Regulatory Alerts2021-01-01
Board of Directors Decision No. (9) of 2021 Regarding Conditions and Regulations for Licensing Clearing and Settlement Operations for Contracts Traded in Futures Exchanges
The Financial Regulatory Authority of Egypt issued Board Decision No. (9) of 2021 to establish mandatory licensing conditions and regulatory controls for companies seeking to conduct clearing and settlement operations for futures contracts. The decision mandates a minimum paid-up capital of 100 million Egyptian pounds, restricts corporate purpose to futures clearing and settlement, and requires qualified board members, a Managing Director with ten years of financial experience, and specific executive departments including risk management and internal audit. Applicants must submit detailed ownership disclosures, compliance declarations, and a 100,000 Egyptian pound fee, with the Authority obligated to adjudicate complete applications within thirty days while applying existing non-banking financial activity governance and anti-money laundering standards.
Financial Regulatory Authority FINANCIAL REGULATORY AUTHORITY
Chairman of the Authority Board of Directors Decision No. (9) of 2021 dated 2021/1/31 Regarding the Conditions and Regulations for Licensing Clearing and Settlement Operations for Contracts Traded in Futures Contracts Exchanges
Board of Directors of the Financial Regulatory Authority Having reviewed the Capital Market Law issued by Law No. (95) of 1992; And the Central Deposit and Registration of Securities and Financial Instruments Law issued by Law No. (93) of 2000; And Law No. (10) of 2009 on regulating supervision over non-banking financial markets and instruments; And Board of Directors Decision No. (53) of 2018 regarding licensing issuance and renewal conditions and share ownership rules for companies operating in non-banking financial activities; And Board of Directors Decision No. (100) of 2020 regarding corporate governance rules for companies operating in non-banking financial activities; And Board of Directors Decision No. (126) of 2020 regarding company ownership structure controls for central deposit and registration of government securities and financial instruments, and controls for forming boards of directors of companies operating central deposit and registration activities; And Board of Directors Decision No. (2) of 2021 regarding supervisory controls in combating money laundering and terrorist financing for entities operating in non-banking financial activities; And Board of Directors Decision No. (3) of 2021 on reorganizing registration, renewal, and deregistration controls for auditors in the Authority's register; And after approval by the Board of Directors in its meeting held on 2021/1/31;
DECIDED
(Article One) Companies wishing to obtain a license to conduct clearing and settlement operations for contracts traded in futures contracts exchanges must meet the following conditions: 1- The issued and paid-up capital of the company must not be less than one hundred million Egyptian pounds. 2- The company's purpose must be limited to conducting clearing and settlement operations for traded futures contracts.
Smart Village, Building 136, Giza, Egypt Postal Code: 110 Tel: +202 35370435 Fax: +202 35370036 WWW.FRA.GOV.EG Building Bridges not Walls We Build Bridges, Not Walls
Financial Regulatory Authority FINANCIAL REGULATORY AUTHORITY
Chairman of the Authority 3- The company must have an independent headquarters dedicated to the activity, equipped with the necessary technological infrastructure, information systems, and equipment to conduct the activity in accordance with requirements specified by the Authority. 4- Members of the company's board of directors must hold a higher education degree. 5- The Managing Director of the company must have at least ten years of experience in either banking or non-banking financial work, and must have previously held a supervisory position of an appropriate level in a banking or non-banking financial institution. 6- The company's organizational structure must include a minimum of the following executive departments:
- Departments responsible for clearing, settlement, deposit, and central registration activities.
- Finance Department.
- Risk Management Department.
- Internal Audit Department. Managers of the aforementioned departments must have suitable practical experience of no less than seven years in the company's fields of work. 7- The categories mentioned in items (5 and 6) must pass the personal interviews conducted by the Authority for this purpose. 8- The company's auditor must be among the auditors registered in the register maintained by the Authority for this purpose, in accordance with the provisions of the aforementioned Board of Directors Decision No. (3) of 2021. 9- Undertake to comply with the corporate governance rules for companies operating in non-banking financial activities and the anti-money laundering and terrorist financing controls issued by the Board of Directors, without prejudice to the aforementioned Board of Directors Decision No. (126) of 2020. 10- No final judgments imposing a felony or misdemeanor sentence for crimes against honor or trust, or for any of the serious crimes stipulated in laws regulating non-banking financial activities or stipulated in the Central Bank and Banking System Law or the Anti-Money Laundering Law, or a bankruptcy declaration judgment, must have been issued against any of the company's founders, principal shareholders, board members, or senior executives during the five years preceding the license application, unless their reputation has been restored (1).
(1) For the application of the provisions of this Decision, serious crimes refer to crimes punishable by imprisonment or a fine with a maximum limit of no less than five hundred thousand pounds in any of the laws regulating non-banking financial activities, the Central Bank and Banking System Law, or the Anti-Money Laundering Law.
Smart Village, Building 136, Giza, Egypt Postal Code: 110 Tel: +202 35370435 Fax: +202 35370036 WWW.FRA.GOV.EG Building Bridges not Walls We Build Bridges, Not Walls
Financial Regulatory Authority FINANCIAL REGULATORY AUTHORITY
Chairman of the Authority 11- No bankruptcy judgment must have been issued against any of the company's founders or principal shareholders during the five years preceding the license application. 12- Payment of the licensing fee at a rate of one hundred thousand pounds.
(Article Two) The license application must be submitted on the form prepared by the Authority, accompanied by supporting documents proving compliance with the conditions stipulated in Article One of this Decision, as well as the following documents: 1- A statement of shareholders' names, nationalities, and each shareholder's percentage of ownership in the company's capital. 2- A statement of investments representing at least (10%) in any other financial institutions operating in Egypt owned by the founders or shareholders who own more than (10%) of the company's shares. 3- A declaration from the company's legal representative confirming that the company possesses technical capabilities, information systems, risk management mechanisms, and a complaints examination system. 4- A declaration from the Managing Director confirming they are responsible for the actual management of the company with full dedication to it, as well as declarations from the managers of the departments mentioned in Article One of this Decision confirming their full dedication to their work at the company. The Authority shall issue the applying company a certificate of receipt of the required documents if submitted in full, and shall rule on the license application within thirty days from the date of submission of the application with all required documents.
(Article Three) In the absence of a specific provision in this Decision, the provisions of Board of Directors Decision No. (53) of 2018 regarding licensing issuance and renewal conditions and share ownership rules for companies operating in non-banking financial activities shall apply.
(Article Four) This Decision shall be published in the Egyptian Gazette and on the Authority's website, and shall take effect from the day following its publication in the Egyptian Gazette.
Chairman of the Board of Directors Dr. Mohamed Omran