EFSA Board of Directors Decision No. (67) of 2012

Dated 8/10/2012

Regarding the Intra-Day Trading Mechanism for Shares

(Intra Day Trading)

The Board of Directors of the Egyptian Financial Supervisory Authority

Having reviewed the Joint Stock Companies, Partnerships Limited by Shares, and Limited Liability Companies Law issued under Law No. (159) of 1981, and its executive regulations,

Having reviewed the Capital Market Law issued under Law No. 95 of 1992, and the decisions issued pursuant to it,

Having reviewed the Central Depository and Registration Law issued under Law No. (93) of 2000, and its executive regulations,

Having reviewed Law No. (10) of 2009 regulating supervision over markets and non-banking financial instruments,

Having reviewed the Presidential Decision No. (191) of 2009 regarding the rules governing the management and financial affairs of the Egyptian Exchange,

Having reviewed the EFSA Statute issued by Presidential Decision No. (192) of 2009,

Having reviewed the EFSA Board of Directors' approval in its meeting No. (18) dated 8/10/2012,

Has decided

(Article One)

Trading in shares, both buying and selling, during the same trading session (Intra Day Trading) is permitted. This involves selling all or part of what was purchased in the same trading session, or buying all or part of what was sold from the client's available balances in the same trading session, in accordance with the attached executive rules.

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(Article Two)

The Egyptian Exchange and the Central Depository and Registration Company shall prepare and equip the automated systems and technical requirements for implementing the intra-day trading mechanism for shares.

(Article Three)

The Egyptian Exchange shall establish a supervision system for intra-day trading operations and intervene immediately to cancel non-compliant operations during the trading session.

The Egyptian Exchange shall notify the Authority at the end of each trading session of all operations cancelled under the intra-day trading mechanism, along with the reasons for cancellation.

(Article Four)

The Central Depository and Registration Company shall perform real-time settlement of the cash and securities positions for intra-day trading operations, while clearing and settlement for the related trading operations for the other parties to the transaction shall be conducted on the approved settlement date.

The Central Depository and Registration Company shall automatically provide the Authority at the end of each working day with trading data under this mechanism regarding clients, traded shares, and dealing brokerage companies. This report shall include the total deposited amount by these companies, the ratio of their trading value during the day to the deposited amount in this account, as well as any violations attributed to each company, if any.

(Article Five)

Brokerage companies wishing to trade under the intra-day trading mechanism must obtain the Authority's approval after fulfilling the requirements stipulated in the attached rules. Approved companies must notify the Authority of the documentation of their status in accordance with this Decision and its attached rules within a maximum of three months from the effective date.

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(Article Six)

Decisions of the Board of Directors of the former General Authority for the Capital Market No. (3) of 2008, No. (24) of 2008, and No. (21) of 2009 are hereby repealed, along with Circular Letters No. (3) and No. (51) of 2009. Any provision conflicting with this Decision is also repealed.

(Article Seven)

This Decision shall be published in the Egyptian Gazette, and on the websites of the Authority, the Egyptian Exchange, and the Central Depository and Registration Company, and shall take effect from the day following its publication in the Egyptian Gazette.

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Dr. Al-Sharif Al-Sharqawi
Chairman of the Board
46076

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Executive Rules for Operating the Intra-Day Trading Mechanism for Shares

(Intra Day Trading)

(Article One)

A brokerage company wishing to obtain the Authority's approval to operate the intra-day trading mechanism must fulfill the following requirements:

1. Provide documentation confirming that the company belongs to Category (A) of the Egypt Clear (Central Depository and Registration Company) classification grades regarding settlement risk and compliance with scheduled settlement deadlines.

2. Provide documentation confirming the audit of corporate governance rules.

3. The company's record with the Authority must be free of any penalties or regulatory measures issued by the Authority's Chairman or Board. A company subject to penalties or measures shall not be barred from obtaining approval to operate this mechanism until the penalty or measure period expires and the following periods have elapsed:

   • a. Three months from the date of fulfilling the commitment to increase the deposited insurance value or rectifying the violation, whichever is earlier.
   • b. Six months from the date of the suspension of activity or the convening of the company's board meeting upon the Authority's request to review the alleged violation.
   • c. Nine months from the date of the suspension of activity.
   • d. Eighteen months from the date of appointing a supervisory member to the company's board or from the date of appointing a new management to implement the board dissolution decision and appoint a commissioner to manage the company.

4. Provide a certified certificate from the company's legal advisor confirming that no final judicial ruling has been issued against it or any of the actual management officials on the license application date for financial crimes affecting market participants' interests, within the five years preceding the application.

5. Verify the company's sound financial position based on the last two audited balance sheets accompanied by an auditor's report.

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(Article Two)

Brokerage companies permitted to trade under the intra-day trading mechanism must comply with the following:

1. Notify the Authority of any changes in the submitted data to obtain approval, including the attributes or names of employees involved in this activity, immediately upon occurrence.

2. Adhere to the attached model contract issued by the Authority, which the company must execute with a client wishing to trade under this mechanism. The contract must be accompanied by the following:

   • a. The rules governing trading under this mechanism.

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(Article Three)

Trading under the intra-day trading mechanism for shares is only permitted for shares that meet the criteria issued by the Egyptian Exchange Board of Directors and approved by the Authority.

The Exchange shall, in real-time through the trading system, identify the shares permitted for trading under this mechanism, as well as the maximum limits set for client trading per share.

(Article Four)

The daily trading value for a single client must not exceed 1/20,000 (one twenty-thousandth) of the number of shares registered in the company's tables on the Exchange.

The Authority may, in cases it determines, modify the aforementioned ratio to serve the interests of the market and its participants.

(Article Five)

Brokerage companies shall not execute any operations at the trading prices for the intra-day trading mechanism except based on client orders and in accordance with the attached order form for this mechanism.

In the event of a sale or purchase, the brokerage company must reserve the quantity to be sold from the client's available balance.

Shares purchased or sold in the same session may only be sold or purchased through the same brokerage company.

(Article Six)

The daily trading operations of a brokerage company for shares under the intra-day trading mechanism shall be limited to four times the amount deposited as a guarantee, pursuant to Item (6) of Article One of these Rules.

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(Article Seven)

The Egyptian Exchange and the Central Depository and Registration Company shall use automated linkage between the trading system and the central depository system to reserve quantities to be sold, ensuring that no sell orders (whether for this mechanism or other sell orders) are allowed except after confirming the reservation of the quantities to be sold.

Furthermore, the Egyptian Exchange and the Central Depository and Registration Company must verify that brokerage companies do not submit any buy or sell orders for settlement in the session unless a sale or purchase has been executed in the same session for the same client.

(Article Eight)

The Central Depository and Registration Company shall verify that no sale or purchase operation under the intra-day trading mechanism is executed unless the brokerage company has reserved all or part of the client's available securities balance in the case of a sale, or the available cash balance for purchase.

The Authority, the Exchange, and the Central Depository and Registration Company for Securities shall negotiate fees for services provided under the intra-day trading mechanism, which shall not exceed those collected for regular trading operations.

(Article Nine)

The Central Depository and Registration Company shall settle the financial positions between participants in the intra-day trading mechanism on the same day in real-time by crediting or debiting the brokerage company's dedicated account at the Clearing Bank. If the company's obligations exceed the limit, the Settlement Guarantee Fund shall intervene according to established mechanisms to ensure transaction settlement. The company's provided guarantee shall be utilized pursuant to Item (6) of Article One of these Rules in case the brokerage company fails to settle the Fund's dues.

The brokerage company must restore the minimum guarantee value stipulated in Item (6) of Article One of these Rules if it falls below the threshold, no later than the start of the next trading session. The company is prohibited from trading under the intra-day mechanism until this threshold is restored.

(Article Ten)

The Authority may reduce trading limits under this mechanism for any brokerage company in case of violation of the governing rules, without prejudice to any other measures stipulated by law.

To protect market stability or the interests of participants, the Authority may suspend a brokerage company's trading under the intra-day mechanism for a specified period, suspend its trading on specific financial company shares for a period it determines, or revoke the approval issued to the brokerage company to trade under the intra-day mechanism, based on the provisions of the Capital Market Law, its executive regulations, and decisions issued pursuant thereto.

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Egyptian Financial Supervisory Authority (EFSA)
Headquarters: Smart Village, Building 15 - 84 B, Km 78, Cairo-Alexandria Desert Road, Giza Governorate, Postal Code: 12577

Telephone: +202 2537 0040 - Fax: +202 2537 0041
Email: info@efsa.gov.eg
Website: www.efsa.gov.eg