Board of Directors Decision No. (9) of 2021 Regarding Conditions and Procedures for Licensing Clearing and Settlement Operations for Contracts Traded in Futures Exchanges (as amended on 2023/8/9)

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Chairman of the Authority

Board of Directors Decision No. (9) of 2021 dated 2021/1/31 Regarding the conditions and procedures for licensing the operation of clearing and settlement for contracts traded in futures exchanges (according to the latest amendment dated 2023/8/9)¹

Board of Directors of the Financial Regulatory Authority Having reviewed the Capital Market Law issued by Law No. (95) of 1992; Having reviewed the Central Depository and Registration Law for Securities and Financial Instruments issued by Law No. (93) of 2000; Having reviewed Law No. (10) of 2009 regulating supervision over non-banking financial markets and instruments; Having reviewed Board of Directors Decision No. (53) of 2018 regarding licensing issuance and renewal rules and share ownership rules for companies operating in non-banking financial activities; Having reviewed Board of Directors Decision No. (100) of 2020 regarding corporate governance rules for companies operating in non-banking financial activities; Having reviewed Board of Directors Decision No. (126) of 2020 regarding company ownership structure controls for entities conducting central depository and registration activities for government securities and financial instruments, and controls for forming boards of directors of such companies; Having reviewed 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; Having reviewed Board of Directors Decision No. (3) of 2021 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 operate clearing and settlement for contracts traded in futures exchanges must meet the following conditions:

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¹ The Decision was amended by Board of Directors Decision No. 19 of 2023 dated 2023/2/22, and Board of Directors Decision No. 165 dated 2023/8/9.

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Chairman of the Authority

1. The issued share capital of the company must not be less than one hundred million Egyptian pounds or its equivalent in foreign currencies at the exchange rate issued by the Central Bank of Egypt, with a requirement that (25%) be paid upon establishment and the remainder paid upon licensing the activity.²
2. The company's purpose must be limited to operating clearing and settlement for contracts traded in futures exchanges and other financial instruments traded in Egyptian exchanges, as approved by the Authority.³
3. The company must have an independent dedicated headquarters for the activity, equipped with the necessary technological infrastructure, IT systems, and equipment to conduct the activity according to Authority requirements.
4. Board members must hold a higher education degree.
5. The Managing Director must have at least ten years of experience in either banking or non-banking financial sectors, and must have previously held a supervisory position of appropriate level in a banking or non-banking financial institution.
6. The company's organizational structure must include at a minimum the following executive departments:

• Departments responsible for clearing, settlement, depository, and central registration activities.
• Finance Department.
• Risk Management Department.
• Internal Audit Department.
  The 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 interview 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 Board of Directors Decision No. (3) of 2021 mentioned above.
9. Commitment to comply with the corporate governance rules for companies operating in non-banking financial activities and anti-money laundering and terrorist financing controls issued by the Board of Directors, without prejudice to Board of Directors Decision No. (126) of 2020 mentioned above.

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² Item (1) of Article One was replaced by Board of Directors Decision No. 19 of 2023 dated 2023/2/22.
³ Item (2) of Article One was replaced by Board of Directors Decision No. 165 dated 2023/8/9.

Smart Village, Building 136, Giza, Egypt
Postal Code: 110
Tel: +20235345350 Fax: +20235370036
WWW.FRA.GOV.EG
Building Bridges not Walls
We Build Bridges, Not Walls

Chairman of the Authority

10. No final judgments convicting any of the company's founders, principal shareholders, board members, or CEOs of a felony, a misdemeanor involving moral turpitude or breach of trust, or any serious crimes stipulated in laws regulating non-banking financial activities, the Central Bank and banking system law, or the anti-money laundering law, or a bankruptcy declaration, must have been issued against them during the five years preceding the license application, unless their reputation has been restored.⁴
11. No insolvency 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 amounting to one hundred thousand Egyptian pounds.

(Article Two)
The license application must be submitted on the form prepared by the Authority for this purpose, accompanied by supporting documents proving compliance with the conditions in Article One of this Decision, plus the following documents:

1. A statement listing shareholders' names, nationalities, and each shareholder's percentage of the company's capital.
2. A statement of investments representing at least (10%) in any other financial institutions operating in Egypt owned by founders or shareholders holding more than (10%) of the company's shares.
3. A declaration from the company's legal representative confirming the availability of technical capabilities, IT systems, risk management mechanisms, and a complaint examination system.
4. A declaration from the Managing Director confirming they are responsible for the actual management of the company and dedicating themselves fully to it, along with declarations from the managers of the departments mentioned in Article One confirming their full dedication to their work at the company.

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(⁴) For the purpose of applying this Decision, serious crimes refer to crimes punishable by imprisonment or a fine with a maximum penalty of no less than five hundred thousand Egyptian 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: +20235345350 Fax: +20235370036
WWW.FRA.GOV.EG
Building Bridges not Walls
We Build Bridges, Not Walls

Chairman of the Authority

The Authority shall issue the applying company a certificate of receipt for the required documents if submitted in full, and shall rule on the license application within thirty days from the date of submission of the complete required documents.

(Article Three)
Provisions of Board of Directors Decision No. (53) of 2018 regarding licensing issuance and renewal rules and share ownership rules for companies operating in non-banking financial activities shall apply to matters not specifically addressed in this Decision.

(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.

Smart Village, Building 136, Giza, Egypt
Postal Code: 110
Tel: +20235345350 Fax: +20235370036
WWW.FRA.GOV.EG
Building Bridges not Walls
We Build Bridges, Not Walls