Regulatory Alerts2016-01-01
Circular Letter No. (3) of 2016 Regarding Controls for Executing Transactions Where the Counterparty is the Brokerage Firm (The Referee)
The Egyptian Financial Supervisory Authority mandates that securities brokerage firms conduct all transactions with their employees exceeding 100,000 EGP through accounts at Central Bank-supervised banks, and require all dealings with foreign clients to use such accounts regardless of value. Brokerages must verify that purchasing clients deposit securities purchase funds into the firm's account and are prohibited from accepting seller-issued settlement statements except for specific intra-entity transfers, Egyptian share swaps, or Authority-approved cases. Firms must maintain organized records of these exceptions without prejudice to other Capital Market Law requirements, and this directive is published on the Authority's and Egyptian Exchange websites.
Egyptian Financial Supervisory Authority
Egyptian Financial Supervisory Authority
Circular Letter No. (3) of 2016
Dated 22/6/2016
Regarding Controls for Executing Transactions Where the Counterparty is the Brokerage Firm (The Referee)
In light of the provisions of the Executive Regulation of Law No. (95) of 1992 regarding rules on how securities brokerage firms deal with their employees, as well as the provisions of Minister of Economy and Foreign Trade Decision No. (620) of 2001 obligating securities brokerage firms to deal with their employees through an account at a bank supervised by the Central Bank of Egypt if the transaction value exceeds one hundred thousand Egyptian pounds, and that dealings with clients abroad be conducted through an account at one of the aforementioned banks.
The Authority emphasizes the necessity for securities brokerage firms to ensure that their dealings with their employees are conducted through an account at a bank supervised by the Central Bank of Egypt if the transaction value exceeds one hundred thousand Egyptian pounds, and that dealings with clients abroad be conducted through an account at one of the aforementioned banks regardless of the transaction value.
Securities brokerage firms must, when executing transactions where the counterparty is a client of the firm, ensure that the purchasing client deposits the value of their securities purchases into the firm's account, adhering to the preceding paragraph. In all cases, the firm shall not accept settlement statements issued for the value of securities from the seller except in one of the following cases:
- Transfer of ownership of securities between the main and branch accounts of natural persons.
- Transfer of ownership of securities between a company and its subsidiary.
- Transfer of ownership of securities within the framework of share swap transactions, provided they are for Egyptian companies.
- Other cases approved by the Authority for accepting settlement statements issued for the value of securities from the seller.
The securities brokerage firm is obligated to prepare a file at its premises documenting the aforementioned cases in an organized manner, all without prejudice to any other requirements stipulated in the Capital Market Law and its Executive Regulation or the decisions issued to implement them.
This Circular Letter shall be published on the Authority's and the Egyptian Exchange's websites.
Head of the Central Administration
Affairs of the Authority's Presidency
Dr. Naji Mustafa
46076
Smart Village, Building 15 - 84, Giza
P.O. Box: 12577
Tel: 25370040 - Fax: 25370041
1 Al-Masterly Towers - Al-Bajaa Al-Azam St. - Giza
P.O. Box: 12517
Tel: 2572142 - Fax: 2572119
28 Talaat Harb St. - Cairo
P.O. Box: 25450
Tel: 25758807 - Fax: 25758581
20 Imad El-Din St. - Cairo
P.O. Box: 11111
Tel: 25792340 - Fax: 25745598