• Sherif Samy: EFSA strikes a balance between the need for greater protection of clients’ accounts and considerations of speed dealing
• EFSA’s decisions allow the opening of an account by a power of attorney for expatriates on condition that the power of attorney shall be authenticated
• EFSA allows the distribution of dividends to clients through custodians in case there is a contract text
Sherif Samy- EFSA’s Chairman revealed that the amendments to decision no.61 of 2017 on enhancing the Protection of Clients’ Accounts allowing clients, both Egyptians and foreigners, to appoint a third party to open their accounts with companies operating in securities, that is in case if the address of these clients is outside the country . He added that the power of attorney shall be authenticated by the competent Egyptian authorities abroad. It also allowed intraday trading by using a power of attorney if the purchasing value was paid by the client and not financed by a brokerage company.
He added that EFSA’s BOD decision no. 84 of 2017 which included the said amendments allowed the distribution of dividends to the custodians for the benefit of their clients in case that the contract signed between the two parties explicitly stated the right to do so. With the obligation to pay the dividends to the client whenever he asked for it or to deposit it in his account at one of the banks on the next working day at most starting from the date of disbursement.
Sherif Samy pointed out that the amendments came in the framework of periodic consultations with various parties working in capital market from associations and experts. He emphasized that these amendments came in response to a number of proposals that were discussed in order to emphasize flexibility of dealing in the market and compatibility with specific cases such as residence abroad. He added that the Authority approved amendments that do not affect the system set to strengthen the protection of dealers’ accounts. Also, he pointed out that there are other aspects related to strengthening the protection of dealers’ accounts discussed by market representatives from companies and custodians and it was clarified without any action being taken.
EFSA’s Chairman pointed out that decision no. (61) of 2017 which was issued in April affirmed the commitment of all brokerage companies and portfolio management companies and those who are licensed practice to the activity of custodians not to sign any contract or open accounts for their clients from natural persons except through the client himself . In addition, power of attorney shall not be used to open clients’ accounts unless he is living abroad. Power of attorney shall be used in selling and purchasing, deposit and withdrawal of checks and cash, confirming the accuracy of acts and data, and ratification of Account Statements. All these shall be done by a special official or general power of attorney to “deal with the client’s account at the companies operating in securities.” In all cases, margin trading transactions shall not be held by using the power of attorney. On the other hand, power of attorney that have been issued or have been last updated for more than five years may not be relied upon. Power of attorneys shall be renewed before the end of the mentioned period.