Prudential Rules on Risk Management for Retirement Fund Administrators, Specialized Investment Societies for Retirement Funds, and National SAR Database Operating Companies

DOF: 25/05/2016

REGLAS prudenciales en materia de administración de riesgos a las que deberán sujetarse las administradoras de fondos para el retiro, las sociedades de inversión especializadas de fondos para el retiro y las empresas operadoras de la Base de Datos Nacional SAR.

Al margen un sello con el Escudo Nacional, que dice: Estados Unidos Mexicanos.- Secretaría de Hacienda y Crédito Público.- Comisión Nacional del Sistema de Ahorro para el Retiro.

PRUDENTIAL RULES ON RISK MANAGEMENT TO WHICH RETIREMENT FUND ADMINISTRATORS, SPECIALIZED INVESTMENT SOCIETIES FOR RETIREMENT FUNDS, AND COMPANIES OPERATING THE NATIONAL SAR DATABASE MUST BE SUBJECT.

The President of the National Commission for the Retirement Savings System, pursuant to Articles 5 (fractions I, II, VII, and XVI), 12 (fractions I, VIII, and XVI), 88, 89, 90 (fraction II), 91, and 113 of the Law of Retirement Savings Systems; Article 106 of the Law of the Institute for Social Security and Services for State Workers; Article 140 of the Regulations of the Law of Retirement Savings Systems; Articles 1, 2 (fraction III), and the first paragraph of Article 8 of the Internal Regulations of the National Commission for the Retirement Savings System, has deemed it appropriate to issue the following:

PRUDENTIAL RULES ON RISK MANAGEMENT TO WHICH RETIREMENT FUND ADMINISTRATORS, SPECIALIZED INVESTMENT SOCIETIES FOR RETIREMENT FUNDS, AND COMPANIES OPERATING THE NATIONAL SAR DATABASE MUST BE SUBJECT.

CHAPTER I
OBJECTIVE AND DEFINITIONS

FIRST.- These rules aim to establish the guidelines to which retirement fund administrators, specialized investment societies for retirement funds, and companies operating the National SAR Database must be subject, in order to implement adequate risk management in processes related to:

I. The handling and investment of workers' resources by specialized investment societies for retirement funds.

SECOND.- For the purposes of these rules, in addition to the definitions established by the Law of Retirement Savings Systems, its Regulations, as well as the General Provisions establishing the investment regime to which Investment Societies must be subject, the General Provisions establishing the patrimonial regime to which Retirement Fund Administrators, Pensionissste, and Investment Societies and the Special Reserve must be subject, the General Provisions establishing the procedure for constructing net performance indicators of Investment Societies, the General Provisions on accounting registration, preparation, and presentation of financial statements to which Investment Societies must be subject, and the General Provisions on financial matters of retirement savings systems, the following shall be understood:

I. Notes, meaning Debt Instruments or Foreign Debt Securities with principal protected at maturity linked to one or more indices, or baskets of indices, established in the General Provisions establishing the investment regime to which Investment Societies must be subject, as well as Debt Instruments or Foreign Debt Securities that, structured together with Equity Components, behave like the aforementioned;

II. Operational Risk of SIEFORE, meaning potential loss due to failures or deficiencies in information systems, internal controls, or errors in the processing of operations by Investment Societies, and

III. Securities Monitoring System, meaning the computer system that allows verification and monitoring of the status of securities transfers.

CHAPTER II
GENERAL PROVISIONS

THIRD.- The board of directors of each Investment Society, for the integral management of Financial Risks, shall rely on the following bodies:

I. The Financial Risk Committee, and

II. The IAUR (Internal Audit Unit).

CHAPTER III
OF RETIREMENT FUND ADMINISTRATORS

Section I
Of Financial Risk Management

FOURTH.- Administrators, for the Financial Risk Management of the Investment Societies they operate, must:

I. Identify, measure, monitor, limit, control, report, and disclose quantifiable risks to which the Investment Societies are exposed, and

II. Develop policies and procedures for the management of the different types of risks to which they are exposed, in accordance with the limits on risk exposure defined by their boards of directors.

Administrators must clearly delineate the different functions and responsibilities of their areas and personnel regarding the Financial Risk Management of the Investment Societies they operate, in accordance with what is provided in these rules.

Section II
Of the Board of Directors

FIFTH.- Regarding Financial Risk, the board of directors of each Investment Society shall be responsible for carrying out the following actions:

I. Establish a Financial Risk Committee, and

II. Approve the Manual of Policies and Procedures for Financial Risk Management, as well as any modifications made thereto. Once such Manual, or its modifications, is approved by the board of directors of each Investment Society, through its Administrator, it must be submitted to the Commission so that it may issue, if applicable, its no-objection statement.

The Administrator operating the Investment Society must include the Manual of Policies and Procedures for Financial Risk Management in its self-regulation program approved by its board of directors under Article 29 of the Law.

Section III
Of the Financial Risk Committee

SIXTH.- The board of directors of each Investment Society must establish a Financial Risk Committee whose objective shall be the Financial Risk Management to which they are exposed, as well as to oversee that the conduct of financial operations complies with the limits, policies, and procedures for Financial Risk Management.

The Financial Risk Committee of each Investment Society must be chaired by the general director of the Administrator operating the Investment Society and must be composed, at minimum, of the following members:

I. An independent director;

II. A non-independent director, and

III. The head of the IAUR.

Heads responsible for carrying out investments and executing the strategy dictated by the Investment Committee and the various areas involved in operations involving risk-taking, as well as the Regulatory Controller of the Administrator operating the Investment Society, must be summoned to all sessions of the Financial Risk Committee, in which they will participate as guests with voice but without vote.

SEVENTH.- The Financial Risk Committee, for the development of its objective, shall perform the following functions:

I. Approve exposure limits to risk and by type of risk, taking into account, as appropriate, what is established in these rules;

II. Collaborate in the preparation of the report and portfolio reconstruction program, in accordance with the portfolio reconstruction rules issued by the Commission;

III. Approve:
a. The methodology to identify, measure, monitor, limit, control, report, and disclose the different types of risks to which the relevant Investment Society is exposed; b. The models, parameters, and scenarios to be used to carry out the measurement and control of risks;
c. The conduct of new operations and the provision of new services that, by their very nature, entail a risk, once discussed and approved by the Investment Committee of the relevant Investment Society, and
d. The methodologies, if applicable, to be applied for calculating the valuation prices of Derivatives transactions carried out in over-the-counter markets by Investment Societies, as well as the valuation prices of other Investment Assets that, according to current regulations, the Administrator has made known to the Commission that this financial entity will value such Investment Assets;

IV. Opine on the designation made by the Administrator of the head of the IAUR and on the content of the Manual of Policies and Procedures for Financial Risk Management;

V. Perform an analysis, at least quarterly, on the assumed Financial Risk exposure, on the negative effects that could occur in the operation of the Investment Society, as well as on the non-compliance with the established Financial Risk exposure limits. The result of the analysis performed by the Financial Risk Committee must be reported to the Investment Committee of the Investment Society;

VI. Object to the designation of the Financial Services Provider and the Custodian, if applicable;

VII. Monitor compliance with the investment regime applicable to the Investment Society and, in case of non-compliance, prepare a report to the board of directors and the Investment Committee regarding said non-compliance and its possible repercussions, at least quarterly, or immediately if the repercussions warrant it, in addition to performing the functions provided for in the portfolio reconstruction rules issued by the Commission, and

VIII. Take corrective measures deemed necessary, taking into account the results of audits related to Financial Risk Management procedures.

The Financial Risk Committee shall review, at least once a year, what is stated in fraction I, as well as sub-items a. and b. of fraction III of this rule, without prejudice to performing this function with greater frequency when required by market conditions or, in particular, by the conditions of the relevant Investment Society.

EIGHTH.- The Financial Risk Committee may, within the terms set forth in the Manual of Policies and Procedures for Financial Risk Management, authorize exceeding the exposure limits to the different types of risk or, if applicable, adjust said limits, when the conditions and environment of the Investment Society so require.

Section IV
Of the IAUR

NINTH.- The IAUR, in matters of Financial Risk, shall perform the following functions:

I. Monitor that Financial Risk Management is integral and considers the types of risks incurred by Investment Societies, and

II. Recommend to the general director, to the Investment Committees, to the heads responsible for carrying out investments and executing the strategy dictated by each Investment Committee, as well as to the heads of the various areas involved in operations resulting from their functions that involve risk-taking, the reduction of exposure to risk within the limits previously approved by the Financial Risk Committees, when these have been exceeded.

TENTH.- The IAUR, to carry out the measurement, follow-up, and control of the various types of quantifiable Financial Risks, as well as the valuation of the positions of the Investment Societies operated by the Administrator, must:

I. Periodically compare risk exposure estimates against results actually observed for the same measurement period and, if applicable, modify the assumptions used in formulating such estimates.

ELEVENTH.- The IAUR, with respect to systems, must ensure that they meet at least the following requirements for analysis purposes:

I. Risk concentrations, incorporating special treatment for Derivatives and Notes transactions, in order to verify that they fulfill their purpose.

TWELFTH.- The IAUR will complement its Financial Risk measurement by conducting stress tests, which allow identifying the risk that Investment Societies operated by the Administrator would face under such conditions and recognizing the positions or strategies that make them more vulnerable to them, for which it must:

I. Estimate risk under conditions in which fundamental assumptions and parameters used for risk measurement collapse, as well as the Administrator's capacity to respond to minimize effects on Investment Societies under such conditions;

II. Evaluate the design and results of stress tests, so that, based on such evaluation, contingency plans applicable to the occurrence of such conditions in the financial markets where Investment Societies participate are established, and

III. Consider the results generated by stress tests in the review of policies and limits for risk-taking.

The IAUR must apply stress tests for the measurement of all quantifiable Financial Risks to which Investment Societies are exposed.

THIRTEENTH.- Administrators must have reports based on complete, precise, and timely data related to the Financial Risk Management of the Investment Societies they operate, containing at minimum the following:

I. The degree of compliance with policies and procedures for Financial Risk Management, and

II. Summaries of the results of evaluations regarding compliance with Financial Risk Management policies and procedures, as well as evaluations of risk measurement systems;

Any significant change in the content and structure of the reports, as well as in the methodologies employed in risk measurement, must be specified within the reports themselves.

CHAPTER IV
OPERATIONAL RISK MANAGEMENT OF ADMINISTRATORS

Section I
Of SIEFORE Operational Risk

FOURTEENTH.- Investment Societies, to carry out the management of SIEFORE Operational Risk, must perform the following actions:

I. Implement internal controls that ensure security in operations, allowing verification of a clear delineation of functions in their execution, providing for different levels of authorization, based on the taking of risk positions;

II. To comply with what is provided in the previous fraction, in all securities purchase and sale transactions carried out directly by Administrators, the following must be observed:
a. Quotations made telephonically, as well as the negotiation of operations, must be recorded or maintained in magnetic or documentary media, and the recordings, magnetic media, or documents containing them must be preserved for a period of two years for negotiations and six months for quotations. The recording system or mechanism used for preserving quotations and the negotiation thereof must be used exclusively by the Administrator; b. The recording system or mechanism for preservation in magnetic or documentary media referred to in the preceding paragraph must allow the location and identification, on the equipment itself, of any type of quotation and negotiated operation requested by the Regulatory Controller or the Commission;
c. Operations must be confirmed in writing or by electronic means by the intermediary with whom the operation is concluded;
d. Regular supervision must be conducted to ensure that operations comply with applicable internal and external standards and that they were carried out under market conditions, and e. The person in charge of carrying out securities purchase and sale operations must send, in documentary or electronic form, each transaction concluded, to the area responsible for registration, assignment, and settlement thereof. This area, in addition to the data of the negotiated operation, must have the date and time of negotiation, the name of the official who agreed to it, and the telephone number or extension where the conversation was recorded.

III. In purchase and sale transactions concluded through a Financial Services Provider, it must be verified that the transactions comply with what was agreed upon in the contracts;

IV. Establish mechanisms for the control of the settlement of operations, in accordance with the following:
a. A detailed record of operations and movements corresponding to each operation in securities and cash accounts must be kept; b. With the exception of transactions concluded with Derivatives, operations shall be carried out only under the delivery-versus-payment system, and documentary evidence of said process provided by the Custodian or the printout of the Securities Monitoring System screens must be available, which must contain frequently updated information throughout each day;
c. The buy/sell order for each operation must be sent in writing, either electronically or documentally, to the area in charge of liquidation and administration of securities, as soon as the operation is closed. The instruction for liquidation of cash transfer and securities transfer for each operation must be carried out only by officials of the area in charge of liquidation and administration of securities who are authorized in the respective contracts; said officials must contact the Custodians designated by the Investment Committee to carry out such transfers or liquidations;
d. Officials authorized to issue instructions for liquidation, transfer of securities, or cash must be assigned to treasury, administration, assignment, securities liquidation, or finance areas. Such officials may in no case depend on the person responsible for carrying out the investment strategy. To this effect, internal manuals must clearly determine the functions belonging to each area; e. Those in charge of liquidation may only order the deposit of securities or cash into accounts previously registered in the Investment Society's systems. Deposits into accounts that are not registered will require additional authorization from the Investment Committee. Internal manuals must establish the procedure for such authorization; f. Daily validation must be conducted to ensure that the Investment Society has sufficient and available resources to meet operations agreed upon during the day; The validation referred to in this item must be reported to the person responsible for executing the investment strategy and to the head of the IAUR via a cash flow report that contemplates all cash and availability inflows and outflows at the start of the day, foreseeing, if applicable, for said flow, all inflows and outflows for the management of Derivative instruments; g. Maintain tracking systems for the securities accounts used by the Investment Society; h. Ensure that both liquidation instructions and those relating to the transfer of securities and cash to the Investment Society's accounts, and the movements of said accounts, must be authorized by at least two people jointly. Such persons must be duly accredited in the respective contracts and on the corresponding signature cards;
i. At the close of operations, it must be verified that there is correspondence between the negotiated operations, as well as between the securities and cash of the Investment Society;
j. Contingency systems for the transfer of securities and cash must be available. Furthermore, all processes and procedures relative to contingencies must be established in the Manuals of Policies and Procedures for Financial Risk Management; k. Confirmation of liquidation instructions, cash transfers, and securities transfers must be sent and received. The area in charge of executing instructions must retain receipts of acknowledgment for at least one year, either in magnetic or documentary media, and, if applicable, possess authorized electronic signatures to order transfers;
l. Contracts concluded for the negotiation of operations, for the custody of securities and cash, as well as the attached authorized signature cards, must be available, detailing, if applicable, that liquidation instructions, cash transfers, and securities transfers can only be carried out with instructions duly signed by officials who are authorized on said signature cards, and
m. The Administrator is responsible for keeping updated with the personnel currently serving the signature cards attached to contracts concluded for the negotiation of operations, for the custody of securities and cash;

V. Have information processing systems for Financial Risk Management that contemplate contingency plans in the event of technical failures, force majeure, or unforeseen circumstances, and

VI. Establish procedures regarding the storage, custody, maintenance, and control of files corresponding to acquired operations and instruments.

Investment Societies must report the actions established in this rule to the corresponding Committee, according to what is determined for such effect by the policies approved by the Committees of the Administrator operating them.

Regarding Operational Risk of SIEFORE, the Operational Risk Committee must approve the policies for the management of said risk, which must be contained in the Manual of Policies and Procedures for the Administration of Operational Risk.

Section II
Of Legal Risk

TENTH FIFTH.- Administradoras, for the purpose of Legal Risk of agreements and contracts directly related to the administration and investment of resources in individual worker accounts, must evaluate the following:

I. The costs, damages and/or losses that could result from non-compliance with the agreements and/or contracts, in accordance with the legal regime applicable to said agreements and/or contracts, and

II. The damages and/or losses that could result from the imposition of sanctions on the Administradora and/or the Investment Societies it operates, derived from non-compliance with the agreements and/or contracts in which they are parties.

Section III
Of risk from services directly related to the administration of workers' resources, provided by third parties to Administradoras

TENTH SIXTH.- Administradoras, in relation to the contracting of services with third parties related to the administration of the investment of their resources, must consider the following:

I. Have the approval of the Board of Directors of the Administradora of the guidelines for the contracting of third parties;

II. Carry out a supplier selection study for the service, which determines that the person providing it has the experience, material and qualified human resources and, where applicable, the necessary infrastructure to provide the contracted service;

III. In the event that it is intended to enter into an agreement or contract with a company with which the Administradora has patrimonial or administrative control links, this must be previously approved by the Regulatory Comptroller, in accordance with what is established in articles 64, 64 bis and 64 ter of the Law, in relation to article 70 of the same legal instrument, as well as the general provisions issued by the Commission for this purpose, so that said official verifies that the content of the agreement or contract complies with the conditions existing in the market for similar acts;

IV. Specify in each contracted service, the nature, requirements and object of the same, as well as the rights and responsibilities of the contracting parties;

V. Specify in the contract that the service provider must provide the Administradoras with the records, databases and other information required by the Commission within the scope of its powers;

VI. In the case of IT services, specify in the agreement or contract that the service provider ensures that it has the necessary information encryption mechanisms to maintain the confidentiality of the information and electronic records that are the property of the Administradora and/or the Investment Societies it operates, in such a way as to ensure the confidentiality of said information;

VII. Specify in the contract that the service provider must have contingency plans that provide operational stability for the contracted services, considering at least the following:

a. Protection of the service provider's facilities;

b. Disaster plan, and

c. Periodic information backup tests;

VIII. Specify in the contract they enter into with the service provider, the conditions regarding the termination of the service, and

IX. Specify in the contract they enter into with the service provider, the conditions for the delivery of information and records owned by the Administradora.

CHAPTER V
OF THE ADMINISTRATION OF FINANCIAL RISK BY INVESTMENT SOCIETIES

Section I
Of Financial Risk

TENTH SEVENTH.- Administradoras must adopt practices for the Administration of Financial Risk in areas related to the handling and investment of workers' resources.

Such practices must be established in the Manual of Policies and Procedures for the Administration of Financial Risk, and include at least:

I. Programs for reviewing compliance with objectives, procedures and controls in the execution of operations, as well as with exposure limits to risk, semi-annually, or with greater frequency when justified by market conditions;

II. Systems for storing, processing and handling information that allow the development of Financial Risk Administration;

III. Dissemination and, where applicable, implementation, of action plans for contingency cases due to fortuitous events or force majeure, which prevent compliance with the established exposure limits to risk, and

IV. Training programs for UAIR personnel and for all those involved in operations that imply risk for the Investment Societies operated by the Administradora.

Section II
Of Credit Risk

TENTH EIGHTH.- Investment Societies, in the Administration of Credit Risk in operations with financial instruments they execute, must at minimum:

I. Be subject to risk limits by sector of the economy and by country risk determined by the Financial Risks Committee.

Section III
Of Liquidity Risk

TENTH NINTH.- Investment Societies, in the Administration of Liquidity Risk, must at minimum:

I. Have a plan that incorporates the actions to be taken in case of liquidity requirements.

Section IV
Of Market Risk

TWENTIETH.- Investment Societies, in the Administration of Market Risk, must at minimum:

I. Compare their estimated Market Risk exposures with the results actually observed.

In the event that projected and observed results differ significantly, the assumptions and models used to make projections must be analyzed and, where applicable, such assumptions or models must be modified.

Section V
Of Information Disclosure

TWENTY-FIRST.- Administradoras and Investment Societies must disclose to the public, through notes in their financial statements, information regarding their policies, procedures, methodologies and other measures adopted for the Administration of Financial Risk, as well as information on potential losses by type of risk that Investment Societies face.

Additionally, Administradoras must disclose to workers registered with them and to the public, through accessible distribution channels, additional to those provided in the last paragraph of this rule, the real returns obtained. This information must use as its source that which is made known by the Commission on its Internet page (www.consar.gob.mx).

Finally, if corporate rights are acquired in any investment as a result of the handling and investment of resources, they must disclose to their clients the policy for the administration of such rights in order to comply with what is provided in the Manual of Policies and Procedures for the Administration of Financial Risk.

The information referred to in this rule must be published at least once a year in two newspapers of national circulation.

TWENTY-SECOND.- Administradoras must provide the Commission, in the form and terms established by the Commission itself, the information that, in the exercise of its supervisory powers, it requires, related to the Administration of Financial Risk they carry out, as well as the results obtained from the external evaluation processes referred to in the Single Section of Chapter VI of these rules.

Section VI
Of Best Practices

TWENTY-THIRD.- The Administradora to operate Derivatives must be subject to the following:

I. The UAIR, based on information provided by the investments area, must determine the logistics for the operation of Derivatives, using at minimum the following:

a. Counterparty limits;

b. Issuer limits;

c. Limits for listed and over-the-counter markets;

d. Operator limits, and

e. Marginal and total Value at Risk limits of the investment portfolio.

Regarding particular operations not provided for in the operational framework referred to in this subsection, the operators who execute the investment policy of the Investment Society must request from the UAIR, with prior express confirmation from the Price Provider that it can carry out a daily valuation of the Instrument, to present the operation to the Financial Risks Committee prior to its execution, for its inclusion in the investment policy.

This information, with prior confirmation by the Price Provider of the possibility to value an operation or Instrument, must be submitted to the Financial Risks Committee for its approval and, where applicable, must be made known to the Investment Committee, so that, considering this operational framework, it decides the investment policy regarding Derivatives;

II. The operators of the Investment Society, in each operation they carry out with Derivatives, in accordance with the investment policy defined by the Investment Committee, must:

a. Enter into the corresponding operation on behalf and order of the Investment Society, in operations executed in over-the-counter markets or, once the contract of adherence to the relevant Stock Exchange or Clearing House is signed, for each subsequent operation executed, document it with confirmation letters;

b. Calculate the Marginal Value at Risk of the operation and of the entire portfolio, with the collaboration of the UAIR;

c. Inform the UAIR, the General Director of the Administradora and those in charge of the control and recording of operations, daily, of the operations executed, and

d. Inform the Financial Risks Committee and the Investment Committee, at each of their sessions, about the details of the operations executed, their follow-up and the accounting and financial results;

III. The UAIR must calculate and document the Value at Risk of the operations executed and of the investment portfolio of the Investment Society, monitor compliance with the limits referred to in the previous subsection II and inform the General Director, the Regulatory Comptroller and the person in charge of the investments area of the Administradora, of the operations executed and their impact on the securities portfolio of the Investment Society, as well as monitor daily the impact on the investment regime in the event that guarantees are executed, and

IV. Only those in charge of the control and recording of operations may confirm and reconcile them, for the above purpose they must:

a. Review, in coordination with officials from the legal area of the Administradora, the terms and conditions of the contract corresponding to each operation;

b. Keep the accounting record of the operations;

c. Administer the margin accounts and guarantees of each operation, and

d. Liquidate the operations and their margin accounts.

TWENTY-FOURTH.- Regarding Derivative operations executed in over-the-counter markets, Investment Societies that do not contract a Price Provider to provide valuation services for said assets may carry out such operations without it being necessary to have prior confirmation, from the Price Provider, of the possibility to value said assets.

In this case, the operators who execute the investment policy of the Investment Society must previously submit to the Risk Committee, for its approval, the Derivative operation in question and, where applicable, make it known to the Investment Committee, so that, considering this operational framework, it decides the investment policy regarding operations with Derivatives in over-the-counter markets.

TWENTY-FIFTH.- Investment Societies and the Administradoras that operate them must implement a continuous training program, directed at the operators of the Investment Societies, their support staff, the UAIR and, in general, all personnel involved in the operation of the Investment Societies.

Section VII
Of the Manual of Policies and Procedures for the Administration of Financial Risk

TWENTY-SIXTH.- The Commission will review the results of the valuation models used by each Administradora, as well as the methodology to which the Administradora will be subject for the valuation of Derivative operations, to verify their consistency, comparing them against the results obtained by the Commission's system.

In the event that relevant differences are found in the results of the models used by the Administradoras, the Commission may carry out a partial or total review of them.

CHAPTER VI
OF THE REGULATORY COMPTROLLERSHIP

Single Section
Of External Evaluation

TWENTY-SEVENTH.- Administradoras must hire an independent expert to carry out, at least once a year, an evaluation of the Administration of Financial Risk.

TWENTY-EIGHTH.- The independent expert hired by the Administradoras must meet the following characteristics:

I. Not have negative records reported to the Commission, or to any other authority of the Mexican financial system;

II. Accredit a minimum experience of four years in the Administration of Financial Risk, statistics, financial valuation and IT systems;

III. Not be the external auditor of the Administradora to which it provides its services, nor provide it with professional services other than the Administration of Financial Risk evaluation, and

IV. Not evaluate the same Administradora for more than five consecutive years.

The independent expert referred to in this rule must be chosen by the Board of Directors of the Administradora.

TWENTY-NINTH.- The evaluation in the Administration of Financial Risk carried out by the independent expert must consider, among others, the following aspects:

I. The development of the Administration of Financial Risk, in accordance with what is established in these rules and in the Manual of Policies and Procedures for the Administration of Financial Risk;

II. The organization of the UAIR and its independence from other areas;

III. The sufficiency, integrity, consistency and degree of integration of the information processing systems and for risk analysis, as well as their content;

IV. The modifications in the risk measurement models and their corresponding approval by each Financial Risks Committee;

V. The process for approving the risk measurement models used by the UAIR, and

VI. The adequate functioning of controls that reflect relevant changes in the nature of the Instruments acquired by the Investment Societies, in the exposure limits to risk and in internal control measures, occurring during the review period referred to in this rule.

The results of the evaluation will be recorded in a report that will contain, where applicable, recommendations to solve the observed irregularities.

Said report will be presented to the Board of Directors of the Administradora and of the Investment Societies it operates, to the Investment Committees, to the Financial Risks Committee, to the General Director of the Administradora and to the Regulatory Comptroller.

TRANSITORY PROVISIONS

FIRST.- These general rules will enter into force the day following their publication in the Official Gazette of the Federation.

SECOND.- CONSAR Circulars 62-1, "Prudential Rules on Risk Management to which Retirement Fund Administrators, Specialized Investment Societies for Retirement Funds and National SAR Database Operating Companies must be subject", modified and added by CIRCULAR CONSAR 62-2, published in the Official Gazette of the Federation on February 1, 2006 and November 17, 2006, respectively, are hereby repealed.

Mexico City, May 16, 2016. - The President of the National Commission for the Retirement Savings System, Carlos Ramírez Fuentes. - Signature.

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