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Financial Supervision: Allow settlement of transactions executed on corporate bonds

Dr. Mohamed Omran, Chairman of the Financial Supervisory Authority, revealed that the Board of Directors approved a package of important decisions in its last session, with the aim of activating the secondary market for corporate bonds, facilitating a number of procedural matters related to investment funds, in addition to expanding the volume of transactions in non-banking financial activities. In the forefront of which came the Board of Directors’ Decision No. (82) for the year 2021 to allow clearing and settlement operations to be carried out on the bonds of companies listed in the Stock Exchange on the same day after the end of the trading session, as well as to allow dealing with them using the mechanism of buying and selling in the same session, in the interest of the Board to respond to the demands of bank officials. Investment and asset management companies in the Egyptian capital market, which were previously proposed to activate the secondary market for corporate bonds among small investors, and to develop and give incentives to deal in bonds on the Egyptian Stock Exchange.


Omran said in a press statement today, Wednesday, that the Misr Central Clearing, Depository and Registry Company will end the paper and cash settlement procedures for the operations executed on bonds after the end of the trading session and that they will be available for sale during the next session, in addition to the possibility of executing sales operations in the same session on Corporate bonds (intra day trading).


On the other hand, Omran said that the board of directors sought to expand the scope of financing services provided by consumer finance companies and to allow them, in accordance with Resolution No. (83) of 2021, to finance all goods and services to meet the needs of citizens and stimulate purchase in installments, except for those that are financed through financing activities. Regulated under the provisions of the laws of real estate finance, financial leasing, factoring, financing medium, small and micro enterprises, or buying real estate through real estate developers.


The Authority’s Board of Directors also sought to expand the scope of the financing services provided through factoring activities by amending the executive controls for the exercise of factoring activity - by Resolution No. (84) for the year 2021, which includes an amendment to the conditions that must be met in the sold right to become more general and comprehensive and to be arising from sales of commodity products. or service for non-commercial purposes, except for real estate.


The meeting of the Board of Directors also witnessed the approval of extending the deadline granted to companies whose securities are listed on the Egyptian Stock Exchange and did not complete the procedures for implementing the offering in accordance with the text of the third paragraph of Article (1 bis) of the rules for listing and delisting securities on the Egyptian Stock Exchange for a period of six months ending on December 31 2021, provided that these companies are committed to providing the Egyptian Stock Exchange, no later than 9/30/2021, with a time plan that includes the measures they will take to implement the offering and the approval of the stock exchange’s management.


Omran stressed that Board Resolution No. (85) of 2021 was issued to facilitate the companies whose securities are listed on the Egyptian Stock Exchange and did not complete the procedures for implementing the offering, in facing the circumstances and events that occurred on the global financial markets and were reflected in the capital market in Egypt, in line with -Also- with the watchdog's vision of strengthening the policy of steadfastness of non-bank financial activities in front of the repercussions that we face in an unprecedented manner, and supporting them with the measures that can be taken to limit their effects.


The head of the authority indicated that with regard to investment funds operating in Egypt, which numbered 114 by the end of 2020 and had net assets of 71.8 billion pounds, the board decided that management services companies licensed by the authority should undertake the preparation of financial statements for investment funds, provided that the lists include Quarterly Disclosure of all transactions on investment tools and savings vessels of any of the related parties, as well as all financial burdens that have been paid to any of the related parties, in accordance with its resolution No. (87) of 2021.


He added that the board had considered granting more facilitation in the procedures for receiving subscription in investment documents, and allowed companies working in the field of securities and licensed by the authority to receive subscription in investment documents, by simply notifying the authority before concluding each contract to receive subscription in investment fund documents, while holding Separate accounts for each subscription separately, in accordance with Board Resolution No. (86) for the year 2021.