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EFSA Starts a study on Regulating Short-term debt-based financial instruments with the European Bank

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• EFSA is studying with the European Bank for Reconstruction and Development (EBRD) means of regulating short-term bonds
• Sherif Samy: The capital market needs to develop a short-term financing instrument in order to be added to the existing bonds

 Sherif samy – EFSA’s Chairman revealed that EFSA starts a technical cooperation project with the European Bank for Reconstruction and Development to study the requirements for developing Short-term debt-based financial instruments in the Egyptian Capital Market in order to complete the system of securities and available financial instruments. He added that there was a need to find bonds or other financing tools for periods less than one year to serve financing requirements of factoring and microfinance companies, that is in addition to other seasonal needs that are characterized by shortening the working capital cycle (WCC) besides  other enterprises, especially industrial ones.

EFSA’s Chairman noted that the project “Development of regulatory frameworks for Short-term debt-based financial instruments in Egypt” was approved by the Ministry of Investment and International Cooperation and it will take a period of six months. The project states that the European Bank for Reconstruction and Development will offer the technical support to EFSA through providing international experts in areas of financial legislations and markets to prepare a comparative study on what is being applied in other markets in order to identify the best practices applied internationally in this field. The project also includes seeking the help of a local expert to participate in the preparation of the proposed model that will be applied in Egypt and drafting the necessary amendments in the relevant legislation.

Sherif Samy pointed out that the Egyptian Capital Market is currently regulating bonds and securitization bonds with periods of 13 months or more. Hence, comes the need to study the availability of providing Short-term debt-based financial instruments to companies along with bank financing. He explained that regulating Sukuk has been already stated in the draft amendments to the Capital Market Law (95) of 1992 which was approved by the Cabinet of Ministers in May and was referred to the State Council to review it.
 

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Regulator Information

Abbreviation: FRA
Jurisdiction: Egypt

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