The Financial Regulatory Authority of Egypt has approved new rules for the Settlement Guarantee Fund to enhance stability in capital markets. The rules include increased resources and a structured approach to counterparty risk management. Members can settle rights on transactions at a heightened ratio to their subscriptions, promoting operational efficiency. Governance structures have also been established to manage the Fund effectively, reflecting a commitment to protect stakeholder rights and ensure market stability.
The Financial Regulatory Authority (FRA) of Egypt has enacted new executive rules and procedures for the Settlement Guarantee Fund, enhancing alignment with international best practices and promoting the stability of the capital market. These guidelines, developed by the Board of Directors of Misr for Central Clearing, Depository and Registry (MCDR), aim to regulate operations and mitigate counterparty risks in settlements.
In its efforts to fortify the Fund, the FRA has increased its resources to 650% of the total value of members’ subscriptions. This increase is facilitated by a “Waterfall” approach to counterparty risk management, which ensures a structured process for utilizing financial resources in the event of potential financial distress.
Additionally, the FRA permits Fund members to settle rights and obligations related to transactions of securities on the Egyptian Stock Exchange up to six times their subscription amount for transactions with a settlement period shorter than the T+2 cycle. The Settlement Guarantee Fund plays a critical role in ensuring the fulfillment of obligations arising from such securities trading.
Governance controls have been established according to the FRA resolution, including the formation of a Management Committee consisting of seven members. This committee brings together representatives from MCDR, securities brokerage firms, custodians executing settlements, and the Egyptian Exchange, all aimed at overseeing effective management of the Fund.
These recent measures by the FRA demonstrate a commitment to stabilizing non-banking financial markets while also securing the rights of all stakeholders involved. By enhancing the operational framework of the Settlement Guarantee Fund, the FRA seeks to reduce counterparty risks effectively and promote operational integrity on the Egyptian Stock Exchange.
In conclusion, the Financial Regulatory Authority of Egypt has implemented essential new rules for the Settlement Guarantee Fund, greatly enhancing its operational framework and ensuring alignment with global standards. The increased resources, risk management strategies, and establishment of a governance committee collectively aim to minimize counterparty risk while safeguarding the rights of stakeholders. These developments signify ongoing efforts to bolster the stability of Egypt’s capital markets.
Original Source: www.dailynewsegypt.com
