Resolution 057/2008

BOARD RESOLUTION NO. 057/2008
SUBJECT: MONETARY OPERATIONS MANAGEMENT – APPROVES MODIFICATIONS TO THE REGULATION FOR THE SALE OF PUBLIC SECURITIES ISSUED BY THE CENTRAL BANK OF BOLIVIA THROUGH MARKET MAKERS.

VIEWED:
The Law No. 1670 of October 31, 1995 of the Central Bank of Bolivia (BCB) and its modifications.
The Law No. 1834 of March 31, 1998 of the Securities Market and its modifications.
The Law No. 1488 of April 14, 1993 on Banks and Financial Entities.
The Statute of the (BCB) approved by Board Resolution No. 128/2005 of October 21, 2005 and its modification approved by Board Resolution No. 031/2006 of April 18, 2006.
The Open Market Operations Regulation approved by Board Resolution No. 127/2003 of November 11, 2003 and its modifications approved by Board Resolutions No. 017/2004 of February 10, 2004, No. 070/2005 of May 24, 2005, No. 108/2007 of August 21, 2007 and No. 130 of October 16, 2007. The Regulation for the Sale of Public Securities Issued by the Central Bank of Bolivia through Market Makers, approved by Board Resolution No. 131/2007 of October 16, 2007. The Technical Report of the Monetary Operations Management GOM-SOMA 006/2008 of May 2, 2008. The Report of the Legal Affairs Management SANO No. 112/2008 of May 5, 2008.

CONSIDERING:
That Article 6 of Law No. 1670 empowers the BCB to execute monetary policy and regulate the amount of money and the volume of credit according to its monetary program, being able to issue, place, and acquire securities and carry out other open market operations for this purpose.

That Article 54, subsection d) of Law No. 1670 and numeral 4) of Article 11 of the BCB Statute, empower the Board of the Issuing Entity to issue regulations for Open Market Operations.

That Article 87 of Law No. 1670 establishes that within the scope of its functions as the monetary authority, and in its capacity as the financial agent of the government, the BCB may carry out, under the conditions determined by its Board, the deposit, custody, registration, administration, transaction, clearing, and settlement of securities issued, guaranteed, or administered by the BCB and by the General Treasury of the Nation (TGN).

That Article 7 of Law No. 1834 establishes that both issuances by the BCB and by the TGN are exempt from the public offering authorization by the Superintendence of Pensions, Securities and Insurance (SPVS), their own legal norms backing their issuance and public offering being sufficient.

That Law No. 1834 in its article 19 subsections a) and g) determines that Stock Agencies are empowered to carry out securities intermediation activities on behalf of third parties, as well as to carry out public offerings on behalf of issuers.

That article 3 numeral 2) of Law No. 1488 establishes that the issuance, discounting, or negotiation of securities and other documents representing obligations are financial intermediation activities and auxiliary services of the financial system.

That numeral 12) of article 39 of Law No. 1488 determines that banking financial entities are authorized to act as intermediaries on behalf of their clients in the subscription, placement, and purchase-sale of securities, prior to the deposit of funds.

That the last paragraph of article 39 of Law No. 1488 establishes that the activities mentioned in numeral 12) must be carried out through companies of majority ownership by the entity.

That, the Open Market Operations Regulation states that these operations may be carried out through the mechanism known as Market Makers, for which it is established that the conditions of this mechanism will be defined through a specific Regulation approved by the Board of the Issuing Entity.

That the Technical Report of the Monetary Operations Management GOM-SOMA 006/2008 recommends the modification of the Regulation for the Sale of Public Securities issued by the BCB through Market Makers, to allow the sale of public securities through Market Makers, using as reference the prices (or, equivalently, rates) defined in the Public Securities Auction or the prices (or, equivalently, rates) determined by the COMA.

That in the opinion of the Legal Affairs Management, there is no legal impediment for the Board to approve the modification of the Regulation for the Sale of Public Securities issued by the BCB through Market Makers.

THEREFORE,
THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:

Article 1. Modify subsection a) of article 4 of the Regulation for the Sale of Public Securities by the BCB through Market Makers, in the following terms:

SAYS:
Article 4. (Eligibility Criteria) The Open Market Operations Committee of the BCB (COMA) may grant the status of Market Maker to authorized entities according to the following eligibility criteria:
a) Interest Rate Differential: Basis points of difference between the market yield rate defined in the last awarded Public Securities Auction and the yield rate that will be offered to natural and legal persons. This differential may be equal to or less than that determined in Article 7 of this Regulation.

SHOULD SAY:
“Article 4. (Eligibility Criteria) The Open Market Operations Committee of the BCB (COMA) may grant the status of Market Maker to authorized entities according to the following eligibility criteria:
a) Interest Rate Differential: Basis points of difference between the market yield rate defined in the last awarded Public Securities Auction or the yield rate determined by the COMA and the yield rate that will be offered to natural and legal persons. This differential may be equal to or less than that determined in Article 7 of this Regulation.”

Article 2. Modify article 5 of the Regulation for the Sale of Public Securities by the BCB through Market Makers, in the following terms:

SAYS:
Article 5. (Delivery of BCB Securities to Market Makers) Market Makers will receive public securities from the BCB for placement in the extrabourse primary market, at the weighted average price (rate) of the last awarded auction, for each of the terms enabled for public sale.

These securities will be available at the BCB every Friday (or the issuance day when there is a holiday Friday), Monday, and Tuesday.

SHOULD SAY:
“Article 5. (Delivery of BCB Securities to Market Makers) Market Makers will receive public securities from the BCB for placement in the extrabourse primary market, at the weighted average price (rate) of the last awarded auction or at the price (rate) determined by the COMA, for each of the terms enabled for public sale. These securities will be available at the BCB every Friday (or the issuance day when there is a holiday Friday), Monday, and Tuesday.”

Article 3. Modify subsection d) of article 6 of the Regulation for the Sale of Public Securities by the BCB through Market Makers, in the following terms:

SAYS
Article 6. (Sale of Public Securities to Natural and Legal Persons) The sale of public securities to natural and legal persons through Market Makers will be governed by the following conditions:
d) The sale price will be that corresponding to the yield rate for public sale (Tp) in the corresponding term and currency, which is calculated as follows:
Tp = Ts – Dif
Where Dif is the interest rate differential (in basis points) and Ts is the weighted average rate of the last awarded auction.”

SHOULD SAY:
“Article 6. (Sale of Public Securities to Natural and Legal Persons) The sale of public securities to natural and legal persons through Market Makers will be governed by the following conditions:
d) The sale price will be that corresponding to the yield rate for public sale (Tp) in the corresponding term and currency, which is calculated as follows:
Tp = Ts – Dif
Where Dif is the interest rate differential (in basis points) and Ts is the weighted average rate of the last awarded auction or the rate defined by the COMA.”

Article 4. The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, May 6, 2008

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Raúl Garrón Claure

_________________________ _________________________ Hugo Dorado Araníbar Rolando Marín Ibáñez

_________________________ _________________________ Ernesto Yáñez Aguilar Osvaldo Nina Baltazar