Egypt’s Financial Regulatory Authority (FRA) has approved a package of decisions aimed at activating the secondary market for corporate bonds.
The decisions also aim to facilitate a number of procedural matters related to investment funds, in addition to expanding the volume of transactions in non-banking financial activities.
The premise of these decisions is to allow clearing and settlement operations to be conducted on the bonds of companies listed on the Egyptian Exchange on the same day after the end of the trading session.
It also allows for dealing with these companies using the mechanism of buying and selling in the same session. This is in the interest of the Board of Directors to respond to the demands of officials of investment banks and asset management companies in the Egyptian capital market.
Mohamed Omran, Chairperson of FRA, said that Misr for Central Clearing, Depository, and Registry (MCDR) will complete the paper and cash settlement procedures for the transactions executed on the bonds after the end of the trading session.
These bonds will then be sold during the next session. This is in addition to the possibility of executing sales operations in the same session on corporate bonds, in same day trading.
He explained that the FRA’s Board sought to expand the scope of the financing services provided by consumer finance companies, and allow them to finance all goods and services to meet the needs of citizens.
This was also aimed at stimulating purchases in instalments, except for those that are financed through financing activities organised under the provisions of the real estate financing and financial leasing laws. It also covers factoring, micro, small, and medium enterprises (MSMEs) financing, or buying real estate through real estate developers.
The FRA’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 2021.
This 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 Board of Directors meeting also witnessed the approval to extend the deadline granted to listed companies to meet the listing requirements by 30 September 2021.
Omran stated that Board Resolution No 85 of 2021 was issued to facilitate listing procedures for companies that did not complete the procedures for implementing the offering.
This aims to help these companies in facing the circumstances and events that occurred on the global financial markets and reflected on the capital market in Egypt.
He also indicated that the Board decided that management services companies licensed by the Authority should undertake the preparation of financial statements for investment funds. This related to investment funds operating in Egypt, which numbered 114 by the end of 2020 with net assets of EGP 71.8bn.
This is provided that the lists include the quarterly disclosures of all transactions on investment tools and savings vessels of any of the related parties. Also part of the disclosures are all financial burdens that have been paid to any of the related parties, in accordance with its resolution No 87 of 2021.
Omran added that the Board of Directors had considered granting more facilitation on procedures for receiving subscription in investment documents. This would also allow companies operating in the field of securities and licensed by the authority to receive subscriptions in investment documents.
They would be allowed to do so by simply notifying the FRA 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 2021.