Resolution 105/2011

BOARD RESOLUTION NO. 105/2011 SUBJECT: MONETARY OPERATIONS MANAGEMENT - APPROVES MODIFICATIONS TO THE OPEN MARKET OPERATIONS REGULATION.

HAVING SEEN: 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 on 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 subsequent modifications. The Open Market Operations (OMA) 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. 130/2007 of October 16, 2007. Board Resolution No. 073/2011 of June 14, 2011, which empowers the Open Market Operations Committee to establish a commission on the transfer and transfer of securities placed through direct sale mechanisms. The Technical Report from the Monetary Operations Management BCB-GOM-SOMA-2011-031 of August 10, 2011. The Report from the Legal Affairs Management BCB-GAL-SANO-INF-2011-274 of August 10, 2011.

CONSIDERING: That Article 6 of Law No. 1670 empowers the BCB to execute monetary policy and regulate the amount of money and credit volume 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 a monetary authority, and in its capacity as the government's financial agent, 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 1 of Board Resolution No. 108/2007 of August 21, 2007 authorizes the sale of public securities issued by the BCB to natural and legal persons, with the exception of financial entities with a license granted by the Superintendence of Banks and Financial Entities or by the Superintendence of Pensions, Securities, and Insurance. That Article 7 of Law No. 1834 establishes that both BCB and TGN issuances 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 majority-owned subsidiaries of the entity. That Administrative Resolution SPVS/IV/ No. 1250 regulates the activities of Stock Agencies carried out through services provided by entities authorized by the Superintendence of Pensions, Securities, and Insurance or by the Superintendence of Banks and Financial Entities. That Board Resolution 127/2003 of 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 by a specific Regulation approved by the Board of the Issuing Entity. That Board Resolution 073/2011 empowers the Open Market Operations Committee to establish a commission on the transfer and transfer of securities placed through direct sale mechanisms.

That the Technical Report from the Monetary Operations Management BCB-GOM-SOMA-2011-031 concludes that with the objective of supporting interest rate signaling and incentivizing financial savings of natural persons nationwide, and of democratizing the population's access to sovereign securities, it recommends to the Board to approve the modification of articles 12 and 13 of the Open Market Operations Regulation.

That in Report BCB-GAL-SANO-INF-2011-274 it concludes that the modification of articles 12 and 13 of the Monetary Operations Regulation proposed by the Monetary Operations Management is legally appropriate as it does not contravene the legal framework, being the competence of the BCB Board to consider its approval by two-thirds of the votes of all its members, in accordance with what is established in article 54 subsection o) of Law No. 1670 and article 24 of the BCB Statute.

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

Article 1.- Modify article 12 of the Open Market Operations Regulation (Board Resolution 127/2003 of November 11, 2003), in the following terms:

SAYS: Article 12 (Operating Mechanisms). III. Direct Sale to Natural and Legal Persons. It is a mechanism for the direct placement of securities to natural and legal persons, except for financial entities with a license granted by the Superintendence of Banks and Financial Entities (SBEF) or by the Superintendence of Pensions, Securities, and Insurance (SPVS). The characteristics of the securities, the prices, the quantities offered, the minimum and maximum amounts to be placed, as well as the channels and requirements to carry out these sales, will be determined by the COMA. The cost for Record Maintenance at the Bolivian Securities Depository Entity S.A. of the dematerialized securities placed through this mechanism will be assumed by the BCB. BCB officials may not acquire public securities under this mechanism. IV. Sale through Market Makers. It is a mechanism through which authorized financial entities receive securities from the BCB to then sell them to natural and legal persons, with the exception of financial entities with a license granted by the SBEF or by the SPVS. The conditions of this mechanism will be defined by a specific Regulation approved by the BCB Board. BCB officials may not acquire public securities under this mechanism.

SHOULD SAY: “Article 12 (Operating Mechanisms). III. Direct Sale to Natural Persons. It is a mechanism for the direct placement of securities to natural persons. The characteristics of the securities, the prices, the quantities offered, the minimum and maximum amounts to be placed, as well as the channels and requirements to carry out these sales, will be determined by the COMA. The cost for Record Maintenance at the Bolivian Securities Depository Entity S.A. of the dematerialized securities placed through this mechanism will be assumed by the BCB. BCB officials may not acquire public securities under this mechanism. IV. Sale through Placement Agents. It is a mechanism through which authorized financial entities receive securities from the BCB to then sell them to natural persons. The conditions of this mechanism will be defined by a specific Regulation approved by the BCB Board.” BCB officials may not acquire public securities under this mechanism.

Article 2.- Modify article 13 of the Open Market Operations Regulation (Board Resolution 127/2003 of November 11, 2003), in the following terms:

SAYS: Article 13 (Types of Operations). The types of OMA carried out by the BCB may be the following: I. Primary Placement of Securities. Primary placement will be carried out with securities issued by the BCB or placed by the BCB through the monetary regulation account. The placement or sale of securities will be carried out through public auction, money table, direct sale to natural and legal persons, sale through market makers, or another mechanism defined by the Board, a public call to this effect must be made previously, disseminated through written, oral, or electronic media. These securities must be registered in the Securities Market Registry.

SHOULD SAY: “Article 13 (Types of Operations). The types of OMA carried out by the BCB may be the following: I. Primary Placement of Securities. Primary placement will be carried out with securities issued by the BCB or placed by the BCB through the monetary regulation account. The placement or sale of securities will be carried out through public auction, money table, direct sale to natural persons, sale through placement agents, or another mechanism defined by the Board, a public call to this effect must be made previously, disseminated through written, oral, or electronic media. These securities must be registered in the Securities Market Registry.”

Article 3.- The modifications established in articles 1 and 2 of this Resolution will enter into effect from the date of their approval.

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

La Paz, August 23, 2011

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Marcelo Zabalaga Estrada

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Hugo Dorado Araníbar Rolando Marín Ibáñez

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Ernesto Yáñez Aguilar Gustavo Blacutt Alcalá Rafael Boyán Téllez