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Saturday, 23 November 2019

Egypt MPs voice reservations over new Central Depository and Registration Law

MPs said the law needs careful study, fearing that its current form could harm the securities market and investment climate

Gamal Essam El-Din , Sunday 20 Oct 2019
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The Egyptian parliament’s economic affairs committee began Sunday discussing new government-drafted amendments of the Central Depository and Registration Law.

The meeting was headed by the committee’s deputy chairman Ashraf Al-Araby.

Abdel-Hamid Ibrahim, an advisor to the chairman of the Financial Control Authority, explained that the amendments allow non-banking entities to be formed to do business in the area of trading in government financial securities.

“In general,” said Ibrahim, "the amendments help attract more investments to the securities market in a way that could positively impact the international credit rating of Egypt.”

“I also want to indicate that the new amendments do not affect in any way the existing entity which takes charge of the clearance and settlement system, as it is an internationally recognised one,” added Ibrahim.

The meeting saw much debate of Article 35 that allows the Central Bank of Egypt to do business in treasury bonds and bills via a joint-venture company to be formed in this regard. The article includes rules regulating activities in this sector.

Article 35 also states that the Financial Control Authority is the entity officially authorised to license joint venture companies to practice the clearance and settlement of contracts concluded in the stock market. The article includes all the requirements that must be met for joint venture companies to get an official license.

MPs, however, voiced reservations over the amendments.

“As far as I see, the amendments impose restrictions on the companies currently performing clearance and settlement activities and this could harm the securities market,” said Salah Hassaballah, the Egyptian parliament’s spokesperson and chairman of the Horreya (Freedom) Party.

Ashraf Al-Araby, deputy chairman of parliament’s economic affairs committee, said it is clear that the articles of the new amendments of the Central Depository and Registration Law need careful study because many of them are controversial, particularly Article 35.

“This law is closely related to the investment and capital market, and so there should be an intensive discussion of all of its articles, one by one, to ensure that it will positively impact the economic and business performance of Egypt in general,” said Al-Araby.

The government’s explanatory note said the amendments include the activities of clearance and settlement of financial securities and this is necessary to settling the legalities resulting from trading in financial securities and the rights and obligations of all those who do business in this sector.

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