Regulatory Alerts2002-01-01
Ministry of Finance Decision No. 480 of 2002
The Egyptian Ministry of Finance issued Decision No. 480 of 2002 to formally establish and regulate the Primary Dealers system for government securities. The decree mandates that only approved banks and securities brokerage firms may serve as Primary Dealers, requiring them to underwrite primary issuances, stimulate secondary market trading, and maintain transparent open-market operations without charging commissions. It further outlines the dealers' obligations to submit regular trading reports, propose market efficiency rules, and comply with regulatory standards subject to cancellation by the Minister of Finance for non-compliance.
Egyptian Gazette - Issue 91 (Continued) on April 21, 2002
Ministry of Finance Decision No. 480 of 2002 Regarding the "Primary Dealers" System
Minister of Finance Having reviewed the Capital Market Law issued by Law No. 95 of 1992; and the Law No. 4 of 1995 authorizing the Minister of Finance to issue Treasury bills under the name Egyptian Treasury Bills; and the Central Deposit and Registration of Securities Law No. 93 of 2000; and Law No. 86 of 2001 linking the State General Budget for the fiscal year 2002/2003; and the Council of Ministers' endorsement, during its session held on April 7, 2002;
Decided: (Article One)
For the implementation of the provisions of this Decision, the following terms shall have the meanings indicated alongside them:
1 - Government Securities: The domestic obligations of the Arab Republic of Egypt issued by the Minister of Finance in accordance with the Law and under the conditions approved by it, including previous and future issuances of both Treasury bills and Government bonds.
2 - Primary Dealers: Institutions registered with the Ministry of Finance according to standards specified by the Minister of Finance, committed to underwriting primary issuances of Government Securities and stimulating trading in secondary markets, in accordance with systems, provisions, and procedures issued by a decision of the Minister of Finance.
3 - Primary Market: The market where Government Securities are issued directly by the Ministry of Finance, or through an agent appointed by it on its behalf, using means specified by the Minister of Finance.
4 - Secondary Market: The market where all transactions following the initial sale of Government Securities take place.
5 - Open Market: The market where trading in Government Securities occurs outside the Stock Exchange, among "Primary Dealers" and between them and any other legal or natural person.
6 - Securities Transactions: Purchase, sale, and repurchase agreements regarding Government Securities.
7 - Primary Dealers' Brokers: Companies that act as intermediaries to facilitate transactions among "Primary Dealers" in Government Securities. The establishment and licensing of these companies shall be in accordance with the provisions of the Capital Market Law issued by Law No. 95 of 1992.
(Article Two) Primary Dealers shall commit to the following:
(a) Underwrite government issuances in the primary market. (b) Encourage trading in the secondary market through buying or selling and repurchase agreements for Government Securities.
(Article Three) Only banks and securities trading and brokerage companies may be appointed as Primary Dealers. For a bank to qualify as a Primary Dealer, it must obtain approval from the Central Bank of Egypt, in addition to a license from the Capital Market Authority to trade Government Securities.
(Article Four) The Minister of Finance shall issue decisions regulating the rights and obligations of Primary Dealers, as well as provisions and procedures for trading Government Securities. Primary Dealers shall conduct specific activities in both the primary and secondary markets, which shall be determined by a decision of the Minister of Finance, who may amend them based on performance outcomes. Primary Dealers shall also submit reports to the Ministry of Finance regarding trading activities, with report templates issued by a decision of the Minister of Finance.
(Article Five) The Minister of Finance may cancel the registration of a Primary Dealer in the designated register at the Ministry of Finance if it is proven that the dealer failed to comply with the provisions of decisions issued by the Minister of Finance.
(Article Six) The Minister of Finance shall establish provisions and procedures for trading Government Securities in the open market. Primary Dealers may trade Government Securities in the open market provided they notify the Stock Exchange of their purchases and sales of Government Securities, in accordance with established trading rules, and they shall not charge any commissions on open market transactions.
(Article Seven) Primary Dealers shall work to:
(a) Submit proposals to the Minister of Finance regarding trading rules and procedures in the Government Securities market to ensure efficiency and transparency. (b) Propose licensing for brokerage companies operating between Primary Dealers. (c) Provide training programs for their employees.
(Article Eight) The provisions of this Decision and decisions issued pursuant to it shall not derogate from the provisions of the Capital Market Law, the Central Deposit and Registration of Securities Law mentioned above, and decisions issued in implementation thereof, with respect to Government Securities.
(Article Nine) This Decision shall be published in the Egyptian Gazette and shall take effect from the day following its publication.
Issued on April 20, 2002 Minister of Finance Dr. Medhat Hassanein