Controls for banks establishing money market funds

Mr. Chairman of the Board of Directors,

Greetings,

In light of the role of the Central Bank of Egypt in ensuring the good performance of banks' activities and guaranteeing the application of quality and financial safety standards, and ensuring adequate supervision by the relevant Bank on the activity of money market funds established by them as stipulated in Article 175 of the Executive Regulations of Capital Market Law No. 95 of 1992, amended by Minister of Investment Decision No. 126 of 2008 (a copy is attached for easy reference), and in addition to the necessity of observing the provisions of Capital Market Law No. 95 of 1992 and the decisions, instructions, and controls issued by the Minister of Investment or the Capital Market Authority, the Board of Directors of the Central Bank of Egypt, in its session held on June 3, 2008, approved the necessity for banks establishing money market funds to apply the following controls:

1. Control: A committee shall be formed in each bank, whose task is to supervise and oversee the funds' activities by utilizing the internal auditor and the compliance officer of the fund's investment manager. The main responsibilities of this committee are as follows:

• Evaluating the fund's investment performance compared to other funds.
• Verifying the fund's compliance with the offering circular and its bylaws.
• Verifying the implementation of the investment funds' objectives and strategies, returns, and risks as stipulated in the offering circular.
• Verifying the fund's compliance with laws and instructions applicable to money market funds.
• Evaluating the performance of the fund's investment manager.
• Verifying that the controls used in calculating the Net Asset Value (NAV) are fair and accurate.
• Verifying the efficiency of the accounting and electronic systems applied in the fund.
• Identifying conflicts of interest and the adequacy of measures taken in this regard.
• Reviewing the investment manager's policies regarding risk and liquidity systems.
• Ensuring the absence of reciprocal transactions between the banks and the funds they established for the purpose of achieving mutual interests.
• Ensuring the adequacy of the financial reports issued by the fund to the committee to provide sufficient information to evaluate the fund's performance and supervise it.

2. The Central Bank of Egypt's approval must be obtained to ratify any increase in the bank's contribution to the fund's capital.

3. The maximum limit for the bank's contribution to the total of its money market funds shall be 5% of its Tier 1 capital.

4. The bank must possess all capabilities qualifying it to comply with the aforementioned rules.

5. Banks conducting money market fund activities at the time of implementing this decision must comply with the above instructions within a period not exceeding one year from the date of their notification thereof. Banks wishing to establish money market funds in the future must comply with the above instructions to obtain the Central Bank of Egypt's approval.

Please accept our highest respect, Gamal Naguib

Ministry of Investment

Decision No. 126 of 2008 amending some provisions of the Executive Regulations of Capital Market Law No. 95 of 1992 issued by Minister of Economy and Foreign Trade Decision No. 135 of 1993

Minister of Investment

After reviewing Capital Market Law issued by Law No. 95 of 1992 and its amendments, And Presidential Decree No. 231 of 2004 organizing the Ministry of Investment, And Minister of Economy and Foreign Trade Decision No. 135 of 1993 amending the Executive Regulations of Capital Market Law, And based on what was presented by the Chairman of the Capital Market Authority,

Decision:

Article (1) The text of Article 175 of the Executive Regulations of Capital Market Law issued by Minister of Economy and Foreign Trade Decision No. 135 of 1993 is replaced with the following text: "Banks and insurance companies may conduct the activity of money market funds, which are funds that invest all their assets in short-term investments such as government and bank securities, repurchase agreements, treasury bills, bank deposit certificates, and certificates of other money market funds.

The fund's board of directors is committed to achieving a stable value for the investment certificate issued by the fund based on its net asset value, according to the standards set by the Authority's board of directors, observing the following:

1. The maximum limit for the fund's investments shall not exceed thirteen months.
2. The average maturity of the fund's portfolio shall not exceed ninety days.
3. The fund's investments shall be diversified so that investments in any single issuer do not exceed 10% of the fund's net asset value, except for government securities.

Except for investment in government securities, the Authority's board of directors determines the minimum risk rating level for investments, which shall not be less than BBB/ in the ratings resulting from the activity."

Article (2) Investment funds conducting money market fund activities at the time of implementing this decision must comply with its provisions within a period not exceeding one year from the date of its implementation.

This decision shall be published in the Egyptian Gazette and shall be implemented from the day following its publication.

[Signature/Stamp] 13:35 2008