Search:   
Contact us   FAQ     
 
Home Trading Clearing & Settlement
Clearing & Settlement

Clearing and Settlement Procedures

The Clearing and Settlement System in Egypt is based upon Delivery versus Payment, whereby MCDR acts as the Clearing House between the buying and selling member firms, regarding their paper and funds settlement as follows:

  • T+0 for securities traded by the Intra-day Trading System
  • T+1 for government bonds that are traded through Primary Dealers System
  • T+2 for all other securities

Buy Transactions or Trades

  • EGX provides each member firm with its buy transactions at the end of trade day.
  • EGX transmits the buy transactions of each member firm to MCDR through the electronic link between both entities.
  • MCDR sends sell transactions details to the custodians end of trade day.
  • Each custodian verifies and allocates the bought transactions to each client’s account according to the previous received orders from the client. This process should be done at least a day before SD.
  • The clearing members would add additional funds in their accounts at the clearing banks to be able to pay for buy transactions, taking into account the sell transactions that the member has done which would funds to his accounts.
  • The clearing banks would then send through an electronic file to MCDR the updated cash accounts of member firms.
  • MCDR then updates the member firms accounts with the updated information received from the clearing banks.

Sell Transactions or Trades

  • The selling member sends the sell order electronically to the custodian to ensure that the client has securities to sell prior to inputting a sell order on EGX trading system.
  • The custodian informs the selling member whether there are sufficient securities for the clients to sell or not. Afterwards, the custodian blocks the clients’ securities that are going to be sold through the selling member.
  • EGX provides each member firm with its sell transactions at the end of trade day.
  • EGX transmits the sell transactions of each member firm to MCDR through the electronic link between both entities.
  • MCDR sends sell transactions details to the custodians end of trade day.
  • The custodian would check the sell transactions with the already blocked securities for the selling member and then send electronically those shares in the accounts of the selling member at least a day before settlement date.

Settlement Procedures at MCDR on Settlement Day

  • MCDR ensures that the cash account of member firms at the clearing bank has sufficient funds, plus the proceeds from selling transactions, to meet their buying transactions.
  • MCDR conducts clearing and settlement among its member firms as follows:
    • Transfer the securities traded from the account of selling member via selling custodian to the account of buying members via the buying custodian.
    • Reduce the account of the buying member by an amount equal to the value traded of securities and add the same amount to the account of the selling member.
    • Provide an electronic detailed account of each member firm to the clearing banks stating whether the member is a net creditor or debtor.
    • The clearing banks would then update the records of clearing members with the data received from MCDR i.e. add monies to credit clearing members and subtract monies from debit clearing members.
    • The clearing banks would provide a detailed document to clearing members including all transactions that was settled on their behalf as a buying member and all transactions that was settled on their behalf as a selling member.
    • The clearing banks would provide a detailed document to selling custodians including the transactions that were conducted on behalf of their clients reducing their sold securities.
    • The clearing banks would provide a detailed document to buying custodians including the transactions that were conducted on behalf of their clients increasing their bought securities.
  • After member firms receive the settlement documents from MCDR, they must inform their clients whether their buy or sell transactions was settled.
  • The selling custodian, after receiving the settlement documents from MCDR, must send an account statement to their clients showing the settlement of the sale transactions.
  • The buying custodian, after receiving the settlement documents from MCDR, must send an account statement to their clients showing the settlement of the buy transactions.

T= trade day
SD = settlement day
MCDR = Misr for Central Clearing, Depository and Registry

For more information about Misr for Central Clearing, Depository and Registry please refer to the following link: www.mcsd.com.eg

Home Related Laws Glossary Links Sitemap Disclamer
© 2014 The Egyptian Exchange