliness of the information they make available in accordance with what is provided in this article.

Article 11.- Brokerage houses that carry out operations on their own account in foreign securities markets on the same type of Securities listed in the SIC, must register the referred operations in the stock exchange where the Securities subject to the operation are listed, no later than the next business day after their execution, subject in all cases to the schedule that such stock exchanges establish in their internal regulations.

Article 12.- Brokerage houses and credit institutions must include in the electronic and automated system for the receipt, registration, and execution of orders and assignment of operations with Securities that they have, the orders with equity Securities listed in the SIC, observing for this purpose the general provisions that are applicable in matters of the referred system.

Operations that are carried out on Securities of any type listed in the SIC may only be concluded through the system that, for this effect, stock exchanges have established and subject to what is provided by their internal regulations. Credit institutions will provide their services through the intermediation of a brokerage house, unless it is a case of debt instruments, in which case they must be subject to the applicable legal or administrative provisions for this effect.

Stock exchanges must inform the Commission of the characteristics of the referred trading system, as well as the modifications that are made to it, prior to the listing of Securities that are intended to be carried out in said system.

Article 13.- Stock exchanges may negotiate in their systems the foreign Securities that some

another stock exchange has listed in the SIC established by it, in accordance with the Securities Market Law and these provisions, provided that the former have their own SIC.

Third Chapter

Final Provisions

Article 14.- Stock exchanges shall, with prior authorization from the Commission, cancel the listing of Securities listed in the SIC, in the event that:

I. The requirements set forth in articles 2, 4, 7, and 9 of these provisions are no longer met.

II. The listing or registration of the Security in question is cancelled in the stock exchange of the country of origin or primary quotation.

III. The conditions that allow for the operation of the Securities in question are no longer met.

IV. There has been no trading in said Securities in the last 6 months prior to the date the cancellation is requested, and at the time of the request, there is no shareholding or participation by national investors or investors within national territory.

Article 15.- Stock exchanges, when they become aware of the following, may suspend the quotation of Securities listed in the SIC:

when the listing of the corresponding Security is suspended in the market of the country of origin or primary quotation; when there are disorderly conditions or operations not in conformity with sound market uses or practices; when the issuer omits to supply the corresponding information; or when the regulatory authority in the market of origin has imposed a sanction on the issuer for providing false or misleading information regarding the financial, economic, accounting, legal, and administrative situation of said issuer or the Securities in question, in accordance with the terms of its internal regulations.

The stock exchange in question shall notify the suspension and the lifting thereof, as soon as technologically possible, both to the stock exchanges where said Securities are traded within national territory and, where applicable, to the Commission.

In the event that any stock exchange becomes aware that the foreign Security was suspended in the market of origin, it shall notify the stock exchange where said Securities are listed in the SIC as soon as technologically possible.

Additionally, the Commission may order stock exchanges to suspend the quotation of Securities listed in the SIC, in the cases referred to in the first paragraph of this article or in fractions I or II of article 14 of these provisions, as well as, where applicable, order the lifting of said suspension.

Article 16.- The Commission may declare that the recognitions granted to foreign Securities have become void, when in its judgment any of the following circumstances occur:

I. The requirements set forth in articles 2 or 4 above are no longer met.

II. Extraordinary events occur that continuously and permanently prevent the negotiation of the security in the stock market in question.

III. The quotation is suspended indefinitely or the listing or registration of the security in question is cancelled in the stock market of the country of origin or primary quotation.

IV. The competent authority of the market of origin determines that the issuer has omitted to supply information or has provided false or misleading information regarding its financial, economic, and accounting situation or regarding the Securities in question.

The declaration referred to in this article may be requested by the stock exchanges where the corresponding Securities are listed or by a securities depository institution, for which it must substantiate the circumstances set forth in the preceding fractions.

Once the recognition of a foreign Security has been declared void, the Commission shall notify the corresponding stock exchanges, for the purpose of proceeding to cancel the listing of said Security in the SIC, understanding that prior to the cancellation of the listing, stock exchanges must immediately disclose this situation in the terms and conditions established in their internal regulations. This is so that investors may adopt the measures they deem necessary.

Article 17.- Securities depository institutions may continue to keep in custody the Securities subject to cancellation from the SIC, and brokerage firms are authorized to provide deposit and custody services requested by their clients, regarding the Securities in question, adjusting themselves to what is provided in the Securities Market Law and, where applicable, to the legislation applicable in the country of origin or primary quotation of the Securities whose listing has been cancelled.

The positions of Securities that brokerage firms hold on behalf of their clients may not be increased when they fall under the circumstance of the preceding article, and said Securities may only be held until their maturity, amortization, or extinction. As an exception to the above, positions of Securities falling under this circumstance may only be increased when such increase derives from a payment of rights in kind decreed by the issuer.

TRANSITORY PROVISIONS

FIRST.- These provisions shall enter into force three months following the date of their publication in the Official Gazette of the Federation.

SECOND.- Stock exchanges shall have a period of three months counted from the publication in the Official Gazette of the Federation of this instrument to present to the National Banking and Securities Commission the modifications to their respective internal regulations necessary to adjust to what is provided in these provisions.

THIRD.- Stock exchanges where foreign securities are listed in their international quotation system shall have a period of three months counted from the entry into force of this instrument to comply with the obligations to provide the financial, economic, accounting, legal, and administrative information of the issuer, including that relating to relevant events, with the same opportunity and frequency with which it is disclosed in the stock market of the country of origin or in that of its primary quotation, as referred to in article 10 of these provisions.

Brokerage firms and credit institutions that, as of the date of entry into force of this instrument, have acted as sponsoring financial entities under the "General Provisions Applicable to the International Quotation System," in effect prior to the entry into force of these provisions, shall be obliged to continue providing the general public with the financial, economic, accounting, legal, and administrative information, including information relating to relevant events of the issuer whose securities are listed in the international quotation system of some stock exchange and which they have sponsored in accordance with such provisions, with the same opportunity and frequency with which it is disclosed in the stock market of the country of origin or in that of its primary quotation, until such time as the stock exchanges where said securities have been listed adjust to what is provided in the preceding paragraph.

Securities depository institutions shall have a period of three months counted from the date of entry into force of this instrument to provide stock exchanges, brokerage firms, and credit institutions with the information related to the exercise of rights referred to in article 10, third paragraph of these provisions.

FOURTH.- In the case of securities listed in the international quotation system in accordance with the "General Provisions Applicable to the International Quotation System" in effect prior to the entry into force of these provisions, which do not meet the requirements established for their listing and operation in accordance with this instrument, they shall be deemed delisted from the international quotation system, and therefore may not be traded in the aforementioned system from the entry into force of these provisions.

FIFTH.- Upon the entry into force of these provisions, the "General Provisions Applicable to the International Quotation System," published in the Official Gazette of the Federation on December 18, 2003, as well as its various modifications, are hereby repealed.

Respectfully,

Mexico City, December 13, 2016. - The President of the National Banking and Securities Commission, Jaime González Aguadé. - Signature.

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