The Financial Regulatory Authority’s (FRA) board of directors approved a proposal to amend the Central Depository and Registry Law, Mohammed Omran, chairperson of FRA, said.
Omran added, in a Sunday statement, that the proposed amendments aim to make the Central Depository and Registry Law comprehensive, regulating the clearing and settlement operations, whether in the current or future exchanges.
This includes the clearing and settlement of all securities, including government ones, such as treasury bonds and bills.
He added that some provisions regulating the clearing and settlement of contracts that derive from financial, in kind, price indices, commodities, financial instruments, or other indicators.
Omran said that in order to activate the mechanism of the contract exchanges and to update its system of work, the proposed amendments included allowing companies to be licensed by the FRA.
This is so that it can carry out clearing and settlement operations for contracts traded on future exchanges, whether the license was for depositary and registry or through a new company established for this purpose.
Omran also said that the amendment allows the Central Bank of Egypt (CBE) to establish a joint stock company. This would be solely owned by it or with others to carry out clearing and settlement operations for government bonds and treasury bills.
The FRA’s board of directors shall issue the necessary conditions, controls, and procedures for granting the license and practicing the activity.
The proposed amendments had established provisions for the regulation of securities and government securities between the current debtor and the encumbered creditor.
The amendments allowed any central depository and registry company, in case one of its members go bankrupt, to clear and settle the final orders made by this member and settle the financial positions opened as a result. This is in addition to allowing the FRA to annul these transactions and orders if involved fraud. The bankrupt member is committed to compensate, in activation for the FRA’s role in the control of the market and the protection of traders.