Chapter Two: Rules Regulating Repo Operations

First: For a period of 7 days according to a fixed yield rate 1

1. The operation and its results are announced on all screens of the SWIFT system and the screens of participating banks on the day of the operation.

2. Banks participating in the auction submit their bids to the participating Central Bank on the second business day preceding the operation date, starting from 8:00 AM until 11:00 AM. The bid amount is one million EGP and its multiples, with annual yields directed to the working capital and investment accounts (Annex 1).

The bank determines the present value of the bonds held in its portfolio from the bonds serving as collateral for the repo operation and their maturity dates.

The participating bank adds the operation amount to the accounts of the banks participating in the repo operation.

3. The repo operation amount to be conducted by the participating bank is calculated according to the formula stated in the repo agreement.

4. As collateral for the repo operation, the value of the bonds calculated for each bank at the end of the previous business day for the purpose of conducting the repo operation for the use of the secondary market and intraday credit facilities (Loan Intraday) (which are conducted on the day of the repo operation) must have a maturity date later than the repo operation date.

5. The margin amount received is analyzed in the calculation of the bond purchase value according to the agreement, with a margin of 3%.

6. In the event that the collateral offered for the repo operation is found to be insufficient, the operation is cancelled from the participating bank, and the operation is terminated due to the insufficiency of the offered collateral.

7. The cash received in the repo operation is included in the components of the liquidity ratio for the local currency as long as the operation is ongoing.

(Annex 2): The agreement for the repo operation for the participating bank and its valuation and confirmation for the participating bank.

SWIFT Message for Repo Operations

1. The message is sent via SWIFT to receive the 599MT query, and the type of query does not matter.

2. The message is sent to the following address: CBEGEGCXBKO, and the message does not contain another address.

3. The 599MT message is sent as follows:

• The message priority must be "URGENT" (Urgent priority Message SWIFT).
• The Reference in FIELD 21 must be (IN CAPITAL LETTERS) - REPO AUCTION.
• The Reference is added in the form of a suffix so that no other message is confused with the instruction, and the message is cancelled.

4. Banks are allowed to send their bids from 8:00 AM until 11:00 AM, and the message is not sent to the participating bank for valuation (according to Annex 1).

5. In the event that the bank is late in sending the message until 11:00 AM, a new message is sent for its counterpart, and the previous message is cancelled because the single message must contain one.

6. Confirmation must be obtained from the sending bank via a 011MT message (SWIFT Notification Delivery Message) by 12:00 PM. In the event that the sending bank is not confirmed by the receiving bank by 11:00 AM, the following messages must be sent to the valuation bank: (27702810 27702813 27702814).

7. The repo operation amount to be conducted by the bank is calculated.

8. The bonds offered as collateral for the repo operation are arranged according to their value as collateral for the bank in the event that the participating bank conducts the operation.

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Continuation of Annex (1)

REPO AUCTION

REPO AMOUNT

RELATIVE IMPORTANCE OF COLLATERAL

MATURITY DATE	FACE VALUE
1.	---------------------
2. -	--------------------
3.	--------------------
4.	---------------------
5.	--------------------
6.	--------------------

Agreement between the Central Bank of Egypt

and Bank ..............................

To conduct Repo Operations

This agreement was concluded on the day of / / 2011 between:

1. The participating bank represented by the Director / (First Party)
2. A bank represented by the Director / (Second Party)

Preamble

The undersigned are aware that the purpose of the repo operation is to implement monetary policy and represents the following conditions for the implementation of the rules and procedures that the parties agree upon in the repo operation to be conducted between them, and the bonds are transferred as collateral according to additional standards.

Article 1: Definitions

1. Operation Day: The day banks operate in the country.

2. Repo Operation: An operation where two parties agree on the transaction, and an agreement is reached to invest available liquidity for a specific period and for the agreement to purchase bonds from the owner of the funds for a specific period and for the agreed benefits between them.

3. Lender Bank: The bank lending the bonds for the repo.

4. Borrower Bank: The bank borrowing the bonds.

5. Bonds of the Operation: The bonds whose maturity date is later than the repo operation date.

Article 2: Start of Operation

The repo operation consists of the borrower bank and the lender bank. The participating bank receives the bonds of the operation, the lender and borrower, the purchase date, the purchase value, and the repo date. The agreement is signed by both parties.

According to the signed agreement, on the settlement day, the participating bank transfers the operation bonds from the account of the borrower bank to the account of the lender bank, adding the purchase value to the borrower bank's account.

Article 3: Value

The present value of the bonds received in the repo operation is calculated according to the following formula:

Present Value = (Nominal Value * 100) / (1 + (Declared Yield Rate for the Period from the Central Bank * Days until Maturity) / 365)

The purchase value of the bonds is calculated according to the following formula:

Purchase Value = Present Value of Bonds * 100% - Declared Margin from the Participating Bank (3%)

1. The result of the formula in parentheses is rounded to the nearest cent.

2. The participating bank announces the yield rate for all the bonds offered daily.

The repo value of the bonds is calculated according to the following formula:

Repo Value = Purchase Value + Purchase Value * Declared Yield Rate * (Number of Operation Days / 360)

Article 4: End of Operation

According to the signed agreement, on the repo date, the participating bank adds the repo value to the lender bank's account and transfers the operation bonds from the borrower bank to the lender bank.

In the event that the participating bank is a borrower and the lender bank's account is insufficient, the bonds are transferred and the operation is converted into an intraday credit facility for the day, and the bank is notified to provide collateral if needed.

Article 5: Transfer of Ownership

Ownership of the bonds is transferred from the lender bank to the borrower bank on the purchase date from the funds owned by the lender bank for the bonds of the operation and bearing their incidental costs and the costs incurred by the borrower.

The borrower bank is the owner of the bonds as long as the operation is ongoing, and it has the right to trade them in the secondary market to conduct a repo operation for them until the repo date for the ongoing operation, and the bank agrees to the terms of the agreement as a transaction.

Article 6: Authorization for Deduction

The second agreement is authorized according to the first agreement to deduct from the second agreement's accounts the value of the purchase operation and its reverse operation for both parties.

Article 7: Administrative Matters

This agreement is subject to the laws of the two parties, and the agreement is valid for thirty days from the date of termination.

The ongoing operation remains valid for the bank until the date of the final repo for the operation.

The agreement is considered terminated if one of the parties terminates the agreement.

Article 8: Dispute Resolution

The arbitration law applicable to the first agreement is applied, and in the event of a dispute, the dispute is referred to arbitration according to the rules of the Cairo Regional Centre for International Commercial Arbitration.

Article 9: Copies

This agreement consists of two copies, and each party receives a copy.

(First Party) (Second Party)

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1. The repo operation is announced 28 days before each SWIFT screen and the screens of participating banks on the day preceding the day of the operation to be conducted by the participating bank.

2. Banks participating in the auction submit their bids to the participating Central Bank on the second business day preceding the operation date, starting from 11:00 AM until 2:00 PM. The bid amount is one million EGP and its multiples, with annual yields directed to the working capital and investment accounts. The bank determines the present value of the bonds held in its portfolio from the bonds serving as collateral for the repo operation and their maturity dates (Annex 1).

The participating bank arranges the bids submitted by banks according to the yield rates. Bids are arranged according to the highest yield rate submitted by banks until the repo operation is completed. In the event of equal yield rates, the selection is made based on the announced value according to the submitted quantity.

The participating bank adds the operation amount to the accounts of the banks participating in the repo operation on the third day.

3. The repo operation amount to be conducted by the participating bank is calculated according to the formula stated in the repo agreement.

4. As collateral for the repo operation, the value of the bonds calculated for each bank at the end of the previous business day for the purpose of conducting the repo operation for the use of the secondary market and intraday credit facilities (Loan Intraday) (which are conducted on the day of the repo operation) must have a maturity date later than the repo operation date.

5. The margin amount received is analyzed in the calculation of the bond purchase value according to the agreement, with a margin of 3%.

Director's Book Deputy Governor Date 14 June 2012 3

6. In the event that the collateral offered for the repo operation is found to be insufficient, the operation is cancelled from the participating bank, and the operation is terminated due to the insufficiency of the offered collateral.

7. The cash received in the repo operation is included in the components of the liquidity ratio for the local currency as long as the operation is ongoing.

Annex (1) REPO AUCTION

1. ---

2. ---

3. ---

REPO AMOUNT INTEREST RATE RELATIVE IMPORTANCE OF COLLATERAL

MATURITY DATE FACE VALUE

1. ---

2. ---

3. ---

4. ---

5. ---

6. ---