FRA directs expediting the launch of a settlement mechanism for future contracts

Fatma Salah
3 Min Read

Chairperson of the Financial Regulatory Authority (FRA) Mohamed Farid revealed on Tuesday that a settlement mechanism for future contracts is being presented to the FRA’s Board of Directors.

He added that the FRA is also making fundamental amendments to the rules of listing and delisting in the Egyptian Exchange (EGX), which were sent for publication in the official gazette and applied from the date of publication.

Farid’s remarks came on the side-lines of the FRA Vision Conference, where he explained that the authority is working on a comprehensive development of the rules for listing and delisting securities on the EGX to facilitate companies wishing to list and offer in the stock market, stressing that the stock market is a platform that helps economic entities operating in various activities to access financing necessary for expansion to support the growth of the national economy.

The amendments include the possibility of temporarily listing the shares of Egyptian and foreign companies on the stock exchange’s tables before registering with the authority, instead of prior registration with the authority.

The percentage of shares or certificates of deposit are free to trade, provided that the registration and implementation of the offering or the start of trading take place within six months from the date of registration instead of one month.

The registration of the shares of these companies shall be considered as if it had not happened in the event that the aforementioned period expires without implementing the offering and fulfilling the conditions and requirements of the registration instead of requiring the issuance of a decision by the FRA’s Board of Directors to extend the period for companies that were registered before the implementation of the Resolution No. 122 of 2017.

Farid pointed out that the Board of Directors of the FRA also issued Resolution No. 72 amending Resolution No. 67 of 2014 and cancelling Resolution No. 61 of 2021, which regulated the practice of brokerage firms in securities and custodians for purchases of securities on margin as part of the Authority’s strategy to maximise the role played by risk managers in brokerage firms to support market stability.

Furthermore, the new decision included cancelling Article Six of Resolution No. 67 regarding the maximum margin purchases on the company’s security being 30% of the company’s free-tradable shares or 15% of the company’s total shares, whichever is higher.

This is in addition to setting the maximum transaction limit of margin buying for a single client and their associated group on a security to 5% of the company’s free-trading shares or 3% of the company’s total shares, whichever is higher.

Finally, it stipulates that stockbroking companies and custodians are obligated not to make margin purchases on securities when reaching the maximum limits stipulated in the article.

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