Egypt's FRA sets controls for deposit, registration of gov't securities

CAIRO – 4 October 2021: The Financial Regulatory Authority (FRA) issued the controls regulating the process of depositing and registering government tools and securities and settling financial positions arising from its trading, in preparation for the start of work for the Central Depository and Registry Company for Government Tools and Securities.

The new controls will allow natural or legal persons to invest in government securities and financial instruments through the depository and settlement members of the newly created company, according to a statement from the Financial Supervisory Authority Monday.

The decision classified the depository and settlement members of the Central Depository and Registry Company for Government Instruments and Securities into four categories, which are: banks and branches of foreign banks registered with the Central Bank of Egypt, companies operating in authorized securities, foreign companies and entities that practice central depository activity, and other entities whose membership is accepted by the Board of Directors of the Depository and Registry Company in accordance with the terms and conditions determined by the Authority’s Board of Directors, according to Mohamed Omran, Chairman of the Financial Supervisory Authority.

The depositary and settlement member of the company must have sufficient financial resources to fulfill its obligations arising from membership and to face the risks of clearing and settlement in government financial securities and instruments, in addition to the human resources, technical capabilities, systems and procedures necessary to deal with the central deposit and registry activity.

Clearing and settlement operations are carried out, both of them, from instant financial settlement and paper settlement to complete the procedures for transferring ownership of government tools and securities, in accordance with the settlement instructions agreed upon between the two parties to the process, as stated by the Egyptian Stock Exchange and the depository and settlement members - they are all licensed by the Central Bank of Egypt, including the main dealers, as well as the authorities and companies authorized to practice the activity in accordance with the rules of the authority.

The decision of the Authority’s Board of Directors assigned the Depository and Recording Company a settlement mechanism for four operations: settling the maturities of government securities and financial instruments through cash payment for the nominal value of the paper on the maturity date, settlement of the expedited redemption of government securities and financial instruments at the request of the Ministry of Finance to pay part or all of the value of the paper.

The operations also included the settlement of the entitlement to coupon payments and tax receipts for government securities and financial instruments, and adding money to customer accounts.