- Dr. Omran: FRA’s Futures Exchanges Committee sets licensing rules to practice trading futures as well as the rules governing brokerage in this field
Dr. Mohamed Omran – FRA’s Chairman revealed that FRA’s Futures Exchanges Committee which was formed in order to prepare the rules and decisions regulating Futures Exchanges has completed the study of the best international practices in regulating Futures Exchanges in more than seven leading countries (Chicago, London, Hong Kong, India, France, Malaysia, Morocco) that is in addition to the other principles issued by international bodies concerned with Capital Market.
FRA’s Chairman stated that the law allowed Futures Exchange in one of two forms, the first is establishing a private company to engage in the activity of Futures Exchange and the other is that the Egyptian Stock Exchange shall practice this activity directly. The study prepared by the committee resulted in setting the proposed rules and regulations to start futures trading. The said rules include the following:
– Rules and conditions of membership in the Stock Exchange
– Setting specifications of contracts and special contracts between clients and brokerage firms
– Trading rules to ensure operations’ integrity
– Pricing policies for contracts traded on the Stock Exchange
– Clearing and Settlement System
– Procedures and measures that will be applied in case of violation of membership rules or trading rules in the Stock Exchange
– Setting the rules and regulations for licensing futures contracts and capital adequacy criteria that must be met by brokerage companies practicing this activity and other basic rules governing this activity.
Dr. Omran added that the committee which includes number of experts in the capital markets and related legislation as well as number of young technical staff in both the Financial Regulatory Authority (FRA) and the Egyptian Stock Exchange, is preparing all rules governing the work of the Stock Exchanges and proposing and drafting related regulatory rules. In addition, the Committee is preparing its reports regarding the proposed controls and conditions set for licensing trading at Futures Exchange, rules set for practicing brokerage in Futures, the capital adequacy standards that must in these companies and the conditions that must be met by those engaged in this field. And finally the said report shall be submitted to FRA’s Board of Directors.
Dr. Omran stressed that FRA’s Board of Directors will begin, in turn, respectively, to discuss the decisions governing Futures Exchanges by the end of the year.