Yasser Zaazaa, Managing Director of the Egyptian Central Securities Depository (ECSD), has revealed to DNE that the bond clearing and settlement activity was launched on Sunday after all regulatory procedures were completed.
Last Thursday, the ECSD signed a memorandum of understanding (MoU) with the Egyptian Tax Authority to set the rules governing the application of agreements to avoid double taxation on bond returns for non-residents in Egypt.
The MoU comes within the framework of the intensive preparations that the company is making to launch the first phase of its activity, which includes transferring all transactions related to treasury bonds to the company.
Zaazaa said that signing the MoU with the Tax Authority is an important step within the integrated coordination plan and fruitful cooperation between the Central Bank of Egypt (CBE), the Ministry of Finance and the Tax Authority to develop the local debt instruments market.
He stressed that the agreement represents a quantum leap that will effectively contribute to facilitating the procedures for refunding tax differences resulting from agreements to avoid double taxation to foreign clients, which would activate the market for government debt instruments.
He added that the most important goal of establishing the company is to organize the tax revenue resulting from the operations of bonds and treasury bills and to combine all these financial instruments under one umbrella.
The ECSD was established with the aim of managing the deposit and settlement operations for all government debt instruments through a unified legal entity operating in accordance with international standards. So that the company carries out the operations of registering and depositing these papers and tools after the Central Bank conducts the auction in the first market (the issuance market), provided that the registration and deposit process includes all data and information related to the issuance of the government paper or financial instrument and the data of the registered owner and the beneficiary owner of each government paper or financial instrument.
The company is specialized in settling dues for government securities and financial instruments through cash payment in exchange for the nominal value of the paper or government financial instrument on the due date for the members’ accounts, then adding those values to the accounts of their clients, and settling the accelerated redemption of government securities and financial instruments, whether for private or public issues. This would be based on a request from the Ministry Finance by paying part or all of the value of the security or instrument, as the case may be, at a date prior to the actual maturity date shown in the prospectus, and finally settling the due payments of coupons and tax receipts for government financial securities and instruments.
The authorized capital of the ECSD, which is 70% owned by the Central Bank of Egypt (CBE) and 30% owned by the Finance Ministry, amounts to EGP 1bn, and the issued and paid-up capital recorded EGP 100m.