SEC Division of Trading and Markets no-action letter: Banco Santander, S.A.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
DIVISION OF
TRADING AND MARKETS
Nicholas A. Kronfeld
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017
Re: Banco Santander, S.A.
File No. TP 19-04
Dear Mr. Kronfeld:
August 2, 2019
In your letter dated August 2, 2019 ( the "Letter"), you request on behalf of Banco Santander, S.A., a bank organized under the laws of the Kingdom of Spain ("Santander Spain"), an exemption from Rules 101 and 102 of Regulation M under the Securities Exchange Act of 1934 ("Exchange Act"), to permit Santander Spain and its affiliates to conduct specified "ordinary course" activities in the ordinary shares of Santander Spain (the "Santander Spain Shares") and American Depositary Shares (the "Santander Spain ADSs") during the distribution of such shares in connection with a proposed dual exchange offer (the "Exchange Offers"). 1 You seek exemptive relief to permit Santander Spain and its affiliates to conduct activities in the ordinary course of business outside the United States in Santander Spain Shares and Santander Spain ADSs during the Restricted Period. Specifically, you request that: (i) the Market Making Subsidiary be permitted to continue to engage in market making activities as described in the Letter; (ii) the Treasury Department be permitted to continue to engage in derivatives market making and hedging activities as described in the Letter; (iii) the Asset Managers be permitted to continue to engage in asset management activities as described in the Letter; (iv) the Insurance Companies be permitted to continue to engage in insurance activities as described in the Letter; and (v) the Non-U.S. Brokerage Units be permitted to continue to engage in unsolicited brokerage activities as described in the Letter. You also seek ex emptive relief to permit certain Santander Spain affiliates to conduct activities in the ordinary course of business in the United States in Santander Spain Shares and Santander Spain ADSs during the Restricted Period. Specifically, you request that: (i) the Puerto Rico Asset Manager be permitted to continue to cop.duct asset management activities in Puerto Rico as described in the Letter; (ii) Banco Santander International be permitted to continue to conduct asset management activities from the Continental United 1 We have attached a copy of the Letter. Each defined term in our response has the same meaning as defined, directly or by reference, in the Letter, unless we note otherwise.

Nicholas A. Kronfeld
August 2, 2019
States for non-U.S. clients as described in the Letter; and (iii) the U.S. Brokerage Units (Santander Investment Securities and Santander Securities LLC) be permitted to continue to engage in unsolicited brokerage activities as described in the Letter. Response:
Based on the facts and representations that you have made in the Letter, but without necessarily concurring in your analysis, the Securities and Exchange Commission (the "Commission") finds that it is necessary or appropriate in the public interest, and is consistent with the protection of investors, to grant, and hereby grants, Santander Spain and the Companies an exemption from Rules 101 and 1023 to permit them to continue to engage in the activities described in the Letter during the Restricted Period. This exemption is subject to the following conditions:

1. None of the transactions for which relief is being granted shall occur in the United
   States, except transactions in connection with the unsolicited brokerage activities by Santander Investment Securities and Santander Securities LLC, asset management activities of the Puerto Rico Asset Manager, and non-U.S. client asset management activities of Banco Santander International, as each is described in the Letter;
2. All of the transactions for which relief is being granted shall be effected in the
   ordinary course of business, as described in the Letter, and not for the purpose of facilitating the Exchange Offers;
3. Santander Spain shall include disclosure in the offer to exchange/prospectus that will
   be distributed to U.S. shareholders of Santander Mexico regarding the possibility of, or the intention to engage in, the transactions described in the Letter;
4. Santander Spain shall keep records for each purchase or sale of Santander Spain
   Shares or Santander Spain ADSs that Santander Spain or any of the Companies effects in the United States during the Restricted Period ("Records"). Such Records shall include:
   (a) the date and time of execution, the broker (if any), and the amount and price of the transaction; (b) the market or other manner in which the transaction is effected, and 2 For purposes of this letter, the Market Making Subsidiary, the Treasury Department, the Asset Managers (including the Puerto Rico Asset Manager and Banco Santander International), the Insurance Companies, the Non-U.S. Brokerage Units, and the U.S. Brokerage Units (Santander Investment Securities and Santander Securities LLC) are collectively referred to as the "Companies." 3 As described in the Letter, the Companies may be deemed to be "affiliated purchasers" of Santander Spain, and thus subject to Rule 102 of Regulation M, except to the extent that any of them acts as a "distribution participant" subject to Rule 101 of Regulation M.

Nicholas A. Kronfeld
August 2, 2019
( c) whether the transaction was made for a customer account or a principal or proprietary account (but such Records will not include any client-specific data, the disclosure of which is restricted under applicable law);
5. Upon written request of the staff of the Division of Trading and Markets ("Division"),
Santander Spain shall make the Records (arranged in a time-sequenced manner) available to the Division at its offices in Washington, D.C., within 30 days of its request;
6. Santander Spain and each of the Companies shall retain the Records for a period of
two years following the completion of the Exchange Offers;
7. Representatives of Santander Spain and each of the Companies shall be made
available by telephone to respond to inquiries of the Division relating to the Records; and
8. Except as otherwise exempted by this letter, Santander Spain and each of the
Companies shall comply with Regulation M in connection with the Exchange Offers. The foregoing exemption is based solely on the facts presented and the representations made in the Letter. Any different facts or circumstances may require a different response. This exemption is subject to modification or revocation at any time the Commission determines that such action is necessary or appropriate in furtherance of the purposes of the Exchange Act. In addition, persons relying on this exemption are directed to the anti-fraud and anti-manipulation provisions of the Exchange Act, particularly Sections 9(a) and 1 0(b ), and Rule 1 0b-5 thereunder. Responsibility for compliance with these and any other applicable provisions of the federal securities laws rests with the persons relying on the exemption. We express no view with respect to any other question that the Letter, or any activities undertaken pursuant to this exemption, may raise, including, but not limited to, the applicability of other federal or state securities laws or rules, or other laws and rules, to the proposed activities. Attachment 4 17 CFR 200.30-3(a)(6). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority,4 µP 9n-9r Josephine J. Tao Assistant Director

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Davis Polk
Nicholas A. Kronfeld
Davis Polk & Wardwell LLP 212 450 4950 tel
450 Lexington Avenue 212 701 5950 fax
New York, NY 10017 Nicholas.Kronfeld@davispolk.com August 2, 2019 Re: Banco Santander, S.A. Request for Exemptive Relief from Rules 101 and 102 of Regulation M Josephine J. Tao Assistant Director Division of Trading and Markets Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 Dear Ms. Tao:
We are writing as counsel to Banco Santander, S.A. ("Santander Spain"), a bank organized under the laws of the Kingdom of Spain, with respect to the application of Regulation M to transactions by Santander Spain and its affiliates in the ordinary shares of Santander Spain (the "Santander Spain Shares") during the distribution of Santander Spain Shares, including in the form of American Depositary Shares (the "Santander Spain ADSs"), to be made by Santander Spain to shareholders of Banco Santander (Mexico), S.A., lnstituci6n de Banca Multiple, Grupo Financiero Santander Mexico ("Santander Mexico"), in connection with the proposed acquisition by Santander Spain of Santander Mexico Series B shares ("Santander Mexico Shares") and American Depository Shares (each of which represents five Series B shares) ("Santander Mexico ADSs"). Santander Spain intends to structure the acquisition as a dual exchange offer comprising an exchange offer executed in the United States for Santander Mexico ADSs and Santander Mexico Shares held by U.S. holders (the "U.S. Exchange Offer") and a separate exchange offer in Mexico for Santander Mexico Shares (the "Mexican Exchange Offer" and, together with the U.S. Exchange Offer, the "Exchange Off.ers"). Specifically, on behalf of Santander Spain, we ask the members of the staff (the "Staff') of the Securities and Exchange Commission (the "SEC") to grant Santander Spain exemptive relief from Rules 101 and 102 of Regulation M to permit Santander Spain and its affiliates to continue, in the ordinary course of their respective businesses as described below and in accordance with applicable local law, to engage in the activities described below during the distribution of Santander Spain Shares and Santander Spain ADSs in connection with the Exchange Offers. In connection with the relief requested by Santander Spain in this letter, please note that substantially similar exemptive relief from Rules 101 and 102 of Regulation M was granted to Santander Spain under each of your

Josephine J. Tao 2 August2,2019 exemptive letters dated September 10, 2004, August 18, 2008, November 7, 2008, December 22, 2008, September 18, 2014, January 6, 2015 and June 29, 2017. 1 This letter sets forth data concerning the trading activity of Santander Spain and its affiliates for periods ending May 31, 2019. Santander Spain has represented to us that it is not aware of any material changes in the nature or volume of these activities since May 31, 2019. Market Making Activities. As is customary in Spain for financial institutions, Santander Spain engages in market making activities with respect to Santander Spain Shares through a subsidiary dedicated to that function (the "Market Making Subsidiary"). 2 The Market Making Subsidiary makes bids and offers for Santander Spain Shares on the Automated Quotation System ( Sistema de lnterconexi6n Bursati/ EspanoQ of the Spanish stock exchanges (the "AQS"), the centralized national market that integrates by computer quotation the Spanish stock exchanges in Madrid, Barcelona, Bilbao and Valencia (collectively, the "Spanish Exchanges") and purchases and sells Santander Spain Shares on the AQS. The Market Making Subsidiary effects these transactions for its own account in order to provide liquidity to the market. Derivatives Market Making and Hedging. As part of its business, the Treasury department of Santander Spain (the "Treasury Department") issues, buys and sells derivatives on Santander Spain Shares or on baskets or indices including Santander Spain Shares (the "Santander Spain Share Derivatives") for its own account and for the accounts of its customers. All of these trades are executed outside of the United States and the majority of these trades are for the accounts of customers outside the United States. The derivatives traded include listed and over￾the-counter options, warrants, futures, convertible securities and other structured products relating to Santander Spain Shares. The Treasury Department engages in derivatives market making activities, on both solicited and unsolicited bases, in order to provide liquidity to the derivatives market and to facilitate customers' derivatives transactions. These transactions are effected primarily on the MEFF Renta Variable, S.A. (the "MEFF Renta Variable") with the balance occurring on other exchanges outside the United States and, in some cases, in the over￾the-counter market outside the United States. In addition, the Treasury Department solicits and effects trades in Santander Spain Shares or in Santander Spain Share Derivatives for their own accounts and for the accounts of customers of the Treasury Department for the purpose of hedging positions (or adjusting or liquidating existing hedge positions) belonging to them and the customers of the Treasury Department that are established in connection with these derivatives market activities. The hedging transactions in Santander Spain Shares are effected outside the United States through the AQS and
the hedging transactions in derivatives on Santander Spain Shares are effected outside the United States on the MEFF Renta Variable, on other exchanges outside the United States and in the over-the-counter market outside the United States. During the twelve months ended December 31, 2018 and the five months ended May 31, 2019, these market making and hedging transactions in Santander Spain Shares and derivatives on Santander Spain Shares amounted to approximately 1.54% and 1.79%, respectively, of the value See Banco Santander Central Hispano, S.A., SEC No-Action Letter, File No. TP 04-70 (Sep. 10, 2004), Banco Santander, S.A., SEC No-Action Letter, File No. TP 08-77 (Aug. 18, 2008), Banco Santander, S.A., SEC No-Action Letter, File No. TP 09-16 (Nov. 7, 2008), Banco Santander, S.A., SEC No-Action Letter, File No. TP 09-29 (Dec. 22, 2008), Banco Santander, S.A., SEC No-Action Letter, File No. TP 14-15 (Sep. 18, 2014), Banco Santander, S.A. SEC No-Action Letter, File No. TP 15-07 (Jan. 6, 2015) and Banco Santander, S.A., SEC No-Action Letter, File No. TP 17-09 (June 29, 2017). Santander Spain's market making activities are carried out by Pereda Gesti6n, S.A., a corporation organized under the laws of Spain.

Josephine J. Tao 3 August 2, 2019 of average daily trading volume (the "ADTV") in Santander Spain Shares on the Spanish Exchanges. Trading in Santander Spain Shares by the Asset Managers. Certain affiliates of Santander Spain manage the assets of mutual funds, pension funds and discretionary investor portfolios (such affiliates, the "Asset Managers"; such funds and discretionary investor portfolios, the "Managed Funds"). 3 As part of their ordinary investment management activities on behalf of the Managed Funds, the Asset Managers buy and sell Santander Spain Shares and derivatives, including listed and over-the-counter options, warrants, convertible securities and other structured products relating to Santander Spain Shares or baskets or indices including Santander Spain Shares, as well as index futures on the foregoing, for the Managed Funds' accounts. Trading by the Insurance Companies. As part of its ordinary business, certain affiliates of Santander Spain (the "Insurance Companies")4 , sell certain insurance products requiring the insurer to invest the premiums paid by the purchaser of the policies within certain asset classes determined by that purchaser (such as shares represented in the IBEX 35 Index, which includes The Asset Managers consist of Santander Private Banking Gesti6n, S.A., S.G.1.1.C., Santander Asset Management, S.A., S.G.1.1.C., and Santander Pensiones, S.A., E.G.F.P., each a corporation organized under the laws of Spain (collectively, the "Spanish Asset Managers"); Santander Rio Asset Management Gerente de Fondos Comunes de Inversion, S.A., a corporation organized under the laws of Argentina; Banco Santander International S.A. Bahamas branch, a corporation organized under the laws of Bahamas; Santander Asset Management Brasil Participa9oes S.A., Santander Brasil Asset Management Distribuidora de Titulos e Valores Mobiliarios S.A., and Santander Brasil Gestao de Recursos Ltda., each a corporation organized under the laws of Brazil; Santander Asset Management, S.A., Administradora General de Fondos, a corporation organized under the laws of Chile; SAM SGIIC S.A. (German branch), a corporation organized under the laws of Germany; Santander Asset Management Finance Lux s:A.R.L., and Santander Asset Management Luxembourg, S.A., each a corporation organized under the laws of Luxembourg; SAM Asset Management, S.A. de C.V., Sociedad Operadora de Fondos de Inversion, a corporation organized under the laws of Mexico; BZ WBK Towarzystwo Funduszy lnwestycyjnych S.A., a corporation organized under the laws of Poland; Santander Asset Management - Sociedade Gestora de Fundos de lnvestimento Mobiliario, S.A., Santander Pens6es - Sociedade Gestora de Fundos de Pens6es, S.A., and Popular Gestao De Activos, each a corporation organized under the laws of Portugal; Santander Asset Management LLC, a corporation organized under the laws of Puerto Rico (the "Puerto Rico Asset Manager"); Banco Santander (Suisse) SA, a corporation organized under
the laws of Switzerland; Santander Asset Management UK Holding Limited and Santander Asset Management UK Limited, each a corporation organized under the laws of the United Kingdom; and Banco Santander International, a banking corporation organized under U.S. laws ("Banco Santander International"). Santander Seguros y Reaseguros S.A. Compaiiia Aseguradora, Santander Generales Seguros y Reaseguros S.A., Santander Vida Seguros y Reaseguros S.A., and Allianz Popular Vida, S.A.U., each a corporation organized under the laws of Spain (collectively, the "Spanish Insurance Companies");.Zurich Santander Seguros Argentina S.A., a corporation organized under the laws of Argentina; Zurich Santander Brasil Seguros e Previdencia S.A., Zurich Santander Brasil Seguros S.A., and Sancap Invest e Previdencia Participa9oes S.A., each a corporation organized under the laws of Brasil; Zurich Santander Seguros Generales Chile S.A., and Zurich Santander Seguros Vida Chile S.A., each a corporation organized under the laws of Chile; PSA Insurance Europe Limited and PSA Life Insurance Europe Limited, each a corporation under the laws of Malta; Santander Insurance Europe DAC, and Santander Insurance Life DAC, each a corporation organized under the laws of Ireland; Zurich Santander Seguros Mexico S.A., a corporation organized under the laws of Mexico; Bank Zachodni WBK AVIVA Towarzystwo Ubezpiecen Naycie S.A., and Bank Zachodni WBK AVIVA Towarzystwo Ubezpiecen Ogolnych S.A., each a corporation organized under the laws of Poland; Santander Totta Seguros Portugal, Aegon Santander Portugal Nao Vida S.A., Aegon Santander Portugal Vida S.A., Eurovida, S.A., and Popular Seguros, S.A., each a corporation organized under the laws of Portugal; and Zurich Santander Seguros Uruguay S.A., a corporation organized under the laws of Uruguay.

Josephine J. Tao 4 August2,2019
Santander Spain Shares) (such products, the "Asset Class Policies"). The Insurance Companies do not provide any investment advice to purchasers with respect to the asset classes that may be selected by the customer as part of the Asset Class Policies. Unsolicited Brokerage. The non-U.S. brokerage units set forth in note 5 below (the "Non-U.S. Brokerage Units")5 effect unsolicited brokerage transactions in Santander Spain Shares by placing orders on the AQS and other overseas exchanges or effecting trades in the over-the￾counter markets in Spain and elsewhere outside the United States. These transactions arise from unsolicited buy or sell orders received by the Non-U.S. Brokerage Units from their customers, although the Non-U.S. Brokerage Units may solicit the other side of these transactions. Additionally, Santander Spain conducts a securities business through its affiliated U.S. (including Puerto Rico) broker-dealers, Santander Securities LLC, a corporation incorporated under the laws of Puerto Rico ("Santander Securities LLC"), and Santander Investment Securities, Inc., a corporation incorporated under the laws of the state of Delaware ("Santander Investment Securities" and, together with Santander Securities LLC, the "U.S. Brokerage Units"; the U.S. Brokerage Units, together with the Non-U.S. Brokerage Units, the "Brokerage Units"), each of which may engage in unsolicited brokerage transactions in the Santander Spain Shares and Santander Spain ADSs with its customers in the United States. These transactions would be effected in the United States markets or in the non-U.S. markets described above. During the twelve months ended December 31, 2018 and the five months ended May 31, 2019, the unsolicited brokerage activities of the Brokerage Units (excluding trades executed by the Non-U.S. Brokerage Units on behalf of the Market Making Subsidiary) as a percentage of the worldwide value of ADTV in Santander Spain Shares was 11.47% and 9.27%, respectively. During the twelve months ended December 31, 2018 and the five months ended May 31, 2019, the unsolicited brokerage activities of the U.S. Brokerage Units collectively as a percentage of the worldwide value of ADTV in Santander Spain Shares was 0.10% and 0.08%, respectively. The Market Making Subsidiary, the Treasury Department, the Spanish Asset Managers, the Spanish Insurance Companies and the Spanish Brokerage Units are collectively referred to herein as the "Spanish Companies". The Spanish Companies, together with the other Asset Managers, the other Insurance Companies and the other Brokerage Units are collectively referred to herein as the "Companies". The availability of the exemptions Santander Spain is requesting would be conditioned on the disclosure and record-keeping undertakings outlined below. 5 The Non-U.S. Brokerage Units consist of Banco Santander S.A., Open Bank S.A., and Popular Bolsa S.V., S.A., each a corporation organized under the laws of Spain (the "Spanish Brokerage Units");
Banco Santander Rio S.A., and Santander Rio Valores S.A., each a corporation organized under the laws of Argentina; Santander Corretora de Cambio e Valores Mobiliarios, S.A., a corporation organized under the laws of Brazil; Santander Corredores de Bolsa Limitada and Santander Asesorias Financieras Limitada, each a corporation organized under the laws of Chile; Casa de Bolsa Santander, S.A. de C.V. Grupo Financiero Santander Mexico, a corporation organized under the laws of Mexico; Santander Bank Polska S.A., and Santander Securities, S.A., each a corporation organized under the laws of Poland; Banco Santander Totta, S.A., a corporation organized under the laws of Portugal; Banco Santander (Suisse) SA, a corporation organized under the laws of Switzerland; and Abbey Stockbrokers Limited, Abbey National Treasury Services Pie, Santander ISA Managers Ltd., and Santander UK Pie, each a corporation organized under the laws of the United Kingdom.

Josephine J. Tao 5 August2,2019
The descriptions of factual matters in this letter, including the market for Santander Spain Shares and the Companies' business and market activities, as well as the descriptions of certain matters under Spanish law and the laws of other jurisdictions outside the United States included in this letter, have been provided to us by Santander Spain.
I. The Market for Santander Spain Shares
The principal trading market for Santander Spain Shares is on the Spanish Exchanges through the AQS in Spain. The Santander Spain Shares also are listed on the New York (in the form of the Santander Spain ADSs), London (in the form of Santander Spain Crest Depositary Interests ("Santander Spain CDls")) and Warsaw Stock Exchanges, and on the unsponsored Sistema Internacional de Cotizaciones of the Mexican Stock Exchange. Each Santander Spain ADS represents one Santander Spain Share and is evidenced by an American Depositary Receipt issued by Bank of New York Mellon, as Depositary. Santander Spain is a foreign private issuer as defined in Rule 3b-4(c) under the U.S. Securities Exchange Act of 1934. As of December 31, 2018, 16,236,573,942 Santander Spain Shares were outstanding, held by 4,131,489 record holders. Approximately 61.20% of the outstanding Santander Spain Shares were held of record by non-residents of Spain and 21.42% of the outstanding Santander Spain Shares were held by 1, 158 record holders with registered addresses in the United States (including Puerto Rico). As of May 31, 2019, 16,236,573,942 Santander Spain Shares were outstanding, held by 4,081,583 record holders. Approximately 61.56% of the outstanding Santander Spain Shares were held of record by non-residents of Spain and 21.58% of the outstanding Santander Spain Shares were held by 1.144 record holders with registered addresses in the United States (including Puerto Rico). Santander Spain's market capitalization at December 31, 2018 was approximately €64.5 billion ($76.2 billion),6 the largest of any Spanish bank and the second largest of any Spanish company, representing 14.5 % of the IBEX 35 Index. The values of ADTV in the Santander Spain Shares on the Spanish Exchanges during the twelve months ended December 31, 2018 and the five months ended May 31, 2019 were approximately €376.2 million ($444.5 million) and €377.0 million ($427.1 million), or 90.47% and 90.74% of the global value of ADTV, respectively. The ADTV in number of shares in the Santander Spain Shares on the Spanish Exchanges during the twelve months ended December 31, 2018 and the five months ended May 31, 2019 were approximately 74.96 million shares and 88.06 million shares, respectively. The values of ADTV of the Santander Spain ADSs on the New York Stock Exchange (the "NYSE") during the twelve months ended December 31, 2018 and the five months ended May 31, 2019 were approximately $43.4 million and $39. 7 million, respectively. The values of ADTV of the Santander Spain Shares on the London and Warsaw Stock Exchanges and on the unsponsored Sistema Internacional de Cotizaciones of the Mexican Stock Exchange during the twelve months ended 6 Throughout this letter, euros have been translated to dollars at the rate of €1. 00 = $1.1817, the average rate of exchange in 2018 published by the Federal Reserve System on December 31, 2018, with regard to data as of or for periods ended December 31, 2018, and at the
rate of €1.00 = $1.1327, the average rate of exchange in 2019 (up to May 31, 2019) published by the Federal Reserve System on May 31, 2019, with regard to data as of or for periods ended May 31, 2019.

Josephine J. Tao 6 August 2, 2019
December 31, 2018 and the five months ended May 31, 2019 were, in the aggregate, approximately €2.7 million ($3.2 million) and €3.4 million ($3.9 million), respectively. The AQS links the Spanish Exchanges, providing securities listed on it with a uniform continuous market that eliminates the differences among the Spanish Exchanges. The principal feature of the system is the computerized matching of buy and sell orders at the time of entry of the order. Each order is executed as soon as a matching order is entered, but can be modified or canceled until executed. The activity of the market can be continuously monitored by investors and brokers. All trades on the AQS must be placed through a bank, a brokerage firm, an official stock broker or a dealer firm member of a Spanish Exchange directly. The AQS operates separate order-matching systems for block trades (which exceed certain minimum amounts) arid all other trades.
II. Santander Spain's Market Activities
Santander Spain is one of the world's largest banking and financial services groups, and its headquarters are in Madrid, Spain. In addition, Santander Spain has subsidiary, branch, representative and similar offices. Santander Spain is regulated and directly supervised by the European Central Bank under the Single Supervisory Mechanism ("SSM"), and its branches and affiliates in the United States are subject to applicable U.S. bank regulations, among other laws and regulations. Santander Spain has confirmed that the activities described below, for which it is requesting relief, are permitted under .and would be conducted in accordance with applicable Spanish law and other non-U.S. laws. Assuming the requested relief is granted, Santander Spain has confirmed that the activities described below also would be conducted in accordance with applicable U.S. law. In the continental United States, Santander Spain conducts a securities business through Santander Securities LLC and Santander Investment Securities and an asset management business for non-U.S. clients through Banco Santander International. During the period from January 1, 2018 through May 31, 2019, purchases and sales by Banco Santander International of Santander Spain Shares and Santander Spain ADSs totaled approximately $85.6 million. Santander Investment Securities is registered with the SEC as a broker-dealer and is a member of the Financial Industry Regulatory Association ("FINRA") and the NYSE. In Puerto Rico, Santander Spain conducts a securities business through Santander Securities LLC and an asset management business through the Puerto Rico Asset Manager. During the period from January 1, 2018 through May 31, 2019, there have been no purchases or sales by the Puerto Rico Asset Manager of Santander Spain Shares and Santander Spain ADSs and $1.25 million of purchases and sales by Santander Securities LLC of Santander Spain Shares and Santander Spain ADSs. Santander Securities LLC is registered with the SEC as a broker-dealer and is a member of FINRA. With respect to those activities for which Santander Spain is seeking relief, Santander Investment Securities will only engage in unsolicited brokerage activities in the United States, Santander Securities LLC will only engage in unsolicited brokerage activities in Puerto Rico and the United States, the Puerto Rico Asset Manager will only engage in asset management activities in Puerto Rico and Banco Santander International will only engage in asset management activities from the continental United States for non-U.S. clients. The rest of the activities for which Santander Spain is seeking relief (including unsolicited brokerage and asset management), with the possible exception of trades made by the Spanish Asset Managers, which, due to their fiduciary obligations as asset managers, cannot follow instructions from Santander Spain, or by the Asset Managers not based in Spain, which may not be able to follow

Josephine J. Tao 7 August 2, 2019 the instructions to be provided by Santander Spain due to the same fiduciary duties, will be conducted by the Spanish Companies and the other Companies outside the United States and Puerto Rico as described below. Market Making Activities. As is customary in Spain for financial institutions, Santander Spain engages in market making activities with respect to Santander Spain Shares through its Market Making Subsidiary. The Market Making Subsidiary makes bids and offers for Santander Spain Shares and purchases and sells Santander Spain Shares on the AQS. The Market Making Subsidiary effects these transactions for its own account in order to provide liquidity to the market. The Market Making Subsidiary conducts its market making activities outside the United States and manages these activities from Madrid. As noted above, the AQS is an order-matching system, not an inter-dealer market with formal, officially designated market makers. The Market Making Subsidiary engages in its market making activities by placing bids and offers on the AQS, primarily through one of the Non-U.S. Brokerage Units. However, the Market Making Subsidiary is not required to and does not maintain independently established bid and ask prices. The Market Making Subsidiary is not required to make a market in the Santander Spain Shares. Accordingly, the Market Making Subsidiary does not act as a "market maker" as that term is understood in the U.S. securities markets. Santander Spain believes that the Market Making Subsidiary is the only market maker for Santander Spain Shares on the Spanish Exchanges and, for the twelve months ended December 31, 2018 and the five months ended May 31, 2019, the Market Making Subsidiary's market making activities accounted for approximately 1.46% and 2.07% of the value of ADTV in Santander Spain Shares on the Spanish Exchanges. At times when supply has significantly exceeded demand, its share of such value of ADTV has increased materially, but the Market Making Subsidiary's market making activities generally do not comprise in excess of 15% of the value of ADTV in Santander Spain Shares as measured on a daily basis, on the Spanish Exchanges. The monthly average percentage of outstanding Santander Spain Shares held by the Market Making Subsidiary as a result of market making activities ranged from 0.03% to 0.07% during the twelve months ended December 31, 2018 and ranged from 0.004 % to 0.07% during the five months ended May 31, 2019. During the restricted period for the Exchange Offers (the "Restricted Period"), the Market Making Subsidiary intends to continue its market making activities in the ordinary course of business, although the Exchange Offers' distribution may result in increased selling pressure and thus volumes of transactions by the Market Making Subsidiary may be higher than average and represent a greater than average percentage of trading volume, including in excess of 15% of such daily trading
volume. Derivatives Market Making and Hedging. The Treasury Department conducts its derivatives market making and hedging activities outside the United States and manages these activities principally from Spain. In Spain, the Treasury Department is admitted under the MEFF Renta Variable rules as a market maker and is a significant market maker in derivatives of Santander Spain Shares. The Treasury Department is also the only market maker on the Spanish Exchanges of securitized derivatives issued by it and based, in whole or in part, on the Santander Spain

Josephine J. Tao 8 August 2, 2019
Shares and the Treasury Department is required by applicable stock exchange rules to provide quotes for such derivatives it issues. This activity involves the issuance, purchase and sale of derivative products for its own account and for the accounts of its customers on both solicited and unsolicited bases, on the Spanish Exchanges, certain other non-U.S. exchanges and in the over-the-counter market in Spain and elsewhere outside the United States. These derivatives products include listed and over-the-counter options, warrants, futures and other securities that are exercisable or convertible into, or the value of which is determined by reference to, Santander Spain Shares or proprietary or third-party baskets or indices including Santander Spain Shares. These derivatives may also include index futures on the foregoing. The Treasury Department's derivatives market making involves issuing, purchasing and selling derivatives on Santander Spain Shares in order to facilitate customer orders and to provide liquidity to the market. In addition, the Treasury Department will maintain varying positions in these derivatives and their financial exposure to movements in the price of the Santander Spain Shares will vary from time to time. In order to manage this financial exposure, the Treasury Department continually enters into hedging transactions that involve, in whole or in part, purchases and sales of Santander Spain Shares or of derivatives based on Santander Spain Shares, for their own accounts and on behalf of customers of the Treasury Department, as applicable, in order to assist them in hedging their own derivatives positions. The derivatives hedging transactions in Santander Spain Shares described above occur primarily on the AQS and on the MEFF Renta Variable, with the balance occurring on other exchanges outside the United States and, in some cases, in the over-the￾counter market outside the United States. During the twelve months ended December 31, 2018 and the five months ended May 31, 2019, these market making and hedging transactions in Santander Spain Shares represented approximately 1.54% and 1. 79%, respectively, of the value of ADTV in Santander Spain Shares on the Spanish Exchanges. Trading in Santander Spain Shares by the Asset Managers. As part of their ordinary investment management activities, the Asset Managers buy and sell Santander Spain Shares and derivatives, including listed and over-the-counter options, warrants, convertible securities and other structured products related to Santander Spain Shares or baskets or indices including Santander Spain Shares, as well as index futures on the foregoing, outside the United States for the Managed Funds' accounts.7 Under Spanish law, the Asset Managers have a fiduciary duty to oversee the Managed Funds in a manner that is in the best interests of the investors of those funds8. The Asset Managers are prohibited by law from taking into account any factors other The Puerto Rico Asset
Manager conducts such activities in Puerto Rico and Banco Santander International conducts such activities in the continental United States for non-U.S. clients. Both entities' volume of trading in Santander Spain Shares has historically been low. Under Spanish law, Santander Spain cannot issue directives to the Spanish Asset Managers requesting them to stop trading in any specific security for a specified period. This has been confirmed orally by the Spanish National Markets Commission (the "CNMV''). As a result, prior to the commencement of the Restricted Period, Santander Spain will instead issue advisory notices to the Spanish Asset Managers informing them that any trading by them in Santander Spain Shares or derivatives during the Restricted Period could result in a violation of U.S. law. Prior to the commencement of the Restricted Period, Santander Spain will issue directives to the Asset Managers not based in Spain requesting such Asset Managers to stop trading in Santander Spain Shares or derivatives until the termination of the Restricted Period. However, in light of the fiduciary duties that the Asset Managers have to the beneficiaries of the Managed Funds, no assurances can be given that the Asset Managers will in fact refrain from trading in Santander Spain Shares or derivatives during the Restricted Period. Accordingly, we are asking that the requested relief cover the asset management activities of the Asset Managers to the extent that the Asset

Josephine J. Tao 9 August 2, 2019 than the interests of the Managed Funds' beneficiaries in making investment decisions. Accordingly, the Asset Managers would be prohibited by law from following a directive by Santander Spain to cease trading Santander Spain Shares and derivatives, including listed and over-the-counter options, warrants, convertible securities and other structured products related to Santander Spain Shares or baskets or indices including Santander Spain Shares, as well as index futures on the foregoing, during the Restricted Period, unless the Asset Managers believed that cessation of such trading was in the best interests of the Managed Fund's beneficiaries9• Similarly, the Asset Managers would be prohibited by law from following a Santander Spain directive to bid for or purchase Santander Spain Shares and derivatives, including listed and over-the-counter options, warrants, convertible securities and other structured products related to Santander Spain Shares or baskets or indices including Santander Spain Shares, as well as index futures on the foregoing, unless the Asset Managers independently concluded that such bids or purchases were in the best interests of the Managed Fund's beneficiaries. Trading by the Insurance Company. The Insurance Companies purchase Santander Spain Shares in connection with investing premiums paid on Asset Class Policies, which require investments within a narrow class of assets, such as the IBEX 35 Index, that may include Santander Spain Shares. The Insurance Companies conduct these activities outside the United States. Under Spanish law, the Insurance Companies have a fiduciary duty to the purchasers of Asset Class Policies to oversee the investments with respect to those policies in a manner that is in the best interests of those purchasers. The Insurance Companies may not take into account any factors other than the interests of its insureds in making investment decisions under those policies. Accordingly, the Insurance Companies would be prohibited by law from following, with respect to the Asset Class Policies, a directive by Santander Spain to cease trading Santander Spain Shares during the Restricted Period, unless such a halt in trading were in the best interests of the purchasers of those policies. Similarly, the Insurance Companies would be prohibited by law from following a Santander Spain directive to bid for or purchase Santander Spain Shares unless the Insurance Companies independently concluded that such bids or purchases were in the best interests of its insureds under the Asset Class Policies. Unsolicited Brokerage. The Non-U.S. Brokerage Units effect unsolicited brokerage transactions in the Santander Spain Shares by placing orders on the Spanish Exchanges and other overseas exchanges or effecting trades in. the over-the-counter market in Spain and elsewhere outside the United States, in each case on behalf of customers. These transactions arise from unsolicited buy and sell
orders received from their customers, although the Non-U.S. Brokerage Units may Managers continue to trade in Santander Spain Shares or derivatives in the ordinary course of business during the Restricted Period. Some of the pension funds managed by the Asset Managers have an "investment oversight committee" charged with overseeing the investments made by the Asset Managers. In certain cases, representatives and/or employees of Santander Spain or its affiliates may be members of those investment oversight committees. However, those committees (and their members) would be unable to require the pension fund Asset Manager to stop or start trading Santander Spain Shares or derivatives during the Restricted Period if the Asset Manager did not believe it was in the best interests of the fund's owners to do so. The representatives and/or employees of Santander Spain who participate on the investment oversight committees are, like the Asset Managers themselves, isolated by Information Barriers from the areas of Santander Spain where price-sensitive information relating to Santander Spain Shares or derivatives and where information relating to the Exchange Offers would be discussed.

Josephine J. Tao 10 August2,2019 solicit the other side of these transactions. The unsolicited brokerage activities of the Non-U.S. Brokerage Units (excluding trades executed by the Non-U.S. Brokerage Units on behalf of the Market Making Subsidiary) represented approximately 11.47% and 9.27% of the value of ADTV in Santander Spain Shares on the Spanish Exchanges during the twelve months ended December 31, 2018 and the five months ended May 31, 2019, respectively. Although the Non-U.S. Brokerage Units from time to time provide advice to their customers regarding an investment in Santander Spain Shares, none of the Non-U.S. Brokerage Units, Santander Spain or any subsidiary of Santander Spain publishes research reports concerning Santander Spain. The Non-U.S. Brokerage Units are required by Spanish law, as well as, in some cases, by the terms of their contracts with customers, to facilitate the trading activity of customers as described above 1°. It would place a substantial burden on the Non-U.S. Brokerage Units' customers to require them to transfer their Santander Spain Shares to a securities account with another bank, or to have the Non-U.S. Brokerage Units place orders with another bank, in order to make trades with respect to Santander Spain Shares during the Restricted Period. Moreover, the Non-U.S. Brokerage Units would likely lose a significant number of those customers if the Non-U.S. Brokerage Units were prevented from providing them with customary facilitation services during the Restricted Period. As noted above, the U.S. Brokerage Units may also engage in unsolicited brokerage transactions in the Santander Spain Shares with their customers in the United States. These transactions would be effected on the NYSE, in the over-the-counter markets in the United States or in the non-U.S. markets described above. Significance to Market. As noted above, the Market Making Subsidiary's market making activities accounted for 1.46% and 2.07% of the values of ADTV in Santander Spain Shares on the Spanish Exchanges during the twelve months ended December 31, 2018 and the five months ended May 31, 2019, respectively, while the derivatives market making and hedging activities of the Derivatives Market Participants and the unsolicited brokerage activities of the Non-U.S. Brokerage Units (excluding trades executed on behalf of the Market Making Subsidiary) represented approximately 1.54% and 11.47%, respectively, of such 2018 value of ADTV and approximately 1.79% and 9.27%, respectively, of such 2019 value of ADTV. In the aggregate, these market activities represented approximately 15.93% and 15.19% of the values of ADTV in Santander Spain Shares on the Spanish Exchanges during the twelve months ended December 31, 2018 and the five months ended May 31, 2019, respectively. Information Barriers. Santander Spain maintains and enforces written "Information Barrier" policies and procedures to prevent material non-public information from passing between the
sales/trading areas and other sensitive areas of Santander Spain (including any investment oversight committee). Accordingly, during restricted periods prior to announcements of earnings results or other material developments that have not yet become public, most market making and all other ordinary course market activities of Santander Spain are permitted to continue. Under these policies and procedures, Santander Spain's traders and sales force who conduct these market activities will generally be able to continue doing so during and outside these restricted 10 The Brokerage Units are not required, however, to buy or sell Santander Spain Shares as principal for the benefit of their clients.

Josephine J. Tao 11 August 2, 2019 periods, although senior management may restrict such activities in extraordinary circumstances. Santander Spain will continue to maintain and enforce these policies and procedures during the Restricted Period. Other affiliates of Santander Spain conduct market activities in Santander Spain Shares in the ordinary course of their business. In connection with the Exchange Offers, these other affiliates will comply with Regulation M, either by suspending their market activities during the relevant period or by conducting those activities in accordance with an available exception from Regulation M. These exceptions might include those available for "affiliated purchasers." Accordingly, Santander Spain is not seeking relief from the Staff for these activities.
Ill. The Exchange Offers
On April 12, 2019, Santander announced the terms of the Exchange Offers pursuant to which Santander Spain is offering to acquire all the issued and outstanding (i) Series B shares of Santander Mexico ("Santander Mexico Shares") and (ii) American Depositary Shares (each of which represents five Santander Mexico Shares) ("Santander Mexico ADSs"}, in each case other than any Santander Mexico Shares or Santander Mexico ADSs owned directly or indirectly by Santander Spain, in exchange for 0.337 of a Santander Spain Share, for each Santander Mexico Share, and 1.685 Santander Spain ADSs, for each Santander Mexico ADS. Holders of Santander Mexico Shares and Santander Mexico ADSs who tender into the U.S. Exchange Offer through Bank of New York Mellon, as the US exchange agent, will receive Santander Spain Shares or Santander Spain ADSs, which will be in book-entry form or will be evidenced by American Depositary Receipts. Holders of Santander Mexico Shares who tender into the Mexican Exchange Offer by tendering their Santander Mexico Shares will receive Santander Spain Shares. The Exchange Offers are subject to certain customary conditions. Santander Spain has filed a registration statement on Form F-4 (which contains an offer to exchange/prospectus) with the SEC pursuant to which the Santander Spain Shares, including those underlying the ADSs, to be delivered in the U.S. Exchange Offer will be registered under the Securities Act of 1933. Santander Spain plans to mail the offer to exchange/prospectus to the holders of Santander Mexico ADSs and the record holders of Santander Mexico Shares that are residents of, or located in, the United States and whose names appear on the shareholder lists provided by Santander Mexico as soon as practicable after the registration statement is declared effective. Assuming all of the Santander Mexico Shares and Santander Mexico ADSs are tendered into the Exchange Offers, the Santander Spain Shares (including those underlying Santander Spain ADSs) issued in connection with the Exchange Offers will represent approximately 3.4% of the Santander Spain Shares that would be outstanding following completion of the Exchange Offers. An application will be made to list the Santander Spain Shares on the Mexican Stock Exchange, and to list the Santander Spain ADSs that will be. issued pursuant to the Exchange Offers on the NYSE.
IV. Application of Regulation M

Josephine J. Tao 12 August 2, 2019
In connection with the Exchange Offers, Santander Spain will distribute Santander Spain Shares and Santander Spain ADSs to holders of Santander Mexico Shares and Santander Mexico ADSs, some of whom are expected to reside in the United States, and may therefore be considered to be engaged in a distribution in the United States for purposes of Regulation M. Pursuant to Rule 100 under Regulation M, the Restricted Period will begin on the day that the Exchange Offers are commenced, which is the day the offer to exchange/prospectus will be mailed, and will end once the Exchange Offers are completed. Thus, the Restricted Period is likely to last approximately one month, and potentially longer in the event the Exchange Offers are extended. As business units or affiliates of Santander Spain that, from time to time, purchase Santander Spain Shares for their own accounts and the accounts of others and recommend and exercise investment discretion with respect to the purchase of Santander Spain Shares, the Companies may be deemed to be "affiliated purchasers" of Santander Spain, as defined in Rule 100 of Regulation M. As such, their market activities will be subject to Rule 102 of Regulation M throughout the Restricted Period, except to the extent that any of them acts as a "distribution participant" subject to Rule 101. Under both Rule 101 and Rule 102, the Companies will not be permitted to bid for or purchase, or attempt to induce any person to bid for or purchase, Santander Spain Shares during the Restricted Period unless one of the specified exceptions under the applicable rule is available. There are no exceptions available under either rule that would permit the Companies to engage in the ordinary course market-making, derivatives hedging, asset management, insurance and unsolicited brokerage activities described in this letter. Therefore, without the requested exemptive relief, the Companies would not be permitted to engage in these activities for an extended period of time, which is likely to last approximately one month, and potentially longer in the event the Exchange Offers are extended. Santander Spain believes that the withdrawal of the only market maker in Santander Spain Shares in the primary market for those shares, which are among the most actively traded in Spain, for such an extended period of time would have serious harmful effects in the home market and, indirectly, in the U.S. market, for the Santander Spain Shares. These effects could include a significant imbalance of buy and sell orders, particularly given the large number of shares to be distributed in the Exchange Offers, and thus greater volatility and reduced liquidity. In addition, as the Treasury Department is also a significant market maker in derivatives on Santander Spain Shares, if the Treasury Department is precluded from conducting market making activities in the derivatives or from effecting hedging transactions in Santander Spain Shares relating to the derivatives,
,the application of Regulation M could have adverse effects on the market for derivatives, as well as on the Treasury Department's ability to manage hedge positions maintained by them and the customers of the Treasury Department previously established in connection with this activity. The Asset Managers and the Brokerage Units may also be unable to execute asset-management related or unsolicited brokerage orders submitted by their customers in the normal course, thereby forcing their customers to take their orders elsewhere or to refrain from trading. Similarly, the Asset Managers and the Insurance Companies have a fiduciary duty to the investors of the Managed Funds and to the purchasers of their insurance products to oversee the investments in a manner that is in the best interests of those purchasers. Accordingly, the Asset Managers and the Insurance Companies may not refrain from, or engage in, trading in Santander Spain Shares or, as the case may be, derivatives, including listed and over-the-counter options, warrants, convertible securities and

Josephine J. Tao 13 August2,2019 other structured products related to Santander Spain Shares or baskets or indices including Santander Spain Shares, as well as index futures on the foregoing, as a result of investment instructions received from Santander Spain, unless such action is in the best interests of the purchasers of those policies. The derivatives market making and hedging, asset management, insurance and unsolicited brokerage activities described in this letter are also important aspects of Santander Spain's business as a major financial institution in Europe and, therefore, interrupting those activities for such an extended period could also have an adverse impact on Santander Spain's business, including its ability to properly manage its risks. The Santander Spain Shares would easily qualify as actively traded securities that are exempt under Rule 101(c)(1), with a value of average daily trading volume for the twelve months ended December 31, 2018 and the five months ended May 31, 2019 of approximately $491 million and $471 million, respectively, and a public float value of approximately $70 billion. Regulation M normally would not interfere with market-making and other market activities in actively traded securities, such as the Santander Spain Shares. However, because the Companies are affiliated purchasers of the issuer, they may not rely on the actively traded securities exception to do what market makers and brokers for large U.S. issuers are normally allowed to do during distributions by those issuers. In addition, the Exchange Offers are being conducted in accordance with applicable U.S. law and trading in Santander Spain Shares by the business units and affiliates of Santander Spain identified herein during the Exchange Offers' distribution is subject to and will be conducted in accordance with applicable Spanish law and other applicable non-U.S. laws. As discussed in greater detail below, applicable Spanish law provides important safeguards against the type of risk of abuse that Regulation M was designed to prevent. Finally, Santander Spain believes that the risk of market manipulation by the Companies is limited by the "Information Barrier" procedures and fiduciary duties described above, the fact that the market activities that are the subject of this request for exemptive relief are the ordinary course market activities of the Companies rather than activities commenced or managed in contemplation of the Exchange Offers, and the fact that the jurisdictions in which the Companies operate have laws that prohibit market manipulation (as further discussed below). For the foregoing reasons, Santander Spain asks the Staff to provide an exemption from Regulation M that would allow the Companies to continue to engage in market making, derivatives market making and hedging, asset management, insurance and unsolicited brokerage activities with respect to Santander Spain Shares and Santander Spain ADSs in the ordinary course of their
respective business as described above during the Restricted Period, as permitted under market practice and applicable law in their home jurisdictions.
V. The Spanish Regulatory Regime
The principal regulations that apply to the Spanish Companies' securities market activities under Spanish law are the Regulation (EU) No 596/2014, of the European Parliament and the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and implementing and delegated regulations (the "MAR"), the Spanish Securities Market Act (the "SSMA"), Royal Decree 217/2008 (relating to regulations governing the activities of investment firms and conduct on the Spanish Exchanges). The SSMA

Josephine J. Tao 14 August2,2019 established an independent regulatory authority, the CNMV, to supervise the securities markets. The SSMA and the MAR govern, among other things, trading practices, insider trading and disclosure. In particular, Articles 1511 of the MAR and 282.1512 of the SSMA prohibit market manipulation. Under the SSMA, the CNMV oversees price formation, execution and the settlement of transactions to ensure that insider trading, price manipulation and other breaches of law may be detected. The CNMV has a division which has responsibility for market supervision, monitoring compliance, investigating violations and imposing disciplinary measures. The CNMV also takes measures to ensure that information necessary to maintain a transparent market is made public. This applies, in particular, to the prices and volumes of securities traded on and off the Spanish Exchanges. The Spanish Criminal Code provides remedies for abusing confidential information that is likely to influence the prices of securities. Market manipulation and dissemination of false rumors to affect the prices of listed securities to realize a gain are prohibited. The breach of professional secrecy, insider trading and price manipulation in Spain are criminal offenses. In particular,
Article 284 of the Spanish Criminal Code establishes criminal liability for employment of any
mechanism with the intent to alter prices that would otherwise result from a free market for, among other things, securities. Under Spanish law, Santander Spain and its subsidiaries are prohibited from purchasing Santander Spain Shares unless the purchase of Santander Spain Shares is generally authorized at a meeting of shareholders of Santander Spain, and such purchase, together with the Santander Spain Shares previously held by Santander Spain and its subsidiaries, do not result in a net equity lower than the Santander Spain share capital amount plus any restricted legal or statutory reserves. In addition, the total number of Santander Spain Shares held by Santander Spain and its subsidiaries may not exceed 10% of the total capital stock of Santander Spain. Spanish law requires that the CNMV be notified each time Santander Spain and its subsidiaries acquire, on an aggregate basis, 1 % of the outstanding capital stock of Santander Spain. In addition, the competent banking supervisor requires Santander Spain to provide monthly reports of the number of Santander Spain Shares held by Santander Spain and its subsidiaries, the number of Santander Spain Shares held for hedging purposes and the number of Santander Spain Shares held by third parties whose purchase was either financed by or pledged to Santander Spain or any of its subsidiaries. Pursuant to Spanish regulations relating to conduct in the securities markets, the Spanish Brokerage Unit must keep records of orders received from any third party regarding Santander Spain Shares and any other security as well as the execution of such order. The Spanish 11 Article 15 provides:
A person shall not engage in or attempt to engage in market manipulation.
12 Article 282.15 provides:
Breach of any of the provisions established in article 15 of Regulation (EU) No 596/2014, of the European Parliament and of the Council, of 16 April 2014, when any of the following circumstances occur:
a) the conduct causes a significant change in the price; b) the amount of the funds used or the volume or value of the financial instruments used in the commission of the breach is significant, or c) the actual or potential profits gained or the losses avoided as a consequence of committing the breach are significant.

Josephine J. Tao 15 August 2, 2019
Brokerage Unit also must keep records relating to transactions in which they are acting as principals. The information contained in such records must include identification of the client, the number, type and price of securities bought or sold and the market on which the transaction is effected. These records must be made available to the CNMV upon request. In addition, the Market Making Subsidiary, the Treasury Department, the Spanish Asset Managers and the Insurance Company must also maintain records relating to the transactions in which they engage, including the number, type and price of securities bought or sold. The jurisdictions in which the Companies other than the Spanish Companies operate generally have anti-market manipulation, insider trading and record-keeping laws and regulations similar to those governing market activities in Spain.
VI. Relief Requested
As discussed above, Santander Spain is seeking exemptive relief from Rule 102 and, to the extent applicable, Rule 101 of Regulation M to permit the Market Making Subsidiary, the Treasury Department, the Asset Managers, the Insurance Companies and the Non-U.S. Brokerage Units to continue to engage in the ordinary course market making, derivatives market making and hedging, asset management, insurance and unsolicited brokerage activities as described in this letter during the Restricted Period. The Market Making Subsidiary, the Treasury Department, the Asset Managers, the Insurance Companies and the Non-U.S. Brokerage Units would conduct these activities in the ordinary course of their business, not for the purpose of facilitating the Exchange Offers' distribution and in accordance with applicable law, all as described in this letter. Santander Spain also asks for relief to permit the U.S. Brokerage Units, Banco Santander International and the Puerto Rico Asset Manager to engage in their respective activities in the normal course of business, not for the purpose of facilitating the Exchange Offers' distribution and in accordance with applicable local law, as described in this letter. As a condition to the relief being requested, none of the transactions for which relief is being requested will occur in the United States, except transactions in connection with unsolicited brokerage activities by Santander Investment Securities and Santander Securities LLC and asset management activities by the Asset Managers, as each is described in this letter. As another condition to the requested relief, all of the transactions for which relief is being requested will be effected in the ordinary course of business, as described in this letter, and not for the purpose of facilitating the Exchange Offer. As another condition to the relief being requested, Santander Spain would undertake to include disclosure in the offer to exchange/prospectus that will be distributed to Santander Mexico shareholders as set forth in the offer to exchange/prospectus. The disclosure would be substantially similar to the following:
Since the announcement of the Exchange Offers, Santander Spain, through certain identifiable business units, and certain of its affiliates have engaged and intend to continue to engage in various dealing and brokerage activities involving Santander Spain Shares outside the United States. Among other things, Santander Spain, through an affiliate, has made a market, from time to time, and intends to continue to make a market, from time

Josephine J. Tao 16 to time, in the Santander Spain Shares by purchasing and selling Santander Spain Shares for its own account in Spain on the Spanish Exchanges. Certain mutual fund management companies, pension fund management companies, asset management companies and insurance companies that are affiliates of Santander Spain have purchased and sold, and intend to continue to purchase and sell, Santander Spain Shares and derivatives, as part of their ordinary investing activities and/or as part of the investment selections made by their clients. Santander Spain, through its derivatives business units, has also engaged, and intends to continue to engage, in dealings in Santander Spain Shares and derivatives for their accounts and for the accounts of their respective customers for the purpose of market making of derivatives, short term management of balance sheet risk or of hedging their respective positions established in connection with certain derivatives activities (such as options, warrants, futures and other instruments) relating to Santander Spain Shares entered into by Santander Spain and its affiliates and their respective customers. Santander Spain, through its brokerage business units, has also engaged, and intends to continue to engage, in unsolicited brokerage transactions in Santander Spain Shares with Santander Spain's customers. These activities occurred and are expected to continue to occur through the AQS, on the Spanish Exchanges, the stock exchanges of London and Warsaw and on the unsponsored Sistema lntemacional de Cotizaciones of the Mexican Stock Exchange and in the over-the-counter market in Spain or elsewhere outside the United States. Santander Spain's affiliates in the United States also have engaged and may continue to engage in unsolicited brokerage and asset management transactions in Santander Spain Shares and Santander Spain ADSs in the United States. In addition, Santander Spain's affiliates in Puerto Rico have engaged and may continue to engage in unsolicited brokerage transactions in Santander Spain Shares and Santander Spain ADSs in Puerto Rico and may purchase Santander Spain Shares and Santander Spain ADSs in connection with asset management activities in Puerto Rico. Santander Spain is not obliged to make a market in Santander Spain Shares and any such market making may be discontinued at any time. All of these activities could have the effect of preventing or retarding a decline in the market price of the Santander Spain Shares. Santander Spain has sought and received from the SEC certain exemptive relief from Regulation M in order to permit its identifiable business units and affiliates to engage in the foregoing activities during the Restricted Period. August 2, 2019

Josephine J. Tao 17 August 2, 2019
As a further condition to the relief being requested, Santander Spain and each of the Companies will undertake to keep records (the "Records"') of the date and time when any Santander Spain Shares or Santander Spain ADSs are purchased or sold, the broker (if any), the market or other manner in which the purchase or sale is effected, the amount of Santander Spain Shares or Santander Spain ADSs purchased or sold and the price of the purchase or sale, and whether the purchase or sale was made for a customer account or a principal or proprietary account, for each purchase or sale of Santander Spain Shares or Santander Spain ADSs that Santander Spain or any of the Companies effects in the United States during the Restricted Period. This information will not include any client-specific data, the disclosure of which is restricted under local law. Santander Spain will maintain Records for a period of two years following the completion of the Exchange Offers. Upon the written request of the Division of Trading and Markets of the SEC, Santander Spain will make a copy of the relevant Records (arranged in a time-sequence manner) available at the SEC's offices in Washington, D.C. within 30 days of the request, and will make representatives of Santander Spain and each of the Companies available by telephone to respond to inquiries of the Division relating to the Records. As a final condition to the relief being requested, except as otherwise permitted by the relief being requested, Santander Spain and its affiliates will comply with Regulation M in connection with the Exchange Offers. In connection with the relief requested by Santander Spain in this letter, please note that substantially similar exemptive relief from Rule 101 and Rule 102 of Regulation M was granted to Santander Spain with respect to market making, derivatives hedging, asset management, insurance and unsolicited brokerage activities under your exemptive letters dated September 10, 2004, August 18, 2008, December 22, 2008, September 18, 2014, January 6, 2015 and June 29, 2017 and to Banco Bilbao Vizcaya Argentaria, S.A. under your exemptive letters dated June 25, 2007, October 28, 2010, November 17, 2014 and November 3, 2017, substantially similar exemptive relief from Rule 101 and Rule 102 of Regulation M was granted to Allianz AG with respect to market making, derivatives market making and hedging and unsolicited brokerage activities under your exemptive letter dated April 10, 2003 and to Deutsche Bank AG under your exemptive letter dated March 17, 2017 and similar exemptive relief from Rule 102 of Regulation M was granted to Santander Spain with respect to derivatives market making and hedging, asset management, insurance and unsolicited brokerage activities relating to shares of the Royal Bank of Scotland under your exemptive letter dated July 23, 2007, to Lloyds Banking Group pie with respect to derivatives hedging, asset management, insurance, unsolicited brokerage and other activities
under your exemptive letter dated September 16, 2013 and to National Bank of Greece S.A. with respect to market making, derivatives hedging, asset management and unsolicited brokerage activities under your exemptive letter dated May 7, 2014.

Josephine J. Tao 18 August 2, 2019

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If you have any questions about this request, please do not hesitate to contact Nicholas A. Kronfeld (212-450-4950). We appreciate your assistance in this matter. Nicholas A. Kronfeld Copy to:
Javier Illescas
Head of Corporate Legal
Banco Santander, S.A.
Pedro de Mingo
Head of Regulatory Compliance
Banco Santander, S.A.