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Investor Protection Procedures |
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EGX investors has a range of protection means that secure them against non-commercial risks and other risks that are not related to their investment decisions. The most important of these means:
Settlement Guarantee Fund (SGF)
It is a financial pool of the Central Depository which all brokerage firms (settlement members) share in. It aims at ensuring the implementation of the settlement resulting from the trading of listed securities by verifying that the settlement are executed on its exact time according to the following:
- Covering the cash deficit resulting from the buyer
- Covering the deficit in securities resulting from the failure of the seller to deliver
• The Settlement Guarantee Fund replaces the non-compliant brokerage firm where it delivers buyer's securities or paying the funds to the seller (the brokerage firms representing the other party in the transaction). Thus, ensuring settlement of the transactions to the customers of the compliant companies.
• SGF is designed to execute the settlement on the specified time frame whether the brokerage firm did or did not comply to deliver to the other party (brokerage firm) the money or securities within the purchasing or selling transactions.
Investor Protection Fund (IPF)
• It is a private legal entity, not a shareholding company. It is a non-individual and a separate financial liability. It can be said that it is a legal identity established for a specific purpose which is compensating the brokerage firms clients from the fraud they suffer as a result of brokerage firms’ activity in executing the clients’ orders.
• The Investor Protection Fund intervenes when brokerages fail to meet their obligations to the investor. It is after their claim and the FRA approval to the fund to initiate the compensation program. The Fund shall begin to intervene to protect and compensate the Investor in accordance to the prescribed compensation scheme.
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