Capital Markets Authority Board Decision No. (37) of 2014

Dated 12/3/2014

Concerning Solvency Standards for Companies Licensed to Conduct Market Maker Activities

Capital Markets Authority Board

After reviewing the Capital Market Law issued by Law No. (95) of 1992 and its Executive Regulations, and the decisions issued to implement them;

And the Central Depository and Registration of Securities Law issued by Law No. (93) of 2000 and its Executive Regulations;

And Law No. (10) of 2009 concerning the regulation of supervision over non-banking financial markets and instruments;

And Presidential Decree No. (191) of 2009 organizing the Egyptian Exchange and its financial affairs;

And Presidential Decree No. (192) of 2009 issuing the Statute of the Capital Markets Authority;

And Investment Minister Decision No. (293) of 2007 adding the market maker activity to the activities of companies operating in the securities field;

And Capital Markets Authority Chairman Decision No. (14) of 2007, and its amendments;

And upon the approval of the Authority's Board of Directors in its session held on 12/3/2014;

Decided

(Article One)

The financial solvency standards for companies operating in the securities field issued by Capital Markets Authority Chairman Decision No. (14) of 2007 and its amendments shall apply to companies licensed to conduct market maker activities, subject to the following:

First: Adding a new item numbered (4) to the financial solvency conditions in item (a) contained in the solvency standards structure in Article (1) of Capital Markets Authority Chairman Decision No. (14) of 2007, with the following text:

(4) Market Maker:

The minimum issued and paid-up capital shall be ten million Egyptian pounds.

---

Second: Adding the following items to the current assets listed under the "Assets" item in Appendix (A) attached to Capital Markets Authority Chairman Decision No. (14) of 2007, as follows:

• Net Clearing Results:

The result of selling securities or index fund documents purchased from the market maker that are still under settlement shall be added with a weighting factor of 100%, and the result of purchasing securities or documents still under settlement shall be deducted with a weighting factor of 100%, with a deduction of 10% of the value of the purchased securities and documents for each day until the settlement date (T+2), to hedge against market volatility risks until the settlement date.

• Company Investments in Securities or Fund Documents:

The value of securities or index fund documents owned by the market maker shall be calculated with a weighting factor of 100% of their market value, and these securities or documents shall be valued daily according to their closing price.

• Deposited Amounts under the Settlement Account for Securities Lending for Sale Operations:

In the event of borrowing securities or index fund documents according to the securities lending for sale mechanism, the amounts deposited under the settlement account for these operations shall be treated with a weighting factor of 100%.

---

Third: Adding the following item to the current liabilities listed in Appendix (A) attached to Capital Markets Authority Chairman Decision No. (14) of 2007, as follows:

• Valuation of Borrowed Securities and Fund Documents:

These securities or documents shall be valued daily according to their closing price, and the value of borrowed securities and fund documents shall be calculated with a weighting factor of 100% plus an additional 10% of the market value of the borrowed securities and documents, to hedge against market volatility risks until the return date.

---

(Article Two)

Subject to the rules for calculating net liquid capital specified in Capital Markets Authority Chairman Decision No. (14) of 2007 and its amendments, the company licensed for the market maker activity is obligated to maintain at all times a net liquid capital of not less than 10% of its total weighted liabilities or total expenses for six months, whichever is greater.

(Article Three)

This Decision shall take effect from the day following its publication, and the concerned authorities are tasked with its implementation according to their respective jurisdictions.

---

Chairman of the Board of Directors
Sherif Samy

Capital Markets Authority
Chairman's Office
46076

---

Headquarters: Smart Village, Building 15 - A B
Km 28 Cairo/Alexandria Desert Road
Giza Governorate, Postal Code: 12577

Phone: 02-22570040 - Fax: 02-22570041
Email: info@efsa.gov.eg
Website: www.efsa.gov.eg