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EFSA issued Unified regulations for Trading in Unlisted Securities

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• Sherif Samy: EFSA issued one decision that regulates transfer of ownership and Over-the-counter (OTC)
• EFSA’s decision stressed on the necessity of dealing through a bank account if the transaction worth more than 100 thousand pounds
• Sherif Samy: The protection granted for dealers of listed securities is not granted in the Over-the-counter (OTC)

EFSA’s BOD issued a decision to regulate trading on unlisted securities and transfer of ownership. Sherif Samy – EFSA’s Chairman explained that those rules include transfer of unlisted securities’ ownership and   automated trading system(s), or what is known as the Over-the-counter (OTC).

EFSA’s Chairman pointed out that decision no. 17 of 2017 facilitates certain issues for the dealers and companies. He added that the said decision will replace number of decisions issued within the period of 1994 and 2012. The decision stated that the previous decisions are cancelled as each of them regulated one side of those transactions. In addition, the decision develops transfer of ownership procedures in light of its application over the past years. He added that the decision will be published in the Egyptian Gazette pursuant  to a ruling of the Supreme Constitutional Court, which ruled that one of these decisions are  unconstitutional as it was  not published in the Gazette .

Sherif Samy revealed that   trading in unlisted securities or proof of  transfer of ownership shall be held through  automated trading system(s) or OTC . He added that this shall be applied only on delisted securities deposited by central depository system. Trading shall be held according to this mechanism for two days a week, as determined by the Stock Exchange the same way as it determines trading hours. Transactions shall be settled through this system in the third day of transaction T+3.

EFSA’s Chairman asserted that price limits will not be applied, closing price will not be calculated and price indices will not be calculated as well.

He stressed that if there will be any amendments to the data or issuance elements of these securities that are traded on the OTC, the Stock Exchange will stop trading in them in accordance with this mechanism , that is if the Exchange’s rejects the continuation of trading in these stock in light of the justifications offered by the company and accepted by the Stock Exchange.

He stressed that the rules set for trading in listed securities are not applied on trading in unlisted securities. He added that the closing price will not be calculated and price limits will not be defined and price indices will not be calculated as well, so in this respect, the protection granted for dealers of listed securities is not granted in the Over-the-counter (OTC).

Sherif Samy pointed out that all brokerage firms shall deal with its clients through its accounts in the banks that are subjected to the supervision of the Central Bank of Egypt (CBE) if the value of the transaction exceeded one hundred thousand pounds. On the other hand, it shall deal with clients from outside the country through the banks referred regardless the value of the transaction. The purchaser may prove that he deposit the value of the transaction in the bank account within a month at most from the date of submitting a request for holding the transaction. 

He added that the BOD of the Egyptian Stock Exchange shall issue the operational procedures of this decision, the forms and documents associated with trading and prove the transfer of ownership.  He noted that the Stock Exchange shall notify EFSA of any violations within two working days from the date of discovery of the violation, whether the violation is committed by the brokerage firms or by the dealers.
 

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Regulator Information

Abbreviation: FRA
Jurisdiction: Egypt

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