Regulatory Alerts2021-01-01
Board of Directors Decision No. 61 of 2021
The General Authority for Financial Supervision issued Board Decision No. 61 of 2021 to amend Decision No. 67 of 2014 by establishing maximum limits for securities margin purchases at 30% or 15% of freely circulating and total shares, respectively, whichever is higher. The decision further caps margin purchases for a single client and its affiliated group at 5% or 3% of those share bases, obligating brokerage firms and custodians to halt margin purchases once these thresholds are reached. Additionally, it mandates the Central Deposit and Registration Company to implement necessary automated systems, periodically disclose margin purchase ratios per company, and automatically suspend trading capabilities upon threshold attainment, with the amended rules taking effect on January 1, 2022.
46 Egyptian Official Gazette - No. 247 on November 4, 2021
General Authority for Financial Supervision Board of Directors Decision No. 61 of 2021 Dated April 27, 2021 Amending the Board of Directors Decision No. 67 of 2014 regarding the regulation of securities brokerage companies and custodians for margin purchase operations of securities.
Board of Directors of the General Authority for Financial Supervision Having reviewed the Capital Market Law issued by Law No. 95 of 1992 and its executive regulations; and the Central Deposit and Registration of Securities and Financial Instruments Law issued by Law No. 93 of 2000 and its executive regulations; and Law No. 10 of 2009 regulating supervision over non-banking financial markets and instruments; and the Board of Directors Decision No. 67 of 2014 regarding the regulation of securities brokerage companies and custodians for margin purchase operations of securities; and after the approval of the Board of Directors in its meeting held on April 27, 2021;
HAS DECIDED:
( Article One ) A new article numbered (Article 6 bis) and a new paragraph to Article Ten of the aforementioned Board of Directors Decision No. 67 of 2014 are added, with the following text:
( Article 6 bis ) The maximum limit for margin purchase operations on a company's security shall be (30%) of the company's freely circulating shares or (15%) of the company's total shares, whichever is higher.
47 Egyptian Official Gazette - No. 247 on November 4, 2021 Furthermore, the maximum limit for margin purchase operations for a single client and its affiliated group on the security shall be (5%) of the company's freely circulating shares or (3%) of the company's total shares, whichever is higher. Securities brokerage companies and custodians are obligated to refrain from conducting margin purchase operations on securities when they reach the maximum limits stipulated in this article.
( Article Ten - Second Paragraph ) The Central Deposit and Registration Company is obligated to prepare the necessary automated systems and connection lines to implement the provisions stipulated in this decision, and it shall periodically disclose the percentages of margin-purchased securities for each company. It is also obligated to suspend the ability to conduct margin purchase operations in the relevant automated systems upon reaching the maximum limits for permitted margin purchases, as stipulated in Article 6 bis of this decision.
( Article Two ) This decision shall be published in the Egyptian Official Gazette, and shall take effect as of January 1, 2022.
Chairman of the Board of Directors Dr. Mohamed Omran