| 
Non - Banking Financial
Markets

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

The req. of Tech. structure & info. security systems for hosting providers
President of the Republic issues Law No. (143) of 2020 to amend some provisions of the Central Depository and Registration Law - Sunday 12/7/2020

•  Dr. Omran: The Law allows the Central Bank of Egypt (CBE) to establish a joint stock company owned entirely by it or with others to provide clearing and settlement of government securities and treasury bills

• Dr. Omran: The Central Depository and Registration Law No. (143) of 2020 represents a qualitative step that introduces the activity of custody, settlement, central depository and registration of government securities

• Dr. Omran: FRA’s BOD shall issue the necessary executive decisions to implement the provisions of the Central Depository and Registration Law promulgated by Law No. 93 of 2000

Dr. Omran - FRA’s  Chairman welcomes the issuance of Law No. (143)  of 2020 on amending some provisions of the Central Depository and Registration  Law and publishing it in the Official Gazette, stressing that the Authority’s Board of Directors will successively issue the rules and executive procedures necessary to implement the provisions of the said law . He adds that the Law stipulates the establishment of a settlement and clearing company specialized in government securities, whether they are treasury bills or government bonds or futures contracts.

FRA’s Chairman also clarifies that the amendment to the provisions of Central Depository and Registration Law No. 93 of 2000 have been made to become a comprehensive law that regulate clearing and settlement operations for both the current market represented by government securities and the future market represented by future contracts. The new Law aims at developing the legislative structure of non-banking financial activities and facing the changes that may   occur in the capital market activity, thus strengthening the competitiveness of the national economy and protect its customers.

Dr.  Omran says that the Central Depository and Registration Law No. (143) of 2020 allows the Central Bank of Egypt (CBE) to directly engage in central depository and registration of government securities - most notably bonds and treasury bills - through a joint stock company that is wholly owned by the CBE or in partnership with others. The company shall be established according to the provisions of companies operating in capital market. In addition, the provisions of Article 7 of the new Law require the transfer of T-bills and bonds deposited with existing companies at the time of the law’s issuance to the CBE’s central clearing, depository and registry within six months of its launch.

 Dr. Omran adds that the amended Law authorizes FRA’s Board of Directors to issue rules regulating the deposit and registration of government securities. It also includes the creation of a fund to ensure obligations resulting from securities transaction are fulfilled, under the guidance of the CBE and the Ministry of Finance.

On the other hand, provisions of the Law have stressed that all trading operations that have been settled and become final according to the rules approved by the Authority’s Board of Directors remain valid, and it is not permissible to suspend , cancel or seize them without adhering to the provisions stipulated in any other law.

 Dr. Omran also explains that the Law grants the FRA’s board of directors the right to issue the executive decisions needed to implement the provisions of central depository and registration law promulgated by Law no. 93 of 2000. He adds that the Law assigns FRA’s BOD to set controls related to the formation of the companies’ Boards’ engaged in central depository and registration process.  Also, the Law stipulates that FRA’s BOD shall define the maximum fees for the services provided by these companies to protect securities dealers and reduce the process costs. Moreover, the said Law allows FRA to determine the controls governing the ownership structure of companies operating in central depository and registration of government securities   and other companies operating in future contracts.
According to Omran, establishing and licensing of companies undertaking clearing and settlement operations for future contracts will be carried out in accordance with the provisions governing the companies operating in capital market. The company shall issue a regulation on settlement and clearing rules and procedures and it shall be approved by the Authority.
FRA’s Chairman indicates that the Law represents an integrated organization for depository and registration, clearing and settlement of financial positions arising from trading operations and transferring securities ownership, including registration of mortgage rights.
FRA’s Chairman points out that in 2018, according to the amendments made to the Capital Market Law pursuant to Law No. (17) of 2018, it was permitted to establish private exchanges that are traded on contracts whose value is derived from the value of financial assets, in kind or price indicators or commodities, financial instruments or other indicators determined by the Authority. Clearing and settlement operations shall be carried out in accordance with the provisions of the Central Depository and Registration Law mentioned above through a clearing and settlement company authorized by the Authority.
Therefore, it was necessary to go towards an amendment to the Central Depository and Registration Law No. (93) of 2000 previously issued to regulate the central depository and registration activity in the current market only. The said amendment included - in detail- all the provisions related to central depository and registration and clearing and settlement of securities with a view to settling legal positions arising from dealing in securities. Also, the said amendments defined the rights and obligations of those dealing in securities. Moreover, the said Law organized the establishment and management of  the company authorized by FRA to practice central depository and registration of securities.