Egypt studies structure of Futures Exchange, Settlement companies

CAIRO – 25 August 2020: Chairman of the Financial Regulatory Authority (FRA) Mohamed Omran suggested forming a working group to study the proposed shareholding structure of the Futures Exchange Company and the settlement company related to its dealings, and presenting their perception to the Capital Market Advisory Committee; in preparation for presentation to the Authority’s Board of Directors.

He noted that the working group includes representatives from each of the Central Bank, the Egyptian Stock Exchange, the Egypt Central Clearing, Depository and Registry Company, the Federation of Egyptian Banks, the Egyptian Insurance Union, a representative of investment banks and the European Bank for Reconstruction and Development (EBRD).

Omran clarified Tuesday that it was necessary to wait for the issuance of amendments to some provisions of the Central Depository and Registry Law issued by Law No. 93 of 2000 and which was approved last month by Law No. 143 of 2020 to become a comprehensive law to regulate clearing and settlement operations, and to include futures contracts, so that we call for this meeting and encourage financial institutions to contribute to the ownership of the futures exchange and the new clearing company within the framework of working to expand the ownership base and maximize the participation of the private sector in these entities.

This came during the inauguration of Omran and his two deputies, the round table activities called by the Financial Supervision Authority, with the participation of Gamal Negm, Deputy Governor of the Central Bank, Mohamed Farid, Chairman of the Exchange, Alaa Amer, Chairman of the Misr Clearing Company, Tarek Abdel Bary, Managing Director of the Clearing Company, and Mohamed Al-Atribi, President of the Federation of Egyptian Banks, Alaa Al-Zuhairi, President of the Egyptian Insurance Federation, representatives of major local institutions from banks, insurance companies, and investment banks, as well as the European Bank for Reconstruction and Development (EBRD), and representatives of the Capital Market Advisory Committee to discuss the proposed controls for the ownership structure of the Futures Exchange and the new clearing company. Responsible for settling transactions in this market.

Omran stated that the Authority had previously approved the two preliminary contract models and the articles of association of the Futures Exchange Company that are derived from securities and financial instruments listed on a stock exchange for the purpose of establishing and managing an electronic trading platform through which trading is performed on contracts whose values ​​are derived from price indices or restricted securities or financial instruments. In one of the stock exchanges, the articles of association of the Futures Exchange Company included specifying the issued and fully paid up capital of no less than LE 20 million or its equivalent in foreign currencies.

In addition, the futures exchange is subject to the provisions of Board Resolution No. (33) of 2019 for a company wishing to obtain a license to practice the activity of a futures exchange, to fulfill a number of requirements, the most important of which is that the share of financial institutions, stock exchanges, or companies licensed to operate in the financial markets not be less about 75 percent of the shareholder structure of the Futures Exchange Company.