Decision No. 14 of 2007 on Financial Adequacy Criteria for Securities Companies (As Last Amended)

Decision No. (14) dated 2/4/2007
Regarding the Financial Adequacy Criteria for Companies Operating in the Securities Sector As last amended on 30/11/2023

Board of Directors of the General Authority for Financial Supervision Decided:

Article 1
Scope of Application
1.

Article 2
Obligation to Comply with Financial Adequacy Criteria

Article 3
Financial Adequacy Criteria for Companies Operating in the Securities Sector

Article (1)
Structure of Financial Adequacy Criteria
Financial Adequacy Conditions:
A- The minimum issued and paid-up capital:
.1 Brokerage in securities:
.2 Trading, brokerage, and securities brokerage:
.3 Custodians:
.4 Market maker:

B- Sub-types of net liquid capital:
C- The minimum equity for operating specialized mechanisms and activities.

Article (2)
Obligations of Companies Operating in the Securities Sector The company shall comply with the following:
A.
B.

Article (3)
Other Measures and Procedures

Appendix (A)
"Definition of Net Liquid Capital Sub-types and Calculation Method" Item 1: Net Liquid Capital (CAPITAL LIQUID NET):
Hair-Cut Rate (HCR):
Item 2: Mark-to-Market Valuation of Securities:
Mark-to-Market Valuation
Item 3: Weighting Factors:
First, Assets:
Current assets:
.1 Cash in hand and at banks:

.2 Receivables due from clients:
 Margin buying clients:
 Delivery vs. payment (DVP) clients:
.3 Receivables due from companies operating in the securities sector:
.4 Investments of trading, brokerage, and securities brokerage companies in bonds at market price – calculated at 100%. .5 Company investments in Suez Canal certificates – calculated at 90%. .6 Other current assets:

.7 Long-term assets:

.8 Fixed assets:

.9 Intangible assets:
 Other long-term assets


Second, Liabilities listed in the financial statement:
Current liabilities:
.10 Borrowed bonds for resale to trading, brokerage, and securities brokerage companies – calculated at 100% of market value. .11 Creditors clients and short-term loans:

Other current liabilities:


Long-term liabilities:
.14 Long-term liabilities – calculated at 100% 

Third, Off-balance sheet liabilities:
.15 The company’s liabilities are increased by the following items – calculated at 100%:
 Short Selling
 Firm Commitment


Fourth, Supported loans:
.16 The model is deducted from the company’s liabilities when calculating net liquid capital according to Appendix (B) if the following conditions are met by the company:
:

Fifth, Market maker:
.1 The following items are added to the assets side of the net liquid capital report specific to market makers:
 Settlement transactions "netting result"
 Company investments in securities or fund documents:
 Amounts deposited under settlement of borrowing operations for resale:
The following items are added to the liabilities side of the net liquid capital report specific to market makers:
 Valuation of borrowed securities and fund documents:

Appendix (B)
"Model for Calculating Net Liquid Capital"

Item No.	Description	Market Value	Weighting Factor	Weighted Value
1	Cash in hand and at banks (Cash in Treasury)	0.00	100%	0.00
	Treasury bills	0.00	100%	0.00
	Current accounts at banks	0.00	100%	0.00
	Settlement accounts balances at Misr Clearing (Net)	0.00	100%	0.00
	Deposits at banks	0.00	100%	0.00
	Money market fund documents	0.00	100%	0.00
	Cheques under collection	0.00	100%	0.00
	Cheques in company treasury	0.00	0%	0.00
	Amounts allocated for same-day buying and selling operations	0.00	100%	0.00
	Amounts frozen under capital increase account	0.00	0%	0.00
1 Total	0.00	0.00
2	Receivables due from clients (Net after provisions)	0.00	50%	0.00
	Margin buying clients	0.00	50%	0.00
	DVP clients (up to two days after settlement date)	0.00	100%	0.00
	DVP clients (after two days up to fifth day from settlement date) (Securities approved for margin buying trading)	0.00	80%	0.00
	DVP clients (after two days up to fifth day from settlement date) (Securities NOT approved for margin buying trading)	0.00	50%	0.00
	DVP clients (after five days from settlement date)	0.00	0%	0.00
	Other clients (up to settlement date)	0.00	100%	0.00
	Other clients (after settlement up to fifth day from settlement date) (Securities approved for margin buying trading)	0.00	80%	0.00
	Other clients (after settlement up to fifth day from settlement date) (Securities NOT approved for margin buying trading)	0.00	50%	0.00
	Other clients (after five days from settlement date)	0.00	0%	0.00
2 Total	0.00	0.00
3	Receivables due from companies operating in the securities sector	0.00	100%	0.00
	Egyptian companies (up to five working days after settlement)	0.00	100%	0.00
	Egyptian companies (after five working days from settlement date)	0.00	0%	0.00
	Foreign companies (up to five working days after settlement)	0.00	80%	0.00
	Foreign companies (after five working days from settlement date)	0.00	0%	0.00
3 Total	0.00	0.00
4	Company investments in bonds (Market Value)	0.00	100%	0.00
5	Company investments in Suez Canal certificates	0.00	90%	0.00
6	Other current assets (Insurance with third parties, various debtors, withheld taxes, related companies, prepaid expenses, employee/manager advances, other receivables)	0.00	0%	0.00
6 Total	0.00	0.00
7	Long-term assets (Investments in subsidiaries and affiliates)	0.00	0%	0.00
7 Total	0.00	0.00
8	Fixed assets (Net after depreciation)	0.00	0%	0.00
9	Intangible assets (Goodwill and trademarks)	0.00	0%	0.00
10	Other long-term assets (Central depository investment, classified funds A/B/C/D subscriptions, prepayments for assets/investments, deferred taxes, investor protection fund subscription)	0.00	0%	0.00
10 Total	0.00	0.00
	Total weighted assets value (Items 1–10)	0.00	0.00
11	Borrowed bonds for resale (Market Value)	0.00	100%	0.00
12	Creditors clients and short-term loans (Client creditor balance, margin financing loans, other bank short-term loans, banking facilities/current accounts, payment instruments, related company creditors)	0.00	91% / 100%	0.00
12 Total	0.00	0.00
13	Other current liabilities (Client compensation claims, balances due from securities companies, provisions, various creditors)	0.00	100%	0.00
13 Total	0.00	0.00
14	Long-term liabilities (Loans other than supported loans, deferred taxes, other long-term liabilities)	0.00	100%	0.00
15	Long-term liabilities related to fixed asset acquisition (due within financial year) & Leasing contracts (due within financial year)	0.00	100% / 0%	0.00
14 Total	0.00	0.00
15	Off-balance sheet liabilities (Excess margin client debt, excess DVP balances, excess borrowed securities for resale, shortfall in cash collateral, bond repurchase price increases under repo agreements, net subscription guarantee liabilities, financial guarantees/covenants/commitments, uncovered same-day trading guarantees)	0.00	100%	0.00
15 Total	0.00	0.00
16	Total liabilities value (Items 11–15)	0.00	0.00
17	Supported loans meeting conditions	0.00	0%	0.00
18	Total weighted liabilities value (Items 16–17)	0.00	0.00
19	Net Liquid Capital (Difference between total weighted assets and total weighted liabilities)	0.00
20	Minimum Net Liquid Capital (10% of total weighted liabilities)	0.00
21	Increase or decrease in Net Liquid Capital (Difference between Item 18 and Item 19)	0.00
22	Net Liquid Capital Ratio	0.00%

Note: Item "Right of Use (Net)" was added to Appendix B via CMA Chairman Decision No. 3019 dated 30/11/2023. Note: Items "Long-term liabilities related to fixed asset acquisition" and "Current liabilities related to leasing contracts due within the financial year" were added to Appendix B via CMA Chairman Decision No. 3019 dated 30/11/2023.

Appendix (B1)
"Model for Calculating Net Liquid Capital for Market Makers"

Item No.	Description	Market Value	Weighting Factor	Weighted Value
1	Cash in hand and at banks (Treasury, bills, current accounts, settlement balances, bank deposits, money market funds, cheques under collection/company treasury, same-day operations amounts, frozen capital increase amounts, settlement deposits for borrowing-for-resale)	0.00	100% / 90%	0.00
2	Settlement transactions (Netting result)	0.00	90%	0.00
3	Company investments in securities or fund documents	0.00	100%	0.00
4	Receivables due from clients (Net after provisions) (Margin clients, DVP clients up to 2/5 days, other clients up to 5 days)	0.00	0% / 80% / 50%	0.00
5	Receivables due from securities companies (Egyptian/Foreign, up to 5 working days)	0.00	100% / 80%	0.00
6	Company investments in bonds (Market Value)	0.00	100%	0.00
7	Company investments in Suez Canal certificates	0.00	90%	0.00
8	Other current assets (Insurance, debtors/taxes/prepaids/advances)	0.00	0%	0.00
9	Long-term assets (Subsidiaries/affiliates)	0.00	0%	0.00
10	Fixed assets (Net) & Intangible assets (Goodwill/trademarks)	0.00	0%	0.00
12	Other long-term assets (Central depository, classified funds A/B/C/D, prepayments, deferred taxes, investor protection fund)	0.00	80% / 60% / 0%	0.00
12 Total	0.00	0.00
13	Borrowed bonds for resale (Market Value)	0.00	100%	0.00
14	Valuation of borrowed securities and fund documents	0.00	110%	0.00
15	Creditors clients and short-term loans (Client balance, margin financing loans, other bank loans, banking facilities, payment instruments, related companies)	0.00	91% / 100%	0.00
16	Other current liabilities (Compensation claims, securities company balances, provisions, various creditors, investor protection fund loan, Ministry of Finance loan, frozen capital increase amounts, shareholder current accounts)	0.00	100% / 0%	0.00
17	Long-term liabilities (Loans other than supported loans, deferred taxes, other long-term liabilities, fixed asset acquisition liabilities)	0.00	100% / 0%	0.00
18	Off-balance sheet liabilities (Margin debt excess, DVP balance excess, borrowed securities excess, cash collateral shortfall, repo price increases, subscription guarantee liabilities, financial guarantees/covenants, uncovered same-day trading guarantees)	0.00	100%	0.00
19	Total liabilities value (Items 13–18)	0.00	0.00
20	Supported loans meeting conditions	0.00	0%	0.00
21	Total weighted liabilities value (Items 19–20)	0.00	0.00
22	Net Liquid Capital (Difference between total weighted assets and total weighted liabilities)	0.00
23	Minimum Net Liquid Capital (10% of total weighted liabilities)	0.00
24	Increase or decrease in Net Liquid Capital (Difference between Item 21 and Item 22)	0.00
25	Net Liquid Capital Ratio	0.00%