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In the first steps to activate Futures Exchange: FRA adopts the contract form and Statute of Futures Exchange

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Within the framework of activating Futures Exchanges, Mohammed Omran – FRA’s Chairman approved the adoption of the two preliminary contract forms and the statute of Futures Exchange. In a step to establish and manage an electronic trading platform through which trading will be held on contracts derive its value from price indices or securities or financial instruments listed at one of the Stock Exchanges.

FRA’s Chairman stated that the statute of Futures Exchange defined the issued and fully paid up capital of at least twenty million pounds or the equivalent of foreign currencies. In addition, the statute ensures that the Board of Futures Exchange shall include at least seven members and no more than eleven members with experience, competence and good reputation. The Board shall last for three renewable years. An Executive Chairman from the Board members shall be appointed by the Board to take over the executive management of the Futures Exchange.

Dr. Omran added that in accordance with governance rules, the Board of Directors separates the Non-executive independent Chairman of the Board and the Executive Chairman of the Exchange.  The Board shall include five non-executive members, including at least two independent members, one of whom is the Vice Chairman.
The Statute of the Futures Exchange which is approved by FRA’s Chairman decision no. 371 of 2019, have set the most important terms of reference of the Board of Directors:
• Setting the terms and conditions of the contracts after obtaining FRA’s approval, including futures and options contracts, and swap contracts.
• Issuing decisions and trading rules necessary for the proper functioning, besides providing the needed information to the clients and maintaining the safety and stability of transactions in the Futures Exchange.
• Setting the rules governing the Exchange’s membership.
• Establishing the rules and procedures to protect competition and ensure equality among consumers.

The statute also prohibits the Chairman of the Futures Exchange, its Board and the employees of the Exchange from using, leaking, exploiting the information they obtain by virtue of their duties for their own interests.

On the other hand, the statute sets the procedures for convening the General Assembly of the Exchange and the topics presented to it. These topics included the election of the board member and their removal, approving the financial statements , the board of directors’ report on the Exchange’s activity, appointing the auditor, determining his fees, and stating that the auditor shall be listed at FRA’s registry.

The statute obliges Futures Exchange to prepare the financial statements in accordance with the Egyptian Accounting Standards and to audit their accounts in accordance with the Egyptian Auditing Standards. In addition, financial statements shall be published in one of the daily newspapers at least twenty-one days before the Assembly’s meeting. Also, it shall be published at the websites of both the Stock Exchange and the Authority.

Dr. Omran pointed out that statute of the Futures Exchange included in its articles the formation and functions of the Exchange’s membership committee and Monitoring Committee for trading operations. Moreover, the Board authorized the formation of other specialized committees.

FRA’s Chairman explained that the contract form and statute represent the first procedures for starting trading on Futures Exchange. In its coming meeting, FRA’s BOD will discuss the conditions and procedures for licensing the activity of Futures Exchange and the rules set for the Egyptian Exchange upon trading in contracts derived from securities and financial instruments listed on any Stock Exchanges.

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Regulator Information

Abbreviation: FRA
Jurisdiction: Egypt

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