Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

MEXICO

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of December 31, 2006)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: November 12, 1946.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictionsNo.
References to legal instruments and hyperlinksn.a.
Exchange Arrangement
CurrencyThe currency of Mexico is the Mexican peso.
Exchange rate structureUnitary.
Classification
Independently floatingThe exchange rate of the peso is determined freely in the foreign exchange market. The Exchange Commission established a rules-based mechanism to reduce the rate of international reserves accumulation. The Bank of Mexico (BOM) sells dollars directly in the foreign exchange market every day according to the following procedure: the BOM announces every quarter the total amount of dollars it will offer to the currency market each day during the following four quarters. The total amount of dollars to be sold will equal 50% of the net international reserves accumulated during the previous quarter, with one-fourth of the established amount being auctioned each quarter, not including the cumulative amount of dollars sold through the auction mechanism during the same period. Based on the total amount of dollars, the BOM auctions on a daily basis a fixed amount of dollars following a preestablished schedule (the daily amount to be sold is determined according to the number of working days in the current quarter).
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketOnly commercial and development banks are allowed to enter into exchange rate, stock exchange, and other derivative transactions. Authorization from the BOM is required, which is granted on the basis of certain organizational, legal, and risk management requirements.
References to legal instruments and hyperlinksCircular-Fax 18/2003, 18/2003 BIS, and 18/2003 BIS I on U.S. Dollar Auctions, www.banxico.org.mx/tipo/disposiciones/bancos/cir18-2003-compilado.htm; Nos. M.52.1, M.52.2, M.52.3, and Annex 8 of Circular 2019/95, on Borrowing and Lending Operations and Services of Full-Service Banks, www.banxico.org.mx/tipo/disposiciones/Circular2019/default.htm; Circular 1/2006, on Borrowing and Lending Operations and Services of the Development Banks, No. BD.72, www.banxico.org.mx/polmoneinflacion/disposiciones/dispDirigidasInstitucionesCredito/dispDirigidasInstitucionesBancaDesarrollo/Circular1_2006TextoCompilado.html.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payments arrangements
Bilateral payments arrangements
OperativeThere is a payments arrangement with the Bank Negara Malaysia.
Regional arrangementsIn accordance with the Reciprocal Credits and Payments Agreements entered into by the BOM with the CBs of Argentina, Bolivia, Brazil, Chile, Colombia, the Dominican Republic, Ecuador, Paraguay, Peru, Uruguay, and República Bolivariana de Venezuela, payments to these countries may be made through the BOM and the CB of the country concerned within the framework of the multilateral clearing system of the LAIA. A similar payments arrangement exists with the CBs of Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. Mexico has free trade agreements with several other countries.
Clearing agreementsThere are clearing agreements in accordance with the regional payments agreements referred to above.
Administration of controlNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotes
On importsThe customs law requires that persons bringing into the country an amount of cash, checks, or a combination of both in domestic or foreign currency exceeding the equivalent of $10,000 declare it to the customs authorities.
Domestic currencyYes.
Foreign currencyYes.
References to legal instruments and hyperlinksReciprocal Payment and Credit Agreement signed by the Bank of Mexico and the central banks of the other LAIA member countries and the Dominican Republic. Rules of operation: Circular 2031/97, www.banxico.org.mx/sistemafinanciero/disposiciones/dispDirigidasInstitucionesCredito/dispDirigidasInstitucionesCreditoBaMulYBaDes/circular2031-97/Circular2031-97.html; Article 9 of the Customs Law, www.diputados.gob.mx/leyesBiblio/pdf/12.pdf.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyCommercial banks are permitted to hold foreign exchange demand deposits payable in Mexico, provided the holders of such accounts are (1) residents of the 20-kilometer-long strip along the northern border area of Mexico or living in Baja California or Baja California Sur, or (2) firms domiciled in Mexico. Effective March 17, 2006, demand deposits in foreign currency may be withdrawn with debit cards. Commercial banks may also hold foreign exchange time deposits from firms established in Mexico, provided such deposits are payable abroad. Controls apply to deposits denominated in foreign currency by an insurance company or a privately managed pension fund with Mexican financial institutions or foreign financial entities that are affiliates of these.
Held abroadControls apply to deposits of funds denominated in foreign currency by an insurance company or a privately managed pension fund with nonresident financial institutions other than those registered in the National Register of Securities (NRS).
Accounts in domestic currency held abroadYes.
Accounts in domestic currency convertible into foreign currencyNo.
References to legal instruments and hyperlinksCircular 2019/95, on Borrowing and Lending Operations and Services of Full-Service Banks, Nos. M.12.1, M.12.11, M.12.2, M.12.21, and Annex 2, www.banxico.org.mx/dDisposiciones/Disposiciones2019/default.htm.
Nonresident Accounts
Foreign exchange accounts permittedCommercial banks are permitted to hold foreign exchange demand deposits payable in Mexico with respect to official representations of foreign governments and international organizations, including foreign individuals employed in such entities and foreign correspondents. In such cases, they must be registered in Mexico with the appropriate authority. Effective March 17, 2006, demand deposits in foreign currency may be withdrawn with debit cards.
Domestic currency accountsYes.
Convertible into foreign currencyNo.
Blocked accountsNo.
References to legal instruments and hyperlinksCircular 2019/95, on Borrowing and Lending Operations and Services of Full-Service Banks, No. M.12.11.3 and Annex 2, www.banxico.org.mx/dDisposiciones/Disposiciones2019/default.htm.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresImport licenses issued by the Ministry of Economy (MOE) are required for 180 of the 11,954 items on which Mexico’s general import tariff is levied, including the 26 tariff lines related to “special operations,” under which manufacturing industries may import (with zero duties but under a license) finished goods that allow them to complement their offer and fulfill the program of manufacture in which they have registered; temporary imports of raw materials and intermediate inputs for exporting industries do not need a license. New licenses are issued, provided the criteria set by the MOE are satisfied. On average, import licenses are valid for a period of one year, but for some sensitive products, they are valid only for six months. For some products, open-ended import licenses may be granted, allowing imports to be effected during a period of six months to one year, subject to an overall limit. Depending on the importer’s performance, the license may be renewed repeatedly. No import license is required for funeral cars and coaches, go-karts, and collectors’ vehicles (at least 30 years old). Imports of used cars other than funeral cars and coaches, go-karts, and collectors’ vehicles, are subject to the prior approval of the MOE, but only special-purpose vehicles that are different from those made locally are allowed.
Negative listYes.
Open general licensesEffective March 13, 2006, imports of gold and silver are allowed under OGLs.
Licenses with quotasYes.
Other nontariff measuresImports of used agricultural machinery, raw materials, and intermediate products require agricultural certificates, inspection, and lab analysis. Goods covered by CITES are prohibited. Other nontariff regulations, such as those related to national security concerns (firearms and weapons); Health Department standards; ecological and environmental regulations; and restrictions on drugs, narcotic substances, nuclear energy, and toxic and hazardous materials, apply to about 1,680 of the 11,954 items of Mexico’s general import tariff. About 3,712 tariff items are subject to qualitative examinations by customs to verify if goods fulfill certain Mexican consumer standards.
Import taxes and/or tariffsImport duties range from zero to 20%, with higher rates for a few products, such as fructose (subject to a 210% tariff) and clothing, footwear, and leather goods (35% tariff), whereas 2,500 tariff items are totally duty-free without restriction on country of origin. A 50% tariff applies to imports of new cars from countries with which no commercial agreement exists. A 7% to 10% duty rate applies on 17 tariff items in the automobile sector. Imports from members of the LAIA are granted preferential duty treatment. Free trade agreements exist with Bolivia, Chile, Colombia, Costa Rica, the EFTA, El Salvador, the EU, Guatemala, Honduras, Israel, Japan, Nicaragua, and Uruguay. Trade with Canada and the United States takes place under the NAFTA. Mexico has applied antidumping duties to the following products: electrical transformers and steel products from Brazil; textiles and articles of apparel, electronic products, nonelectronic toys, pencils, padlocks, bicycles and bicycle tires, iron and steel valves, and chemical products from China; beef, rice, sodium hydroxide, polyvinyl chloride, fructose, seamless steel tubes, rods and bars, and polystyrene from the United States; seamless steel tubes from Japan; polyester from Korea; steel products from Canada, the Russian Federation, Ukraine, and República Bolivariana de Venezuela; chemical products from Denmark; and frozen beef and polystyrene from EU countries. Tariffs do not apply to imports destined for reexportation, except those under a free trade agreement. The tariff measures are designed to support competitiveness of the industrial plant, to allow imports of strategic inputs, and to reduce production costs. Effective September 5, 2006, the duty rates applicable to aluminum ingots and lysine (a foodstuff input), some chemical substances, inputs for tanning, flats for bike tires, and some handheld tools were reduced. A tariff item for statistical purposes was created for footwear heels and soles, as well as machinery for repairing airships and aircraft parts. Effective September 29, 2006, generalized duty rates for about 6,900 tariff lines related to inputs were reduced to reorder productive chains and standardize the rates applicable to intermediate inputs. Effective November 27, 2006, the duty rates applicable to textile inputs were reduced. A new quota was imposed on textile inputs. A new tariff item was introduced to keep track of wines, brandy, and distilled agave. Tariff classifications were made for steel products. The duty rate applicable to specialized boats used in the processing of crude petroleum was eliminated, and the preferential rates applicable to goods from the European Community, AELC, El Salvador, Guatemala, Honduras, Nicaragua, and Japan were adjusted. Also, the presidential decree that establishes special duty rates for inputs imported under the Sectorial Programs (PROSEC) was updated to support the manufacturing industries that operate these programs.
State import monopolyNo.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licensesMost exports do not require licenses. Exports of a few specified items related to drugs, narcotic substances, endangered species, and archaeological pieces are prohibited.
With quotasEffective April 1, 2006, an export license is required to export cement to the United States in fulfillment of an agreement between Mexico and the United States. A maximum amount on these exports is set.
Export taxesExport taxes apply to endangered species’ skins, turtle oil, vegetable alkaloids, human organs, and electricity.
References to legal instruments and hyperlinksn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
References to legal instruments and hyperlinksn.a.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinksn.a.
Capital Transactions
Controls on capital transactionsYes.
Repatriation requirementsNo.
Controls on capital and money market instruments
On capital market securitiesEffective June 1, 2006, the new Securities Market Law is in effect.
Shares or other securities of a participating nature
Purchase locally by nonresidentsPurchases of shares and other securities of a participating nature may be affected by the laws on inward direct investment. Such laws specify activities for which investment is reserved for the government or Mexican investors. Thus, with the authorization of the MOE, investment trusts may be established by Mexican banks acting as trustees. These trusts issue ordinary participation certificates that may be acquired by foreign investors; the certificates grant only economic rights to their holders and do not confer voting rights in the companies whose stock is held by the trusts (such voting rights being exercisable only by the trustee).
Sale or issue locally by nonresidentsForeign commercial entities must be authorized by the MOE before engaging in habitual commercial activities in Mexican territory. Foreign securities publicly offered in the domestic market must be approved by the National Banking and Securities Commission (CNBV).
Purchase abroad by residentsMOF authorization is required for banks and securities firms to purchase shares of foreign financial intermediaries. Controls apply to the purchase (1) of foreign securities by securities firms on their own account and on the account of their clients; and (2) by an insurance company or a privately managed pension fund of securities denominated in foreign currency, with the exceptions of capital market instruments registered in the NRS and of securities issued in foreign currency by the federal government or payable abroad by Mexican financial institutions or by foreign financial entities that are affiliates of these.
Sale or issue abroad by residentsDomestic securities offered in foreign markets must be registered with the NRS.
Bonds or other debt securities
Sale or issue locally by nonresidentsThe rules applicable to shares or other securities of a participating nature apply.
Purchase abroad by residentsThe rules applicable to shares or other securities of a participating nature apply.
Sale or issue abroad by residentsThe rules applicable to shares or other securities of a participating nature apply.
On money market instruments
Sale or issue locally by nonresidentsThe rules applicable to shares or other securities of a participating nature apply.
Purchase abroad by residentsThe rules applicable to shares or other securities of a participating nature apply.
Sale or issue abroad by residentsThe rules applicable to shares or other securities of a participating nature apply.
On collective investment securities
Purchase locally by nonresidentsIrrespective of the holder’s nationality or residence, the board of directors of each mutual fund must establish a maximum limit on individual holdings of its shares.
Sale or issue locally by nonresidentsThe rules applicable to shares or other securities of a participating nature apply.
Purchase abroad by residentsControls apply to the purchase by an insurance company of securities denominated in foreign currency, with the exceptions of those securities registered in the special section of the NRS and of securities issued in foreign currency payable abroad by Mexican financial institutions or by foreign financial entities that are affiliates of these. Pension funds may invest up to 30% of their net assets in debt instruments and foreign debt securities denominated in foreign currency.
Sale or issue abroad by residentsThe rules applicable to shares or other securities of a participating nature apply.
Controls on derivatives and other instrumentsEffective January 27, 2006, in accordance with a circular, development banks are allowed to conduct borrowing, lending, and derivatives operations.
Purchase locally by nonresidentsForeigners are restricted to investing in publicly traded options when investments in the underlying assets or other securities of a participating nature of such options are reserved exclusively for Mexican residents.
Sale or issue locally by nonresidentsFinancial intermediaries can enter into futures and option agreements, as clients, only when the underlying asset of such agreements is a commodity or right that they are authorized to negotiate with, according to the applicable regulation.
Controls on credit operations
Financial credits
By residents to nonresidentsThere are limits on the amounts that banks are allowed to lend to individual borrowers and on the open foreign exchange position of banks. In addition, controls apply to credits and loans denominated in foreign currency granted by an insurance company or a private pension fund.
To residents from nonresidentsThere are limits on credits denominated in foreign currency granted to Mexican banks and on open foreign exchange positions.
Guarantees, sureties, and financial backup facilities
To residents from nonresidentsContracting with foreign bonding companies to insure actions of persons who must fulfill obligations on Mexican territory, except for reguarantee operations, is prohibited.
Controls on direct investmentEffective April 24, 2006, the General Law on Mutual Insurance Companies and Institutions and Federal Law on Bonding Companies were amended to conform to the wording of the other financial laws that establish that foreign entities that exercise governmental functions may not invest in such companies.
Inward direct investmentControls apply to (1) acquisitions exceeding a total of 49% of the capital stock of a Mexican company, which are subject to review if the total value of the assets of that company exceeds MEX$2.186 million; (2) acquisition of land used for agriculture, livestock, or forestry purposes; however, “T” shares that represent the value of such land may be purchased up to a total of 49% of the capital stock of the company; (3) investment in (a) retail trade in gasoline and distribution of liquefied petroleum gas; (b) supply of fuels and lubricants for ships, aircraft, and railroad equipment up to a total of 49% of the capital stock; and (c) construction of oil pipelines and other derivative products, and oil and gas drilling, exceeding a total of 49% of capital stock, unless an authorization is granted; (4) investment not exceeding a total of 49% in fishing, other than aquaculture, in coastal and fresh waters or in the Exclusive Economic Zone; (5) investment in air, maritime, and ground transport and related services, including cabotage and port services, except (a) participation up to a total of 25% of the capital stock in national air transport, specialized air services, and aerotaxis; up to a total of 49% in the administration of air terminals and more than 49%, provided an authorization is granted; (b) participation up to a total of 49% of the capital stock in interior navigation and coastal sailing, except tourist cruises and the exploitation of dredges and other naval devices for ports; in integral port administration and port pilot services for interior navigation; and in companies dedicated only to the export of high-speed ships and port services for interior navigation, in which participation may be authorized up to 100%; (c) railroad-related services and participation up to 49% in the capital stock of a railway concessionaire enterprise (full ownership may be authorized); and (d) participation in the capital stock of a company engaged in national ground transport of passengers, tourism, and loading within Mexico; (6) investment in radio and television broadcasting other than cable television; (7) investment exceeding a total of 49% of the capital stock (a) in using, utilizing, or developing a frequency band in national territory, except for the free-use spectrum and the official-use spectrum; and (b) in installing, operating, or developing public telecommunications networks, occupying geostationary orbital positions and satellite orbits assigned to Mexico, or developing the corresponding frequency bands and developing signal transmission and reception rights of frequency bands associated with foreign satellite systems that may cover or render services in the national territory; (8) investment up to a total of 49% in newspapers for national distribution; (9) investment in cellular telephony, in which participation may be authorized up to 100%; (10) direct or indirect investment by entities that exercise governmental authority functions in financial institutions, effective April 26, 2006 (previously, insurance and bonding companies were exempt); (11) acquisition of real estate in the restricted zone (100-kilometer strip along the Mexican land border and 50-kilometer strip in and from the Mexican coast), where some controls apply as for “Controls on real estate transactions”; (12) investment by foreign nationals in (a) legal services and private education services exceeding 49% of the capital stock, unless an authorization is granted; and (b) certain professional and technical services; (13) investment up to a total of 49% of the capital stock of companies manufacturing explosives and firearms; (14) investment in the following financial institutions: insurance companies, financial leasing companies, factoring companies, general deposit warehouses, bonding companies, foreign exchange firms, limited scope financial institutions, securities advisory companies, and pension funds, in which foreign investment may not exceed 49%. Any shareholder, regardless of nationality, may acquire the control of series “O” shares of a commercial bank, securities firm, or financial holding company; and (15) investment in credit unions and development banks, which is reserved exclusively for Mexican individuals or Mexican corporations with a foreign exclusion clause.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase abroad by residentsControls apply to the acquisition of real estate abroad by an insurance company or by a privately managed pension fund.
Purchase locally by nonresidentsControls apply for the direct acquisition by foreign nonresidents of real estate inside the restricted zone (a 100-kilometer strip along the Mexican land border and a 50-kilometer strip in and from the Mexican coast). Foreign nonresidents may acquire real estate through Mexican companies according to whose by-laws these nonresidents are considered Mexican, provided they refrain from invoking the protection of their government regarding the property acquired and their rights to the real estate within the zone defined above. Such acquisitions may take place (1) through the acquisition of shares of Mexican companies dedicated to nonresidential activities, with notification to the Ministry of Foreign Affairs (MFA); or (2) through a real estate trust for residential activities, with the approval of the MFA.
Controls on personal capital transactions
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsThese transactions are subject to local civil provisions. In some states, foreign inheritances from a Mexican resident are subject to international reciprocity.
References to legal instruments and hyperlinksPolitical Constitution of the United Mexican States, www.diputados.gob.mx/leyinfo/pdf/1.pdf; Foreign Investment Law, www.diputados.gob.mx/leyinfo/pdf/44.pdf; Law on the Stock Market, www.diputados.gob.mx/leyinfo/pdf/89.pdf; Law on Credit Institutions, www.diputados.gob.mx/leyinfo/pdf/43.pdf; Law on Investment Companies, www.diputados.gob.mx/leyinfo/pdf/69.pdf; Law on Retirement Savings Systems, www.diputados.gob.mx/leyinfo/pdf/52.pdf; Law Regulating Credit Information Companies, www.diputados.gob.mx/leyinfo/pdf/237.pdf; Federal Law on Bonding Companies, www.diputados.gob.mx/leyinfo/pdf/108.pdf; General Law on Mutual Insurance Companies and Institutions, www.diputados.gob.mx/leyinfo/pdf/138.pdf; General Law on Credit Organizations and Auxiliary Activities, www.diputados.gob.mx/leyinfo/pdf/139.pdf; Federal Law on Telecommunications, www.diputados.gob.mx/leyinfo/pdf/118.pdf; Circular 1/2002 Setting out Regulations for Investment Companies Specializing in Retirement Funds Entering into Financial Transactions Known as Derivatives, www.banxico.org.mx/dDisposiciones/otras_ent_fin/Circular1-2002 (compilado).htm; Circular 2019/95 on Borrowing and Lending Operations and Services of Full-Service Banks, www.banxico.org.mx/dDisposiciones/Disposiciones2019/default.htm; Regulations on Risk Diversification in Lending Operations, as referred to in Article 51, para. II of the Law on Credit Institutions, www.shcp.gob.mx/servs/normativ/rdiversas/rd_020225.html; General Resolution No. 5, which determines the present value of the assets referred to in Article 9 of the Foreign Investment Law, www.economia.gob.mx/pics/p/p1195/rg5cnie.doc; Prudential arrangements to which participants in the market for futures and exchange-trade options are subject, www.mexder.com.mx/inter/info/mexder/avisos/Disposiciones.doc.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutionsBanks that obtain an unconditional warranty from foreign financial entities may be exempt from the limits on foreign currency liabilities and investments for foreign exchange transactions, provided the long-term debt of the warrantor is rated at least “AA-” by Standard & Poor’s or “Aa3” by Moody’s Investors Service. BOM approval is required for debt rated by other agencies. Banks and limited scope financial institutions must disclose fees and commissions to users of financial services, and the BOM is authorized to determine if there is reasonable competition with respect to the fees of banks and other financial intermediaries. Effective July 18, 2006, the General Law on Credit Organizations and Auxiliary Activities has been amended to overrule all the provisions regarding financial leasing companies and financial factoring companies. Granting of credits, financial leasing, and financial factoring may be provided by any person without prior approval by the federal government. People who engage in the aforesaid activities in a customary and professional manner are considered multiple scope companies, which may be regulated or not regulated. Regulated multiple scope companies are supervised by the CNBV and are those entities that maintain economic links with credit institutions, or holding companies that have a credit institution in their financial group.
Borrowing abroadBorrowing abroad is permitted, subject to the limits on the liabilities of commercial banks denominated in foreign currency and on open foreign exchange positions.
Maintenance of accounts abroadForeign exchange risk positions, both total and for each foreign currency, must not exceed the daily limit of 15% of a bank’s base capital.
Lending to nonresidents (financial or commercial credits)There are limits on the amount banks may lend, regardless of the borrower’s residence.
Lending locally in foreign exchangeThere are limits on the amount that banks may lend regardless of the borrower’s nationality or residence, and on their net open foreign exchange position.
Purchase of locally issued securities denominated in foreign exchangeBanks may enter into transactions on their own account with respect to securities, commercial debt instruments not registered with the NRS, and capital instruments, whether or not registered with the NRS.
Differential treatment of deposit accounts in foreign exchange
Liquid asset requirementsBanks must invest in liquid assets—as determined by the BOM and denominated in foreign currency—an amount calculated through the maturity structure of their liabilities payable in foreign currency.
Investment regulations
Abroad by banksControls apply on the types and amounts of transactions for banks.
In banks by nonresidentsAny shareholder, regardless of nationality or residence, may acquire the control of “O” shares, with prior MOF approval. If the acquisition exceeds 5% of the shares representing the capital stock of a banking institution, CNBV opinion is required prior to MOF approval. The limits on shareholders do not apply to foreign offshore banking institutions that were set up in accordance with an international trade treaty.
Open foreign exchange position limits
On resident assets and liabilitiesIrrespective of the counterparty’s residence, total liabilities of commercial banks denominated in or referred to foreign currency (excluding cash and liquid assets, as determined by the BOM) must not exceed an amount equal to 183% of the capital stock of the respective bank. (Calculation of the base capital stock reflects the capitalization procedure set under the Basel Accord. The conversion of the base capital into national currency takes into account the exchange rate published by the BOM in the Official Gazette of the business day following the date of the calculation of the base capital.) Notwithstanding this requirement, the BOM allows short or long foreign exchange risk positions, which, both jointly and for each foreign currency at the end of each day, do not exceed 15% of the bank’s base capital (base capital being calculated pursuant to rules issued by the MOF). For the calculation of the foreign exchange position, commercial banks must include the foreign currency operations of their agencies and affiliates—in Mexico and abroad—except for securities firms, foreign exchange firms, bonding companies, insurance companies, managing companies of mutual funds, mutual funds, and pension fund management companies.
Commercial banks may be authorized by the BOM to determine the positions referred to above from a long position in dollars.
On nonresident assets and liabilitiesThe regulations governing resident assets and liabilities apply.
Provisions specific to institutional investors
Insurance companies
Limits (max.) on securities issued by nonresidentsInsurance companies may invest in equity of other insurance, reinsurance, or bonding companies. However, they may invest their reserves only pursuant to rules issued by the MOF. These rules specify the type of instruments and amounts in which insurance companies may invest. In particular, controls apply to the purchase by an insurance company of securities denominated in foreign currency, with the exception of capital market instruments registered with the NRS and its intermediaries and of securities issued in foreign currency by the federal government or payable abroad by Mexican financial institutions or by foreign financial entities that are affiliates of these.
Limits (max.) on investment portfolio held abroadThe regulations governing limits on securities issued by nonresidents apply. In addition, controls apply to (1) credits and loans denominated in foreign currency granted by an insurance company, (2) deposits of funds denominated in foreign currency by an insurance company with financial institutions other than those registered with the NRS, and (3) acquisition of real estate abroad by an insurance company.
Pension funds
Limits (max.) on securities issued by nonresidentsPension fund management companies may invest their net assets in the types of instruments and amounts specified in the rules established by the Pension Fund Systems National Commission (CONSAR). In particular, controls apply to the purchase by a privately managed pension fund of securities denominated in foreign currency, with the exceptions of capital market instruments registered in the special section of the NRS and of securities issued in foreign currency by the federal government or payable abroad by Mexican financial institutions or by foreign financial entities that are affiliates of these. Pension fund management companies may invest in government issued instruments and in instruments rated by international rating agencies. In addition, pension fund management companies may invest up to 20% of their net assets in securities issued by nonresidents subject to approval by the CONSAR.
Limits (max.) on investment portfolio held abroadPension funds may invest up to 30% of their net assets in debt instruments and foreign debt securities denominated in foreign currency. In addition, controls apply to (1) deposits of funds in foreign exchange with financial institutions other than those registered with the NRS, (2) credits and loans denominated in foreign currency granted by a pension fund, and (3) acquisition of real estate abroad.
Investment firms and collective investment fundsEffective December 4, 2006, new provisions regarding the investment regime on mutual funds have been issued to establish the minimum capital requirement and investment regime of the different types of mutual funds. Mutual funds must invest at least 96% of their total assets in specially designated “assets for investment”—which include securities registered with the NRS and others established by law, depending on the types of funds—and those authorized by the CNBV. Mutual funds that invest in fixed income instruments, debt instruments, and assets and other instruments of a participating nature must invest their assets in accordance with the regulations issued by the CNBV.
Limits (max.) on securities issued by nonresidentsControls apply to the purchase of foreign securities by mutual funds in variable income and in debt instruments, on their own account and on the account of their clients.
Limits (max.) on investment portfolio held abroadControls apply to the purchase of foreign securities by mutual funds in variable income and in debt instruments, on their own account and on the account of their clients.
Limits (min.) on investment portfolio held locallyYes.
References to legal instruments and hyperlinksLaw on Credit Institutions, www.diputados.gob.mx/leyinfo/pdf/43.pdf; General Law on Mutual Insurance Companies and Institutions, www.diputados.gob.mx/leyinfo/pdf/138.pdf; Law on Investment Companies, www.diputados.gob.mx/leyinfo/pdf/69.pdf; Law on Retirement Savings Systems, www.diputados.gob.mx/leyinfo/pdf/52.pdf; Law on the Transparency and Management of Financial Services, www.diputados.gob.mx/leyinfo/pdf/265.pdf; Circular 2019/95 on Borrowing and Lending Operations and Services of Full-Service Banks, www.banxico.org.mx/dDisposiciones/Disposiciones2019/default.htm; Circular CONSAR 15-12 Setting out the General Regulations Establishing the Investment Regime to Which Investment Companies Specializing in Retirement Funds Are Subject, www.consar.gob.mx/normatividad/circulares/COMPULSA%20CC%2015-12%20a%2015-16.pdf; Regulations on Risk Diversification in Lending Operations, as referred to in Article 51, para. II of the Law on Credit Institutions, www.shcp.gob.mx/servs/normativ/rdiversas/rd_020225.html; Regulations for the Investment of Technical Reserves of Mutual Insurance Companies and Institutions, www.shcp.gob.mx/servs/normativ/rdiversas/rd_000818.html; Circular Setting out the General Provisions Applicable to Investment Companies, www.cnbv.gob.mx/recursos/circula/Otras/Circular%20SINCAS%20.htm; Circular 12-22: General Provisions Applicable to Common Investment Funds and Funds Investing in Debt Instruments on Behalf of Individuals and Legal Entities, www.cnbv.gob.mx/recursos/circula/Valores/12-22.htm.
Changes during 2006
Resident accountsMarch 17. Demand deposits in foreign currency were permitted to be withdrawn with debit cards.
Nonresident accountsMarch 17. Demand deposits in foreign currency were permitted to be withdrawn with debit cards.
Imports and import paymentsMarch 13. Imports of gold and silver were allowed under OGLs.
September 5. The duty rates applicable to aluminum ingots and lysine (a foodstuff input), some chemical substances, inputs for tanning, flats for bike tires, and some handheld tools were reduced. A tariff item for statistical purposes was created for footwear soles and heels, as well as machinery for repairing airships and aircraft parts.
September 29. Generalized duty rates for about 6,900 tariff lines related to inputs were reduced to reorder productive chains and standardize the rates applicable to intermediate inputs.
November 27. The duty rates applicable to textile inputs were reduced. A new quota was imposed on textile inputs. A new tariff item was introduced to keep track of wines, brandy, and distilled agave. Tariff classifications were made for steel products. The duty rate applicable to specialized boats used in the processing of crude petroleum was eliminated, and the preferential rates applicable to goods from the European Community, AELC, El Salvador, Guatemala, Honduras, Nicaragua, and Japan were adjusted. Also, the presidential decree that establishes special duty rates for inputs imported under PROSEC was updated to support the manufacturing industries that operate these programs.
Exports and export proceedsApril 1. An export license was required to export cement to the United States in fulfillment of an agreement between Mexico and the United States. A maximum amount on these exports was set.
Capital transactions
Controls on capital and money market instrumentsJune 1. The new Securities Market Law went into effect.
Controls on derivatives and other instrumentsJanuary 27. A circular was issued allowing development banks to conduct borrowing, lending, and derivatives operations.
Controls on direct investmentApril 24. The General Law on Mutual Insurance Companies and Institutions and Federal Law on Bonding Companies were amended to conform to the wording of the other financial laws that establish that foreign entities that exercise governmental functions may not invest in such companies.
April 26. Controls applied on direct or indirect investment by entities that exercise governmental authority functions in financial institutions.
Provisions specific to the financial sector
Provisions specific to commercial banks and other credit institutionsJuly 18. The General Law on Credit Organizations and Auxiliary Activities was amended to overrule all the provisions regarding financial leasing companies and financial factoring companies. Granting of credits, financial leasing, and financial factoring may be provided by any person without prior approval by the federal government. People who engage in the aforesaid activities in a customary and professional manner are considered multiple scope companies, which may be regulated or not regulated. Regulated multiple scope companies are supervised by the CNBV and are those entities that maintain economic links with credit institutions, or holding companies that have a credit institution in their financial group.
Provisions specific to institutional investorsDecember 4. New provisions regarding the investment regime on mutual funds were issued to establish the minimum capital requirement and investment regime of the different types of mutual funds.

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