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2021-01-01

Financial Regulatory Authority Board of Directors Resolution No. (46) for the Year 2021 Regarding Allowing Licensed Investment Fund Management Companies to Manage Margin Securities Purchase Financing Through Brokerage Firms

The Financial Regulatory Authority (FRA) issued Resolution No. 46 of 2021 to permit licensed investment fund management companies to manage margin financing for securities purchases through approved brokerage firms. The resolution mandates a formal contract detailing each party's rights and obligations, including collateral provisions and conflict-of-interest safeguards regarding related-party brokerage financing. Furthermore, it restricts this margin financing to a specific list of securities that meet the Egyptian Exchange's criteria and receive FRA approval, with immediate effect upon publication in the Egyptian Gazette.

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FINANCIAL REGULATORY AUTHORITY

Chairman of the Authority

Resolution of the Authority's Board of Directors No. (46) for the Year 2021, dated 2021/4/4 Regarding Allowing Companies Licensed to Operate Investment Fund Management Activities to Manage Margin Securities Purchase Financing Through Securities Brokerage Firms

The Financial Regulatory Authority Board of Directors

Having reviewed the Capital Market Law issued by Law No. (95) of 1992 and its executive regulations; and the Law No. (10) of 2009 regulating supervision over non-banking financial markets and instruments; and the Authority's Board of Directors Resolution No. (67) of 2014 regarding regulating the operation of securities brokerage and custody companies for margin securities purchase transactions; and after the approval of the Authority's Board of Directors in its session held on 2021/4/4;

HAS DECIDED

(Article One)

Licensed companies operating investment fund management activities may manage margin securities purchase financing through brokerage firms approved by the Authority to trade securities under this mechanism, subject to observing the following controls:

  1. A contract shall be concluded between the two parties specifying the rights and obligations of each party, which shall specifically include the following: (a) A statement of the collateral obtained by the fund manager from the financing brokerage firms. (b) Conflict of interest avoidance mechanisms, the most important being whether financing by brokerage firms that are related persons to the fund manager is permitted.
  2. The financing by brokerage firms for margin securities purchase transactions shall be limited to a list of securities meeting the conditions and criteria set by the Exchange and approved by the Authority.

(Article Two)

This Resolution shall be published in the Egyptian Gazette and on the websites of both the Authority and the Egyptian Exchange, and shall be effective from the day following its publication in the Egyptian Gazette.

Chairman of the Board of Directors of the Authority Dr. Mohamed Omran

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