Circular dated April 22, 2026 regarding controls for financing margin purchases of securities

Cairo: April 22, 2026 Mr./Chairperson of the Board of Directors Bank Greetings, Within the framework of the Central Bank's keenness to maintain the stability and safety of the banking sector, and in light of monitoring current developments with the aim of establishing an effective regulatory framework to limit risks associated with financing margin securities purchase operations, the Central Bank Board of Directors decided at its session held on April 21, 2026, the following: "Banks are required to adhere to the following rules when financing margin securities purchase operations:

1. The bank's internal policies approved by the Board of Directors must address margin purchase financing rules, taking into account periodic reviews, provided that such policies include compliance with the decisions of the Financial Regulatory Authority in this regard and include the following: 1-1 A maximum limit for the amount allocated for financing margin purchase operations. 2-1 A maximum limit for financing a single client, and the client and their related parties, from the amount allocated for margin purchase financing. 3-1 A maximum limit for both the security and sectoral concentration from the total portfolio of each client according to the risk level accepted by the bank, as well as a maximum limit for securities traded outside the EGX 100 index not exceeding 10% of the total portfolio of each client. 4-1 Procedures to be followed in case of exceeding the limits referred to in the previous item, provided that they include the limits at which clients are notified to reduce those ratios, whether through clients making repayments or providing additional collateral, and the period allowed for this, as well as the limits at which the bank takes measures to sell securities and liquidate provided collateral.
2. Availability of automated systems, procedures, and controls to identify, monitor, and manage all risks associated with these operations, including daily revaluation of securities, to ensure compliance with limits established by the bank's policy and the Financial Regulatory Authority's decision mentioned above.
3. Confirmation that the traded securities must be held in custody by the bank itself.
4. Confirmation that financing must be in Egyptian Pounds and trading is limited to securities issued in the same currency.
5. Traded securities must not include shares of the bank itself.
6. It is not permitted to grant any client margin purchase facilities to finance the purchase of shares of a company where the client is a major shareholder or a board member.
7. Necessity to commit to reporting facilities granted for margin securities purchase financing to both the credit registration system at the Central Bank of Egypt and credit rating and inquiry companies according to regulations in this regard, as unsecured facilities.
8. These instructions apply from this date, and banks are granted a period of six months from this date to reconcile the positions of existing portfolios.
9. Confirmation of what was stated in the instructions issued on June 20, 2001, regarding limiting facilities to securities trading companies for the purpose of covering the short-term time gap between the company executing operations and settling them with their clients, and that when granting these facilities, the size must correspond to the operations the company performs, with necessary measures taken to avoid any risks resulting from granting these facilities, including the facility period and covering company accounts with mandatory collateral. Please take note and provide notice to take necessary actions to work according to the aforementioned decision. With highest regards, Tarek Fayed