Post on 19-Dec-2015
transcript
Mohamed S. Abdel SalamChairman & Managing Director
MCDR OVERVIEW
Misr For Central Clearing, Depository & Registry Presentation
AMEDA conferenceAlex., April 27th -29th 2009
Contents• Introduction• Mission• MCDR Integrated Activities• Services initiated upon the international standards • MCDR Awards & International Recognition• Relations among Correspondent Business• MCDR Short term initiatives• Future Plans• Compliance to the International Recommendations• Useful Links
IntroductionMCDR – brief Overview MCDR (Misr For Central Clearing, Depository & Registry ) was
founded in 1994 Branches:6 branches in Cairo, Alex.&6th October MCDR members
Securities brokerage firms. Custodians Banks. Banks and financial institutions authorized to work as securities
intermediaries or as custodian or settlement members. MCDR Participants Securities issuers, Brokerage firms, Custodians, Direct Settlement,
Registered Owners, Primary Dealers Website: http://www.mcsd.com.eg
Introduction
Establishment• MCDR was established according to the
provisions of the Capital Market law #95 of 1992 and within the framework of the programs adopted by the Capital Market Authority (CMA) for developing the capital market mechanisms and applying the central depository system in accordance with the international standards in this field.
Introduction
MCDR Profile
• Legal Type 100% Egyptian Joint Stock• Date of Establishment August 1994• Date of Operation October 1996• Authorized Capital 250 million EGP• Issued Capital 140 million EGP• Paid Capital 140 million EGP• Governed by Depository & Registry Law
no 93 year 2000
MCDR Ownership
50% Banks
45% Brokers
5% EGX
shareholder %
Banks- Custodians(Member of central depository)
50%
Brokerage firms(Member of central depository)
45%
Egyptian Exchange 5%
Shareholders structure
Introduction
MCDR Participants
Type NumberIssuers 1260
Brokers 157
Custodians 41
Direct Settlement 32
Registered Owners 7
Primary Dealers 14
Introduction
MissionIn the past:MCDR focused mainly on:
Executing clearing and settlement of the daily stocks transactions in the Egyptian Capital market.
Finalizing central registry system for securities.
Providing investors with all information and data related to their accounts.
Managing the default risk through the settlement guarantee fund (SGF).
Guaranteeing the execution of financial or securities obligations.
Achieving stability and discipline in the market.
Mission
Reducing risks associated with delivering securities versus the value of the transaction.
Attracting foreign investor through applying the international standards (DVP).
Protecting securities investors against non-commercial risks.
Providing an auto match system matches online the trading system in the stock exchange with the clearing system in MCDR, Custodians and Brokerage firms.
MissionRecently:MCDR has conducted several initiative improvements to meet all market
participants’ interests: Well designed, clear, comprehensible and transparent legal infrastructure
Participating in IT company aims to provide Brokerage, Custodian firms with application systems in front and back office which are necessary to e-trade systems.
Managing the accounts of both cash and securities with the international institution for central depository (Clear Stream)
Establishing the automated system of the “Intra Day Trade” for active securities.
Protection of investor assets
Mission Corporate governance structure providing balance between the interests
of public and shareholders
Properly managed operational risk, business contingency and disaster recovery plans
Securities Lending/Borrowing practices
Efficient Cross-border settlement practices
Establishing the automated system of “Margin Trade” System and real
time Gross settlement “RTGS”. Providing accurate and timely information to the institutions rating Central
Settlement and Custody institutions as well as market participants and auditors
Mission
Providing Digital signature services to benefit a wide sector of the electronic media users
Subscripting in the SWIFT as a service bureau to provide the company members and Middle East with the SWIFT service.
Enforcing the international relation with the external institutions “AMEDA”, “IOSCO”, “FEAS”, “CSDs and others.
Central Counterparty practices
CentralDepository Central
Registry(Beneficiary Owner)
Participants
RTGS STP OTHERSettlement
EquitiesClearing
(traded Equities)
Fixed IncomesClearing
(Corporate &Governmental
Bonds)
Exchanged Trading Data with EGX
Clearing & Settlement systems
Issuers
MCDR Integrated ActivitiesMCDR Integrated Activities
BrokersCustodians Direct Settlement
Registered Owner
Primary Dealers
DVP
Shareholder list
Cash dividends
Stock dividends
Bond redemption
Other corporate action
Settlement Guarantee
fund (SGF)
Central Depository
Central depository activities
all activities related to the depository of securities, clearing, settlement of financial position resulting from securities transactions, and the transfer of securities ownership through book entry, including:
1. The deposit of securities with the company or with any licensed entity.
2. The transfer of ownership by book-entry of securities traded among Central
Depository Members.
3. The pledge of securities recorded by book - entry and financial position
4. The clearance and settlement of resulting from securities transaction
Number of settled transactions executed on deposited and undeposited securities
Clearing and settlement system
• ClearingThe daily executed transactions ( buy and sell orders), are processed
through MCDR system in preparation for the transfer of ownership of the product and the fulfillment of all obligations.
Executing the clearing and settlement transaction at the exact periods (T+2) , (T+1) or (T+0) upon its nature.
• SettlementAt due date when the obligation is settled, then the ownership of the
product is transferred. This process involves Matching the buy and sell instructions Renewing the product's ownership, Transferring the related cash.
Transactions involving securities are usually settled on a delivery-versus-payment (DVP) basis..
Broker 2
Clearing & Settlement cycle
Broker 1Sell
order
Buy order
SWIFT/Net Settlement
Inject net
settlement
amount
Dr. Securities acc.
MCDRprocess
CustodianBlock for
sale Check balance
EGX Executed trades
Cr. Securities acc.Clearing between brokers
Settlement BanksBuyer acc.
Dr. cashBal.
Seller acc.
Cr. cashBal.
Clearing between
Sett. Banks
Net settlementSWIFT notification
CBEDr. Settlement
Bank 1
Cr. Settlement Bank 2
Registry owners log
Clearing & Settlement
Process
12 3
4
14
5
7
6 7
7
7
Central RegistryCentral registry Activities
All activities related to the bookkeeping of securities ownership, and of
pledge of securities, including:
1. The maintenance of records with the names of owners of securities, the
rights thereto, and the disposal thereof.
2. The distribution of entitlements of securities deposited with the
company, including the principal amount, the proceeds, dividends,
redemption value, and restructuring payments.
3. The publishing of any information and reports disclosed by issuers of
securities, be it general or related to their securities.
4. The offering of services related to the issuance of securities on behalf of
the issuer; and
5. The exchange of securities upon the restructuring of the issuing entity.
Development of the registered issuer number
Settlement Guarantee Fund• The Settlement Guarantee Fund is committed to settle transactions
executed at the stock exchange in case of delay or default of settlement by any of the trading parties.
• SGF cover, cash default through financing the financial position& Securities default through stock lending and borrowing
• SGF positive role can be observed through the increase of the securities turn over rate as a result of the settlement of the member obligation defaults
SGF aims to facilitate.
– Guaranteeing the execution of financial or securities obligations.
– Achieving stability and discipline in the market.
– The fund is committed to settle transactions executed in the stock
exchange in case delay or default of settlement by any trading party.
– Attract local and foreign investments.
SGF positive role in market
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%21.96%
0.05%
default settlement
default cash
default securities
Through 47 bank branch
1. Dividends distribution service
MCDR Providing the distribution services for the dividends due on the deposited securities on behalf of the issuing companies (i.e. shares Dividends –Bond interest and redemption - …) , MCDR developed the distribution channels to satisfy the various customers needs
Dividends Channel
Home delivery SWIFT ChequesBank transfers Cash dividends
Services initiated upon the international standards
Services initiated upon the international standards 2. Introducing SWIFT service• MCDR was authorized to set the SWIFT message
standers of the NSMPG (National securities Market Practice Group) in Egypt.
• MCDR subscribed in SWIFT as a service bureau for company members allowing them to benefit from all system’s advantages with lower cost.
• The system aims to introduce the latest scientific means in the field of connection and exchange of massages and information among markets through authorized banks in different countries.
Corporate Insurance companiesBanks
Broker-Dealers
InvestmentManagers
Stock Exchanges
DepositoriesTrustees
Clearing systems
PaymentSystems
SettlementSystems
Government Institutions
SWIFT SWIFT Service Service Bureau Bureau (58 (58 Brokers)Brokers)
SWIFT Service BureauSWIFT Service Bureau
Services initiated upon the international standards
3. Introducing Short Selling service A New Leveraged Vehicle for Securities Trading being
Introduced in Egypt Managed by MCDR The system allows investors who own securities and
wish to keep them in order to gain a return through lending these securities to other investors, this leads to:
Increase the market liquidity; Benefit for all related parties; Increase the activity in the stock exchange as a whole.
The following chart reveal the process of short selling
Services initiated upon the international standards
Short Selling Process
Interest Income
Sell Order
Cash Collateral
Waiting Queue
Lending Pool
EGX TradingSystem
MCDRSettlement
System
BorrowingBroker
ShortSelling
Customer
Margin Calls
Initial Margin
Short Sell
Order
Cash
Lendingcustomer
LendingCustodian
Interest Income
Lending Request
MCDR SLB System
Services initiated upon the international standards
4. Certificate AuthorityThe Certification Authority (CA) is the entity authorized by the
Policy Management Authority to create, sign and issue Digital Certificates which built in accordance with the newest & the most secured international technology “ISO 27001” standards and it will provide a key role in the Capital Markets:– Protecting clearing and settlement system from fraud– Providing extra security for E-Trade instructions– Providing strong audit ability and legal enforceability of all
transactions– Enabling online services for issuers and their investors
• E-Trade Solution• E-Voting for company resolutions
– Strong authentication of stock market participants
Services initiated upon the international standards
28
Signing using PKIWritten signature
Digital signature Internet / intranet
•Unsecured documents` delivery • Late in documents` delivery•Availability of changing the contents
•No verification of the signature validity•No verification of the document contents validity•No verification of time stamping•No verification of who exactly signed
Using smart card and personal pin code
•Signing any document before sending•Signing data with Time stamping
Availability of storing signature & signed data
•verification of the signature validity•verification of the document`s contents validity•verification of time stamping•verification of who exactly signed
Services initiated upon the international standards
5. Other servicesMCDR initiate several services to meet the various
market participant (Issuers ,Investors, ….)needs: Shareholders list Pledge Repatriation Call center Internet Email & post mail SMS & Fax E vote
Services initiated upon the international standards
JP Morgan assessmentMCDR was granted the highest level of efficiency with a score of 1.25 points on a scale of 1 to 3
MCDR built the Information Security System in accordance with the ISO 27001 standards
B.I.D. quality award in the Diamond categoryFor significant contribution to the business world, for high standing and professionalism demonstrated by prestigious performance
Thomas Murray Risks AssessmentMCDR was granted an overall AA in Thomas Murray depository risks assessment that overall, Rating for Misr for Central Clearing, Depository and Registry (MCDR) is: A = Low riskMCDR overall rating
MCDR AWARDS & International Recognition
Overall, the Thomas Murray CSD Rating for Misr Company for
Central Clearing, Depository and Registry (MCDR) is:
A = Low risk
The outlook for the rating is: Stable
CSD Rating
Asset Comm
itment Risk
Liquidity Risk
Counterparty Risk
Financial Risk
Operational Risk
Asset Servicing Risk
Overall Rating
MCDR Rating: A A A A A+ A A
This Rating is for MCDR settlement, safekeeping and asset servicing operations
TM Risk Assessment to MCDR
Relations among Correspondent Business
● Africa & Middle East Depositories Association (AMEDA)
● Japan Securities Depository Center, Inc. (JASDEC)
● Thomas Murray
● International Organization of Securities Commissions (IOSCO)
● World Federation of Euro-Asian Stock Exchanges (FEAS)
● Union of Arab Stock Exchanges
● Central Securities Depositories (CSDs)
● Association of Global Custodian
● Association of National Numbering Agencies (ANNA)
MCDR Short term plans Establishing the settlement system of the exchange
traded funds (ETF) and the system of its related transactions:– Issuance of ETFs certificates.– safekeeping of the portfolio assets of the ETFs to be established.– Creation and redemption transactions of ETFs
Initiating an integrated system for clearing and settlement of the NILEX transactions (the Egyptian Exchange' market for growing medium and small companies) to provide an appropriate, secure, flexible movements for both companies & investors, together with an efficient and admission process.
Establishing an Effective risk management and corporate governance structures
Future plans Implementing the clearing and settlement system of
the derivatives market Futures Options
Developing the fixed income marketSettlement of Repo agreements. Bonds short selling
Meeting the necessary requirements for obtaining a credit rate of (AAA) from the international rating agency “Thomas Murray”.
Cross-border movement of capital and funds Increased cross-border securities trading Integration among stock exchanges and clearing
institutions Full automation and STP CCP and CMU Mechanism
Compliance to the International Recommendations
Compliance with G30 recommendations Compliance with SEC17F7 requirements. ISO 27001 standards Full automation in communication and data gathering Message standards and communication protocols Securities Lending/Borrowing practice Risk management and control processes Synchronized transfer of cash and securities Efficient business contingency and Disaster Recovery Planning Fair and easy access to the system Impartial, open and efficient corporate governance
Useful Links Misr for Clearing, Central Depository and Registry (MCDR)
www.mcsd.com.eg Capital Market Authority (CMA)
www.cma.gov.eg Egyptian Stock Exchange (EGX)
www.egyptse.com Egyptian Capital Market Association (ECMA)
www.ecma.org.eg Ministry of investment
www.investment.gov.eg Central Bank of Egypt
www.cbe.org.eg
Thank you