General Decision No. 6 of April 24, 2000 in application of the status of securities intermediaries

GENERAL DECISION OF THE COUNCIL OF THE FINANCIAL MARKETS NO. 6

of April 24, 2000 on risk rates for the assessment of risks incurred by securities intermediaries by category of securities and type of market.

The College of the Council of the Financial Market, meeting on March 2, 2000,

Having regard to Law No. 94-117 of November 14, 1994, reorganizing the financial market and in particular its Articles 28, 31, 48, 57 and 58,

Having regard to Decree No. 99-2478 of November 1, 1999, establishing the status of securities intermediaries and in particular its Article 87;

Decides:

Article 1

The net own funds required for risk coverage are obtained by applying, as appropriate, to each security in the portfolio of the securities intermediary as it must be weighted in accordance with the provisions of Article 2 below, one of the following rates:

a- 10% if it is debt securities issued or guaranteed by the State or a local public authority;

b- 20% if it is debt securities issued or guaranteed by a bank or a public enterprise;

c- 30% if it is debt securities whose issuer has obtained, from a rating agency recognized by the Financial Markets Council, a rating generally considered satisfactory;

d- 50% if it is equity securities admitted to listing or securities of collective investment undertakings (OPCVM);

e- 60% if it is:

• equity securities of companies or bodies other than those referred to in point (d) and which make a public offering of savings;
• debt securities whose issuer has obtained, from a rating agency recognized by the Financial Markets Council, a rating generally considered unsatisfactory;

f- 75% if it is:

• equity securities of companies not making a public offering of savings;
• unsecured debt securities that have not been rated by a rating agency recognized by the Financial Markets Council.

The net own funds required for risk coverage must represent, permanently and in all cases, at least 30% of the value of the securities portfolio of the securities intermediary as evaluated in accordance with Article 5 of this decision.

Article 2

For the calculation of risk, each security in the portfolio of the securities intermediary must be weighted by applying, as appropriate, one of the following coefficients:

a- Coefficient 1 if it is:

• equity securities admitted to listing or securities of collective investment undertakings (OPCVM) with a concentration less than 20%
• debt securities issued or guaranteed by the State or a local public authority;
• debt securities issued or guaranteed by a bank or a public enterprise;
• debt securities whose issuer has obtained from a rating agency recognized by the Financial Markets Council, a rating generally considered satisfactory;

b- Coefficient 1.2 if it is equity securities admitted to listing or securities of collective investment undertakings (OPCVM) with a concentration between 20% and less than 50%;

c- Coefficient 1.5 if it is:

• equity securities admitted to listing or securities of collective investment undertakings (OPCVM) with a concentration between 50% and less than 80%;
• unlisted equity securities with a concentration less than 20%;

d- Coefficient 2 if it is:

• equity securities admitted to listing or securities of collective investment undertakings (OPCVM) with a concentration greater than 80%;
• unlisted equity securities with a concentration between 20% and 50%;
• debt securities whose issuer has not obtained, from a rating agency recognized by the Financial Markets Council, a rating generally considered satisfactory;
• unsecured debt securities that have not been rated by a rating agency recognized by the Financial Markets Council.

e- Coefficient 2.5 if it is unlisted equity securities with a concentration between 50% and 80%;

f- Coefficient 3 if it is unlisted equity securities with a concentration equal to or greater than 80%.

Concentration means the percentage that a security entering the portfolio of the securities intermediary represents, evaluated in accordance with the provisions of Article 5 of this general decision, compared to the total of securities constituting, as appropriate:

• debt securities;
• equity securities of companies whose securities are admitted to listing and securities of collective investment undertakings (OPCVM);
• equity securities of companies making a public offering of savings whose securities are not admitted to listing;
• equity securities of companies not making a public offering of savings.

Article 3

The net own funds of the securities intermediary taken into account under this general decision include:

• Share capital;
• Reserves;
• Share premiums, merger premiums, and contribution premiums;
• Revaluation reserves;
• Shareholders' current accounts;
• Retained earnings;
• The result of all securities transactions, not yet integrated into the result of the period, determined daily;

All of which is reduced, where applicable:

• By the amount of subscribed capital not yet called and/or not yet paid up;
• By the value of investment and participation securities held in the capital of other securities intermediaries, net of depreciation provisions;
• By the value of investment and participation securities held in the capital of the shareholder companies of the securities intermediary, net of depreciation provisions;
• By the value of net intangible fixed assets and deferred charges;
• By the amounts of loans and advances to subsidiaries or personnel;
• By contributions to guarantee funds.

The securities intermediary must calculate, after each trading day, the amount of its net own funds and the amount of net own funds required for risk coverage, in accordance with Tables I and II attached to this general decision.

Article 4

Each securities intermediary must send, no later than the fifth trading day after the end of each month, to the Financial Markets Council:

• A statement of its net own funds, prepared in accordance with Table I and finalized on the date of the last business day of the month in question;
• A summary statement of the composition of its securities portfolio, prepared in accordance with Table II and finalized on the date of the last business day of the month in question;
• A summary statement of the value of its securities portfolio, the value of its net own funds, and the value of its required net own funds, calculated daily, and prepared in accordance with Table III attached to this general decision.

Article 5

The accounting treatment of the securities comprising the securities portfolio of the securities intermediary is carried out according to the methods of recognition and evaluation of short-term investments, provided for by the accounting legislation in force.

Article 6

This general decision will be published in the Official Bulletin of the Financial Markets Council after the visa of the Minister of Finance.

Tunis, April 24, 2000

Visa For the College of the Council of the Financial Markets

The Minister of Finance The President Taoufik BACCAR Béchir EL YOUNSI

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Total Net Own Funds

TABLE I Calculation of Net Own Funds of the Securities Intermediary

+/- Element	Amount
(+) Share capital
(+) Reserves
(+) Share premiums, merger premiums, and contribution premiums
(+) Revaluation reserves
(+) Shareholders' current accounts
(+/-) Retained earnings
(+/-) The result of all securities transactions, not yet integrated into the result of the period, determined daily;
(-) The amount of subscribed capital not yet called and/or not yet paid up
(-) Investment and participation securities held in the capital of other securities intermediaries, net of depreciation provisions
(-) Investment and participation securities held in the capital of the shareholder companies of the securities intermediary, net of depreciation provisions
(-) Net intangible fixed assets and deferred charges
(-) Loans and advances to subsidiaries or personnel
(-) Contributions to guarantee funds

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Tableau II: Calculation of Net Own Funds Required for Risk Coverage

Composition of Portfolio *	Number of securities acquired in the framework of counterparty	Number of securities acquired in the framework of market making	Number of securities acquired as guarantee of good performance of issuance	Number of securities in portfolio	Total number of securities acquired for own account	Value of the security	Value of the portfolio	% held compared to the same category	Weighting Coefficient	Weighted Value of the Portfolio	Risk Rate	Net Own Funds Required according to Portfolio Composition
Equity Securities
Securities admitted to the stock exchange listing or securities of collective investment undertakings (OPCVM)								With a concentration < 20%	1	50%	Sub-total
								With a concentration between 20% and 50%	1.2	50%	Sub-total
								With a concentration between 50% and 80%	1.5	50%	Sub-total
								With a concentration > 80%	2	50%	Sub-total
Securities of companies making a public offering of savings and not admitted to the stock exchange listing								With a concentration < 20%	1.5	60%	Sub-total
								With a concentration between 20% and 50%	2	60%	Sub-total
								With a concentration between 50% and 80%	2.5	60%	Sub-total
								With a concentration > 80%	3	60%	Sub-total
Securities of companies not making a public offering of savings								With a concentration < 20%	1.5	75%	Sub-total
								With a concentration between 20% and 50%	2	75%	Sub-total
								With a concentration between 50% and 80%	2.5	75%	Sub-total
								With a concentration > 80%	3	75%	Sub-total
Debt Securities
Debt securities issued by the State or local public authorities									1	10%	Sub-total
Debt securities guaranteed by the State or local public authorities									1	10%	Sub-total
Debt securities issued by a bank or a public enterprise									1	20%	Sub-total
Debt securities guaranteed by a bank or a public enterprise									1	20%	Sub-total
Debt securities whose issuer has obtained from a rating agency recognized by the Financial Markets Council, a rating generally considered satisfactory									1	30%	Sub-total
Total Net Own Funds Required for Risk Coverage
Debt securities whose issuer has obtained from a rating agency recognized by the Financial Markets Council, a rating generally considered unsatisfactory									2	60%	Sub-total
Unsecured debt securities and whose issuer has not been rated by a rating agency recognized by the Financial Markets Council									2	75%	Sub-total

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Tableau III A summary statement of the value of the portfolio, the value of net own funds, and the value of net own funds required for risk coverage, calculated daily.

Reference Month:

Trading Day	Value of Portfolio	Net Own Funds Required (according to Table II)	Net Own Funds Available (according to Table I)