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SAGAPL

The SAGAPL is the information system operated by Banco de México in order to administer the collateral pledged by banks either to receive credit from Banco de México or to make overdrafts in their current accounts at SIAC. Furthermore, SAGAPL registers the reverse repo agreements between banks and Banco de México (agreements in which Banco de México is the buyer of securities). SAGAPL and the information system called Reportos para proporcionar liquidez en los Sistemas de Pagos (or RSP) are the systems used by Banco de México to provide liquidity to the payment systems.

Banco de México performs liquidity auctions daily banks with accepted bids for credit need to settle either collateralized credits or reverse repo operations through SAGAPL in order to receive the funds won in auction from the central bank.

  • Banco de México requires the banks to put up specific levels of collateral to cover credit operations. To that end, the banks can make use of their deposits at the Banco de México (DRMs, Depósitos de Regulación Monetaria). For each credit operation, the interest rate applied is the specific rate the bank bid at the auction. To implement the operation, Banco de México transfers the funds to the bank’s current account as long as the corresponding collateral has been pledged. This transaction is registered at SIAC. On the credit maturity date, Banco de México debits the bank’s corresponding current account by the sum of the principal of the credit and the interest charged. Later, the pledge, made in advance to guarantee the credit operation, serves as collateral that allows an overdraft on a commercial bank’s current account maintained at SIAC.
  • In the case of reverse repo agreements, on the other hand, banks must transfer eligible securities to Banco de México’s account, maintained by a securities settlement system called Sistema Interactivo para el Depósito de Valores SIDV. SIAC, which is administrated by the Mexican central securities depository S.D. INDEVAL. Securities accepted to make these transactions are the following: 1) Government bonds; 2) Bonds issues by the Institute for the Protection of Bank Savings (IPAB); 3) Banco de México bonds (DRMs). The interest rate applied to a reverse repo operation is the rate bid at the auction. When a reverse repo agreement is formalized with a specific bank, Banco de México transfers the corresponding funds to the bank’s current account, maintained at SIAC. At the agreement’s maturity date, Banco de México charges the agreed-upon interest rate to the bank and substitutes this reverse repo agreement for an intraday reverse repo agreement through the RSP system.

The SAGAPL is also used to maintain the collateral required by Banco de México for overdrafts made by the banks in their current accounts, which are administrated by SIAC. Banco de México accepts the DRMs the banks have in their accounts with Banco de México as collateral. At SIAC the banks are allowed to make overdrafts in their current accounts only if the amount of an overdraft does not exceed the amount of the collateral or the overdraft limit for that bank. Intraday overdrafts on current accounts do not carry fees for the banks. Nevertheless, if an overdraft persists overnight, the fee paid by a commercial bank is equivalent to twice the market interest rate.

The rules applied to the transactions performed through SAGAPL are established in Appendix 5 of the Circular 2019/95 for universal banks and in Appendix 20 of the Circular 1/2006 for development banks. The rules for overdrafts on banks’ current accounts at are established in M.71.12.41 of Circular 2019/95 for multiple banks and in BD.51.12.3 of Circular 1/2006 for development banks.