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Derivatives

On January 15 2007, new rules and requirements were introduced that affect banking institutions, the stock markets, investment companies and financial companies when entering into derivatives transactions. The new rules seek to simplify authorization; suppress the opinions of auditors and consultants; grant indefinite and general authorization to enter into derivatives operations; allow banking institutions to conduct derivatives credit operations; add new underlying operations against which derivatives can be written; expand the scope of operations for investment companies; and bring financial companies under the scope of the regulations.

The rules assign specific activities to each entity according to its nature. Depending on the type of entity and its activities, various requirements must be fulfilled, including filing periodic reports, notices and registries before the Bank of Mexico and the National Banking and Securities Commission.

The underlying operations against which derivatives can be written include:

  • shares, a group or basket of shares, or referenced titles to shares, that are quoted on a stock market;
  • price indexes on shares that are quoted on a stock market;
  • national currency, currencies and investment units;
  • price indexes referring to inflation;
  • gold or silver;
  • nominal or real interest rates or increased rates, including any debt title;
  • loans or credits; and
  • future, option and swap operations on the underlying operations referred to above.

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