الهيئة العامة للرقابة المالية

• The decree aims to boost trading government securities on the secondary market and enables brokerage firms to participate, thereby expanding the beneficiary base
• The Authority will create a registry for entities qualified to trade government securities.
• The registry will encompass a range of market participants, including primary dealers, both banks and non-bank financial institutions, as well as brokerage firms specializing in bonds and investment funds
• Primary dealers must be connected to the Exchange’s trading and settlement systems
• Brokerage firms must have a minimum capital of 15 million Egyptian pounds.
• A 3-month grace period will be provided to facilitate a smooth transition to the new regulatory framework.

FRA actively works to foster a favorable climate for growth and development in the non-banking financial sector, thereby empowering individuals and businesses. By facilitating access to diverse financial services, including government debt securities, FRA aims to enhance financial inclusion and empower investors.

FRA, led by Dr. Mohamed Farid, has issued Decree No. 232 of 2024. This decree regulates trading government securities on the secondary market.

The new regulation mandates the establishment of a registry encompassing all entities qualified to trade government securities on the secondary market. This registry will include primary dealer banks, non-primary dealer banks, FRA-licensed brokerage and asset management companies. By creating a regulated framework for secondary market trading, FRA aims to promote competitiveness and efficiency of trading process.

Government securities and instruments, such as treasury bills and bonds issued by the Ministry of Finance.

To be included in the registry of entities authorized to trade these securities on the secondary market, primary dealer banks must fulfill several requirements. These include providing proof of their primary dealer status from the Ministry of Finance, obtaining approval from the Central Bank of Egypt to be listed at the registry and establishing electronic links with the Exchange’s trading and settlement systems.

Additionally, regulations required that the bank to have an electronic settlement system with the Central Securities Depository Company, be a member of the Egyptian Exchange and provide the necessary infrastructure for trading.

Also, Banks must maintain separate accounts for securities trading, subject to quarterly audits by an independent auditor and submit a report to the Authority. Banks must appoint a dedicated team led by a qualified manager to oversee government securities trading, adhering to the Authority’s standards. Compliance with Anti-Money laundering and counter-terrorism financing regulations is mandatory.

On the other hand, non-primary dealer banks have similar registration requirements, excluding proof of primary dealer status.

As for brokerage companies to be listed at FRA’s registry, they must declare that having automated links to the Egyptian Exchange’s trading system and the central depository’s settlement system. In addition, these companies must be an exchange member and provide necessary technical infrastructure. They must have separate accounts, audited quarterly and a dedicated team to manage trading government securities.

Moreover, these companies must have a minimum issued and paid-up capital of 15 million Egyptian pounds, with equity equal to or exceeding the paid-up capital at the time of application. Also, they must have research units specializing in financial instruments and have remote trading capabilities. Additionally, they must not have a recent disciplinary record, excluding minor infractions like warnings or non-compliance with Anti-Money laundering and counter-terrorism financing regulations. They must complete specified training courses.

Additionally, Asset management companies must declare that they have automated links to the Egyptian Exchange’s trading system and the central depository’s settlement system. In addition, these companies must be an exchange member and provide necessary technical infrastructure. They must have separate accounts, audited quarterly and a dedicated team to manage trading government securities.

Moreover, these companies must have a minimum issued and paid-up capital of 15 million Egyptian pounds, with equity equal to or exceeding the paid-up capital at the time of application. They must not have a recent disciplinary record, excluding minor infractions like warnings or non-compliance with Anti-Money laundering and counter-terrorism financing regulations. They must complete specified training courses. Compliance with all the aforementioned conditions is a prerequisite for maintaining registration with the Authority.

The company or entity must submit a completed application and supporting documents. The Authority will decide within 15 days.